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AXIL Brands, Inc.’s AXIL fiscal 2024 earnings results reflect the impacts of the complexities of rapid growth and rising costs. While the year showcased substantial revenue gains and notable improvements in earnings per share, the challenges of scaling (particularly through increased branding, marketing and operational expenses) have started to weigh on profitability. As AXIL continues to expand its market presence, investors are faced with a mixed outlook, wherein robust top-line growth is tempered by tightening margins and pressures on cash flow.
AXIL Brands, Inc. Price, Consensus and EPS Surprise
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Fiscal 2024 Results
AXIL Brands reported fiscal 2024 earnings per share of 21 cents, increasing from 10 cents a year ago.
For fiscal 2024, AXIL Brands reported year-over-year net sales growth of 17%, reaching $27.5 million from $23.5 million in the prior year.
This growth was primarily driven by enhanced marketing and sales initiatives within the hearing protection and enhancement segment, which accounted for approximately 95% of total revenues.
Key Business Metrics
AXIL Brands' fiscal 2024 financial results highlight its ongoing efforts to scale its operations, while grappling with rising expenses. The significant year-over-year increase in sales demonstrates the effectiveness of the company's strategic initiatives, particularly in expanding distribution and retail channels. However, sharp rises in the cost of sales and operating expenses compressed margins, signaling potential challenges ahead.
Consequently, gross profit increased year over year to $20.2 million from $17.7 million, though the gross margin narrowed slightly to 73.4% from 75.3% primarily due to expansion costs into new retail and distribution channels.
Despite these higher costs, AXIL Brands achieved a net income of $2 million, an improvement from $1.8 million a year earlier. The net income available to common shareholders was significantly bolstered to $3.3 million due to a gain on the redemption of preferred shares.
The company maintained a solid operating income of $1.5 million, though this was a decrease from $2 million in the prior year. The net profit margin stood at 7.3%, slightly lower than the 7.8% reported in the prior year.
Additionally, the return on equity was robust, supported by the increase in net income available to common shareholders, reflecting the company’s strategic efforts to optimize its capital structure.
Costs
Despite impressive revenue growth, the cost of sales rose 26% to $7.3 million from $5.8 million in fiscal 2023. This escalation in costs was due to the increased expenses associated with branding and marketing efforts, which, while boosting sales, also heightened cost pressures.