Outdoor Holding Company

Ladies and gentlemen, thank you for standing by. Good afternoon, and welcome to the Ammo, Inc. Fiscal First Quarter 2023 Earnings Call. At this time, all participants are in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star, then two. Participants of this call are advised that the audio of this conference call is being broadcast live over the Internet and is also being recorded for playback purposes. I would now like to turn the call over to Matt Blasey of CoreIR, the company's investor relations firm. Please go ahead, sir.

Good morning, and thank you for participating in today's conference call. Joining me from AMLO's leadership team are Fred Wagenholz, Chairman and Chief Executive Officer, Rob Wiley, Chief Financial Officer, and Rob Goodmanson, President. During this call, management will be making forward-looking statements, including statements that address AMLO's expectations for future performance or operational results. Forward-looking statements involve risks and other factors that may cause actual results to differ materially from those statements. For more information about these risks, Please refer to the risk factors described in AMO's most recently filed periodic reports on Form 10-K and Form 10-Q, the Form 8-K filed with the SEC today, and the company's press releases that accompanied this call, particularly the cautionary statements in it. Today's conference call includes non-GAAP financial measures that AMO believes to be useful in evaluating its performance. You should not consider this additional information in isolation or as a substitute for results prepared in accordance with GAAP. For a reconciliation of this non-GAAP financial measure to net loss, its most directly comparable GAAP financial measure, please see the reconciliation table located in the company's earnings press release. The content of this call contains time-sensitive information that is accurate only as of today, August 15, 2022. Except as required by law, AMO disclaims any obligation to publicly update or revise any information received. With that, it is now my pleasure to turn the call over to AMO's CEO, Fred Wagenholz.

