AMMO, Inc. (NASDAQ:POWW) Q4 2023 Earnings Call Transcript

AMMO, Inc. (NASDAQ:POWW) Q4 2023 Earnings Call Transcript June 14, 2023

AMMO, Inc. misses on earnings expectations. Reported EPS is $0.03 EPS, expectations were $0.04.

Operator: Ladies and gentlemen, thank you for standing by. Good afternoon, and welcome to the AMMO, Inc. Full Fiscal Year 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [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 CORE IR, the company’s Investor Relations firm. Please go ahead, sir.

Matt Blazei: Good afternoon, and thank you for participating in today’s conference call. Joining me from AMMO’s leadership team are Fred Wagenhals, Chairman and Chief Executive Officer; Jared Smith, President and Chief Operating Officer; and Rob Wiley, Chief Financial 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 those 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 releases 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, June 14, 2023. 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 Fred Wagenhals, Chairman and CEO of AMMO, Inc.

Fred Wagenhals: Thank you, and good afternoon. I appreciate everyone joining us for our fourth quarter and fiscal 2023 earnings call. I would like to start this call by acknowledging all the hard work of our employees and the patience of our investors. As we continue to navigate through a very challenging environment over the past year. While it’s been challenging period for all of us and the market in general, I firmly believe we have laid the foundation for the next great growth cycle for our company. I’m going to take a few minutes to highlight a few of these initiatives and then hand the call over to Jared to discuss these in more detail. During the past few quarters of Global and U.S. economy downturn, which has impacted our market as well, we have been hard at work transitioning our customer base toward longer term strategic clients, while also positioning the company as long term supplier of pistol and brass casings to OEM in international markets.

As the ammunition market normalizes, we will also continue our penetration into higher margins, niche markets with our proprietary technology. [Technical Difficulty] expansion of our international market and continue to press forward on our exciting government work. This pivot in strategic was designed to substantially improve the profitability of our pistol, rifle and brass sales, while also reducing our working capital needed and improving the balance sheet. We are confident with these changes along with the significantly greater capacity at our state-of-the-art manufacturing Wisconsin facility. We will put us in an excellent position to rapidly improve profitability as we execute in the coming quarters. Moving now to GunBroker.com. While brick-and-mortar retailers have suffered from the significantly decrease in revenue and foot traffic our GunBroker.com revenue and profitability has remained steady throughout the past fiscal year.

We believe this has been a function of improving customer acquisition tools significantly upgrading our targeting, marketing and better overall customer experience, which the team has spent a lot of time and effort in enhancing in every material way. As I have discussed on previous calls, we have undertaken a number of initiatives over the past year to enhance the GunBroker.com platform, including carting and credit cards, processing capability, which are for preparing to rollout as we continue the necessary and critical beta testing. Meanwhile, the massive layoffs seen in the technology industry has allowed us to expand our development capabilities as we have leveraged the increased availability of skilled workers to add a number of highly strategic hires.

I remain confident that we are only in the early stages of what we believe will be a long runway of revenue, growth and increasing profitability. We started the company in 2016 with the vision and mission to innovate and capture a meaningful share of the ammunition market. Picking our spots for acquisitions, staying focused on always improving manufacturing operations, all while working to bring our customers the product they desire. We have grown by leaps and bounds in the short seven plus years, and I am proud of the future going forward, but there is much work left to be done. And we now have the team assembled to meet these challenges. At this time, I would like to turn the call over to Jared Smith, AMMO’s President and COO. He will discuss these initiatives in more detail, review the current state of operations and what we believe the future has in-store for AMMO, its team and our shareholders.

Jared Smith: Thank you, Fred. Good afternoon, everyone. This is my second time addressing you on an earnings call as President and COO. And in these last five months, I have seen transformative change here at AMMO. I joined Fred and thanking our employees for making these changes possible. Their dedication and wealth of knowledge continue to make great things happen and make calls like today all the more enjoyable knowing the great work we have accomplished. Before I dig into the business, our team and shareholders must take a look at our balance sheet. We ended our fiscal year with $39.1 million in cash, have eliminated debt and generated $35.5 million in cash from operations over the past 12 months. We are well prepared for this downturn and with the company repositioned its operations, we are ready to meet this new market head on.

