Outdoor Holding Company Q1 FY2025 earnings call

Employee Appreciation

• Thanked employees for their commitment and contributions to the company's transformation.

Ammunition Division

• Focused on increasing rifle production and pulling back on low-margin pistol production. Delivered 12.7x108 cases to ZRO Delta.

Marketplace (GunBroker)

• Increased take rate by 40 basis points to 6.2% in Q1 through category fee changes, advertising revenue, listing option fees, and Collector's Elite. Cross-selling accessories launched, working on gear fire financing solution.

Financials

• Non-recurring expenses of $6.3 million related to legal and professional fees, including litigation contingency; expect to recover 2.9 million shares from settlement.

In the first quarter of fiscal 2025, total revenues were approximately $31 million, down from $34.3 million in the prior year quarter. The Ammunition segment contributed $18.7 million in revenues with a cost of revenues of $19.4 million, resulting in a negative gross margin of $0.7 million (-4%). The Marketplace segment generated $12.3 million in revenues with a cost of revenues of $1.8 million, yielding a gross margin of $10.5 million (85.6%). Total gross margin for the quarter was $9.8 million (31.6%) compared to $14 million (40.9%) in the prior year period.

Take Rate

• Expect take rate to further increase with gear fire financing and enhanced cross-selling capabilities.

Ammunition Production

• Anticipate higher margins and profitability despite top-line revenue impact from shifting production away from low-margin products.

GunBroker Enhancements

• Financing solution and cross-selling to drive sales growth through better functionality and enhanced purchasing power.

• Macro economic environment impacting industry revenue.
• Transition from pistol to rifle ammunition poses challenges with production inefficiencies.
• Litigation-related contingencies could affect results.

Q: How should we expect casing revenues to ramp up and gross margins for ammo?

A: Steady progress in rifle case production, expect positive inflection in margins as production ramps up.

Q: Observations on firearms demand and trends?

A: Slight uptick in NICS for July, healthy trend, but election impact on NICS is uncertain.

Q: GunBroker sales decline and cross-selling?

A: Compete in premium space, cross-selling functionality is new, with early signs of potential to drive growth.

Q: Ammo plant operations updates?

A: Annealing oven to start up in late August/early September, steady progress in rifle production, with ongoing mechanical issues but continued progress.