AXIL Brands, Inc. Reports Record Fiscal Year 2024 Financial Results

Rhea-AI Summary

AXIL Brands, Inc. (NYSE American: AXIL) reported record financial results for fiscal year 2024. Key highlights include:

- Net sales increased 17% to a record $27.5 million, primarily due to increased marketing and sales initiatives in the hearing protection and enhancement segment.

- Gross profit margin decreased slightly to 73.4% from 75.3% in the prior year.

- Net income per common share on a fully diluted basis was $0.21, including $0.08 gain on redemption of preferred shares.

- Operating expenses as a percentage of net revenues increased to 68.0% from 66.9% in the prior year.

The company's focus on expanding distribution and retail channels drove growth, with no single customer accounting for more than 10% of total sales in the hearing protection segment, which represented about 95% of total revenue.

Positive

• Record net sales of $27.5 million, a 17% year-over-year increase
• Net income per common share on a fully diluted basis increased to $0.21 from $0.10 in the prior year
• Successful expansion into new retail and distribution channels
• No single customer accounted for more than 10% of total sales in the hearing protection segment
• 49% reduction in weighted average outstanding shares on a diluted basis as of August 13, 2024

Negative

• Gross profit margin decreased to 73.4% from 75.3% in the prior year
• Operating expenses as a percentage of net revenues increased to 68.0% from 66.9%
• Cost of sales increased by 26%, outpacing revenue growth
• Cash balance decreased from $4,832,682 to $3,253,876 year-over-year

Insights

Financial Analyst

AXIL Brands' fiscal year 2024 results show strong growth with a 17% increase in revenue to a record $27.5 million. However, the company's profitability metrics present a mixed picture. While net income per share increased, gross profit margin declined from 75.3% to 73.4%, primarily due to expansion costs. The company's focus on international expansion and strategic partnerships could drive future growth, but investors should monitor the impact on margins.

The 49% reduction in diluted shares outstanding since the fiscal year-end is a significant development, potentially indicating share buybacks or other capital structure changes. This could positively impact EPS going forward. The company's strong cash position of $3.25 million and low debt levels provide financial flexibility for future growth initiatives.

Market Research Analyst

AXIL's performance in the hearing protection and enhancement segment, which accounts for 95% of total revenue, is impressive. The absence of customer concentration risk, with no single customer accounting for over 10% of sales in this segment, indicates a diversified customer base. This reduces vulnerability to client-specific risks.

The company's strategic focus on expanding distribution and retail channels is yielding results, as evidenced by the strong revenue growth. However, the increase in operating expenses as a percentage of revenue from 66.9% to 68.0% suggests that the company is investing heavily in growth initiatives. Investors should watch for improvements in operational efficiency to ensure these investments translate into long-term profitability.

Legal Expert

The company's listing on the NYSE American exchange is a positive development, potentially increasing visibility and access to capital. However, it also comes with increased regulatory requirements and associated costs, as reflected in the rise in general and administrative expenses.

The $1.33 million gain on redemption of preferred shares is noteworthy. While this boosted EPS in the short term, investors should understand the long-term implications of this capital structure change. The reduction in outstanding shares could indicate a shift in the company's approach to equity financing. Future filings should be monitored for any changes in shareholder rights or voting structures that could impact investor interests.

LOS ANGELES, Aug. 15, 2024 (GLOBE NEWSWIRE) -- AXIL Brands, Inc. (“AXIL,” “we,” “us,” “our,” or the “Company”) (NYSE American: AXIL), an emerging global consumer products company for AXIL® hearing protection and enhancement products and Reviv3® hair and skin care products, today announced financial and operational results for fiscal year 2024.

Highlights for Fiscal Year Ended May 31, 2024

All comparisons are to the full year of the prior year, unless otherwise noted.

• Consolidated net sales (revenue) increased 17% to a record $27.5 million compared to $23.5 million in the prior year primarily due to the increase in marketing and sales initiatives in our hearing protection and enhancement segment. 
  
  
• Cost of sales increased by $1,494,386 or 26%, as compared to the comparable period in 2023 due to increases in our branding and marketing initiatives which increased our sales, thereby leading to an increased cost of sales. Cost of sales as a percentage of net revenues for the fiscal year ended May 31, 2024 was 26.6% as compared to 24.7% for the comparable period in 2023.
  
