AMMO (POWW) 8 Aug 24 2025 Q1 Earnings call transcript

In the recent earnings call for AMMO Inc., Jared Smith, Chief Executive Officer, provided a comprehensive update on the company's performance and initiatives for the first quarter of fiscal 2025. The call highlighted several key themes, including strategic product shifts, marketplace expansion, and cost-cutting measures.

Strategic Product Shifts and Marketplace Expansion

AMMO Inc. is undergoing a significant transformation, with a focus on high-margin rifle and pistol production and the transition to an innovative ecommerce leader. Despite the challenges of operating in a regulated market, the company is confident in its strategy for long-term value creation and sustainability. The ammunition division is streamlining operations to increase rifle production and reduce overhead costs, while the marketplace segment is seeing growth through increased functionality and diversified product offerings.

Cost-Cutting Measures and Process Improvements

Paul Kasowski, Chief Compliance and Transformation Officer, spoke about cost-cutting and process improvement initiatives, targeting up to $15 million in savings over the next 18 to 24 months. These efforts are aimed at simplifying the business model, improving operational efficiency, and enhancing financial returns.

Financial Performance and Outlook

The financial performance for Q1 fiscal 2025 showed a decrease in revenues to approximately $31 million, with cost of revenues increasing and gross margins decreasing. However, the company remains optimistic about the potential for increased product throughput and margin improvement in the coming quarters. The net working capital position remains strong, with a net position of $134 million, providing a solid foundation for the company's transformation efforts.

Market and Competitive Landscape

The ammunition and firearm market has seen a decline in sales across all segments, with AMMO Inc. focusing on strategic product categories to mitigate the impact of low-margin products. The company is also leveraging its marketplace, GunBroker, to expand its offerings and increase functionality, positioning itself as a versatile platform for outdoor enthusiasts.

Investor Questions and Analyst Insights

During the Q&A session, investors and analysts asked about the outlook for casings revenues, gross margins, and competition with brick-and-mortar stores. Jared Smith provided insights into the company's expectations for rifle case production and its ability to compete in the premium space. The call also touched on the impact of the election on demand and the potential for cross-selling within the marketplace.

Conclusion

AMMO Inc.'s Q1 fiscal 2025 earnings call painted a picture of a company in transition, focusing on strategic product shifts, marketplace expansion, and cost-cutting measures. Despite facing challenges in the ammunition market, the company is confident in its long-term prospects, with a focus on increasing rifle production, improving margins, and enhancing its ecommerce platform. The outlook for the remainder of fiscal 2025 remains positive, with expectations for steady progress in the second and third quarters.