Our sales and margins are down from 2022. We have retooled our factory and changed our go-to-market approach for both the ammunition and GunBroker.com divisions. 2023 and the first half of 2024 will be a challenging year for the AMMO (ph) for this industry. Markets normalized, shelves are restocked and our customers are once again looking for value as they tighten their belts. To thrive in this environment, we must create opportunities in the marketplace that build long term relationships and communicate the value and strength of our platform and products. I first, we want to focus on execution concerning the major process changes we have implemented, which may seem simple in nature, but provide a major lift for a young and emerging company.

These process improvements are essential in a tightening market and our requirement for repeatable margin growth during the continuing headwinds this sector faces. We’ve spent late nights and countless weekends developing these processes, programs and new products to take this market head on. Operationally, we have developed our sales and operated model, enhanced our sales and market forecast, tightened our purchasing plans, shortened feedback loops and will continue with cost out initiatives that will keep us lean and competitive in the quarters ahead. We have also aligned execution of those players with project management principles that will allow us to continue to monitor our execution and delivery on these key principles. Finally, we continue to add talent to our team and grow our people and in turn our performance.

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Let’s talk a minute about GunBroker.com. GunBroker.com is about managing and establishing trust. The buyer trusts in this experience of buying a new or used firearm (ph) online without first handling it, trusting the experience that a firearm will be shipped to the FFL undamaged and in a timely manner and following all the necessary state and federal regulations. The seller must trust that the funds settle accurately and in a timely manner, and they must trust that the transferring FFL will handle the firearm transfer experience professionally for their customer. For non-firearm purchases, trust must exist that the product being delivered is in the same condition as noted in the listing by the seller, and that the [indiscernible] process quick payment upon bidding or buying the selected item.

It is that trust that we are building upon today. I trust that our community does not give or take lightly, and our developers and managers recognize that we must get it right. As we’ve discussed in the past, with the onboarding of credit card processing and carding, this platform will change, streamline and expedite processes within the systems and we must do everything in our power to ensure that we keep the trust of this community. To ensure that we continue to bring value, we must provide new tools and advancements that empower buyers and sellers with a deeper level of engagement within the community. The first major advancement was from a universal to a unique approach and our marketing campaigns. We shifted to an in-house team that generates campaigns around GunBroker.com’s individualized, quantified and internally generated data.

This resonates with our customer base and enables us to hit unprecedented metrics as buyers discover new sellers on the platform around these personalized and self-selected genres. We are aware of no other competitor in our space that possesses and deploys this data in this method. This has resulted in 126 targeted unique customer personas that are curated and used in banner and e-mail campaigns that direct traffic back to those curated items by our sellers. This campaign also generates 1.5 million e-mails daily to an active and engaged audience segmented from an overall list of 3.5 million opt-in subscribers. The second major advancement was from a reactive to a proactive approach on customer service, seller engagement and industry relationships.

By restructuring customer service and adding product specialists, we have unified our outreach to both the seller and buyer community, leading to better navigation within the platform. We have accelerated customer response time and significantly increased our satisfaction ratings. The third major advancement of our marketplace was enabling buy-now links for manufacturer sites and manufacturer stores within GunBroker.com, which are fulfilled by our sellers’ inventories. We’ve also recognized and helped draw out one of the core strengths of the marketplace, which is sellers can exceed normal industry margins on rare, highly sought-after, and collectible goods through the auction process. This book has become clear to our seller community, and has become a source of much talk, and something we will continue to educate our user base on through a new podcast launching in July.

This podcast will be filled with conversations around fun facts, demystifying consumer selling and buying, and historical relevance of the product that can be found on GunBroker.com. We’re also very excited to announce the newest member of our management team, industry veteran, Alan Faulkner, a Vice President of Public Relations and Brand Management. In this role, Alan will help bring awareness and retention to GunBroker.com and the ever-growing number of programs and services it offers sellers, and buyers in the outdoor industry. As a whole, the entire GunBroker.com team feels, they’re just really hitting their stride, with the past two years focused on this strategic planning and development of what is now being deployed, bringing a whole new breadth of services and opportunities to the platform and its users.

