EX-99.1 2 ex99-1.htm

 

Exhibit 99.1

 

 

 

AMMO, Inc. Reports Third Quarter 2023 Financial Results

 

SCOTTSDALE, Ariz., February, 14, 2023 (GLOBE NEWSWIRE) — AMMO, Inc. (Nasdaq: POWW, POWWP) (“AMMO” or the “Company”), the owner of GunBroker.com, the largest online marketplace serving the firearms and shooting sports industries, and a leading vertically integrated producer of high-performance ammunition and components, today reported results for its third quarter of fiscal 2023, ended December 31, 2023.

 

Third Quarter Fiscal 2023 vs. Third Quarter Fiscal 2022

 

● Net Revenues decreased 40% to $38.7 million.
● Gross profit margin of approximately 32.3%.
● Historical Adjusted EBITDA of $7.9 million compared to $20.1million.
● Updated Adjusted EBITDA of $4.8 million compared to $10.7 million.
● Net loss of ($4.1) million, compared to net income of $9.1 million.
● Diluted EPS of ($0.04), compared to $0.07.
● Historical Adjusted EPS of $0.05, compared to $0.14.
● Updated Adjusted EPS of $0.05 compared to $0.08

 

GunBroker.com “Marketplace” Metrics – Third Quarter 2023

 

● Marketplace revenue of approximately $15.4 million.
● New user growth averaged 40,000 per month.
● Average take rate increased to 5.7% compared to 5.4% in fiscal 2022.

 

Fred Wagenhals, AMMO’s Chairman & CEO, commented that “[t]he entire ammunition market is currently facing significant headwinds primarily due to the current inflationary and recessionary drivers impacting the consumer. Despite these near-term challenges, the management team and AMMO Board remains excited about the Company’s prospects in both the short and long term. Our confidence is supported by the continued ramp up in the production capacity at our state-of-the-art facility in Manitowoc, along with the continuing rollout of enhancements to our Gunbroker.com Marketplace site.

 

“These opportunities, coupled with the exciting addition of our newest executive management team member, Jared Smith, President & COO, supports the high level of confidence I have in AMMO’s future. Jared’s experience, the wealth of his relationships, intellect and drive are all valuable assets for our organization as we chart our path forward to a bright future through the balance of this fiscal year and beyond,” Mr. Wagenhals concluded.

 

 

 

 

Third Quarter 2023 Results

 

We ended our third quarter with total revenues of approximately $38.7M in comparison to approximately $64.7M in the prior year quarter - this was a decrease of 40% from the prior year quarter. The decrease in revenue was mainly attributable to our ammunition segment and the inflationary impacts that are currently affecting the market. These market conditions also impacted the revenue of our Marketplace segment effecting a 12% decrease from the prior year period. However, operating performance of our Marketplace, GunBroker.com still remained strong and although our top line revenues waivered, our margins are still comparable to historical performance.

 

We continue to see margin compression on our ammunition segment as we have seen further pricing pressure as the US commercial markets continue to slow from the inflationary impact and approaching global recession. The reduction in sales, higher commodity and freight costs along with increased operating expenses such as, the remainder of the one-time legal expenses related to the proxy contention, stock compensation, corporate insurance and payroll have increased our cost of revenues and operating expenses resulting in a net loss for the period.

 

To address these increases and as discussed earlier in the call we plan to recoup cash tied up in our inventory in our quarter ending in March and pivot the direction of our manufacturing operations to more profitable opportunities such as premium rifle brass. Additionally, we continue to push forward on the improvements to our marketplace, GunBroker.com, and expect the payment suite and cart platform to launch in the first half of our next fiscal year, which should drive growth and profitability to the site.

 

Our Cost of Revenues was approximately $26.2M for the quarter compared to $42.2M in the comparable prior year quarter. This decrease was related to reduced sales volume and increased commodity costs. Accordingly, this resulted in a gross margin of $12.5M compared to $22.5M. As our sales volume fell in the reported quarter, we anticipate another quarter of margin compression due to these increased costs, but expect to swiftly transition to more profitable sales activity starting in the first quarter of our next fiscal year.

