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DATE

Monday, Aug. 10, 2026 at 9:00 a.m. ET

CALL PARTICIPANTS

• Chairman and Chief Executive Officer-Steve Urvan
• Chief Financial Officer-Paul Kasowski
• Chief Legal Officer and Corporate Secretary-Jordan Christensen
• Investor Relations-Michael Bacal

TAKEAWAYS

• Net Revenues -- $14.5 million, an increase of 22.1% driven by increased marketplace volume and the launch of Federal Firearms License transfer fees.
• Net Income from Continuing Operations -- $3.6 million, an improvement of $9.4 million from a $5.9 million loss in the prior-year period.
• Adjusted EBITDA -- $7.9 million, representing 152% growth and the fifth consecutive quarter of sequential improvement.
• Operating Cash Flow -- $4.4 million, an improvement of $11.1 million from a $6.7 million deficit last year.
• Gross Merchandise Value -- $223.7 million, up 18.1% reflecting improvements in traffic, conversion, and average order value.
• Average Order Value -- $477, an increase of $33 or 7.5% year over year.
• Marketplace Conversion -- 1.76%, representing an 11-basis-point improvement from the previous year.
• Firearm Unit Sales -- increased 11.6%, outpacing the 5.3% growth in adjusted National Instant Criminal Background Check System checks.
• NICS Market Share -- 6.4%, an increase of 41 basis points compared to the prior-year quarter.
• Take Rate -- 6.47%, up from 6.26% driven primarily by a 39-basis-point contribution from new transfer services.
• Federal Firearms License Transfer Revenue -- $900,000, representing a new revenue stream launched at the beginning of the fiscal year.
• Gross Margin -- 84.5%, down from 87.2% due to start-up implementation costs and a shift toward lower-margin transaction services.
• Operating Expenses -- $8.9 million, a 45.3% decrease resulting from the resolution of legacy legal matters and corporate restructuring.
• Cash and Cash Equivalents -- $68.8 million, an increase of $700,000 during the first quarter.
• Share Repurchases -- 1 million shares for $2 million, with $12 million remaining under the current authorization.
• NFA Category GMV -- 71% growth in silencers and suppressed firearms following the reduction of federal transfer taxes to zero.
• Legal and Professional Fees -- decreased by $3.7 million as Delaware litigation and federal investigations concluded.
• Salaries and Related Costs -- fell $2.7 million due to corporate restructuring and headcount reductions.
• Engaged Sessions -- first-party sessions grew 2.9% year over year.
• Legacy Take Rate -- 6.08%, a decline from 6.26% due to higher volume from top-tier sellers and increased average item values.
• Preferred Dividends -- $800,000 paid during the quarter.
• Related Party Note Payment -- $1 million scheduled payment completed during the period.
• Trailing 12-Month Adjusted EBITDA -- $27 million, exceeding the company goal of a $25 million annualized run rate.
• SEC-Related Adjustments -- $600,000 during the quarter, reflecting a normalization of the business from $5.6 million in total adjustments last year.

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RISKS

• Urvan stated, "We are not assuming that demand pulled forward into the first quarter will repeat in the second quarter," referring to a temporary surge in Virginia buying activity ahead of proposed legislation.
• Kasowski noted that the take rate for the legacy marketplace decreased because of "a larger share of volume from our top sellers who qualify for discounted fee rates and an increased average item value, which carry a lower inherent take rate."

SUMMARY

Management reported that Outdoor Holding Company (POWW +0.00%) has moved past its stabilization phase and is now focused on continuous operational improvement and disciplined growth. The company achieved a leaner cost structure following the resolution of major legacy litigation and corporate restructuring, contributing to its return to profitability. Strategic initiatives center on expanding marketplace monetization through value-added services such as Federal Firearms License transfers and universal payment processing. Management indicated that capital allocation priorities remain focused on maintaining a strong balance sheet, investing in platform enhancements, and returning value to shareholders through opportunistic share repurchases.

