AMMO(US:POWW)2026-02-09 15:00Financial Data and Key Metrics Changes - Net sales for Q3 2026 were $13.4 million, an increase of 7% or approximately $900,000 compared to the previous year, outperforming broader trends in a restrained consumer spending environment [4][9] - Gross margin remained strong at 87%, with a slight improvement in the take rate to 6.2% from 6.17% in the same period last year [5][10] - Adjusted EBITDA increased by 54% to $6.5 million compared to $4.3 million in Q3 2025, representing 49% of net sales [8][9] - Net income before discontinued operations was $1,465,000, a significant improvement from a loss of $21,177,000 in the same period last year, translating to earnings per share of $0.01 versus a loss of $0.18 [7][9] Business Line Data and Key Metrics Changes - Firearm unit sales increased over 8% from the previous quarter, while Adjusted NICS decreased by 3.7%, resulting in an increased share of Adjusted NICS by 56 basis points [9] - Gross merchandise value (GMV) rose to nearly $216 million, with a growth of 6.4% [9][10] - The non-firearms category experienced a decline, partially offsetting the increase in firearm GMV [9] Market Data and Key Metrics Changes - The company noted that the tax holiday in Florida contributed to increased sales, but it was not a large driver of overall performance [29] - The removal of the NFA tax is expected to drive renewed interest in firearms, contributing positively to sales [31][60] Company Strategy and Development Direction - The company is focused on improving user experience on GunBroker.com and has announced a strategic partnership with Master FFL to streamline the transfer process for regulated products [10][43] - The near-term objective is to achieve a $25 million Adjusted EBITDA run rate before sales growth over the next 12 months [13] - The company is committed to disciplined capital allocation to support long-term shareholder value, including a stock repurchase program [14][38] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about continued cost optimization and targeted investments to enhance user experience, which is expected to drive traffic and revenue [15] - Legal costs are anticipated to impact cash generation in the short term, but a larger percentage of cash from operations is expected to be retained as legal matters are resolved [11][12] - The company is exploring opportunities for reasonably priced debt financing, which could support various capital allocation strategies [50][52] Other Important Information - Operating expenses were significantly reduced by approximately $22 million year-over-year, with a notable decline in litigation-related costs [5][11] - The company has a strong cash position of nearly $69.9 million, including $500,000 of interest income [10] Q&A Session Summary Question: What is driving the good performance in firearm sales versus NICS? - Management highlighted the focus on buyer experience and streamlined processes as key factors driving growth, along with strong performance in used firearms [17][18] Question: What is the status of universal payments implementation? - Management indicated that about 30% of transactions are not done through credit cards, and universal payments could significantly enhance the buyer experience and increase GMV [20][21] Question: What are the expectations for legal fees and professional fees in the coming quarters? - Management noted that legal costs are variable and may not trend consistently, but efforts are ongoing to resolve legal issues quickly [24][25] Question: How did the tax holiday in Florida impact sales? - Management confirmed that while sales were up, the tax holiday was not a major driver, with both new and used firearms contributing to the increase [29][30] Question: What are the expectations for cash generation and capital allocation? - Management is always looking for capital allocation strategies and is open to exploring reasonably priced debt financing opportunities [50][52]