  
• Gross profit as a percentage of sales was 73.4% for the fiscal year ended May 31, 2024, compared to 75.3% for the prior year. The decrease in gross profit, as a percentage of sales, was primarily attributable to costs associated with expansion into new retail and distribution channels.
  
  
• Operating expenses as a percentage of net revenues were 68.0% for the fiscal year ended May 31, 2024, compared to 66.9% for the full year 2023. The increase was primarily due to higher marketing and selling expenses, increased compensation, and a rise in general and administrative expenses, including expenses associated with our listing on the NYSE American exchange.
  
  
• Net income per common share on fully diluted basis was $0.21, including $0.08 of gain on redemption of preferred shares, compared to $0.10 for the prior year. Net income per common share on basic basis was $0.57, including $0.23 gain on redemption of preferred shares, compared to $0.32 for the prior year.
  

• Diluted earnings per share for 2024 reflects weighed average outstanding shares on a diluted basis of 16,168,181. As of August 13, 2024, the weighted average outstanding shares on a diluted basis were 8,290,277 or a 49% reduction of our weighted average outstanding on a fully diluted basis.
  

“We are making continued progress in areas that should contribute to our sustainable, long-term growth and profitability. The impressive results underscore our team's relentless dedication and the successful execution of our strategic initiatives,” commented Jeff Toghraie, Chairman and Chief Executive Officer of AXIL. “For 2025, our strategic initiatives are geared towards enhancing our global presence, fostering strategic partnerships, and adapting our offerings to meet diverse market needs. This emphasis on international expansion not only broadens our market reach but also strengthens our competitive position on the global stage, in our view, driving sustainable growth and maximizing our potential for success in new and dynamic markets.”

“We concluded the fiscal year with record revenues of $27.5 million, reflecting a solid 17% year-over-year growth, largely driven by our strategic focus on expanding distribution and retail channels,” remarked Jeff Brown, Chief Financial Officer of AXIL Brands. “For the fiscal year, our fully diluted EPS reflects a weighted average of 16,168,181 outstanding shares on a diluted basis. As of August 13, 2024, the number of weighted average outstanding shares on a diluted basis was approximately 8,90,277, representing a 49% reduction from the weighted average outstanding shares on a fully diluted basis. Maintaining the quality of our revenue is a key priority this year as we focus on optimizing our existing partnerships and establishing new ones. There was no single customer that accounted for greater than 10% of total sales in our hearing protection and enhancement segment which accounted for approximately 95% of our total revenue for fiscal year 2024.”

AXIL BRANDS, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
		May 31, 2024				May 31, 2023
ASSETS
CURRENT ASSETS:
Cash		$	3,253,876			$	4,832,682
Accounts receivable, net			509,835				417,016
Inventory, net			3,394,023				1,311,864
Prepaid expenses and other current assets			809,126				801,360
Total Current Assets			7,966,860				7,362,922
OTHER ASSETS:
Property and equipment, net			260,948				157,463
Deferred tax asset			231,587
Intangible assets, net			309,104				382,674
Right of use asset			36,752				101,845
Other assets			16,895				12,195
Goodwill			2,152,215				2,152,215
Total Other Assets			3,007,501				2,806,392
TOTAL ASSETS		$	10,974,361			$	10,169,314
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable		$	967,596			$	908,606
Customer deposits			154,762				183,688
Equipment payable, current			-				2,200
Contract liabilities- current			905,311				827,106
Notes payable			146,594				172,588
Due to related party			11,798				158,072
Lease liability, current			36,752				65,824
Income tax liability			242,296				230,913
Other current liabilities			332,936				305,664
Total Current Liabilities			2,798,045				2,854,661
LONG TERM LIABILITIES:
Lease liability- long term			-				36,752
Contract liabilities- long term			480,530				605,942
Total Long Term Liabilities			480,530				642,694
Total Liabilities			3,278,575				3,497,355
Commitments and contingencies (see Note 11)			-				-
STOCKHOLDERS' EQUITY:
Preferred stock, $0.0001 par value; 300,000,000 shares authorized; 42,251,750 and 250,000,000 shares issued and outstanding as of May 31, 2024 and 2023, respectively			4,225				25,000
Common stock, $0.0001 par value: 450,000,000 shares authorized; 5,908,939 and 5,863,939 shares issued, issuable and outstanding as of May 31, 2024 and 2023, respectively			591				586
Additional paid-in capital			7,825,240				10,113,365
Accumulated deficit			(134,270	)			(3,466,992	)
Total Stockholders' Equity			7,695,786				6,671,959
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$	10,974,361			$	10,169,314