• CEO Urvan stated that the stabilization phase is substantially complete and noted that operational improvement remains an ongoing management responsibility.
• The company is piloting an artificial intelligence-supported customer service agent designed to improve response times while maintaining human escalation for complex issues.
• CEO Urvan attributed sales growth in silencers to being supported by the reduction of federal transfer taxes to zero, though quarterly growth may remain uneven.
• CFO Kasowski noted that the company expects total gross margin "stabilizing above 85%" as Federal Firearms License transfer services scale.
• Management emphasized a strategy of removing friction from each transaction to increase take rate without relying solely on base fee increases.
• The company hired an artificial intelligence director to oversee the implementation of tools intended to reduce listing times and improve marketplace searchability.
• Urvan reported that GunBroker outperformed the broader firearms market by gaining 41 basis points of market share relative to adjusted National Instant Criminal Background Check System activity.

INDUSTRY GLOSSARY

• NICS: National Instant Criminal Background Check System, used to track legal firearm transfer activity in the United States.
• FFL: Federal Firearms License, a license required for a person or company to engage in the business of manufacturing, importing, or dealing in firearms.
• GMV: Gross Merchandise Value, the total dollar value of all goods sold through a marketplace platform.
• Take Rate: The percentage of Gross Merchandise Value that a marketplace captures as revenue.
• NFA Items: Firearms and accessories, such as silencers, regulated under the National Firearms Act.
• Adjusted EBITDA: A non-GAAP financial measure that excludes non-recurring costs, interest, taxes, depreciation, and amortization to show core operating performance.

Full Conference Call Transcript

Operator: Thank you for joining us, and welcome to Outdoor Holding Company's First Quarter Earnings Call for Fiscal Year 2027. [Operator Instructions] Participants on 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 Michael Bacal of Darrow Associates, the company's Investor Relations firm. Please go ahead, sir.

Michael Bacal: Good morning, and thank you for participating in today's conference call. Joining me from Outdoor Holding Company's leadership team are Steve 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, quarterly report 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 the company believes can be useful in evaluating its performance, including adjusted EBITDA. 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 and 10-Q and previously released financial reporting. The information discussed on this call is current as of today, August 10, 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. It is now my pleasure to turn the call over to Outdoor Holding Company's Chairman and CEO, Steve Urvan.

Steven Urvan: Good morning, everyone, and thanks for joining us. Over the past year, we substantially stabilized and simplified the company and established a much leaner and more focused operating foundation. The stabilization phase is substantially behind us, but operational improvement is continuous. Our operating philosophy is simple, continuous improvement and disciplined growth. Continuous improvement means operating the business better every quarter, simplifying processes, improving efficiency, applying technology where it creates measurable value and allocating capital to its highest and best use. Disciplined growth means investing in initiatives that strengthen the platform, expand monetization through value-added services and create durable long-term shareholder value, not simply by charging customers more, but by making the platform more valuable and monetizing more of each transaction.

This quarter demonstrates the earnings power of that philosophy. Four numbers capture the quarter. Net revenues increased 22.1% to $14.5 million, marking our fourth consecutive quarter of year-over-year revenue growth. Net income from continuing operations improved by $9.4 million from a $5.9 million loss to income of $3.6 million. Adjusted EBITDA increased 152% to $7.9 million, and operating cash flow improved by $11.1 million from a deficit of $6.7 million last year to positive $4.4 million this year. Just as importantly, improvement was broad-based. Traffic conversion, average order value and firearm unit sales all increased, while our leaner operating structure converted that growth into meaningful earnings and cash flow.