 

Our balance sheet remains strong with our total current liabilities decreasing by 21% since our year end and our total current assets at virtually unchanged.

 

We are revising our Adjusted EBITDA and Adjusted Net Income Per Share calculations moving forward, which we believe will provide the market with a more accurate representation of our operations. To transition to our new calculations, we are providing our historical Adjusted EBITDA and Adjusted Net Income Per Share calculations and as well the calculations you can expect to see moving forward and incorporated into our updated guidance. For the quarter, using our historical Adjusted EBITDA and Adjusted EPS calculation we recorded adjusted EBITDA of approximately $7.9M busing, compared to prior year quarter Adjusted EBITDA of $20.1M. Using our Updated Adjusted EBITDA calculation, we recorded $4.8M in Adjusted EBITDA for the period compared to $10.7M.

 

 

 

 

This resulted in a loss per share of $(0.04) or Historical Adjusted Net Income per Share of $0.05 in comparison to $0.14 in the prior year period. Using our updated calculation, Adjusted Net Income per Share was $0.05 in comparison to Adjusted Net Income per Share of $0.08 in the prior year period.

 

Outlook

 

Due to the decline is sales activity due to the market shift, we are reducing our guidance for our 2023 fiscal year. We are updating our guidance to revenues of $185 million, adjusted EBITDA using our new calculation of $22 million, and EBITDA of $17 million.

 

Conference Call

 

Management will host a conference call to discuss the Company’s Fiscal second quarter 2023 results at 5:00 p.m. ET today, February 14th, 2023.

 

Investors interested in participating in the live conference call or audio-only webcast, may join by dialing 1-866-777-2509 (domestic), 1-412-317-5413 (international), or via webcast at

 

https://event.choruscall.com/mediaframe/webcast.html?webcastid=yW2dwlnP.

 

Please join at least 5-10 minutes prior to the scheduled start and follow the operator’s instructions. When requested, please ask for “AMMO, Inc. Third Quarter 2023 Conference Call.”

 

About AMMO, Inc.

 

With its corporate offices headquartered in Scottsdale, Arizona, AMMO designs and manufactures products for a variety of aptitudes, including law enforcement, military, sport shooting and self-defense. The Company was founded in 2016 with a vision to change, innovate and invigorate the complacent munitions industry. AMMO promotes branded munitions as well as its patented STREAK™ Visual Ammunition, /stelTH/™ subsonic munitions, and specialty rounds for military use via government programs. For more information, please visit: www.ammo-inc.com.

 

About GunBroker.com

 

GunBroker.com is the largest online marketplace dedicated to firearms, hunting, shooting and related products. Aside from merchandise bearing its logo, GunBroker.com currently sells none of the items listed on its website. Third-party sellers list items on the site and Federal and state laws govern the sale of firearms and other restricted items. Ownership policies and regulations are followed using licensed firearms dealers as transfer agents. Launched in 1999, GunBroker.com is an informative, secure and safe way to buy and sell firearms, ammunition, air guns, archery equipment, knives and swords, firearms accessories and hunting/shooting gear online. GunBroker.com promotes responsible ownership of guns and firearms. For more information, please visit: www.gunbroker.com.

 

 

 

 

Forward Looking Statements

 

This document contains certain “forward-looking statements”. All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including, but not limited to, any projections of earnings, revenue or other financial items; any statements of the plans, strategies, goals and objectives of management for future operations; any statements concerning proposed new products and services or developments thereof; any statements regarding future economic conditions or performance; any statements or belief; and any statements of assumptions underlying any of the foregoing.

 

Forward looking statements may include the words “may,” “could,” “estimate,” “intend,” “continue,” “believe,” “expect” or “anticipate” or other similar words, or the negative thereof. These forward-looking statements present our estimates and assumptions only as of the date of this report. Accordingly, readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the dates on which they are made. We do not undertake to update forward-looking statements to reflect the impact of circumstances or events that arise after the dates they are made. You should, however, consult further disclosures and risk factors we include in Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and Reports filed on Form 8-K.

 

Investor Contact:

 

CoreIR

Phone: (212) 655-0924

IR@ammo-inc.com

 

Source: AMMO, Inc. 

