Outdoor Holding Company (POWW) Q4 2026 Earnings Report, Transcript and Summary

Good morning, and welcome to the Outdoor Holding Company's Fourth Quarter FY 26 Earnings Call. All participants are in a listen-only mode. After the speakers' remarks, we will conduct a Q&A session. As a reminder, this conference call is being recorded. I would now like to turn the call over to the company's Investor Relations representative, Michael Bacal.

Thank you. Please go ahead. Good morning. And thank you for participating in today's conference call. Joining me from Outdoor Holding Company's leadership team are Steven F. Urvan, Chairman and Chief Executive Officer Paul Kasowski, Chief Financial Officer and Jordan Christensen, chief legal officer and corporate secretary. During this call, management will be making forward-looking statements within the meaning of the federal securities laws. Including statements that address Outdoor Holding Company's expectations, strategy, future performance, operational results, margins, cost structure, legal matters, capital allocation, and other matters. Forward looking statements are subject to risks, uncertainties, and other factors that could cause actual results to differ materially from those expressed or implied by such statements. For more information about these risks and uncertainties, please refer to the risk factors and other cautionary statements described in Outdoor Holding Company's most recently filed annual report on Form 10-K and periodic reports on Form 10-Q and the company's earnings press release issued in advance of this call. Today's conference call includes non-GAAP financial measures that Outdoor Holding Company believes can be useful in evaluating its performance. These measures should not be considered in isolation or as a substitute for results prepared in accordance with GAAP. For a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures please see the reconciliation table located in the company's earnings press release. The information discussed on this call is current as of today, 06/22/2026. Except as required by law, Outdoor Holding Company disclaims any obligation to publicly update or revise any information to reflect events, or circumstances that occur after this call. Before we begin, please note that certain non-GAAP financial measures discussed on today's call including adjusted EBITDA, are reconciled in the most directly comparable GAAP measures in the company's earnings materials. Reconciliations for the first second, and third quarters of the fiscal year are available in the applicable quarterly earnings releases posted on the Investor Relations section of the company's website. It is now my pleasure to turn the call over to Outdoor Holding Company's Chairman, and Chief Executive Officer, Steven Urban.

Good morning, everyone. Thank you for joining us for our fiscal fourth quarter full year 26 earnings call. After just over a year as CEO, I am excited to report that annual results reflect remarkable improvement for the company. I am extremely proud of the tremendous progress we have made Fiscal 26 was a year of meaningful improvement across the business, and the fourth quarter gave us a strong finish with continued operating momentum stronger cash generation, growing profitability, and clear progress exceeding the profitability goals I laid out last August. First, I will review our quarterly results. Then Paul will review our financial performance in greater detail, before I recap our accomplishments in fiscal 26 and our priorities for fiscal 27. In the fourth quarter, net sales were $13.9 million an increase of over 10% or almost $1.3 million compared with prior year period. Despite a cautious consumer spending environment. Gross margin remained strong for the quarter at 87.6%. Gross merchandise value or GMV increased to $229 million from approximately $205 million in last year's period. Due to sales mix of increasing firearms GMV versus non firearms GMV, we experienced a modest decline in our take rate to 6.06% from 6.15% in last year's period. We continue to execute our strategy of operating as a streamlined pure play ecommerce marketplace. In the fourth quarter, we made further progress reducing operating expenses. Total operating expenses declined significantly year over year to the tune of $23 million. During the quarter, the company resolved an open litigation item with a $4.4 million payment to fully and finally settle the DCP matter. We inherited numerous litigation matters and have been working hard to resolve these matters. As evidenced by many successful resolutions in the fiscal 26 year. We continue to demonstrate that gunbroker.com can be operated as effectively as a smaller more streamlined organization by reducing redundancies and right-sizing our personnel to match the scope of our operations. Even after absorbing the 1-time $4.4 million settlement expense in the DCP matter, We dramatically reduced our net loss from continuing operations in the quarter to $2.7 million compared to a loss of $27 million in the same period last year. This translated to a loss from continuing operations per share of 2¢ for the quarter versus a loss from continuing operations of $0.23 for the prior year period. Importantly, the significant cost improvements once again drove strong cash generation for the quarter, despite the restructuring costs share repurchases, legal expenses, and other costs offsetting these cash gains for the quarter. Which Paul will discuss in more detail. We view this continued recurring contribution of cash flow from operations as 1 of the clearest indicators of the underlying health of the business. The fourth quarter results reflect a continuation of trends we have seen in the last few quarters. For fiscal 26, net sales and gross margins grew from fiscal 25 levels. More importantly, we have been executing on our cost reduction efforts, in curtailment of legal expenses resulting in significantly lower year over year operating expenses. The net result was a dramatic reduction in operating losses from continuing operations. And positive cash flow from operations for the year. That positive cash generation is a milestone worth underscoring. As it is a direct result of the concerted efforts our team has put in place to increase operational efficiency. Before I turn things over to Paul, would like to touch on a key metric we use to evaluate real world performance. Adjusted EBITDA. We believe this non GAAP metric provides helpful insight into the underlying performance of the business given the level of nonrecurring items impacting reporting results. To help clarify our performance results and identify adjustments, we include a table detailing adjusted EBITDA in both our earnings release and Form 10 ks. This quarter's adjusted EBITDA demonstrates our progress. As we delivered more than double the adjusted EBITDA in the quarter of $7.7 million compared to $2.9 million in the fiscal 25 fourth quarter. Just as encouraging is the trajectory for the year. Quarterly adjusted EBITDA grew from $3.1 million to $4.9 million to $6.6 million to $7.7 million from the first to fourth quarters respectively. For the full year, adjusted EBITDA improved to $22.3 million from $15.3 million in fiscal 25. We are outperforming the run rate of $25 million adjusted EBITDA that I set as a goal just 10 months ago. I am especially proud of the tremendous work our team undertook during fiscal 26 to overhaul and strengthen our financial reporting infrastructure. Culminating in the successful remediation of all previously identified material weaknesses in our internal control over financial reporting by year end. I will now turn it over to Paul Kasowski, our chief financial officer, to discuss the quarter and year's performance in greater detail.