Paul will walk through the financial bridge, so I will focus on the 3 principal operating drivers. First, marketplace productivity. Conversion improved and average item values rose with gains across both new and used products. Firearm units sold increased 11.6% against a 5.3% increase in adjusted NICS. Our FFL required units represented approximately 6.4% of adjusted NICS, an increase of 41 basis points year-over-year. That performance indicates that GunBroker grew faster than the broader market during the quarter. Second, FFL transfer revenue. The FFL integration launched at the beginning of the fiscal year created a new revenue stream, expanded our dealer network, centralized verification and compliance and streamlined the transfer process.

It contributed meaningfully to both revenue and take rate in its first quarter of operation. Paul will discuss the financial contribution and the initial implementation costs in more detail. Third, Virginia provided a meaningful but temporary tailwind. Buying in Virginia, driven by proposed legislation banning high-capacity firearms, contributed to a meaningful portion of our year-over-year GMV increase. We are not assuming that demand pulled forward into the first quarter will repeat in the second quarter. Enforcement of the new law is currently subject to preliminary injunctions and litigation continues. However, excluding Virginia, GMV still increased approximately $23 million year-over-year, supported by improvements in traffic, conversion and average order value.

That broader marketplace performance is the more important indicator of the underlying health of the business despite a slowdown in June velocity. One category worth highlighting before I turn the call over to Paul is silencers and suppressed firearms, where GMV increased approximately 71% year-over-year. Effective January 1, the federal making and transfer taxes were reduced to 0 for most NFA items, including silencers. While the application and registration requirements remained in place, we believe the lower transaction cost should support demand in this category, although quarterly growth may be uneven, and this remains smaller than firearms overall. With that, let me turn it over to Paul.

Paul Kasowski: Thanks, Steve. Good morning, everyone. I will walk through the revenue, gross profit, operating expense and cash flow bridges for the quarter. The results reflect both elements of our operating philosophy, continuous improvement in the way we run the business and disciplined growth through the marketplace expansion and new service offerings. Starting with revenue. Net revenues were $14.5 million, up $2.6 million or 22.1% from $11.9 million in last year's first quarter. That growth primarily came from 2 areas. About $1.7 million was driven by increased volume across the marketplace reflected in final value fees and marketplace service fees. An additional $0.9 million came from FFL transfer fees, which began in April and demonstrated our approach to disciplined growth.

As a result, revenue outpaced GMV growth in the quarter. The underlying marketplace metrics were also strong. GMV increased 18.1% to $223.7 million. Average order value rose $33 or 7.5% to $477. Conversion improved 11 basis points to 1.76% and first-party engaged sessions grew 2.9%. Our take rate was 6.47%, up from 6.26% a year ago, with FFL fees contributing 39 basis points. Our legacy take rate was 6.08%, down modestly from the prior year. The decrease primarily reflected a larger share of volume from our top sellers who qualify for discounted fee rates and an increased average item value, which carry a lower inherent take rate.

Growth concentrated among our most active sellers and high-value items is a healthy sign. More importantly, the FFL contribution demonstrates our ability to monetize useful services without increasing the base final value fee. Our gross profit was $12.2 million for the quarter, up 18.5%. Gross margin was 84.5% compared to 87.2% last year, a drop of about 260 basis points. The decline primarily reflected the launch of FFL transfer services, including start-up and implementation costs incurred early in the quarter that are not expected to recur. Those implementation activities were substantially completed in May, and we expect the margin contribution from FFL transfer services to improve as the service scales with total gross margin stabilizing above 85%.

As noted previously, new services may carry lower margin than the legacy marketplace while still providing highly attractive incremental revenue and profit. Operating expenses are where the continuous improvement side of the quarter is most visible. Total operating expenses were $8.9 million, down $7.4 million or about 45% from $16.3 million a year ago. Legal and professional fees fell $3.7 million, mostly because the Delaware litigation, SEC investigation, audit investigation and the restatement are behind us. Salaries and related costs fell $2.7 million from corporate restructuring. Stock-based compensation was down $0.4 million and last year included $0.6 million in onetime sales tax audit expenses that didn't repeat.