I’d now like to transition to AMMO and the ammunition division. Despite the current recessionary and inflationary macroeconomic effects, the ammunition division still benefits from geopolitical events and conflicts that you read in the news today. Demand for our brass lines is growing and the word is getting out there that AMMO, Inc. is open for business, and has significant capacity for its growing customer base. We are securing new foreign and domestic contracts for rifle and pistol brass just as we anticipated, and our international clientele will contractual supplies that will carry them through the next election cycle versus being cut off when the domestic market rebounds here in the US. To make these opportunities a reality, we had to go back to the drawing board and clear out our cabinets, purge our old inventories, and lean out our processes.

We’ve reduced our working capital requirement and continue to work through slow-moving inventory that clutters the mind and the factory floor. Our continuous improvement projects will create an even leaner operating model in the months ahead, as we process even material after it’s a consolidation of our two facilities last fall. Our sales teams are also busy implementing strategic account management, which focuses our energy and resources on the highest-performing dealer, retail, and distributor, customers in this space. We must continue to tune ourselves in marketing organizations to listen and understand the requirement of our dealers and retailers, and effectively communicate our core strengths and strategic offerings. At the same time, we must create a conversation with our consumers who are getting lost in the aisles and options to choose from in the ammunition category.

We will do this by rebranding and repackaging the AMMO, Inc. signature lines to stand out on the shelf. This will communicate the strength of our best-in-class brass we manufacture, and the highest quality of components we source from other premium U.S. manufacturers. We are superior and take great pride in being a U.S. manufacturer based in Manitowoc, Wisconsin. As we transition our future product offering, we will continue to move our products into stable niche markets with loyal customers. Over the last six months, our AMMO division has transitioned away from top-line revenue and focused on margin creation in conjunction with contractual growth with our premium OEM partners. Sales margins improved, volumes stabilized, and strict inventory reduction plans have been put into place.

We are filling in the factory that came on last fall and continue to see machine efficiencies increase, while we find new demand for this capacity. We will continue to build out our sales and marketing teams to move the needle in a profitable and sustainable manner. Domestic markets will not keep our factories full, military needs are sporadic and timing is unpredictable, international business will not save us, even with the current conflicts raging beyond our borders. We must take a balanced and multi-disciplinary approach, and strategically place our business with clients that are monitoring and measuring their business, with the same care and diligence with which we measure ours. Strategic account management is based on the principle that we will find sales with credible clients, with a similar focus on the bottom line and ability to market their brands with the same effectiveness that we will market ours.

Sales have come rather easily in the past three years with COVID, and the U.S. and the initial industrial base has grown. We will now have to prepare ourselves strategies to compete with this excess capacity and lean our operations, creating efficiencies to compete with manufacturers that have been in this business for over 100 years. We will automate what we can, but automation takes time. Our strategy is differentiation and caliber selection, go our people, cut costs, and manage our relationships both domestically and internationally, militarily, all while hoping for a little luck along the way. We abide by the wise words of Thomas Jefferson, I’m a great believer in luck, and I find the harder I work, the more I have of it. The entire AMMO team feels the exact same way.

Our industry has grown its inherent capacity beyond pure consumption. Bigger factors like political cycles, regulation, international and domestic turbulence drive this market to unprecedented levels. These factors must be managed and weighed. As the sell management team leans into the market, we will take all these factors into consideration as we build shareholder value through steady and predictable growth. I’d now like to turn the call over to Rob Wiley to discuss the quarter.

Rob Wiley: Thank you, Jared. Welcome everyone. Let me now review our fourth quarter and fiscal year 2023 financials in more detail. We are pleased with the progress we have made to date as we continue with the transition period, but headwinds are still active in the market today along with the rest of the industry. We remain excited about the new direction of our two segments, as we are nearing the end of our first quarter and our 2024 fiscal year. As it is observed by the peers within our space, we continue to see margin compression on our ammunition segment. The U.S. commercial ammunition market continues to slow from the inflationary impact and global recessionary drivers being felt across most industries. However, our plans to recoup cash tied up in our inventory and accounts receivable have gone according to plan, as we ended the year with cash generated from operations of approximately $35.5 million.