 

 

 

 

AMMO, Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS

 

   December 31, 2022   March 31, 2022 
   (Unaudited)     
ASSETS          
Current Assets:          
Cash and cash equivalents  $27,093,614   $23,281,475 
Accounts receivable, net   30,419,611    43,955,084 
Due from related parties   -    15,000 
Inventories   67,145,401    59,016,152 
Prepaid expenses   3,838,968    3,423,925 
Current portion of restricted cash   500,000    - 
Total Current Assets   128,997,594    129,691,636 
           
Property and Equipment, net   55,290,328    37,637,806 
           
Other Assets:          
Deposits   9,656,907    11,360,322 
Patents, net   5,156,120    5,526,218 
Other intangible assets, net   126,870,205    136,300,387 
Goodwill   90,870,094    90,870,094 
Right of use assets - operating leases   1,378,711    2,791,850 
TOTAL ASSETS  $418,219,959   $414,178,313 
           
LIABILITIES AND SHAREHOLDERS’ EQUITY          
Current Liabilities:          
Accounts payable  $20,964,686   $26,817,083 
Factoring liability   1,678,450    485,671 
Accrued liabilities   4,298,739    6,178,814 
Inventory credit facility   -    825,675 
Current portion of operating lease liability   518,778    831,429 
Current portion of note payable related party   358,263    684,639 
Current portion of construction note payable   258,430    - 
Insurance premium note payable   119,449    - 
Total Current Liabilities   28,196,795    35,823,311 
           
Long-term Liabilities:          
Contingent consideration payable   158,570    204,142 
Notes payable related party, net of current portion   -    181,132 
Construction note payable, net of unamortized issuance costs   10,967,947    38,330 
Operating lease liability, net of current portion   980,009    2,091,351 
Deferred income tax liability   2,819,962    1,536,481 
Total Liabilities   43,123,283    39,874,747 
           
Shareholders’ Equity:          
Series A cumulative perpetual preferred Stock 8.75%, ($25.00 per share, $0.001 par value) 1,400,000 shares issued and outstanding as of December 31, 2022 and March 31, 2022, respectively   1,400    1,400 
Common stock, $0.001 par value, 200,000,000 shares authorized 118,044,417 and 116,485,747 shares issued and 117,894,417 and 116,485,747 outstanding at December 31, 2022 and March 31, 2022, respectively   117,894    116,487 
Additional paid-in capital   390,501,876    385,426,431 
Accumulated deficit   (15,233,633)   (11,240,752)
Treasury Stock   (290,861)   - 
Total Shareholders’ Equity   375,096,676    374,303,566 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY  $418,219,959   $414,178,313 

 

 

 

 

AMMO, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

  

For the Three Months Ended

December 31,

  

For the Nine Months Ended

December 31,

 
   2022   2021   2022   2021 
                 
Net Revenues                    
Ammunition sales  $20,250,965   $44,069,473   $90,607,817   $112,629,655 
Marketplace revenue   15,419,202    17,596,769    46,486,842    46,646,051 
Casing sales   3,041,327    3,022,944    10,661,420    10,891,897 
    38,711,494    64,689,186    147,756,079    170,167,603 
                     
Cost of Revenues   26,184,315    42,166,320    104,257,529    102,457,775 
Gross Profit   12,527,179    22,522,866    43,498,550    67,709,828 
                     
Operating Expenses                    
Selling and marketing   1,010,543    1,510,574    3,987,214    4,226,817 
Corporate general and administrative   7,835,201    3,737,455    17,920,197    10,976,288 
Employee salaries and related expenses   4,705,636    2,939,095    11,414,434    7,943,076 
Depreciation and amortization expense   3,309,074    3,725,921    9,950,752    10,044,994 
Total operating expenses   16,860,454    11,913,045    43,272,597    33,191,175 
Income/(Loss) from Operations   (4,333,275)   10,609,821    225,953    34,518,653 
                     
Other Expenses                    
Other income/(expense)   (170,403)   363    28,193    21,788 
Interest expense   (320,439)   (190,319)   (538,191)   (468,404)
Total other expense   (490,842)   (189,956)   (509,998)   (446,616)
                     