The decline reflects the elimination of substantial legacy costs and materially lower recurring operating expense. We do not view cost discipline as a onetime restructuring exercise as we continue reviewing our cost structure, simplifying workflows, improving productivity and reallocating resources toward the opportunities that offer the strongest long-term returns. Putting those elements together, net income from continuing operations was $3.6 million compared with a loss of $5.9 million last year. This quarter realized over a $9 million improvement in a single year. After the $0.8 million preferred dividend, net income attributed to common shareholders was $2.8 million or $0.02 per diluted share compared with a loss of $0.06 per share in the prior year period.

Adjusted EBITDA was $7.9 million compared with $3.1 million last year, an increase of approximately 152%. Quarterly adjusted EBITDA has grown sequentially every quarter for the past year, $3.1 million, $4.9 million, $6.6 million, $7.7 million and now $7.9 million. On a trailing 12-month basis, we're at approximately $27 million, which is comfortably above the $25 million annualized run rate goal established last year. The quality of the result also improved beyond interest, taxes, depreciation and amortization. Our adjustments totaled approximately $0.9 million this quarter, which consisted of $0.6 million of SEC-related costs and $0.3 million of stock-based compensation. Comparable adjustments were approximately $5.6 million last year.

The narrowing gap between reported and adjusted performance reflects the normalization of the business. Turning to cash flow and the balance sheet. Operating activities provided $4.4 million of cash compared with $6.7 million use of cash last year, an $11.1 million year-over-year improvement. We funded $2 million of share repurchases, $0.8 million in preferred dividends and the scheduled $1 million payment of the related party note. Despite those uses of cash, we still managed to increase our cash position by $0.7 million to $68.8 million. The business generated enough cash to invest in the platform, return capital to shareholders, meet its obligations and still strengthen the cash position.

On share repurchases, we bought just over 1 million shares this quarter for $2 million. Since launching the program in January of 2026, we've repurchased about 1.5 million shares at an average of $1.97 per share, with $12 million still available under the $15 million authorization. We continue to evaluate repurchases on the same basis as other capital allocation decisions and what generates the best risk-adjusted return for our common shareholders. These results reflect disciplined daily execution, managing costs, simplifying the organization, improving operating efficiency and investing selectively in the user experience. Operational improvement is not a project with an end date. It's an ongoing management responsibility. Our objective is not simply to operate at the lowest possible cost.

It is to direct resources toward the uses that can generate the strongest long-term returns. With that, I'll turn the call back over to Steve.

Steven Urvan: Thank you, Paul. Q1 demonstrates the earnings power of the model, but we are not extrapolating a single quarter. Virginia pulled some demand forward. More durable elements are our continually improving cost structure, stronger marketplace productivity and expanding revenue streams. Our focus is to build on the foundation established over the past year through our operating philosophy, continuous improvement, disciplined growth. I'll close with 3 areas of focus: the market, the platform and capital allocation. First, the market. The broader consumer environment is still cautious, but firearms demand has been resilient with adjusted NICS positive year-over-year in nearly every month of calendar 2026 through the end of the first quarter.

Our economics differ fundamentally from those of a manufacturer or retailer. We do not own firearm inventory, take product obsolescence risk or depend on any single brand or product cycle. We operate a national asset-light marketplace, spanning new and used products, thousands of sellers in a broad range of categories. The FFL transfer integration and our marketplace service fee also reflects an important competitive reality. Compliant commerce at scale is difficult and GunBroker has spent more than 25 years building a specialized marketplace, network and infrastructure to facilitate it. Second, the platform. Our strategy is straightforward, remove friction from each step of the transaction and attach services that make e-commerce easier, safer and more efficient.