We were able to reduce our total inventories by $12.8 million and our fourth fiscal quarter as we shifted our direction for a leaner operating model, focusing on increased brass sales, which afford us higher margins. Additionally, we continue to push forward with improvements to GunBroker.com, expect the payment suite and cart platform to launch in our 2024 fiscal year, which would drive growth and profitability to the site. We ended our fourth quarter with total revenues of approximately $43.7 million in comparison to approximately $70.1 million in the prior year quarter. This was a decrease of 37.7% from the prior year quarter. For the fiscal year, total revenues were $191.4 million, decreasing 20.3% from the prior year. The decrease in revenue was mainly attributable to our ammunition segment and the inflationary impacts that are currently affecting the market.

These market conditions also impacted the revenue of our marketplace segment, affecting a 7% decrease from the prior year quarter, and a 2% decrease from the prior year in total. However, operating performance of our marketplace, GunBroker.com still remains strong, and although that our top line revenues wavered, our margins are still comparable to historical performance. Our cost of revenue is approximately $31.8 million for the quarter compared to $49 million in the comparable prior year quarter. For the full fiscal year, it was $136 million compared to $151.5 million in the prior year. This decrease was related to reduced sales volumes and increased commodity and overhead costs. Accordingly, this resulted in a gross margin of $11.9 million compared to $21.1 million in the prior year quarter and $55.4 million for the year compared to $88.8 million in the prior fiscal year.

As our sales volume fell in the reported period, we are navigating a difficult climate as macro trends appear to be impacting our performance. We’re transitioned to more profitable sales activity is currently in effect for our first fiscal quarter to the 2024 fiscal year, by shifting our focus to more sales of our premium brass and large caliber ammunition rounds. Our balance sheet remains strong, with our total current liabilities decreasing by 29% since our prior year end, and our total current assets virtually unchanged, but our cash position increased $15.8 million since the prior fiscal year 68%. For the quarter, we recorded adjusted EBITDA of approximately $3.8 million compared to the prior year quarter adjusted EBITDA of $10.7 million.

For our fiscal year, our adjusted EBITDA was $26.4 million compared to $60.8 million in the prior fiscal year. This resulted in a loss per share of $0.03 for the quarter or adjusted net income per share of $0.03, in comparison to a net income per share of $0.00 in the prior year quarter or adjusted net income per share of $0.07. And for our fiscal year, a loss per share of $0.07 or adjusted net income per share of $0.16, in comparison to net income per share $0.27 were adjusted net income per share of $0.46 in the prior year. Looking forward to our next fiscal year, we expect a new direction of our company to increase profitability through increased sales of our brass casings and our performance rifle ammunitions that will increase the gross margins of our ammunition segment.

Additionally, the launch of our — the payment processing suite, cutting ability, and analytic offerings are anticipated to position our GunBroker.com marketplace will allow for increases in gross merchandise volume, and as a result, increasing revenue and profitability. Our common stock repurchase plan is underway with approximately 1 million shares repurchased in total under the plan this far. Current plan is in effect until February 2024 with approximately $28 million in funds remaining under the plan. That concludes our opening remarks. I will now turn the call over to the operator for questions.

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Q&A Session

Operator: Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] Today’s first question comes from Matt Koranda with Roth MKM. Please go ahead.

Michael Zabran: Hey, guys. It’s Mike Zabran on for Matt. I guess just starting with the AMMO manufacturing side, the press release says the transition, and the more profitable sales activity is currently in effect. Just want to clarify here, does this mean we’re fully switched over to the target production mix or if not, how far are we in that process? What does the rest of the transition entail and when can we expect that production transition to be completed?

Jared Smith: Yeah. This is Jared Smith. I’ll take that question. In terms of the product mix, we fully transitioned. We still have capacity to bring on and we will be bringing on more and more capacity as we find additional sales. But in terms of product mix sales today, we’re confident in the directions that we stated. I couldn’t be happier with the team and the progress that we’re seeing, long-term contractual volumes that secure factories like ours. Hope that answers your question.

Michael Zabran: Right. Yeah. That’s helpful. I guess switching over to GunBroker, maybe just start by speaking to some of the customer purchasing behavior, any observations and listing trends on GunBroker? And kind of how we expect those trends to pan out for the rest of the year?