Income/(Loss) before Income Taxes   (4,824,117)   10,419,865    (284,045)   34,072,037 
                     
Provision for Income Taxes   (721,125)   1,351,998    1,369,427    1,351,998 
                     
Net Income/(Loss)   (4,102,992)   9,067,867    (1,653,472)   32,720,039 
                     
Preferred Stock Dividend   (782,639)   (782,582)   (2,339,409)   (1,902,966)
                     
Net Income/(Loss) Attributable to Common Stock Shareholders  $(4,885,631)  $8,285,285   $(3,992,881)  $30,817,073 
                     
Net Income/(Loss) per share                    
Basic  $(0.04)  $0.07   $(0.03)  $0.28 
Diluted  $(0.04)  $0.07   $(0.03)  $0.27 
                     
Weighted average number of shares outstanding                    
Basic   117,348,511    114,757,014    116,950,013    111,289,024 
Diluted   117,348,511    116,717,500    116,950,013    113,350,998 

 

 

 

 

AMMO, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW

(Unaudited)

 

  

For the Nine Months Ended

December 31,

 
   2022   2021 
         
Cash flows from operating activities:          
Net Income/(Loss)   (1,653,472)   32,720,039 
Adjustments to reconcile Net Income/(Loss) to Net Cash provided by (used in) operations:          
Depreciation and amortization   12,950,972    12,778,103 
Debt discount amortization   62,440    18,905 
Employee stock awards   4,457,973    2,898,250 
Stock grants   135,344    197,110 
Stock for services   -    4,200 
Warrants issued for services   106,909    148,508 
Contingent consideration payable fair value   (45,572)   (362,753)
Allowance for doubtful accounts   1,327,419    1,097,985 
(Gain) on disposal of assets   -    (12,044)
Reduction in right of use asset   512,063    496,469 
Deferred income taxes   1,283,481    958,019 
Changes in Current Assets and Liabilities          
Accounts receivable   12,208,054    (20,755,245)
Due to (from) related parties   15,000    - 
Inventories   (8,129,249)   (30,599,676)
Prepaid expenses   1,941,206    1,569,928 
Deposits   1,678,415    (13,051,850)
Accounts payable   (5,852,397)   7,538,451 
Accrued liabilities   (2,044,248)   1,310,641 
Operating lease liability   (522,917)   (514,872)
Net cash provided by (used in) operating activities   18,431,421    (3,559,832)
           
Cash flows from investing activities:          
Purchase of equipment   (10,566,182)   (50,517,840)
Gemini acquisition   -    (12,868,156)
Proceeds from disposal of assets   -    59,800 
Net cash used in investing activities   (10,566,182)   (63,326,196)
           
Cash flow from financing activities:          
Payments on inventory facility, net   (825,675)   (896,287)
Proceeds from factoring liability   57,300,000    86,465,962 
Payments on factoring liability   (56,107,221)   (84,210,284)
Payments on note payable - related party   (507,508)   (463,192)
Payments on insurance premium note payment   (1,916,070)   (1,922,651)
Proceeds from construction note payable   1,000,000    - 
Payments on construction note payable   (66,586)   - 
Preferred stock dividends paid   (2,195,075)   (1,758,405)
Common stock repurchase plan   (291,011)     
Common stock issued for exercised warrants   56,046    943,907 
Payments on assumed debt from Gemini   -    (50,000,000)
Payments on note payable   -    (4,000,000)
Sale of preferred stock   -    35,000,000 
Common stock issuance costs   -    (3,199,922)
Net cash used in financing activities   (3,553,100)   (24,040,872)
           
Net increase/(decrease) in cash   4,312,139    (90,926,900)
Cash, beginning of period   23,281,475    118,341,471 
Cash and restricted cash, end of period  $27,593,614   $27,414,571 

 

(Continued)

 

 

 

 

AMMO, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW

(Unaudited)

 

  

