AXIL Brands Reports Second Quarter Fiscal Year 2025 Financial Results

Rhea-AI Summary

AXIL Brands announced its financial results for 2Q25, ending November 30, 2024. Revenue was $7.7 million, down from $8.4 million in 2Q24. Gross profit margin decreased to 71.1% from 74.3%. Operating expenses rose to 62.4% of sales, compared to 59.3% in the prior year. Net income was $0.6 million, down from $1.0 million. Adjusted EBITDA was $1.0 million, down from $1.4 million. Net cash from operations for the six months ended November 30, 2024, was $1.9 million, up from $1.3 million. Cash as of November 30, 2024, was $5.2 million, up from $3.3 million as of May 31, 2024.

AXIL is diversifying its distribution strategy beyond online presence, establishing relationships with international distributors, and expanding into over 1,000 retail locations including Bass Pro Shops, Scheel’s, and Walmart. The company plans to launch new and enhanced hearing products and expects to release the successor series to its TRACKR earmuffs in 1H25. AXIL aims for sustainable growth, prioritizing efficient profitability and leveraging its solid cash position to finance strategic growth plans internally.

Positive

• Net cash from operations increased to $1.9 million for the six months ended November 30, 2024, from $1.3 million.
• Cash position improved to $5.2 million as of November 30, 2024, from $3.3 million.
• Expansion into over 1,000 retail locations including major retailers like Walmart and Bass Pro Shops.
• New product launches planned, including the successor series to TRACKR earmuffs in 1H25.

Negative

• Revenue decreased to $7.7 million from $8.4 million in the prior year period.
• Gross profit margin declined to 71.1% from 74.3%.
• Net income dropped to $0.6 million from $1.0 million.
• Adjusted EBITDA fell to $1.0 million from $1.4 million.
• Operating expenses as a percentage of sales increased to 62.4% from 59.3%.

Insights

Financial Analyst

The Q2 FY25 results reveal concerning trends. Revenue declined by 8.3% year-over-year to $7.7 million, while gross margins contracted from 74.3% to 71.1%. The operating margin deterioration, with expenses rising to 62.4% of sales from 59.3%, signals growing cost pressures. Net income dropped 37.8% to $0.6 million. While cash position improved to $5.2 million, the 28.6% decline in Adjusted EBITDA to $1.0 million raises profitability concerns. The timing shift of Cyber Monday sales to Q3 partially explains the revenue decline, but broader challenges exist in maintaining margins amid expansion efforts. The retail expansion strategy, while promising for growth, may pressure margins further. The significant reduction in share count (from 18.6M to 8.2M diluted shares) provides some EPS support despite lower profits.

Market Research Analyst

The company's strategic pivot toward retail distribution presents a double-edged sword. While expanding into 1,000+ retail locations including Bass Pro Shops and Walmart creates growth opportunities, it introduces inventory management complexities and potential margin pressure from retailer requirements. The international expansion through new distribution agreements signals market diversification but execution risks remain. The planned launch of next-generation TRACKR earmuffs in H1 2025 demonstrates product innovation focus, though success depends on market reception and competitive positioning. The reduced reliance on online sales indicates a maturing business model, but the transition period may continue to impact near-term results. The $5.2 million cash position provides operational flexibility but may limit aggressive expansion compared to larger competitors.

LOS ANGELES, Jan. 08, 2025 (GLOBE NEWSWIRE) -- AXIL Brands, Inc. (“AXIL” 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, announces its financial and operational results for the second quarter ended November 30, 2024 (2Q25).

Financial Highlights for the Quarter Ended November 30, 2024

• Revenue in 2Q25 was $7.7 million, as compared to $8.4 million in the prior year period
• Gross profit as a percentage of sales was 71.1% in 2Q25, as compared to 74.3% for the prior year period
• Operating expenses as a percentage of sales were 62.4% in 2Q25, as compared to 59.3% for the prior year period
• Net income in 2Q25 was $0.6 million, as compared to $1.0 million in the prior year period
• Adjusted EBITDA in 2Q25 was $1.0 million, as compared to $1.4 million in the prior year period
• Net cash provided by operating activities for the six months ended November 30, 2024 was $1.9 million, as compared to $1.3 million for the prior year period
• Cash as of November 30, 2024 was $5.2 million, as compared to $3.3 million as of May 31, 2024
• Weighted average dilutive shares for 2Q25 was 8,168,657, as compared to 18,632,689 in the prior year period

