AXIL Brands(AXIL) - 2025 Q4 - Annual Results

Company Overview & Fiscal Year 2025 Highlights Company Introduction AXIL Brands, Inc. is an emerging global consumer products company specializing in AXIL® hearing protection and enhancement products and Reviv3® haircare and skincare products, with its fiscal year financial and operational results for the period ended May 31, 2025, announced on August 21, 2025 - AXIL Brands, Inc. is a global consumer products company with two main brands: AXIL® (hearing protection and enhancement products) and Reviv3® (haircare and skincare products)[1][21] - The company announced its fiscal year financial and operational results for the period ended May 31, 2025[1] Fiscal Year 2025 Financial Highlights AXIL Brands reported mixed FY2025 financial results, with net sales decreasing to $26.3 million, yet achieved its third consecutive year of profitability with $0.9 million net income and a 21.3% Adjusted EBITDA increase to $2.4 million, alongside improved operating efficiency and cash flow from operations FY2025 Financial Performance Highlights | Metric | FY2025 | FY2024 | Change (YoY) | | :-------------------------------- | :------------- | :------------- | :------------- | | Net sales | $26.3 million | $27.5 million | -4.4% | | Gross profit as % of sales | 71.0% | 73.4% | -2.4 pp | | Operating expenses as % of net sales | 66.6% | 67.9% | -1.3 pp | | Net income | $0.9 million | $2.0 million | -55.0% | | Adjusted EBITDA | $2.4 million | $2.0 million | +21.3% | | Net cash provided by operating activities | $1.9 million | $3 thousand | Substantial increase | | Cash on hand (as of May 31) | $4.8 million | $3.3 million | +45.5% | | Basic EPS | $0.13 | $0.57 | -77.19% | | Diluted EPS | $0.10 | $0.21 | -52.38% | Recent Business Highlights During FY2025, AXIL Brands secured a significant wholesale agreement with a leading national membership retailer, appointed new leadership for its haircare and skincare division, advanced its supply chain transition to domestic manufacturing, established Sharper Vision Marketing, and received media recognition for its hearing protection products - A significant wholesale agreement was signed with a leading national membership retailer, with initial purchase orders issued in Q1 FY2026, expanding retail reach and consumer access[4][7] - An experienced contractor was appointed to lead the haircare and skincare division, aiming to accelerate brand growth[4][9] - Supply chain transformation initiatives are on track, accelerating domestic manufacturing development and operational adjustments to mitigate tariff risks and build long-term resilience[4][6][8] - Sharper Vision Marketing, a wholly-owned subsidiary, was established to monetize internal digital marketing expertise as an external revenue stream while reducing internal customer acquisition costs[4][8] - Featured in leading military publications like Military Times, highlighting brand innovation in hearing protection and solidifying its position among tactical and professional users[5] Management Discussion and Outlook CEO's Review of FY2025 Performance CEO Jeff Toghraie highlighted FY2025 as a pivotal year for AXIL, achieving its third consecutive year of profitability with $0.9 million net income and a 21% Adjusted EBITDA increase despite global trade challenges, emphasizing disciplined growth, optimized expenses, a 71% gross margin, and significantly improved operating cash flow - FY2025 was a pivotal year for AXIL, achieving its third consecutive year of profitability with $0.9 million net income[5] - Adjusted EBITDA increased by 21% year-over-year, reflecting the company's disciplined approach to growth and optimized marketing and operating expenses[5] - Core business remained resilient with a 71% gross margin and significantly improved operating cash flow[5] Strategic Initiatives and Future Outlook Management is accelerating the relocation of most manufacturing and operations to the US to mitigate tariff risks and enhance stability, anticipating significant long-term benefits, while a key wholesale partnership is expected to drive revenue growth and brand awareness from FY2026, and the new Sharper Vision Marketing subsidiary aims to generate external revenue and reduce internal customer acquisition costs, with the Reviv3® haircare and skincare division poised for increased growth under new leadership, entering FY2026 with strong momentum, a robust balance sheet, and investment flexibility without external capital reliance - Accelerating the relocation of most manufacturing and operations to the US to mitigate tariff risks and enhance stability, anticipating significant long-term benefits[6][8] - A significant wholesale partnership was established with one of the nation's largest membership retailers, projected to drive substantial revenue growth and brand awareness starting in