For the Nine Months Ended

December 31,

 
   2022   2021 
         
Supplemental cash flow disclosures:          
Cash paid during the period for:          
Interest  $433,761   $474,454 
Income taxes  $1,302,811   $- 
           
Non-cash investing and financing activities:          
Construction note payable  $10,237,032   $- 

 

Non-GAAP Financial Measures

 

We analyze operational and financial data to evaluate our business, allocate our resources, and assess our performance. In addition to total net sales, net loss, and other results under accounting principles generally accepted in the United States (“GAAP”), the following information includes key operating metrics and non-GAAP financial measures we use to evaluate our business. We believe these measures are useful for period-to-period comparisons of the Company. We have included these non-GAAP financial measures in this Quarterly Report on Form 10-Q because they are key measures we use to evaluate our operational performance, produce future strategies for our operations, and make strategic decisions, including those relating to operating expenses and the allocation of our resources. Accordingly, we believe these measures provide useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and board of directors.

 

Historical Reconciliation of GAAP net income to Adjusted EBITDA

 

   For the Three Months Ended   For the Nine Months Ended 
   31-Dec-22   31-Dec -21   31-Dec -22   31-Dec -21 
                 
Reconciliation of GAAP net income to Adjusted EBITDA                
Net Income (Loss)  $(4,102,992)  $9,067,867   $(1,653,472)  $32,720,039 
Provision for Income Taxes   (721,125)   1,351,998    1,369,427    1,351,998 
Depreciation and amortization   4,356,004    4,623,355    12,950,972    12,778,103 
Excise Taxes   1,669,206    3,982,221    7,816,598    10,317,110 
Interest expense, net   320,439    190,319    538,191    468,404 
Employee stock awards(1)   2,106,535    1,045,125    4,457,973    2,898,250 
Stock grants   43,750    65,098    135,344    197,110 
Stock for services   -    4,200    -    4,200 
Warrant Issuance   106,909    145,508    106,909    145,508 
Other income/(expenses), net   170,403    (363)   (28,193)   (21,788)
Contingent consideration fair value   (20,326)   (359,309)   (45,572)   (362,753)
Proxy contention fees   3,983,254    -    4,724,385    - 
Adjusted EBITDA  $7,912,057   $20,116,019   $30,372,562   $60,496,181 

 

  (1) Includes proxy contention fees of $910,000 for Employee Stock Awards issued as a result of the Settlement Agreement as discussed in our Quarterly Report on Form 10-Q.

 

 

 

 

Updated Reconciliation of GAAP net income to Adjusted EBITDA

 

   For the Three Months Ended   For the Nine Months Ended 
   31-Dec-22   31-Dec -21   31-Dec -22   31-Dec -21 
                 
Reconciliation of GAAP net income to Adjusted EBITDA                
Net Income (Loss)  $(4,102,992)  $9,067,867   $(1,653,472)  $32,720,039 
Provision for Income Taxes   (721,125)   1,351,998    1,369,427    1,351,998 
Depreciation and amortization   4,356,004    4,623,355    12,950,972    12,778,103 
Interest expense, net   320,439    190,319    538,191    468,404 
Employee stock awards(1)   2,106,535    1,045,125    4,457,973    2,898,250 
Stock grants   43,750    65,098    135,344    197,110 
Stock for services   -    4,200    -    4,200 
Warrant Issuance   106,909    145,508    106,909    145,508 
Other income/(expenses), net   170,403    (363)   (28,193)   (21,788)
Contingent consideration fair value   (20,326)   (359,309)   (45,572)   (362,753)
Proxy contention fees   3,983,254    -    4,724,385    - 
Tax effect(2)   (1,438,439)   (5,476,081)   (5,350,584)   (5,290,304)
Adjusted EBITDA  $4,804,412   $10,657,717   $17,205,381   $44,888,767 

 

  (1) Includes proxy contention fees of $910,000 for Employee Stock Awards issued as a result of the Settlement Agreement as discussed in our Quarterly Report on Form 10-Q.
  (2) Tax effect computed at statutory rates.