“The second quarter of our fiscal year is seasonally strong due to the holiday shopping season. However, the 2Q25 period was slightly different than 2Q24 from a timing and reporting standpoint, as Cyber Monday and the day before Cyber Monday in calendar year 2024 fell into our fiscal third quarter, whereas the full holiday weekend from Black Friday to Cyber Monday was part of our second quarter of fiscal 2024. Consequently, a significant portion of these sales will be recognized in the third quarter of this fiscal year,” commented AXIL Chairman and Chief Executive Officer Jeff Toghraie.

“We continue to take steps to diversify our distribution strategy for our hearing protection and enhancement products beyond our online presence. Over the last six months, we have announced relationships with international distributors that we expect to contribute in a more meaningful way going forward. Moreover, we also expect to establish additional international distribution agreements that will allow us to expand the AXIL brand to incremental targeted markets.

“Domestically, we are making strong inroads into the retail channel. We are in over 1,000 retail locations, including Bass Pro Shops, Scheel’s, and select Walmart stores. Ultimately, we would like to expand our retail presence by an order of magnitude, and given our financial discipline, we expect to be able to recognize a healthy margin contribution that is comparable to what we recognize in our online channels. A core corporate value at AXIL is achieving efficient profitability. We prioritize sustainable growth and avoid pursuing revenue expansion solely for top-line growth if it compromises operating leverage.

“In addition to our planned diversification of distribution channels, we aim to give consumers compelling reasons to choose AXIL-branded hearing safety and enhancement products. We intend to achieve this by maintaining our technological leadership and introducing both new and enhanced hearing products with improved functionality and ergonomics across various price points. Accordingly, we expect to launch the successor series to our TRACKR earmuffs in the first half of calendar year 2025.

“Finally, our solid cash position of $5.2 million at the end of 2Q25 enables us to internally finance our strategic growth plans, with no anticipated reliance on external market funding. We believe our dual strategies of distribution channel diversification and continued product innovation, which should all be able to be funded internally, will generate sustainable shareholder value. I extend my gratitude to our shareholders for their continued support and remain confident that AXIL's greatest achievements are still to come,” concluded Mr. Toghraie.

Use of Non-GAAP Financial Measures

The Company calculates EBITDA by taking net income calculated in accordance with accounting principles generally accepted in the United States (“GAAP”), and adjusting for income taxes, interest income or expense, and depreciation and amortization. The Company calculates adjusted EBITDA as EBITDA, further adjusted for stock-based compensation. Adjusted EBITDA is also presented as a percentage of revenue, which is calculated by dividing the non-GAAP Adjusted EBITDA for a period by revenue for the same period. Other companies may calculate EBITDA and adjusted EBITDA differently, limiting the usefulness of these measures for comparative purposes. The Company believes that these non-GAAP measures of financial results provide useful information regarding certain financial and business trends relating to the Company’s financial condition and results of operations, and management considers EBITDA and adjusted EBITDA important indicators in evaluating the Company’s business on a consistent basis across various periods for trend analyses. These non-GAAP financial measures exclude significant expenses and income that are required by GAAP to be recorded in the Company’s financial statements and are subject to inherent limitations as they reflect the exercise of judgments by management about which expenses and income are excluded or included in determining these non-GAAP financial measures. Investors should not rely on any single financial measure to evaluate our business. A reconciliation of EBITDA and Adjusted EBITDA to the most comparable financial measure, net loss, calculated in accordance with GAAP is included in a schedule to this press release.