Thanks, Steven. I am pleased to share some highlights from our fourth quarter. Outdoor Holding Company's fourth quarter adjusted EBITDA was $7.7 million a robust 55% of net sales. Q4 net revenue was $13.9 million 10.1% higher than the fiscal 25 fourth quarter This marks the third consecutive quarter of sequential and year over year revenue growth. GMV was $229 million 6.2% higher than Q3 and up 11.8% from Q4 of fiscal 25. Firearm unit sales were up over 8.7% from last year's quarter, while adjusted mix increased 1.6%. Resulting in an increased share of adjusted mix by 40 basis points. The significant increase in GMV was driven by firearms while the non firearms category showed a slight increase versus the prior year period. In Q4, we saw sales growth in both pistols and rifles with sales of new units slightly outpacing sales of used. The overall change in sales mix resulted in a modest decrease in take rate for the quarter. The company completed its integration with a compliant FFL transfer platform to improve the transfer process for items subject to FFL regulations. This integration has reinforced our commitment to reducing transaction friction and improving the user experience while generating incremental revenue. Our overall strong adjusted EBITDA was driven by our continued improvements in operating efficiency reduced expenses, and increased GMV compared to last year's fourth quarter. The company's strong operating model and continued positive cash flow from operations helped the decline in our quarterly cash position to $1.8 million even after spending $4.4 million to resolve the DCP matter, incurring continuing legal indemnification expenses, repurchasing $1 million in stock, resolving other legal disputes. After including $500 thousand of interest income, we ended the fiscal year with a cash balance of 68.1 million a substantial increase from our closing fiscal 25 cash balance of $30.2 million Regarding cash deployment, the company will continue returning cash to investors through the share repurchase program. Looking at full year results for fiscal 2026, net sales increased 3.5% to $51.5 million as compared to $49.4 million of fiscal year 2025. Fiscal 2026 gross margins improved to 87.2% versus 86.9% in fiscal 25. We expect our gross margins will continue to remain strong, a new revenue stream beginning of fiscal 27 for FFL services will be accretive to sales but not at the same 87% profitability rate. Full year GMV was $824 million up 3.2% from fiscal 25 GMV of $798 million As a percentage of adjusted mix, gun broker increased share of firearm by 41 basis points for the year. The take rate for the year improved modestly to 6.21% from 6.19% in fiscal 2025. Reducing operating expenses and improving the user experience will continue to remain a focus. For fiscal 26, our adjusted EBITDA was $22.3 million or $0.19 per share compared to $15.3 million or $0.13 per share in fiscal 2025. Executing on this strategy and maintaining our focus on financial discipline has increased adjusted EBITDA by $7 million This is a 46% improvement compared to fiscal year 25 and includes over $5 million in reductions across SG&A following the corporate restructuring, less legal expenses, and lower bad debt. Expense. The net loss from continuing operations was $4.9 million per fiscal 26 or a loss of $0.04 per share. A significant improvement over the $65.2 million net loss or $0.55 per share in fiscal 25. Just as important is our positive financial the company also remediated all material weaknesses. This was a key priority for management, and we completed it well before our anticipated deadline. Management continues to emphasize the importance of executing on these controls effectively going forward. Now I would like to turn it over to Steven for some final remarks before we address your questions.