Jared Smith: One of the interesting things that have happened post-COVID is that, while we’ve seen decreased traffic on the website, we’re actually seeing increased profitability. And that’s because during COVID, there’s this new base of sellers and buyers on the community that it’s recognized, and we’re seeing higher ticket items for sale on the platform. We’re seeing better use of the listing options. And the overall percentage of sales has actually increased since the start of the year.

Michael Zabran: Got it. That’s helpful. As — last one for me. So the recent take rate increases in GunBroker, are they in preparation for the expected improvements or can we expect the take rate to decline further alongside those improvements when they’re actually enacted?

Rob Wiley: Hey, this is Rob Wiley. So the recent increase in our take rate is actually related to the increase in our average ticket size, which also relates to the ancillary off-listing options that come from those higher ticket items for sale. We have not increased our take rate related to any of the upcoming activity, and that would just be upside now take place.

Jared Smith: Yeah. I don’t think we’ll see a multi-tiered take rate until the end of this calendar year, but really into 2024. Right now, the goal is to continue to communicate, bring buyers and sellers on the platform, show and demonstrate the strength of the platform for getting a higher value for your firearms and increase the user community and awareness within these specific genres that drive the overall community, and benefits to the user base.

Rob Wiley: With credit card and carting.

Jared Smith: Yeah. And with a credit card and carding, coming on in ’23, ’24, we’ve got nowhere to go but up.

Michael Zabran: That makes sense. Is there a target take rate that we plan to end the year with and given the higher take rate, but considering sort of the AMMO down cycle that we’re in, what type of growth are we expecting for GMB?

Rob Wiley: So we do have a high target take rate in mind. I think we envision ourselves eventually being at — towards the higher-single digit end of the spectrum, but we wouldn’t want to increase our take rate without providing value to our users. So as we continue to add services to this site, that would be — what it would be appropriate for us to increase our take rate, and then obviously the GMB from there is kind of dependent on market activity. So we really — it’s hard for us to come out with a number on that one.

Jared Smith: And our increases in take rate are really related to the carding capabilities and bringing in a larger assortment of items that have higher margins. Right now, our goal is to keep the volume on the platform, keep the sellers happy. I don’t see us adjusting our take rate to the on firearms in the ’23 calendar year. But what’s happening, and Rob alluded to it earlier is that, through listing fees, inventory sitting a little bit longer, things are cycling over, people are seeing that the value of the listing options and different abilities to kind of enhance your product on the website, those are really what’s driving our increased take rate over the last three months to six months.

Michael Zabran: Makes sense. That’s all from me guys. Thanks.

Fred Wagenhals: Thank you for your time, Sir.

Operator: The next question comes from Mark Smith with Lake Street Capital Markets. Please go ahead.

Mark Smith: Hi, guys. First question is just kind of big picture and it’s a little bit of follow-up, but just as you guys get pretty good insight into the consumer and consumer trends and you spoke to some of that here that you saw in the quarter. Any update as we look at Q1, any updates in consumer behavior that you can speak to, whether it’s you’re broadly from your GunBroker data or even within ammunition?

Jared Smith: So Mark, Jared Smith here. Within the ammunition sector, we’re certainly seeing a decrease in demand. We’re seeing price erosion on commodity products as we’re seeing more imports into the U.S. market. I will tell you from AMMO’s side is because we’ve moved away from those sectors and we’re not trying to compete on nine and two to three. Our strategy is really about product differentiation, increased caliber growth, and servicing the OEM market. We think we’re well positioned to go into the remainder of the year. And from a GunBroker.com side, the overall mix volume is pretty stable from what we’ve seen. But our consumers are looking for better value, and they’re shopping harder, and we think GunBroker.com is one of the places that they’re coming to shop and do comparison pricing.

So while we may see a lower value or gross monetary value than 2022, we’re seeing strong activity in the sectors that we want, which is higher gun value sales. There’s still a very, very loyal base out there, that goes to GunBroker.com to find the unique firearm that they’re looking for. And as we add carding and credit card processing and increase our search capabilities, enhance our community engagement with podcast and better tools and kind of dissect the genres of firearms and services and products that we have on our side, we really think that’s where the consumer is going.

Fred Wagenhals: I hope that answers your question, sir.