FY2026[7] - Sharper Vision Marketing, a wholly-owned subsidiary, was launched to convert internal digital marketing expertise into an external revenue stream while reducing internal customer acquisition costs[8] - The Reviv3® haircare and skincare division added experienced leadership, with the segment expected to become an increasingly important contributor to the company's growth story[9] - The company enters FY2026 with strong momentum, a robust balance sheet, and flexibility to invest in growth without relying on external capital, focusing on expanding multi-channel distribution and product innovation to drive sustainable long-term shareholder value[10] Non-GAAP Financial Measures Explanation of Non-GAAP Measures The company utilizes non-GAAP financial measures, specifically EBITDA and Adjusted EBITDA, to offer insights into financial trends and operational performance, with EBITDA calculated by adjusting GAAP net income for income taxes, interest, depreciation, and amortization, and Adjusted EBITDA further adjusting for stock-based compensation, which management considers important for business evaluation but cautions against using as a sole financial metric due to potential differences in calculation methods compared to other companies - EBITDA is calculated as GAAP net income plus provision (benefit) for income taxes, interest income or expense, and depreciation and amortization[11] - Adjusted EBITDA further adjusts EBITDA for stock-based compensation expenses[11] - The company believes these non-GAAP measures provide useful information regarding its financial condition and operating performance, and management considers them important metrics for evaluating the company's business[11] - Investors should not rely on any single financial measure to evaluate the company's business, as these non-GAAP measures exclude significant expenses and income required to be recorded under GAAP and may not be comparable for all purposes[11] Consolidated EBITDA and Adjusted EBITDA Reconciliation For FY2025, the company reported GAAP net income of $854,988 and total EBITDA of $1,321,399, with total Adjusted EBITDA increasing to $2,430,333 from $2,002,889 in FY2024 after adjusting for stock-based compensation, improving Adjusted EBITDA as a percentage of net sales from 7.3% in FY2024 to 9.3% Consolidated EBITDA and Adjusted EBITDA Reconciliation | Metric | FY2025 | FY2024 | | :------------------------------------- | :------------- | :------------- | | Net income (GAAP) | $854,988 | $2,003,134 | | Provision (benefit) for income taxes | $453,828 | $(220,205) | | Interest income, net | $(135,915) | $(177,833) | | Depreciation and amortization | $148,498 | $130,610 | | Total EBITDA (Non-GAAP) | $1,321,399 | $1,735,706 | | Stock-based compensation | $1,108,934 | $267,183 | | Total Adjusted EBITDA (Non-GAAP) | $2,430,333 | $2,002,889 | | Sales, net (GAAP) | $26,257,522 | $27,498,539 | | Adjusted EBITDA as a percentage of Sales, net | 9.3% | 7.3% | Consolidated Financial Statements Consolidated Balance Sheets As of May 31, 2025, total assets increased to $12.87 million from $10.97 million in FY2024, primarily driven by higher cash and accounts receivable, while total liabilities slightly decreased to $3.21 million, and total stockholders' equity significantly rose to $9.66 million due to increased retained earnings and additional paid-in capital Consolidated Balance Sheet Highlights (as of May 31) | Metric | 2025 | 2024 | Change | | :-------------------------- | :------------- | :------------- | :------------- | | Total Current Assets | $9,255,648 | $7,966,860 | +16.18% | | Cash | $4,769,854 | $3,253,876 | +46.6% | | Accounts receivable, net | $1,003,945 | $509,835 | +96.9% | | Inventory, net | $2,533,658 | $3,394,023 | -25.35% | | Total Assets | $12,869,795 | $10,974,361 | +17.27% | | Total Current Liabilities | $2,462,824 | $2,798,045 | -12.0% | | Total Liabilities | $3,210,087 | $3,278,575 | -2.09% | | Total Stockholders' Equity | $9,659,708 | $7,695,786 | +25.52% | | Retained Earnings (Accumulated deficit) | $720,718 | $(134,270) | Shift to positive | Consolidated Statements of Operations For FY2025, net sales decreased to $26.26 million from $27.50 million in FY2024, with gross profit falling to $18.64 million and gross margin declining from 73.4% to 71.0%, while operating expenses decreased to $17.48 million, resulting in operating income dropping to $1.16 million, and net income significantly decreased to $0.85 million from $2.00 million in FY2024, primarily due to lower sales and increased income tax expense, with basic EPS falling to $0.13 and diluted EPS to $0.10 Consolidated Statements of Operations Highlights | Metric | FY2025 | FY2024 | Change (YoY) | | :-------------------------------- | :------------- | :------------- | :------------- | | Sales, net | $26,257,522 | $27,498,539 | -4.51% | | Cost of sales | $7,615,954 | $7,321,838 | +4.02% | | Gross profit | $18,641,568 | $20,176,701 | -7.51% | | Gross profit as % of sales | 71.0% | 73.4% | -2.4 pp | | Total Operating Expenses | $17,480,203 | $18,673,321 | -6.49% | | Income from operations | $1,161,365 | $1,503,380 | -22.75% | | Income before provision for income taxes | $1,308,816 | $1,782,929 | -26.6% | | Provision (benefit) for income taxes | $453,828 | $(220,205) | Significant increase in tax expense | | NET INCOME | $854,988 | $2,003,134 | -57.32% | | Basic EPS | $0.13 | $0.57 | -77.19% | | Diluted EPS | $0.10 | $0.21 | -52.38% | Consolidated Statements of Cash Flows In FY2025, cash flow from operating activities significantly increased to $1.93 million from $2,677 in FY2024, driven by higher net income, increased stock-based compensation, and positive changes in inventory, while cash used in investing activities rose to $394,298 due to increased purchases of intangible assets and property and equipment, and cash used in financing activities substantially decreased to $18,385, primarily due to the absence of preferred stock repurchases from the prior year, resulting in an overall cash increase of $1.52 million and an ending cash balance of $4.77 million Consolidated Statements of Cash Flows Highlights | Metric | FY2025 | FY2024 | Change (YoY) | | :------------------------------------- | :------------- | :------------- | :------------- | | Net cash provided by operating activities | $1,928,661 | $2,677 | Substantial increase | | Net cash used in investing activities | $(394,298) | $(160,525) | +145.63% (increased outflow) | | Net cash used in financing activities | $(18,385) | $(1,420,958) | -98.71% (reduced outflow) | | Net increase (decrease) in cash | $1,515,978 | $(1,578,806) | Shift from decrease to increase | | Cash - End of year | $4,769,854 | $3,253,876 | +46.6% | Additional Information About AXIL Brands AXIL Brands is an emerging global consumer products company that manufactures and sells premium hearing enhancement and protection products under the AXIL® brand, along with premium haircare and skincare products under its Reviv3® brand, with products sold across the United States, Canada, the European Union, and Asia - AXIL Brands manufactures and sells premium hearing enhancement and protection products under the AXIL® brand, including earplugs, earmuffs, and earbuds[21] - The company also sells premium haircare and skincare products under its in-house Reviv3® brand[21] - Products are sold across the United States, Canada, the European Union, and Asia[21] Forward-Looking Statements This section contains forward-looking statements, identified by words such as 'anticipate,' 'believe,' and 'expect,' based on currently available information and management's expectations, which are subject to significant risks and uncertainties that could cause actual results to differ materially from those anticipated, including the company's ability to grow sales, obtain financing, implement cost savings, compete effectively, manage customer concentration, adapt to regulatory changes (taxes, tariffs), execute acquisitions, accelerate supply chain transformation, and navigate volatile market and economic conditions (inflation, recession, geopolitical events, supply chain disruptions), with no obligation to update these statements - Forward-looking statements are based on currently available information and management's beliefs, forecasts, and current expectations[22] - These statements are subject to numerous significant risks and uncertainties, many beyond management's control, which could cause the company's results, performance, or achievements to differ materially from any future results, performance, or achievements expressed or implied by these forward-looking statements[22] - Factors that could cause actual results to differ materially from forward-looking statements include the company's ability to grow net sales and operations, obtain financing, implement cost savings and efficiency measures, compete effectively, manage customer concentration, adapt to changes in laws and regulations (taxes, tariffs, trade policies, or product safety), undertake acquisitions, investments, collaborations, strategic alliances, or dispositions, successfully accelerate its supply chain transformation strategy and realize anticipated benefits, and the impact of volatile market and macroeconomic conditions (inflation, recession, geopolitical events, supply chain disruptions and restrictions, labor shortages)[22] - The company undertakes no obligation to update or revise these forward-looking statements, except as required by law[22] Investor Relations Investor relations contact information is provided, including contact name Todd McKnight, phone number, and email address - Investor Relations contact: Todd McKnight, Phone: +1 (917) 349-2175, Email: investors@goaxil.com[23]