Ladies and gentlemen, thank you for standing by. Good afternoon and welcome to the AMMO, Inc. Fiscal First Quarter 2025 Earnings Call. [Operator Instructions] 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 Blazei 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 AMMO's leadership team are Jared Smith, Chief Executive Officer; Rob Wiley, Chief Financial Officer; and Paul Kasowski, Chief Compliance & Transformation Officer. During this call, management will be making forward-looking statements, including statements that address AMMO'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 AMMO'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 AMMO 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 8, 2024. Except as required by law, AMMO 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 AMMO'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 their 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 eCommerce 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 have 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 12.7x108 cases under our contractual obligations to ZRO Delta. AMMO is at a pivotal point as we start…

Thanks, Jared. This is an exciting time at AMMO. We're executing on a strategy that will enable long-term profitable growth for the ammunition division by focusing on rifle brass production, while positioning GunBroker as the most versatile online site for outdoor enthusiasts through increased functionality and diversified product offerings. Since joining the company, we've identified up to $15 million in cost-cutting and working capital opportunities in an effort to simplify our business model, improve visibility to cost, and enable us to actively manage operating margins. We believe these opportunities can be realized over the next 18 to 24 months. Importantly, we now have the organizational alignment and the talent to execute these initiatives. This type of change takes time as we institutionalize a cultural mindset that emphasizes profitable growth. I will now turn it over to Rob Wiley, our CFO, to discuss our Q1 financial performance and further detail.

Thank you, Paul. Welcome, everyone. Let me now review the financials for the first quarter of fiscal year 2025 in more detail. We ended the first quarter of our 2025 fiscal year with total revenues of approximately $31 million in comparison to $34.3 million in the prior year quarter. Our Ammunition segment made up $18.7 million of total revenues and our marketplace segment generated the remaining $12.3 million in revenues. The decrease in revenue was primarily related to a decrease in activity across both our reporting segments, which we believe decreased as a result of the current macroeconomic environment impacting our industry as well as others. Cost of revenues was approximately $21.2 million for the quarter compared to $20.2 million in the comparable prior year quarter. Cost of revenues for our marketplace segment was $1.8 million and our ammunition segment cost of revenues were $19.4 million. This resulted in a total gross margin for the quarter of $9.8 million or 31.6% compared to $14 million or 40.9% in the prior year period. Our Marketplace segment gross margin was $10.5 million or 85.6%. The gross margin of our Ammunition segment was negative $0.7 million or negative 4%. The increasing cost of goods sold and decreasing gross profit margin was related to the shift in our sales mix and production inefficiencies in our Ammunition segment in comparison to the prior year period. Although our margins decreased from the prior year period, the robust margins on GunBroker continue to hold strong. And while the margins in our Ammunition segment remain down, as the plant ramp is still underway, we are beginning to see increased production throughput and expect that we will see increased product marginality in future periods if we are able to continue with this trend. There was approximately $6.3 million of…

[Operator Instructions] At this time, we will take our first question which will come from Matt Koranda with ROTH Capital Partners. Please go ahead.

Good afternoon. This is Joseph on for Matt. We just wanted to know how should we expect casing revenues to ramp up from here? Can we assume to get back to growth in 2Q and beyond and also regarding your comments on gross margins for the Alamo [ph] segment, can we also expect a positive inflection for the second quarter and beyond?

Joseph, great question. So last quarter we shipped an additional $1 million in our certified rifle brass casings business and yes, we expect steady progress with rifle case production in the quarters ahead.

And if I could get just one more in there. Anything you have observed in the recent months about firearms in the shooting sports consumer? Did you see any uptick in demand in July? And what about the recent weeks with the President election becoming more competitive. Is there any trends in AOV or financing attach rates? So what we saw in NICS was a decline in Q1 -- well, our Q4 into Q1, but we've seen a slight uptick in NICS for July. We anticipate that to hold to the election period, but once again, I'm not a fortune teller when it comes to the election and to NICS, but yes, what we're seeing today, the trend in July looks healthy compared to Q1 and Q4.

Okay. Thank you for answering my questions. I'll go back into queue.

And our next question will come from Mark Smith with Lake Street. Please go ahead.

Hi, guys. I want to start on GunBroker and kind of the sales decline there. Jared, and this is maybe a big picture question, is how much of this is maybe a function of channel inventory and supply? As mom and pops and other gun stores kind of have everything in stock that they need and want? And if so, how in the future do you compete more in kind of steady markets with brick and mortar?

Excellent question, Mark. There's definitely a steady inventory that we saw through the summer months with NICs checks being down. GunBroker really has to compete in that premium space. We will continue to control the ability to shop and price. We own the used market. We're seeing an increase in firearms in the used market. So there are bright spots within our market segments and our ability to go after and be able to really leverage cross-selling in the months ahead. But you're right. There is a tendency as wallet share shrinks due to a reduction in consumer discretionary spending that impacts the business. But at the end of the day, we own the premium side. We own the used market. And with us now turning over and turning on the ability to cross-sells in the cart, we see a tremendous potential going forward.

Okay. And that was kind of my next question. Just where are we at as far as cross-selling? Are we still just kind of first-inning here as far as kind of being able to directly market and show customers, when they put a certain firearm in their cart, an optic or new grips or whatever it may be for that? Where are we at in that process, and are you seeing any early signs of success?

That functionality just came on in the last 25 days, Mark. And as our algorithms get better, as we categorize and prioritize what we're positioning in front of the customer, it's part of the answer to the take rate is that we're going to be able to promote products and be able to promote items where we have greater margins. And from an ability to grow the business, it's really about getting out in front of those consumers that are shopping these premium items and doing a better job of accessorizing those firearms before they check out.

Okay. And then I think last for me just shifting over to the ammo side of the business. Any additional updates on kind of plant operations? I know you -- with Paul coming on it sounds like there's a lot of places to kind of come in and pick up nickels and dimes, but just curious are there any big headaches that are out there that are kind of remaining from the last couple of quarters? Any equipment that's not running, things that need replaced? Maybe talk about kind of the any big things that are remaining that are kind of hurting operations within the plant in Manitowoc.

Well, we just took delivery of an annealing oven that has been an issue for over a year, year and a half, and it'll be starting up in late August or early September. That's one hurdle that's been in the way. There are certainly issues as we bring on more capacity that we'll run into, but we've had a massive uptick in 50-cow production, a line item that we've not been able to lean into in the past, and we have firm deliveries scheduled out for the next year, year and a half. Medium Action 2 is growing its capability. We've had some mechanical issues with another press, but at the end of the day, more and more rifle production comes on, and we are making steady progress, and you will continue to see steady progress in Q2 and Q3.

Okay, great. Thank you.

And with no remaining questions, we will conclude our question-and-answer session. I'd like to turn the conference back over to Jared Smith for any closing remarks.

I want to thank you for participating on today's call and for your interest in AMMO, Inc. We look forward to sharing our ongoing progress when we report our fiscal second quarter 2025 results in November. Thanks and have a great day.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.