That allows us to improve user experience and increase take rate without relying solely on increases to the base final value fee. The path includes FFL transfers, universal payments and premium programs such as Collector's Elite and over time, advertising. FFL transfer services contributed 39 basis points to take rate this quarter while providing a larger dealer network, centralized verification and compliance and a more streamlined transfer process. We continue to advance universal payment processing. Our AI listing tool is intended to reduce listing time, standardize product descriptions and improve marketplace searchability. We are also piloting an AI-supported customer service agent intended to improve response times and handle routine inquiries more efficiently while preserving human escalation for complex matters.

We will deploy these tools only when they meet our quality and operational standards. Third, capital allocation. Our priorities are unchanged: keep the balance sheet strong, invest selectively in high-return platform enhancements and return excess cash to shareholders. We doubled our share repurchase activity this quarter versus last, and we intend to remain opportunistic under the share repurchase authorization subject to market conditions, liquidity and the needs of the business. Let me close with one thought. Our operating philosophy is simple, continuous improvement, disciplined growth. Continuous improvement means operating the business better every quarter.

We continually challenge our cost structure, simplify processes, improve the customer experience, apply technology where it creates measurable value and allocate capital to its highest and best use. Disciplined growth means investing in initiatives that strengthen the platform, expand monetization through value-added services and create durable long-term shareholder value. Every major decision we make fits within one of those two principles. Our priorities for the balance of fiscal 2027 are, therefore, clear: grow marketplace activity and revenue, continue reducing costs and improving operating efficiency, scale new transaction services, convert technology investment into measurable productivity and turn earnings into cash and shareholder value. The stabilization phase is substantially behind us, but operating improvement is continuous.

Q1 demonstrates that we are executing against that philosophy, a growing marketplace, an exceptionally high-margin core business, a leaner cost structure, new monetization opportunities and a strong balance sheet. With gross margins in the mid-80s and a lean cost base, incremental GMV can produce substantial value for shareholders. With that, operator, let's open it up for questions.

Operator: [Operator Instructions] And your first question comes from Mark Smith with Lake Street.

Mark Smith: I wanted to ask first about the FFL transfer revenue. Can you give us just any thoughts around maybe growth in this business, how it trended during the quarter and kind of outlook as we go forward?

Steven Urvan: Yes. Thank you, Mark. So this quarter, in terms of growth, the FFL transfer revenue is only for firearms transactions, the only one that you need an FFL for. And therefore, it's going to move up and down as the actual fire -- really the counts, not necessarily the dollar value, but the count of firearms transactions moves up and down. The -- we had some additional costs for the implementation that kind of tailed out toward the end of this quarter. So we expect that to be kind of stabilized at this point and to provide meaningful revenue and meaningful profitability as we move forward.

Mark Smith: Okay. And Paul, I apologize if I missed it. Did you break out kind of the impact on margin just from the addition of this FFL transfer business?

Paul Kasowski: No. We talked about the combined new weighted average, the current and expected run rate versus the historical run rate.

Steven Urvan: I think we did say it contributed 39 basis points to our take rate. And so that can give you some sense of magnitude or what have you.

Mark Smith: Yes. And I think the last question for me. I wanted to just ask about NFA items. Obviously, really solid year-over-year growth. Curious kind of sequential trends, if we've seen any slowdown in that business kind of after the initial surge in January with the change in the stamp tax on that. Any insights into NFA items and how they're trending would be great.

Paul Kasowski: Yes. They're up quite a bit quarter-over-quarter. Let me pull it up. It was at right around 50% on NFA items, first and last quarter, the same year.

Operator: Your next question comes from the line of Matt Koranda with ROTH Capital.

Matt Koranda: It sounds like core GMV, even ex the Virginia benefits grew pretty nicely. So just wondering how demand trended into July on the marketplace, just given broader adjusted NICS still look pretty healthy and growing on a year-over-year basis. Any commentary on traffic conversion, marketplace mix, AOV, whatever you want to call out would be super helpful.

Paul Kasowski: Yes. We saw -- go ahead, Steve.

Steven Urvan: Go ahead, Paul. No, you go.