AXIL BRANDS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED MAY 31, 2024 AND 2023
		2024				2023
Sales, net		$	27,498,539			$	23,521,027
Cost of sales			7,304,602				5,810,216
Gross profit			20,193,937				17,710,811
OPERATING EXPENSES:
Sales and marketing			13,449,054				11,675,206
Compensation and related taxes			965,931				1,347,839
Professional and consulting			2,589,496				1,420,990
General and administrative			1,686,076				1,282,565
Total Operating Expenses			18,690,557				15,726,600
INCOME FROM OPERATIONS			1,503,380				1,984,211
OTHER INCOME (EXPENSE):
Gain on debt settlement			79,182				50,500
Other income			22,534				16,829
Interest income			182,225				6,469
Interest expense and other finance charges			(4,392	)			(2,521	)
Other Income (Expense), Net			279,549				71,277
INCOME BEFORE PROVISION FOR INCOME TAXES			1,782,929				2,055,488
Provision (benefit) for income taxes			(220,205	)			230,913
NET INCOME		$	2,003,134			$	1,824,575
Deemed dividend on preferred stock buyback		$	1,329,588			$	-
Net income available to common shareholders		$	3,332,722			$	1,824,575
NET INCOME PER COMMON SHARE:
Basic		$	0.57			$	0.32
Diluted		$	0.21			$	0.10
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic			5,868,570				5,644,771
Diluted			16,168,181				17,869,264

AXIL BRANDS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED MAY 31, 2024 AND 2023
										Common Stock																Total
		Preferred Stock								Issued/Issuable								Additional Paid-in				Accumulated				Stockholders'
		Shares				Amount				Shares				Amount				Capital				Deficit				Equity
Balance, May 31, 2022			-			$	-				2,107,385			$	211			$	5,476,068			$	(5,291,567	)		$	184,712
Shares issued for acquisition of business			250,000,000				25,000				3,659,195				366				3,982,114				-				4,007,480
Stock options expense			-				-				-				-				207,342				-				207,342
Shares to be issued for cash			-				-				97,359				9				447,841				-				447,850
Net income for the year ended May 31, 2023			-				-				-				-				-				1,824,575				1,824,575
Balance, May 31, 2023			250,000,000				25,000				5,863,939				586				10,113,365				(3,466,992	)			6,671,959
Stock options expense			-				-				-				-				204,429				-				204,429
Restricted stock awards			-				-				45,000				5				62,749				-				62,754
Preferred stock buyback			(207,748,250	)			(20,775	)			-				-				(2,555,303	)			1,329,588				(1,246,490	)
Net income for the year ended May 31, 2024			-				-				-				-				-				2,003,134				2,003,134
Balance, May 31, 2024			42,251,750			$	4,225				5,908,939			$	591			$	7,825,240			$	(134,270	)		$	7,695,786

AXIL BRANDS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED MAY 31, 2024 AND 2023
		May 31,
		2024				2023
CASH FLOWS FROM OPERATING ACTIVITIES
Net income		$	2,003,134			$	1,824,575
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			130,610				95,179
Bad debts			25,471				76,969
Inventory obsolescence			46,895				-
Stock-based compensation			267,183				207,342
Gain on debt settlement			(79,182	)			(50,500	)
Deferred income taxes			(231,587	)			-
Change in operating assets and liabilities:
Accounts receivable			(118,290	)			(160,277	)
Inventory			(2,129,054	)			353,985
Prepaid expenses and other current assets			(7,766	)			(661,115	)
Deposits			-				(3,810	)
Accounts payable and accrued expenses			138,172				215,175
Other current liabilities			4,298				630,897
Contract liabilities			(47,207	)			389,716
NET CASH PROVIDED BY OPERATING ACTIVITIES			2,677				2,918,136
CASH FLOWS FROM INVESTING ACTIVITIES
Cash acquired on business acquisition			-				1,066,414
Purchase of intangibles			(22,080	)			-
Purchase of property and equipment			(138,445	)			(65,650	)
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES			(160,525	)			1,000,764
CASH FLOWS FROM FINANCING ACTIVITIES
Cash raised for common stock to be issued			-				447,850
Repurchase of preferred stock			(1,246,490	)			-
Repayment of equipment financing			(2,200	)			(3,300	)
Repayment of note payable			(25,994	)			(37,119	)
Advances (payments) from a related party			(146,274	)			132,620
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES			(1,420,958	)			540,051
NET INCREASE (DECREASE) IN CASH			(1,578,806	)			4,458,951
CASH - Beginning of year			4,832,682				373,731
CASH - End of year		$	3,253,876			$	4,832,682
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest		$	6,907			$	2,521
Income taxes		$	-			$	-
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Stock issued for asset purchase agreement		$	-			$	4,007,480
Right of use assets recognized as lease liability		$	-			$	131,970
Tangible assets (excluding cash) acquired in business combination		$	-			$	1,740,729
Intangible assets acquired in business combination		$	-			$	456,945
Goodwill acquired in business combination		$	-			$	2,152,215
Liabilities assumed in business combination		$	-			$	1,408,823

