AMMO, Inc. (NASDAQ:POWWP), the owner of the leading online firearms and outdoor sports marketplace GunBroker.com and a vertically integrated producer of high-performance ammunition and premium components, has delivered a strong performance in its fiscal year 2024, showcasing its ability to navigate a challenging market environment.
Financials
The company reported annual revenue of $145,054,572, a testament to its diversified business model and resilient operations. Despite the headwinds faced by the industry, AMMO managed to generate annual net income of -$15,565,200 and annual operating cash flow of $32,631,341, underscoring its financial discipline and ability to generate substantial cash flow. The company's annual free cash flow of $24,606,576 further highlights its capacity to invest in growth initiatives and strengthen its competitive position.
In the fourth quarter of fiscal year 2024, AMMO reported total revenues of $40.4 million, a decrease from the prior year's $43.7 million. This decline was primarily driven by a softening in the company's marketplace segment, which the management attributes to the current macroeconomic environment impacting the industry. However, the company's ammunition segment experienced a sequential revenue growth of 21.9% in the fourth quarter, demonstrating its ability to adapt to market conditions.
Gross margin for the fourth quarter stood at 23.3%, compared to 27.3% in the prior year period. The decrease in gross profit margin was related to the shift in the company's sales mix, with the robust margins on GunBroker remaining steady, while the margins in the ammunition segment did not meet expectations. Management expects improvements in the ammunition segment's margins as production capacities increase.
AMMO's focus on operational efficiency and cost optimization is evident in its adjusted EBITDA performance. For the fourth quarter, the company reported adjusted EBITDA of approximately $2.2 million, compared to $3.8 million in the prior quarter. This resulted in a loss per share of $0.05 for the quarter or adjusted net income per share of $0.01, in comparison to a loss per share of $0.04 in the prior quarter or adjusted net income per share of $0.03.
For the full fiscal year 2024, AMMO reported a loss per share of $0.16 or adjusted net loss per share of $0.09, in comparison to a net loss per share of $0.07 or adjusted net income per share of $0.16 in the prior year.
Outlook
Looking ahead, AMMO is well-positioned to capitalize on the growth opportunities in both its ammunition manufacturing and marketplace segments. The company has engaged a global consulting firm to optimize its production processes and improve product marginality, which is expected to drive profitability in the ammunition segment.
In the marketplace segment, AMMO has launched several initiatives to enhance the customer experience and drive sales growth. The introduction of the cart platform, the Collector's Elite site for premium firearms and collectibles, and the partnership with Gearfire Capital to offer financing solutions are expected to improve functionality and purchasing power for buyers, ultimately driving revenue growth.
Liquidity
AMMO's strong financial position, with $131.5 million in current assets, including $55.6 million in cash and cash equivalents, and $30.9 million in current liabilities, provides the company with the necessary resources to execute its growth strategies. The company's ability to generate $32.6 million in cash from operations during the fiscal year further strengthens its liquidity and financial flexibility.
Geographical Operations
Geographically, AMMO's operations are primarily focused within the United States, serving both domestic and international markets. The company's revenue breakdown includes ammunition sales, marketplace revenue, and ammunition casing sales, with the marketplace segment contributing the largest portion of revenue.
Revenue by Category
In terms of revenue by category, the company experienced a decrease in ammunition sales, which it attributes to changes in market demand, as well as a shift in operations towards increased ammunition casing sales. The marketplace revenue also saw a decline, which management believes is due to the current macroeconomic environment impacting the industry.
Conclusion
Despite the challenges faced in the industry, AMMO remains optimistic about its future prospects. The company's focus on operational improvements, new product introductions, and strategic initiatives in both its ammunition manufacturing and marketplace segments position it well for continued growth and profitability in the coming years.
Overall, AMMO, Inc. has demonstrated its ability to navigate a complex market environment, leveraging its diversified business model and strong financial position to drive long-term shareholder value. As the company continues to execute on its strategic priorities, investors can look forward to AMMO's continued growth and leadership in the ammunition and outdoor sports marketplace industries.