Thanks, Paul. This was our third consecutive quarter of improved reported financial performance since I became chairman and CEO of the company approximately 13 months ago. As this concludes our 2026 fiscal year, now is a good time to look back and reflect on our progress in achieving the objectives I discussed in my shareholder letter last August. My biggest goals for the year were to substantially reduce the company's SG&A overhead cost structure and to increase adjusted EBITDA. I am thrilled to report that we delivered on both fronts. We have reduced corporate expenses reduced our physical footprint, and cut recurring ordinary course operating expenses by $5.4 million. Those actions translated directly into improved profitability with fourth quarter adjusted EBITDA more than double what we achieved in the first quarter of fiscal 26. Importantly, the fourth quarter adjusted EBITDA also demonstrated that we passed the $25 million adjusted EBITDA annualized run rate that I identified as a goal last August. We are proud to achieve that milestone ahead of schedule but we are not done. We still see opportunities to simplify the organization, improve efficiency, and build on this momentum in fiscal 27. Paul also highlighted a major part of the story, Our operating model continued to generate positive cash from operations. Even while we work through legacy matters and other 1-time costs. That positive cash generation gave us capital allocation options. In the fourth quarter, we began to execute on our stock repurchase program. Purchasing a little over 500 thousand shares for over $1 million. And we expect to continue buying stocks in a disciplined manner in the quarters ahead as trading permits. We have been disciplined in our capital allocation to support long term shareholder value selectively investing in new features like streamlining FFL compliance, to improve the user experience on gunbroker.com. We will continue to target similar select high return enhancements to the platform with the goal of increasing traffic transaction volume, conversion, and ultimately revenue. We will continue to leverage AI to improve the experience for both buyers and sellers on the site. In March, we deployed an AI powered listing tool to produce standardized and marketplace optimized product descriptions that we expect will reduce listing creation time promote consistency, and increase conversion rates. Within the next month or so, we expect to release AI driven virtual customer service to improve our customer support by providing faster and more accurate resolutions to customer issues. To further take advantage of AI, we recently announced the hiring of Eric Berger, as director of AI strategy and implementation. Eric will lead the development, coordination, and execution of AI initiatives across the company. Finally, as we look ahead, in fiscal 27, I am optimistic for the strong margins more efficient operations, positive cash generation from operations, and platform improvements. Each incremental dollar of revenue has the potential to create meaningful profitability and shareholder value. This concludes our prepared remarks. I will now turn the call over to the operator for questions.

Thank you. Thank you. Our first question comes from Matt Koranda from Roth Capital. Please go ahead. Your line is open.

Wondered if you could talk a little bit about sort of the shape of demand during the fourth quarter in terms of overall GMV and firearms units? The unit data that you shared was helpful. And then I guess since the quarter closed since we are kind of a couple months now into the first quarter, any trends to call out on demand, in sort of the April, May time frame and maybe even month to date in June in terms of what you are seeing on firearms demand.

Sure. Matt. Thanks for the question. So we have continued to outperform the market. I think, mix was up a little bit. In the quarter. We were up, substantially more. So that tells me that we are continuing to gain market share. And, we are continuing to execute on our plan to, basically make our sellers happy, make our buyers happy, and then, you know, make gun broker a very seamless experience. You know, for both sides of the transaction. And, you know, that is leading to increases in market share. You know, obviously, we do not, we are not going to preview kind of financial results for the time past the end of the quarter But, demand in the marketplace seems better this year. I think that it is hard to it can be hard to predict exactly why, but you have got, you know, midterms coming up. You have got the, you know, the elimination of the of the tax on silencers. And I think that is the just the whole suppressor there is a lot of built up demand for suppressors, and I think that is just kind of had a, generally positive impact on the firearms market in general. And so, you know, demand, you know, seems to be continuing to be it should be good. You know, it is not 2020, 2021 good. But it is, you know, better than it is been in the last couple years.