Paul Kasowski: No, I was just going to say we definitely saw -- we outpaced pretty heavy. You said kind of going into July. It's definitely our slower time of year. So we saw a little bit of a tail off typical as well. The other thing we saw with specific to Virginia and some other states is that as the legislation was going into effect, we saw a little bit of a dip off in people going back to brick-and-mortar more so than online just due to the timing of legislation going into effect.

Steven Urvan: So just in general, summer is the slowest time of year for us. People are outside, they're on vacation. They're not doing -- they're not sitting in front of their computer and shopping. And this is a pattern that's repeated since 1999 when I started this company. So not surprising. It's just a seasonal aspect of things. The Virginia thing was interesting just because you get a kind of a rush of demand because of a new law that's going to be implemented, then the courts put the law on hold. Let you go back to buying those items, demand fell off.

And it just shows you that in this business, there is a lot of factors that just aren't general marketplace factors. There's a lot of fear, uncertainty and doubt drivers, legislative changes, political changes can influence GMV and purchasing intent by our consumers.

Matt Koranda: Okay. All right. That's helpful, guys. And then on AI implementation, I guess you called it out in the prepared remarks around customer service. Is that fully rolled out now? Maybe just talk about the rollout there? And then any other initiatives, Steve, that you're excited about that might be helpful in terms of impacting GMV growth in the coming quarters?

Steven Urvan: I am extremely excited about AI. The customer service, we did implement it. It is up and running. It's very, very recent. And so I can't -- I don't have any kind of meaningful data on that as of yet. The sample size is just too small. So we can be talking about that down the road, but it is implemented and it is live. We are -- we hired an AI director. We've examined everything about the business. We're looking at everything we do and looking for ways that AI can make it better, make us more productive, cut costs and what have you. Just super excited about it.

So that the AI implementation is ongoing, and we expect that it's going to be a driver not only of GMV and revenue, but also something that will reduce costs and make us more efficient. In terms of headcount, given the kind of volumes we do, we don't have a lot of employees. And so we use technology to provide tremendous operational leverage, and AI is just a spectacular tool for doing that.

Matt Koranda: Okay. That makes sense. And maybe just that brings me to the last question, which is you've surpassed the $25 million adjusted EBITDA target that you initially set out to achieve. And it looks like if we look at the first quarter kind of core OpEx, maybe things are normalizing here in terms of expense. But maybe could you just talk about the next waypoints to look for, what we should be thinking about, maybe if Paul wants to talk about kind of core OpEx and what the pull forward for the rest of the year would be helpful.

Steven Urvan: I'll let Paul take it in a second. But when you look at -- one of the things I'm excited about is, obviously, the delta between adjusted EBITDA and EBITDA, it's closing. And so we're -- we said as we resolve these things, as we keep -- as we resolve issues, we -- our cash flow, our profitability, our adjusted EBITDA, these numbers are going to continue to converge. And this quarter, we had a lot less like in the prior quarter, we had the $4.4 million legal settlement. A lot of those things are in our -- in the historical past. They're not recurring going forward, and we continue to make progress on that.

And so it's very exciting to see the cash flow of this business increasing, the profitability of this business increasing as we're putting these things behind us. So I'll let Paul talk about this a little more.

Paul Kasowski: Thanks, Steve. Yes, I think this quarter definitely reflects a better run rate for the normalized business. I think where it means, that include some items as where we're going to continue to invest in the business, but those investments should have kind of returns on them. So like Steve mentioned, areas like AI, where there's potentially growth and productivity investments we'd expect in the future as well.

Operator: That concludes our question-and-answer session. I will now turn the conference back over to Steve Urvan for closing remarks.

Steven Urvan: Thank you all for joining us today and for your interest in Outdoor Holding Company. This quarter is a credit to the entire GunBroker and Outdoor Holding team. We look forward to updating you on our progress when we report our fiscal second quarter results in November. Thank you, and have a great day.

Operator: This concludes today's conference call. You may now disconnect.