About AXIL
AXIL (NYSE American) is an emerging global e-commerce consumer products company. The Company is a manufacturer and marketer of premium hearing enhancement and protection products, including ear plugs, earmuffs, and ear buds, under the AXIL® brand and premium hair and skincare products under its in-house Reviv3 Procare brand - selling products in the United States, Canada, the European Union and throughout Asia. To learn more, please visit the Company's website at www.reviv3.com and, for the AXIL® brand, visit www.goaxil.com.

Forward-Looking Statements

This press release contains a number of forward-looking statements within the meaning of the federal securities laws. The use of words such as “anticipate,” “believe,” “expect,” “continue,” “will,” “prepare,” “should,” and “focus,” among others, generally identify forward-looking statements. These forward-looking statements are based on currently available information, and management’s beliefs, projections, and current expectations, and are subject to a number of significant risks and uncertainties, many of which are beyond management’s control and may cause the Company’s results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements. Factors that could cause actual results to differ materially from those in the forward-looking statements include, among other things: (i) the Company’s ability to grow its net sales and operations, including expanding internationally, and perform in accordance with any guidance; (ii) our ability to generate sufficient revenue to support the Company’s operations and to raise additional funds or obtain other forms of financing as needed on acceptable terms, or at all; (iii) potential difficulties or delays the Company may experience in implementing its cost savings and efficiency initiatives; (iv) the Company’s ability to compete effectively with other hair and skincare companies and hearing enhancement and protection companies; (v) the concentration of the Company’s customers, potentially increasing the negative impact to the Company by changing purchasing or selling patterns; (vi) changes in laws or regulations in the United States and/or in other major markets, such as China, in which the Company operates, including, without limitation, with respect to taxes, tariffs, trade policies or product safety, which may increase the Company product costs and other costs of doing business, and reduce the Company’s earnings; (vii) our ability to engage in strategic partnerships and expand our distribution and retail channels; and (viii) the impact of unstable market and general economic conditions on the Company’s business, financial condition and stock price, including inflationary cost pressures, the possibility of an economic recession and other macroeconomic factors, geopolitical events, and uncertainty, decreased discretionary consumer spending, supply chain disruptions and constraints, labor shortages, ongoing economic disruption, including the effects of the Ukraine-Russia conflict and the Israel-Hamas conflict, and other downturns in the business cycle or the economy. There can be no assurance as to any of these matters, and potential investors are urged to consider these factors carefully in evaluating the forward-looking statements. Other important factors that may cause actual results to differ materially from those expressed in the forward-looking statements are discussed in the Company’s filings with the U.S. Securities and Exchange Commission. These forward-looking statements speak only as of the date hereof. Except as required by law, the Company does not assume any obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future.

Investor Relations:
AXIL Investor Relations Team
(888) 638-8883
investors@axilbrands.com

FAQ

What was AXIL Brands' revenue for fiscal year 2024?

AXIL Brands reported record net sales of $27.5 million for fiscal year 2024, representing a 17% increase from the previous year.

How did AXIL's (AXIL) earnings per share change in fiscal year 2024?

AXIL's net income per common share on a fully diluted basis increased to $0.21 in fiscal year 2024, compared to $0.10 in the prior year. This includes a $0.08 gain on redemption of preferred shares.

What was AXIL's (AXIL) gross profit margin for fiscal year 2024?

AXIL's gross profit margin for fiscal year 2024 was 73.4%, a slight decrease from 75.3% in the previous year.

How much did AXIL's (AXIL) operating expenses increase in fiscal year 2024?

AXIL's operating expenses as a percentage of net revenues increased to 68.0% in fiscal year 2024, up from 66.9% in the previous year.