 

Historical Adjusted EPS  For the Three Months Ended 
   31-Dec-22   31-Dec-21 
Reconciliation of GAAP net income to Fully Diluted EPS                    
Net Income (Loss)  $(4,102,992)  $(0.03)  $9,067,867   $0.08 
Provision for income taxes   (721,125)   (0.01)   1,351,998    0.01 
Depreciation and amortization   4,356,004    0.04    4,623,355    0.04 
Interest expense, net   320,439    -    190,319    - 
Employee stock awards   2,106,535    0.02    1,045,125    0.01 
Stock grants   43,750    -    65,098    - 
Stock for services   -    -    4,200    - 
Warrants issued for services   106,909    -    145,508    - 
Other income, net   17,403    -    (363)   - 
Contingent consideration fair value   (20,326)   -    (359,309)   - 
Proxy contention costs   3,983,254    0.03    -    0.04 
Adjusted Net Income  $6,242,851   $0.05   $16,133,798   $0.14 

 

 

 

 

Historical Adjusted EPS  For the Nine Months Ended 
   31-Dec-22   31-Dec-21 
Reconciliation of GAAP net income to Fully Diluted EPS                    
Net Income (Loss)  $(1,653,472)  $(0.01)  $32,720,039   $0.29 
Provision for income taxes   1,369,427    0.01    1,351,998    0.01 
Depreciation and amortization   12,950,972    0.11    12,778,103    0.11 
Interest expense, net   538,191    -    468,404    - 
Employee stock awards   4,457,973    0.04    2,898,250    0.03 
Stock grants   135,344         197,110    - 
Stock for services   -    -    4,200    - 
Warrants issued for services   106,909)   -    145,508    - 
Other income, net   (28,193)        (21,788)   - 
Contingent consideration fair value   (45,572)   -    (362,753)   - 
Proxy contention costs   4,724,385    0.04    -    - 
Adjusted Net Income  $22,555,964   $0.19   $50,179,071   $0.44 

 

Updated Adjusted EPS  For the Three Months Ended 
   31-Dec-22   31-Dec-21 
Reconciliation of GAAP net income to Fully Diluted EPS                    
Net income/(loss)  $(4,102,992)  $(0.03)  $9,067,867   $0.08 
Depreciation and amortization   4,356,004    0.04    4,623,355    0.04 
Interest expense, net   320,439    -    190,319    - 
Employee stock awards   2,106,535    0.02    1,045,125    0.01 
Stock grants   43,750    -    65,098    - 
Stock for services   -    -    4,200    - 
Warrants issued for services   106,909    -    145,508    - 
Contingent consideration fair value   (20,326)   -    (359,309)   - 
Proxy contention costs   3,983,254    0.03    -   - 
Tax effect (1)   (1,390,215)   (0.01)   (5,476,184)   (0.05)
Adjusted Net Income  $5,403,358   $0.05   $9,305,979   $0.08 

 

  (1) Tax effect computed at statutory rates.

 

Updated Adjusted EPS  For the Nine Months Ended 
   31-Dec-22   31-Dec-21 
Reconciliation of GAAP net income to Fully Diluted EPS                    
Net income/(loss)  $(1,653,472)  $(0.01)  $32,720,039   $0.29 
Depreciation and amortization   12,950,972    0.11    12,778,103    0.11 
Interest expense, net   538,191    -    468,404    - 
Employee stock awards   4,457,973    0.04    2,898,250    0.03 
Stock grants   135,344    -    197,110    - 
Stock for services   -    -    4,200    - 
Warrants issued for services   106,909    -    145,508    - 
Contingent consideration fair value   (45,572)   -    (362,753)   - 
Proxy contention costs   4,724,385   0.04    -   - 
Tax effect (1)   (5,358,562)   (0.05)   (5,296,470)   (0.05)
Adjusted Net Income  $15,856,168   $0.14   $43,552,391   $0.38 

 

  (1) Tax effect computed at statutory rates.

 

  

For the Three Months Ended

December 31,

  

For the Nine Months Ended

December 31,

 
   2022   2021   2022   2021 
Weighted average number of shares outstanding                    
Basic   117,348,511    114,757,014    116,950,013    111,289,024 
Diluted   117,348,511    116,717,500    116,950,013    113,350,998