Mark Smith: Yeah. No, that’s helpful. As we think about — you’ve answered this question just a minute ago, but I want to just dig deeper on it kind of a shift in manufacturing. Can you just update us on the two sides because it seems like you’re pretty far into it? First, a shift to manufacturing more profitable calibers and rounds, a shift away from two facility and [indiscernible] kind of where that’s at? And then also Jared, I think you talked previously about the kind of a shift back to supplying more of kind of your OEM peers with brass casings, can you give an update on kind of where that is as well?

Jared Smith: Absolutely. I’m going to take the second part of that question first. We are and have shifted and I’d like to take credit for it, but we have a phenomenal team in Manitowoc, Wisconsin. They produce — and really the core talent there is around brass rifle manufacturing. I think they do it as well if not better than anybody else. And our mix of products is where we want it today, and it’s really just growing the capacities in that medium and a large rifle caliber base. Our 50 Cal –our 50 Cal line is coming on, and there’s still more and more demand than I ever would have guessed for things like 12.7 by 108mm, 50 cal, and these kinds of larger premium rifle calibers. And I know I was taking the second question first and I forgot the first question. So can you repeat the question?

Mark Smith: Yeah. Just the shift in manufacturing kind of away from 9 mil and two to three (ph) and into more kind of specialty back around?

Jared Smith: Yeah. It really comes –it was really just that simple. You walk over to the machine and you turn it off. And you divert your purchasing plants and your sales and operating models to where we’re seeing and continue to see margin at 38, 357, 44, 45 long colts. Straight Wall Calibers and these –the mix of products that –the larger manufacturers have fully dedicated lines, dedicated to nine, dedicated to the loading, dedicated to the bullet production, dedicated to the assembly, dedicated to the drawing, we just don’t have that in our factory, and allows us to shift and pivot quickly.

Mark Smith: One last question for me, just — can you just talk about commodities, labor your other inflationary pressures, maybe giving an update since the quarter ended as we’re well into Q1 now? On — what you’re seeing on the inflationary pressure side?

Jared Smith: Yeah, absolutely. What we saw at the end of 2022 — into 2022 really was a continued and steadied increase in raw materials, copper and zinc, we’re going up, our labor inputs were going up. I think as the recession is set in, those are actually turning around and we’ve seen copper prices back off. So we actually have a good guy there in terms of our inputs. Primers are still in high demand, but there is additional primer capacity coming on both internationally and domestically. And just the lack of demand has created a little bit of slack in the primer supply. From a commodity standpoint, you’re always going to have your imports flooding in because they’ve got to sell through those factories from the state of military readiness. But fortunately, we don’t have to play there, we don’t have to compete there.

Mark Smith: Perfect. Thank you, guys.

Operator: Today’s last question comes from Edward Riley with EF Hutton. Please go ahead.

Edward Reilly: Hey, guys. Just wondering if you can maybe give us some color on the cadence of gross margins in the ammunition segment throughout the next fiscal year, just given the strategy to maybe continue seller slower moving — selling slower, moving inventory in the near term. When do you anticipate getting through that inventory and what might gross margins look like within that segment when it’s finally moved?

Jared Smith: We’re working through that inventory now, and what we’re seeing is that we’ve improved margins by 10% to 15% in pistol. Going into the end of calendar year ’22 into ’23, we were damn near at breaking even on most of our rifle ammunition. A lot of that was imported and resold, but it was still heavily commodity mixed. So we turn those machines off, and we’ve set a 10% to 15%, and some months 17% increase in margins based upon the mix that we’re putting out that month. And we have grown our margin business by six fold, I mean our brass business by six-fold since January, where we’re seeing 30% margins.

Edward Reilly: Okay, great. Thank you for that.

Jared Smith: Absolutely. We’re excited where we’re going and I got to tell you what looking back at where the company has come from and it’s quick short seven years, and 22 with a proxy contest and legal fees, we are off to the races in this ’24 fiscal year. So appreciate it.

Operator: This concludes our question-and-answer session. I would now like to turn the call back to Fred Wagenhals for any closing remarks.

Fred Wagenhals: Thank you shareholders and supporters of the company. I appreciate your support. I’ve watched Jared put together a phenomenal team over the past five months, and I have the privilege of setting in the meetings and seeing where we’re going in the next year. And I said you’re going to see some very exciting things out of this company. Thanks again for everything.

Operator: Conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.