Outdoor Holding Company

Ladies and gentlemen, thank you for standing by. Good afternoon, and welcome to the AMO, Inc. Fiscal First Quarter 2025 Earnings Call. At this time, all participants are in a listen-only mode. And should you need any assistance during the call, 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 afternoon and thank you for participating in today's conference call. Joining me from AMLO's leadership team are Jared Smith, Chief Executive Officer, Rob Wiley, Chief Financial Officer, and Paul Kosowski, Chief Compliance and Transformation Officer. 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 these 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 release that accompanies this call, particularly the cautionary statements in it. Today's conference call includes non-GAAP financial measures that AMO believes can 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 8th, 2024. Except as required by law, AMO disclaims any obligation to publicly update or revise any information to reflect events or circumstances that occur after this call. It is now my pleasure to turn the call over to AMO's Chief Executive Officer, Jared Smith.

Good afternoon, everyone. Thank you for joining us for our first quarter fiscal 2025 earnings call. First, I want to take this opportunity to thank all of our employees for their commitment to this company, the mission, and for the contributions to the massive transformation underway in our business. It takes true grit and perseverance to implement changes at this scale and at this level of quality. We have some extraordinary teams leading the way, and I'm proud to be a part of this ongoing effort. In our first quarter of fiscal 2025, we continue to make progress on the primary core initiatives for each of our business units. transforming our ammunition plant to higher margin rifle and pistol production, and transforming our marketplace to an innovative e-commerce leader. Despite the immense challenges of operating in this ever-changing regulated market, we continue to make progress on these initiatives. We remain focused on building long-term shareholder value and strategically positioning this company for sustainable success. Despite the ongoing turbulence in our industry, we are confident that the company's recalibration is the shortest path to long-term stability and reliability. As has been reported market-wide, ammunition and firearm sales have been down across all segments of the commercial market throughout the summer months. While this is in line with historic seasonality in the industry, we've been slowly pulling production back from non-attractive product segments due to low margins and propellant supply. We will continue to focus on strategic product categories that more heavily contribute to the bottom line. We've been building ammunition inventories to accelerate sales this fall for the launch of our new premium rifle hunting segments, and we started delivering on our 12.7 by 108 cases under our contractual obligations to Zero Delta. Ammo is at a pivotal point as we start the second quarter of our 2025 fiscal year. We've been delivering and releasing code over the last month on GunBroker that are starting to take noticeable effect. changes that will positively affect both our 8 million plus registered users and our monthly 13 million unique visitors to the site. We launched our cart just four months ago, and this last month began cross-selling accessories for the firearms purchased through the cart. We will continue to cultivate the algorithms and analytics over the coming months and fine-tune the recommended offerings across all categories as our environment accelerates its learnings. This will be an ongoing development now that we pivot away from the historic single seller, single item framework to a platform with the capability for buyers to buy from multiple sellers in one transaction and includes suggestive placement of products at checkout. We are building out a solution that will create strong revenues for our shareholders in an e-commerce industry with high barriers to entry and low market consolidation. This is an e-commerce industry. and a marketplace that is still in its infancy. While we've been around for 25 years, our transformation in fiscal year 2025 is game-changing and will result in an evolution to the face of GunBroker and for our shareholders. As we communicated last quarter, GunBroker has been committed to growing its service offerings and increasing our take rate on the GMV we do through the site. In Q1, we increased our take rate by roughly 40 basis points. 6.2% versus 5.8% over last year. This was accomplished through category fee changes on non-firearm sales, increases in advertising revenue, enhanced listing option fees, and the launch of Collectors Elite. We see this take rate further increasing in the quarters ahead as we push ahead with our gear fire financing solution and an anticipated increase on non-firearm accessory sales as we monetize the algorithms and tune our cross-selling capabilities. Turning to the ammunition division, we are now laser focused on increasing rifle production at the plant and are strategically pulling back on all range training 9mm and low to negative margin pistol production as rifle capacity increases. We will continue to shift our production away from high volumes and top line revenue and will continue to focus on streamlining our operations and creating bottom line profitability. This will negatively affect the top-line revenue but will create higher margins and higher profitability. The transition from pistol to rifle ammunition and their components is hard. The quantities, processes, and teamwork required must be fine-tuned, and it has required us to cultivate talent and the resources to handle the transformation to manufacture this much-anticipated rifle capacity. While we struggle with overhead absorption due to the lower capacity yields of a new factory, we continue to see opportunities for cost-out initiatives. In conjunction with our manufacturing consulting partner, we will be working to eliminate inefficiencies in the coming months through continuous improvement initiatives to reduce our labor, scrap, and quality issues. This extensive operations review will proceed for the next 20 weeks, focusing on improving financial results by removing critical constraints through continuous improvement initiatives and enhancing our engineering processes. We are excited to see the transformation underway and couldn't be more excited as we come into our second and third quarter. Before I turn it over to our next speaker, I want to remind everyone of the progress we've made since our last earnings call. Just this last month, we delivered 211,000 pieces of 12.7 by 108 for zero delta. We were cleared to start production on our 6.5 Creedmoor IVAC and BMMPR rounds. And we increased our take rate from 5.8 to 6.2% in less than a year. We've enabled cross-selling of accessories with firearms inside the marketplace cart in the last 30 days. And this last quarter, we signed a financing agreement with GearFire with an anticipated Q2 rollout. And lastly, we executed share repurchases in excess of $1 million this last quarter. One of the biggest initiatives we are now undertaking is streamlining of all corporate and divisional processes. In January, we brought on Paul Kozlowski as our Chief Compliance and Transformation Officer to start identifying opportunities for savings throughout the company and making the changes necessary for improving returns. Paul has 21 years of experience in manufacturing in the consumer product goods space and has a firm handle on our opportunities for cost savings and process efficiencies. I will now turn it over to Paul Kozowski, our Chief Compliance and Transformation Officer.