Executive Summary
Outdoor Holding Company reported QQ2 2024 revenue of $34.37 million with a gross margin of 24.1%, but recorded a substantial operating loss of $8.82 million and a net loss of $7.50 million. Earnings per share were negative at $0.07, while adjusted EBITDA stood at $1.2 million for the quarter. The period reflected meaningful transitionary costs, including nonrecurring expenses of $3.9 million, stock-based compensation of $0.9 million, and $0.4 million of write-offs, all tied to the ongoing business and governance changes following the AMMO Inc. restructuring. On a positive note, operating cash flow was robust at $5.15 million for the quarter, contributing to a free cash flow of $3.85 million and ending cash of $49.56 million, with net cash still in a net-cash position of approximately $36.2 million after debt interactions. The mix shift toward higher-margin brass casings and the continued scale-up of GunBroker.com via OutdoorPay are the primary growth levers, but production downtime in the rifle casing presses created overhead absorption headwinds and press-related delays that constrained margin recovery in the quarter. Management framed QQ2 as a transition quarter, laying the groundwork for stronger performance in subsequent quarters as the new manufacturing and digital monetization initiatives mature. Management’s continued emphasis on a leaner operating model, improved cash generation, and higher take rates on GunBroker transactions under OutdoorPay provides a clear, albeit contingent, path toward improved profitability in the back half of 2024 and into 2025.
Key Performance Indicators
QoQ: -40.91% | YoY:-35.43%
QoQ: -425.25% | YoY:-1 649.80%
QoQ: -585.73% | YoY:-832.21%
QoQ: -250.00% | YoY:-600.00%
Key Insights
Revenue: $34.372 million in QQ2 2024, down 28.8% YoY and up 0.34% QoQ. Gross profit: $8.289 million with a gross margin of 24.1%, down 35.4% YoY and 40.9% QoQ. Operating income: -$8.819 million, margin -25.66% (YoY change -1,649.80%; QoQ -425.25%). Net income: -$7.495 million, net margin -21.80% (YoY -832.21%; QoQ -585.73%). EPS: -$0.07 (YoY -600%; QoQ -250%). EBITDA: -$4.344 million with an EBITDARatio of -12.64%. Adjusted EBITDA: $1.2 million (vs. $5.7 million prior year). Cash flow: Net cash ...
Financial Highlights
Revenue: $34.372 million in QQ2 2024, down 28.8% YoY and up 0.34% QoQ. Gross profit: $8.289 million with a gross margin of 24.1%, down 35.4% YoY and 40.9% QoQ. Operating income: -$8.819 million, margin -25.66% (YoY change -1,649.80%; QoQ -425.25%). Net income: -$7.495 million, net margin -21.80% (YoY -832.21%; QoQ -585.73%). EPS: -$0.07 (YoY -600%; QoQ -250%). EBITDA: -$4.344 million with an EBITDARatio of -12.64%. Adjusted EBITDA: $1.2 million (vs. $5.7 million prior year). Cash flow: Net cash provided by operating activities of $5.15 million; free cash flow of $3.85 million. Cash balance: $49.56 million; total assets: $402.65 million; total liabilities: $39.67 million; total equity: $362.99 million. Current ratio: 4.69; cash ratio: 1.79. DSO: 60.3 days; DIO: 182.9 days; CCC: 175.6 days; CPP: 3.62x. Take rate impact from OutdoorPay onboarding is expected to rise 1%-3% over the next ~3-4 months as onboarding completes. On a per-quarter basis, the company notes a shift toward higher-margin brass casings (30% of total sales, up 27% YoY).
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
34.37M |
-28.82% |
0.34% |
| Gross Profit |
8.29M |
-35.43% |
-40.91% |
| Operating Income |
-8.82M |
-1 649.80% |
-425.25% |
| Net Income |
-7.50M |
-832.21% |
-585.73% |
| EPS |
-0.07 |
-600.00% |
-250.00% |
Key Financial Ratios
operatingProfitMargin
-25.7%
operatingCashFlowPerShare
$0.04
freeCashFlowPerShare
$0.03
dividendPayoutRatio
-10.4%
Management Commentary
Key management insights from the QQ2 2024 earnings call (themes and context):
- Strategy and turnaround: Jared Smith emphasized a transition to a leaner, more profitable operating model and addressing historical inefficiencies, noting that the company incurred non-recurring costs to reset operations but aimed for greater transparency and profitability in subsequent years.
- GunBroker and OutdoorPay monetization: Management highlighted early benefits from GunBroker.com's centralized payment processing gateway and the onboarding of outdoor sellers to OutdoorPay, with the expectation that the new cart platform would follow after onboarding. On onboarding, management stated they had onboarded 2,826 sellers since launch and anticipated take-rate improvements as card processing costs are captured.
- Ammunition segment dynamics: Despite a tough market, management cited robust demand for brass casings (30% of total sales, up 27% YoY) and supply constraints due to press downtime. They expect better margins and accelerated revenue growth as presses come online and OEM brass sales scale. They acknowledged margin pressure from overhead absorption while presses were down and from legacy inventory write-downs, but projected a return to higher margins as manufacturing normalization occurs.
- Inventory and cost management: The call underscored the impact of clearing older inventory (resulting in margin compression in the quarter) and the ongoing emphasis on reducing working capital and improving cash flow through the transition plan.
- Market conditions and outlook: The management commentary linked recent global events to reinforced demand in ammunition and firearms on GunBroker, with a view that certain prices and demand could remain supportive into the election year, contributing to a favorable pricing environment for higher-margin products in the near term.
"Our fiscal second quarter was a very difficult quarter for our industry, which had been previously anticipated and reported by our major competitors. With that said, the market is moving very quickly due to recent international and domestic events... we are continuing to transition our business to a leaner and more profitable operating model and remain focused on addressing operational inefficiencies."
— Jared Smith
"We repurchased approximately 198,000 shares of our common stock under our repurchase plan in the reported quarter, bringing us just over 1.2 million shares repurchased in total under the plan."
— Rob Wiley
Forward Guidance
Management commentary points to an improving trajectory driven by (1) completion and stabilization of the rifle casing press upgrade, expected to come online in December, which should improve cost absorption and throughput; (2) ongoing monetization of GunBroker via OutdoorPay, with a projected take-rate uplift of roughly 1%-3% over the next 3.5-4 months as onboarding completes; (3) continued demand for brass casings and OEM brass supply to support higher margins on core ammunition products, aided by global events and market dynamics that have boosted demand. While no formal numeric targets were given for QQ3 2024 or beyond, management signaled anticipation of better results in the fiscal third quarter and the remainder of the year, aided by capex-driven capacity relief and improved checkout economics on the GunBroker platform. Assessing achievability, the plan hinges on successful press reactivation (December timing), resolution of prior-year overhead burdens, and the pace of seller onboarding for OutdoorPay. Key factors investors should monitor include: (a) press uptime and yield for rifle casings, (b) take-rate progression from OutdoorPay and cart readiness, (c) sustained demand for brass casings and loaded ammunition, and (d) progression of cost reductions from the leaner operating model.