AXIL Brands(AXIL) - 2026 Q1 - Quarterly Results

Company Overview & Q1 FY26 Highlights AXIL Brands reported strong Q1 FY2026 results, with increased net sales, profitability, and strategic business growth Introduction AXIL Brands announced Q1 FY2026 results, highlighting its AXIL hearing and Reviv3 beauty product lines - AXIL Brands, Inc. (AXIL) announced its first-quarter fiscal year 2026 financial results[1] - The company primarily offers AXIL hearing protection and enhancement products, alongside Reviv3 hair and skin care products[1] Financial Highlights for the Quarter Ended August 31, 2025 AXIL Brands achieved significant Q1 FY2026 financial improvements, with net sales up 17.2%, turning profitable, and strong net income and adjusted EBITDA Q1 FY2026 Key Financial Data | Metric | August 31, 2025 (1Q26) | Prior Year Period | Change | Change Rate | | :-------------------------------- | :-------------------- | :--------- | :----- | :------- | | Net Sales | $6.9 million | $5.9 million | +$1.0 million | +17.2% | | Gross Margin | 67.6% | 71.0% | -3.4% | - | | Operating Expenses as % of Net Sales | 61.6% | 73.4% | -11.8% | - | | Operating Income (Loss) | $0.4 million | $(0.1) million | +$0.5 million | Turnaround to Profit | | Net Income (Loss) | $0.3 million | $(0.1) million | +$0.4 million | Turnaround to Profit | | Adjusted EBITDA | $0.7 million | $0.2 million | +$0.5 million | +291.3% | | Cash Flow from Operating Activities | $(0.7) million (Used) | $0.9 million (Provided) | - | - | | Cash at Period End | $4.1 million | $4.8 million (May 31) | $(0.7) million | - | | Basic and Diluted EPS (Loss) | $0.05 / $0.04 | $(0.02) | +$0.07 / +$0.06 | Turnaround to Profit | Recent Business Highlights The company made business expansion progress, including AXIL hearing products entering Costco and the full launch of Reviv3 Procare at Chatters, Canada's largest salon retailer - AXIL hearing products, including XCOR SE earplugs (in-store and Costco.com) and X30i filter earplug bundles (Costco.com only), expanded into Costco channels[4] - The full line of Reviv3 Procare products launched at Chatters, Canada's largest salon retailer with over 115 salons[4] Management Commentary Management highlights Q1 FY2026's strong financial turnaround, strategic channel diversification, product innovation, and solid liquidity CEO's Statement on Q1 Performance CEO Jeff Toghraie noted Q1 FY2026 revenue shifted towards retail, driven by initial shipments to a new national membership chain, boosting total revenue by 17% and achieving significant operating leverage through stringent expense management - The Q1 revenue mix shifted more towards retail channels, primarily driven by initial shipments of AXIL hearing products to a new national membership retail chain[5] - Despite a $1.0 million increase in revenue (17% total revenue growth, 25% for AXIL branded hearing products), operating expenses remained flat year-over-year, decreasing from 73% to 62% of sales this quarter[6] - Net income increased from a $0.1 million net loss in Q1 FY2025 to a $0.3 million net income in Q1 FY2026, with EBITDA growing by $0.6 million and turning positive[6] Strategic Focus and Channel Diversification The company's 18-month strategic focus has been diversifying revenue channels to balance online, offline retail, and international distribution, with wholesale retail offering higher profitability and operating leverage despite slightly lower gross margins due to reduced sales and marketing costs - The strategic focus over the past 18 months has been diversifying revenue channels to establish a more stable and balanced mix of owned e-commerce, offline retail, and international distribution[7] - An increased wholesale retail revenue mix is expected to benefit the company by providing higher profitability and operating leverage compared to online e-commerce channels[7] - The company will continue seeking additional retail distribution channels to enhance customer awareness of AXIL hearing enhancement and protection products[8] Product Innovation and Roadmap AXIL Brands will continue innovation, planning multiple new or next-generation product launches over the next two to three quarters, starting with the GS Extreme 3.0 for the holiday season - The product roadmap includes launching multiple new or next-generation products over the next two to three quarters[9] - The next-generation GS Extreme 3.0 product is planned for a holiday season launch[9] Balance Sheet and Liquidity Inventory increased as expected to meet wholesale and new customer orders, with normalization anticipated; cash balance was $4.1 million at Q1 FY2026 end, deemed sufficient for strategic and growth objectives - Inventory significantly increased due to additional product supply required for wholesale business and initial purchase orders from new customers[10] - Cash balance was $4.1 million at the end of Q1 FY2026, which the company believes is sufficient to internally fund its strategy and growth objectives[10] Hair and Skin Care Segment Outlook The company believes the Reviv3 hair and skin care business can exceed its current state, with strategic leadership additions and a new partnership with Chatters in Canada poised to add value and create sustainable shareholder value, particularly in the professional beauty channel - The hair and skin care business (Reviv3 line) has the potential to become a significant asset for the company[11] - Strategic leadership additions have been made to this business unit, with plans for further team strengthening[11] - The new partnership with Chatters, a top salon chain in Canada, demonstrates the leadership's ability to generate meaningful impact[11] Concluding Remarks Management remains focused on execution for long-term growth across both product segments and is encouraged by Q1 performance and FY2026 business trends to date - The company will continue to focus on execution to achieve meaningful long-term growth across both product segments[12] - The company has built a solid foundation to support sustainable growth and operational efficiency and is encouraged by Q1 performance and FY2026 business trends to date[12] Non-GAAP Financial Measures This section explains the company's use of non-GAAP financial metrics like EBITDA and Adjusted EBITDA to provide additional insights into financial performance and trends Explanation of Non-GAAP Measures The company uses non-GAAP financial measures like EBITDA and Adjusted EBITDA, adjusting GAAP net income for income taxes, interest, depreciation, amortization, and stock-based compensation, to provide useful insights into financial condition and operating performance trends, aiding management in period-over-period business assessment, though comparability with other companies may vary - EBITDA is calculated by adjusting GAAP net income for income taxes, interest income or expense, and depreciation and amortization[13] - Adjusted EBITDA further adjusts EBITDA for stock-based compensation expense[13] - The company believes these non-GAAP measures provide useful information regarding its financial condition and operating performance, and management considers them important indicators for assessing business trends[13] Consolidated EBITDA and Adjusted EBITDA Reconciliation In Q1 FY2026, both EBITDA and Adjusted EBITDA significantly improved, with Adjusted EBITDA growing 291.3% year-over-year and increasing from 2.9% to 9.8% of net sales Consolidated EBITDA and Adjusted EBITDA Reconciliation | Metric | August 31, 2025 | August 31, 2024 | | :----------------------------------- | :------------- | :------------- | | Net Income (Loss) (GAAP) | $334,294 | $(109,805) | | Provision for Income Taxes | $115,058 | - | | Net Interest Income | $(36,296) | $(28,631) | | Depreciation and Amortization | $62,087 | $12,895 | | Total EBITDA (Non-GAAP) | $475,143 | $(125,541) | | Adjustments: | | | | Stock-based Compensation | $199,212 | $297,864 | | Total Adjusted EBITDA (Non-GAAP) | $674,355 | $172,323 | | Net Sales (GAAP) | $6,856,218 | $5,851,2