Okay. That makes sense. Thanks for the commentary there, Steven. And then I wanted to hear a bit more about the AI strategy, about the hiring of a director of AI strategy and implementation. Sounds interesting and sounds like you see it as a as a large opportunity for the marketplace. Wanted to hear a little bit, I guess, about where he is going to be focused around is it first around seller initiatives, like the listing tool that you mentioned? Is it more around experience and buyer initiatives like the customer service initiative that you also talked about? Maybe just what the primary first areas of focus are going to be and where you see the sort of the biggest areas of opportunity.

You know, it is a great question. So, obviously, he is, you know, been on the job just since the June 1. Step 1 is to kind of get your feet wet, meet with everybody, and, you know, start understanding the organization and understanding, you know, behind the scenes how we conduct business. To me, the there is so much that AI can do. there is a lot of you know, repetitive tasks that it can perform. there is a lot of things that, you know, it can do 24 hours a day, whereas people are not working 24 hours a day. And so, you know, we are focused on we are not really focused on anything. We are kind of focused on figuring out where we should be focused. And, some of the opportunities we have already seen, obviously, are you know, we have vast amounts of data. We the site's been around since 2000. We have pricing data. We have descriptive data. We have all kinds of information about firearms and using AI. We have in the past, we have used, you know, traditional data mining tools to kind of help us figure out, you know, pricing and certain other things. AI can do it so much more efficiently because, you know, it is capable of kind of, you know, interpreting things a little more loosely. And so, you know, figuring out what we can do with that data, how we can better use that data, help our sellers sell things, to help our buyers find things. You know, marketing, AI is great at content generation. it is great at a--you know, it there is a lot of tasks that you can perform with AI. And so, you know, Eric's job is to really jump in and help us identify where we should be focused And then, the next step would be specific, you know, putting specific implementations to solve specific problems. The 1 that we have already we were pretty far down the road. Well, actually, very far down the road. Even before he joined, you know, his customer service. We are probably about a month away from launching that. And, you know, that 1 for me, I think, is huge. Because questions come in 24 hours a day. And, you know, we do not have people working customer service 24 hours a day. And so being able to get you kind of immediate answers and really good answers I think, is going to be game changing for the organization.

Great. I appreciate all that detail. Steven. Thanks for that. And maybe just the last 1. there is still a little bit of residual noise, I guess, from some of the litigation matters And so trying to get my arms around how to think about core operating expenses, now that you have got the DCP litigation out of the way and the SEC matters settled. Maybe, I do not know, if Jordan is on and wants to talk about that or if Paul wants to take a crack at just how to think about core OpEx and the run rate going forward now that those matters are sort of mostly behind us?

I will I will tell you, you know, we have the only open litigation issues are the you know, the class action and shareholder derivative lawsuit, you know, that were filed in Arizona. To the best of my knowledge, you know, the everything else has been resolved. And so we do not foresee, you know, we do not know what the end result of that will be. But aside from that, you know, we do not have any visibility or knowledge of kind of any, you know, like, $4.4 million settlements that are we are going to make. Like, everything else, has been cleaned up. So you know, the 1 really, that 1 issue looked at, you know, the shareholder derivative matter and the in the class action, if you kind of look at it as kind of 1 interrelated issue. Aside from that, we believe everything else has been settled. Now we still are paying indemnification to ex-officers, you know, for the SEC--you know, the SEC charged them in Arizona and you know, that is ongoing. And that is going to kind of come and go in waves. You know, you have got like, when you go to trial, there is a you know, there is a lot more expense. In other times, there is a lot less expense. it is definitely kind of chunky. But, you know, that ongoing cost is you know, that and the class action are really the last 2 buckets of kind of, you know, 1-time expenses or legacy litigation expenses that we foresee.

Okay. And the indemnification sort of expenses as they come will be called out, I guess, and as sort of 1-time items. I would assume.

Yeah. We ends up in our adjusted EBITDA bridge.

Got it. Okay. Super helpful. Appreciate it. See, I will leave it there.

Our next question comes from David Kanen from Kanen Wealth Management. Please go ahead. Your line is open.

