Outdoor Holding Company Q4 FY2024 earnings call

• At GunBroker: Launched over 200 persona lifestyle campaigns, new Collector's Elite site, signed with Gearfire Capital for consumer financing. Executing aggressive roadmap with shipping solutions, cross-selling enhancements, and tools for firearm accessories sales. Net Promoter Score of 71% achieved.
• At Ammunition facility: Continued infilling production, took delivery of new Annealing Oven, delivered first 15,000 pieces of 12.7x108 for ZRO Delta, started delivery on new hunt line and new calibers. Engaged global consulting firm for process improvement over 28 weeks to address organizational and operational issues. Reduced working inventory, generated $32.6 million in cash from operations, established $20 million credit line, paid down $3.6 million in debt, and achieved adjusted EBITDA margins of 10.6%.

GunBroker: Margins remained robust, but revenue decreased due to macroeconomic factors. Ammunition: Sequential revenue increased in Q4, with casings sales up $0.9 million from prior year. Cost of goods sold increased, but gross margin was $9.4 million (23.3%) in Q4 vs. $11.9 million (27.3%) prior year. Revenue for AMMO, Inc. was approximately $40.4 million in Q4 2024 vs. $43.7 million prior year quarter.

• Focus on increasing plant capacity via global consulting firm to improve product marginality. For GunBroker: Expect sales growth from cart platform launch, Collector's Elite platform, and additional financing partnerships. Strong current assets position with $55.6 million cash and cash equivalents, $131.5 million current assets, and $32.6 million cash from operations for the period.

• Overhead absorption issue due to lower capacity yields in new factory. Commodity pricing pressure on copper and powder. Market softness affecting firearm sales but premium rifle ammunition, casings, and lever action rifle calibers remain strong but could be affected.

Q: Could you unpack the consulting help with production and its impact on casings utilization and capacity?

A: The consulting is a 30-plus week engagement looking at material flows, equipment setup, shift coordination, documentation, and technical specs across the factory. Focused on rifle case production to improve material flows.

Q: What about gross margins in AMMO manufacturing, including casings in Q4?

A: Margin pulled back from Q3 to Q4, partly due to older inventory. Engagement with firm is focused on rifle case production to improve margins as capacity increases.

Q: Sequential dip in casing sales and updates on that?

A: Dip due to equipment setup after a press being down, manufacturing cases for loading and holding inventories for summer/fall delivery.

Q: Quantify marketplace lifts from carting initiative and financing?

A: Cart platform launched in Q4 with early adoption but short quarter made it hard to see big lifts. Financing partnership signed, still in development. Early learnings from cart showed flat line was positive, take rate and value fees increased since then.