AXIL BRANDS, INC. AND SUBSIDIARY
CONSOLIDATED EBITDA and ADJUSTED EBITDA
FOR THE THREE AND SIX MONTHS ENDED NOVEMBER 30, 2024 AND 2023
	For the Three Months Ended								For the Six Months Ended
	November 30,								November 30,
	2024				2023				2024				2023
Net income (GAAP)	$	633,706			$	1,018,075			$	523,901			$	1,172,527
Income taxes		67,250				364,393				67,250				430,382
Interest (income) expense, net		(26,044	)			(36,185	)			(54,675	)			(73,034	)
Depreciation and amortization		34,440				27,785				47,335				56,022
Total EBITDA (Non-GAAP)		709,352				1,374,068				583,811				1,585,897
Adjustments:
Stock-based compensation		304,600				51,108				602,464				102,215
Total Adjusted EBITDA (Non-GAAP)	$	1,013,952			$	1,425,176			$	1,186,275			$	1,688,112
Sales, net (GAAP)	$	7,732,574			$	8,421,677			$	13,583,846			$	14,527,946
Adjusted EBITDA as a percentage of Sales, net (Non-GAAP)		13.1	%			16.9	%			8.7	%			11.6	%

AXIL BRANDS, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
	November 30, 2024				May 31, 2024
	(Unaudited)
ASSETS
CURRENT ASSETS:
Cash	$	5,213,897			$	3,253,876
Accounts receivable, net		1,444,218				509,835
Inventory, net		2,664,489				3,394,023
Prepaid expenses and other current assets		724,778				809,126
Total Current Assets		10,047,382				7,966,860
OTHER ASSETS:
Property and equipment, net		305,433				260,948
Intangible assets, net		324,907				309,104
Right of use asset		737,251				36,752
Deferred tax asset		121,791				231,587
Other assets		20,720				16,895
Goodwill		2,152,215				2,152,215
Total Other Assets		3,662,317				3,007,501
TOTAL ASSETS	$	13,709,699			$	10,974,361
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable	$	1,619,252			$	967,596
Customer deposits		496,404				154,762
Contract liabilities, current		956,022				905,311
Notes payable		143,342				146,594
Due to related party		178,520				11,798
Lease liability, current		207,077				36,752
Income tax liability		67,250				242,296
Other current liabilities		331,395				332,936
Total Current Liabilities		3,999,262				2,798,045
LONG TERM LIABILITIES:
Lease liability		531,081				—
Contract liabilities		357,205				480,530
Total Long Term Liabilities		888,286				480,530
Total Liabilities		4,887,548				3,278,575
Commitments and contingencies		—				—
STOCKHOLDERS' EQUITY:
Preferred stock, $0.0001 par value; 300,000,000 shares authorized; 31,133,500 and 42,251,750 shares issued and outstanding as of November 30, 2024 and May 31, 2024, respectively		3,113				4,225
Common stock, $0.0001 par value: 450,000,000 shares authorized; 6,466,852 and 5,908,939 shares issued, issuable and outstanding as of November 30, 2024 and May 31, 2024, respectively		647				591
Additional paid-in capital		8,428,760				7,825,240
Retained Earnings/(Accumulated deficit)		389,631				(134,270	)
Total Stockholders' Equity		8,822,151				7,695,786
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	13,709,699			$	10,974,361

AXIL BRANDS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED NOVEMBER 30, 2024 AND 2023
(UNAUDITED)
	For the Three Months Ended								For the Six Months Ended
	November 30,								November 30,
	2024				2023				2024				2023
Sales, net	$	7,732,574			$	8,421,677			$	13,583,846			$	14,527,946
Cost of sales		2,234,527				2,163,738				3,932,151				3,622,441
Gross profit		5,498,047				6,257,939				9,651,695				10,905,505
OPERATING EXPENSES:
Sales and marketing		3,377,760				3,672,780				6,047,231				6,879,621
Compensation and related taxes		276,674				204,646				467,322				484,635
Professional and consulting		736,169				694,258				1,684,018				1,303,288
General and administrative		434,573				422,343				920,955				800,292
Total Operating Expenses		4,825,176				4,994,027				9,119,526				9,467,836
INCOME FROM OPERATIONS		672,871				1,263,912				532,169				1,437,669
OTHER INCOME (EXPENSE):
Gain on settlement		—				79,182				—				79,182
Other income		2,041				3,189				4,307				13,024
Interest income		27,340				37,825				55,971				76,318
Interest expense and other finance charges		(1,296	)			(1,640	)			(1,296	)			(3,284	)
Other income (expense), net		28,085				118,556				58,982				165,240
INCOME BEFORE PROVISION FOR INCOME TAXES		700,956				1,382,468				591,151				1,602,909
Provision for income taxes		67,250				364,393				67,250				430,382
NET INCOME	$	633,706			$	1,018,075			$	523,901			$	1,172,527
NET INCOME PER COMMON SHARE:
Basic	$	0.10			$	0.17			$	0.08			$	0.20
Diluted	$	0.08			$	0.05			$	0.06			$	0.06
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic		6,450,226				5,863,939				6,303,002				5,863,939
Diluted		8,168,657				18,632,689				8,194,882				18,632,689