Thank you, Matt, and good afternoon to everyone on this call. Since our IPO in 2017, our primary goal has been to create shareholder value and enhance the overall experience for the outdoor sporting and shooting enthusiasts through innovation, best-in-class products, and superior execution. This strategy focus has driven ammo from $2 million in revenue in 2018 to an estimated $300 million in revenue for fiscal 2023. The acquisition and integration of GunBroker.com marketplace platform in fiscal 2022 is an excellent opportunity example of how our management team and board of directors has identified and executed unique opportunities to expand the ammo brand and create new platforms for growth. Along with the recent completion of our new state-of-the-art manufacturing facility in Manitowoc, Wisconsin, we believe that both the ammunition and marketplace divisions are key to our continued growth. Accordingly, the board and management team has determined that the best option for unlocking the most shareholder value is by splitting the divisions into two separately traded public companies. Our online and marketplace business will soon be called Outdoor Online Incorporated. and will be comprised of gunbroker.com and related online businesses. The second entity, Action Outdoors Sports Incorporated, will support our current ammunition business, including Streak, Blackline, Stealth, Blue Line, Ammo Brass, and Hunt Ammunition. We believe this separation will allow investors to better evaluate the business model of each division and create greater shareholder value as we continue to pursue unique and distinct growth opportunities. The creation of Action Outdoor Sports is well-timed as we officially opened our 185,000th square-foot manufacturing facility last month. This state-of-the-art facility will increase our production capacity to approximately 1 billion loaded rounds of ammunition and support the manufacturing and sales of the company's patented Streak visual ammunition, subsonic munition, and specialty rounds for the military and law enforcement. I will remain chairman of the board and will be naming a new CEO soon who will lead Action Outdoor Sports as it leverages its increased capacity and continue to be an active acquirer in the outdoor recreational marketplace. After the spinoff, I will continue as chairman and CEO of outdoor online and retain and operate the GunBroker.com marketplace and related high margins and asset light operations within ammo. This will give investors opportunity to participate directly in the growth of the leading online outdoor and shooting sport auction marketplace. I mentioned on our last call, we believe there are significant opportunities to grow this platform when we begin the rollout of several initiatives to capture the significantly great percentages of the transactional volume from that platform, including credit cards processing, credit products, gift cards, and loyalty programs for both buyers and sellers. We are confident the decision to separate Ammo into two independent public companies will further unlock the shareholder value we have worked hard to create. With most businesses now having management teams and resources focused exclusively on the future growth opportunities, I am confident both companies will continue to grow revenues, enhance margins, and drive even greater shareholder value. I will continue to update shareholders on the progress of these initiatives and anticipate this transaction will be completed in the 2023 calendar year. I would now like to turn the call over to President Rob Goodmanson to provide more detail about the transaction and our operational performances this quarter. Thanks, Fred, and welcome, everyone, to our quarterly earnings call. The question that I'm asked on a regular basis is, what is the state of our industry? This industry has significant legs, and listening to VISTA, Olin and Clarice's earnings calls, they're all saying exactly what we are seeing. The growth of this industry is still vibrant and shows no sign of slowing down. This trend can be seen not only through AMO's growth, but also the growth in our marketplace. We've grown traffic approximately 40% annually since 2019, and we fully expect these tailwinds to last a minimum of 24 months. What started out as COVID has morphed into civil unrest, not just in the US, but globally. As you can see, we had a temporary decrease in our margins for the quarter. Sales continue to be strong and our production is just beginning to ramp up. We have identified the compression and have addressed the issues. Most have been answered. The rest are being addressed through changes in our operations. The run-up on commodity prices they were trading at their highs during the quarter. Thus, our cost of goods increased. The good news is that we've worked through much of that inventory and are replacing it with the same commodities at significantly lower prices. Shipping costs have also increased dramatically, which has been an issue for every company. The new facility has 12 loading docks. Shipping alone took two points off our margins. We were hiring significantly during the quarter and determined it best to hire and train new employees prior to the opening of the building. We lost one point in the hiring and one point in the training, which takes three to six months depending on the position. But we would make that same decision all over again. Some of our production came offline during the first quarter in preparing some of the equipment for the move. All the equipment will be installed in the new state-of-the-art facilities at the end of August, and our production capabilities will have a significant uptick. We fully believe that the economies of scale, the synergies of having the components and equipment in one spot, as well as packout and shipping, engineering all together will significantly drive our margins. Currently, we drive back and forth between three different facilities. This new facility also offers us the ability to put ourselves in the best position to support our military program partners while enhancing the support of our growing international customer base, both commercially and governmental. These were not our only short-term expenses. Our marketplace also has been extremely busy. We hired five people in-house for our marketing team, more customer service reps, three additional engineers, and two software engineers. We continue to build out the back end of our technology to get where we need to be. This is an absolute necessity. Things are progressing nicely. The financial service, credit cards, ACH, loyalty programs, and gift cards will be coming online in October. and carting capabilities will be right behind. I'd like to add that our objective with GunBroker was never to move away from our hugely successful auction business, but to expand our offerings to manufacturers, dealers, FFLs, and distributors to become a complete marketplace. We're achieving more than a half a million sessions on GunBroker per day, 7.4 million registered users and still adding 55,000 new users a month. We see this as a huge home run with enormous potential. Shortly, you'll see a refreshed website that is significantly easier to navigate and more accommodating for both the buyers and the sellers. As Fred had mentioned, we announced our plan to separate two companies, and the Board of Directors voted unanimously to split the ammunition and marketplace businesses into two independent publicly traded companies, which will trade on the NASDAQ market. AMO's management team and Board of Directors completed a detailed analysis and assessment of our operations, business units, and growth opportunities, and determined that this would achieve the goal of unlocking and enhancing shareholder value. We are changing our names, and we have been advised to soften our brands, similar to Vista, which is Federal Arms, Olin, which is Winchester, Claris, which is Sierra Barnes. Ammo shareholders will retain ownership in Action Outdoor Sports while obtaining ownership in Online Outdoor at no additional cost. We anticipate that this transaction will be in the form of a dividend distribution to its shareholders of 100% of the stock in Action Outdoor Sports, which will become a new independently publicly traded company. This distribution is intended to be tax-free, both companies and shareholders, for U.S. federal income tax purposes. Concurrently, AMO will change its name to Outdoor Online and will operate under a new ticker symbol. Action Outdoors will also attain symbol on NASDAQ once we are through the approval process. This transaction will allow us to prioritize and refine capital allocation. With separate business models, short and long-term goals, each company will be in better position to refine and focus capital allocation strategies moving forward and to expand strategic opportunities. Both companies will be better positioned to focus on continuing the work designed to leverage its leading marketplace. While Action Outdoors can continue its well-established track record of M&A and securing the best-in-class partnerships with other manufacturers and reinforce and amplify the ability to attract and retain top market talent. This has been an exciting time, and we look forward to completing the spinoff And finally, moving into our new facility. With that, let me turn this over to Rob Wiley, our CFO. Rob?