Hi. Good morning, guys. Congratulations. Great job. My first question is, actually was posed by Matt, but I am gonna take a stab at it in a slightly different way, and it is in regards to any momentum Did the momentum continue in fiscal Q1? And what you called out was the NICS data was slightly positive and how you outperformed it, and grew share. So what is your confidence level? The question is, going forward, what is your confidence level of continued outperformance of the mix data and continued share gains?

Thank you, David. I feel very positive about you know, the way we are trending right now. Okay.

And then, in terms of the cost for indemnification of the former officers, is that just remind me. Is that being pulled out? And does the adjusted EBITDA number exclude it or we are throwing that in there?

That is, that is a cost that is pulled out for the purposes of adjusted EBITDA.

Okay. And then the last question is, what are some of the opportunities that you see incrementally in order to grow the business organically?

Absolutely. So, you know, first of all, you know, we continue to as you see from the outperformance relative to Nick's, we continue to basically capture market share. So that is 1 thing that we have been doing, and I believe we will continue going forward. You know, we brought the master FFL system online That has now become, you know, a revenue source. In, you know, prior quarters, it was we were implementing it. So there was, you know, there was cost, but no associated revenue. Now it is generating revenue. As we go forward, you know, advertising, I think I have spoken about advertising in the past. Our ad business, when, you know, I owned the company, it was private. Our ad business was substantially larger than it is at present. Presently, we are working on that. I want to drive, you know, more advertising sales. that is something that would not affect take rate. it is kind of a, you know, completely separate, like, complementary business line. But, you know, it is something that we feel could be you know, generate substantial revenue growth and substantial, profit profitability as well. And then we are continuing to make progress on universal payments. You know, again, some of our sellers do not accept credit cards, do not have the ability to accept credit cards. And we believe that is both a substantial revenue opportunity but also a very substantial potential driver of GMV. You know, just eliminating the friction and having a go to the bank and then go to the post office and get a money order and mail it off and what have you as opposed to just, you know, throwing down your credit card to make a purchase. We think that will drive you know, substantial incremental GMV as well.

1 more question I thought of as you were speaking. Things have been quite calm in the country. You know? Relatively speaking, you know, in terms of civil unrest or catalysts that spur people to go out and buy guns and firearms. So could you give us a reference point in the past? For example, when there were like, during the George Floyd riots and, you know, other events like that, In terms of run rate, historically, what you have seen in the business, in EBITDA in case something like that happens so we can Yeah. Sure. Get a sense as to what the earnings power and EBITDA potential is.

I mean, in early 21, you know, through 2020, you had kind of a triple whammy. You had you had COVID, then you had, you know, the defund the police, You know, you had you had protests and some rioting and looting. And then you had an election. And so you know, going into the first quarter, first calendar quarter, of 21, we were we were on a run rate that was in excess of a $100 million in, you know, in EBITDA. And, of course, at that time, we were private. This is not you know, it is I guess, we were under a different accounting standard, so I do not wanna know, I do not wanna get us in trouble or what have you. But we were in excess of a 100 million in EBITDA, as a run rate. And so, you know, when you have political events, events, like, for example, in 2008, 2 days before Barack Obama got elected, you know, our sales, like, they literally doubled, and then they doubled again. You know, during COVID, our sales, you know, again, we ended up on a run rate of an excess of a $100 million. You can have the size of the spikes can be massive. It can be you know, from a from a GMV standpoint, it can be double and triple and quadruple. The GMV that you are currently doing in a kind of a calmer period. So, you know, the any kind of, you know, political changes, you know, what you were talking about, things like, you know, social unrest, these things could really drive massive increases in revenue and GMV.

Alright. To add on to that, Steven, you know, the big point is it is very scalable. You know, our operating is are pretty fixed. And, you know, when the top line grows, we do not need to invest a lot more in the business to support it. Pretty scalable. So we were 55% adjusted EBITDA as a percent of sales, and I think it would expand as that grows.

Thank you. I appreciate the color, and good luck. I wish you a successful year.

Thanks, sir.

And we have no further questions. I would like to turn the call back over to Steven Urvan for any closing remarks. Remarks.

I want to thank you for participating in today's call and for your interest in Outdoor Holding Company. We look forward to sharing our ongoing progress when we report our first fiscal first quarter results in August. Thank you all, and have a great day.

This concludes today's conference call. Thank you for your You may now disconnect.