AXIL BRANDS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED NOVEMBER 30, 2024 AND 2023
(UNAUDITED)
	November 30,
	2024				2023
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	523,901			$	1,172,527
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		47,335				56,022
Bad debts		27,954				64,327
Stock-based compensation		602,464				102,215
Gain on settlement		—				(79,182	)
Gain on forgiveness of account payable		(218,699	)			—
Deferred income taxes		109,796				—
Change in operating assets and liabilities:
Accounts receivable		(962,337	)			(600,626	)
Inventory		729,534				(1,040,351	)
Prepaid expenses and other current assets		80,524				(267,407	)
Accounts payable		870,357				1,092,735
Other current liabilities		165,959				576,718
Contract liabilities		(72,614	)			175,135
NET CASH PROVIDED BY OPERATING ACTIVITIES		1,904,174				1,252,113
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of intangibles		(41,840	)			—
Purchase of property and equipment		(65,783	)			(70,845	)
NET CASH USED IN INVESTING ACTIVITIES		(107,623	)			(70,845	)
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of equipment financing		—				(1,650	)
Repayment of note payable		(3,252	)			(24,657	)
Advances (payments) from a related party		166,722				(25,212	)
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES		163,470				(51,519	)
NET INCREASE IN CASH		1,960,021				1,129,749
CASH - Beginning of period		3,253,876				4,832,682
CASH - End of period	$	5,213,897			$	5,962,431
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest	$	2,908			$	3,284
Income taxes	$	132,500			$	—
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING ACTIVITIES:
Initial recognition of right of use assets recognized as lease liability	$	767,269			$	—

About AXIL Brands

AXIL Brands (NYSE American: AXIL) is an emerging global 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^® brand - selling products in the United States, Canada, the European Union, and throughout Asia.

To learn more, please visit the Company's AXIL^® website at www.axilbrands.com and its Reviv3^® website at www.reviv3.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 developing new and improved products, diversifying its distribution channels, and expanding internationally, and perform in accordance with any guidance; (ii) the Company’s 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) the Company’s ability to engage in strategic partnerships and expand its 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:
CORE IR
(516) 222-2560
investors@goaxil.com

FAQ

What were AXIL's revenue figures for 2Q25?

AXIL reported revenue of $7.7 million for 2Q25, compared to $8.4 million in the prior year period.

How did AXIL's gross profit margin change in 2Q25?

AXIL's gross profit margin decreased to 71.1% in 2Q25 from 74.3% in the prior year period.

What was AXIL's net income for 2Q25?

AXIL's net income for 2Q25 was $0.6 million, down from $1.0 million in the prior year period.

What is AXIL's cash position as of November 30, 2024?

AXIL's cash position as of November 30, 2024, was $5.2 million, up from $3.3 million as of May 31, 2024.

How did AXIL's operating expenses change in 2Q25?

AXIL's operating expenses increased to 62.4% of sales in 2Q25, compared to 59.3% in the prior year period.

What are AXIL's plans for new product launches?

AXIL plans to launch the successor series to its TRACKR earmuffs in the first half of 2025.

What is AXIL's strategy for distribution channel diversification?

AXIL is diversifying its distribution by establishing relationships with international distributors and expanding into over 1,000 retail locations.

How did AXIL's Adjusted EBITDA perform in 2Q25?

AXIL's Adjusted EBITDA for 2Q25 was $1.0 million, down from $1.4 million in the prior year period.