AMMO NEWS

Jared Smith: Taking Over AMMO, Inc. ( A must read for all Manitowoc Citizens)

By RVL / March 10, 2023

 

FRIDAY, MARCH 10, 2023

 

Jared Smith: Taking Over AMMO, Inc.

 

Jared Smith was announced as the new Chief Operation Officer/President of AMMO, Inc. on December 15th, 2022.

Smith came from Fiocchi of America, where he spent the last 13 years, the last five as the General Manager.

Fred Wagenhals, AMMO’s CEO & Chairman noted that Smith had quickly risen to the top of the company’s target list and had been in discussions with Smith since last Summer.

Starting his duties on January 3rd, Smith has a lot to digest with the lawsuit and eventual settlement with The Urvan Group and more specifically Steve Urvan, the largest shareholder and founder of GunBroker.com, which AMMO, Inc. purchased in April 2021.

Smith is also learning about the new 185,000 square foot ammunition manufacturing facility that opened in Manitowoc, Wisconsin in September 2022 and how to best utilize the new capacity.

Lastly, AMMO’s stock price had been struggling after announcing a potential split of the company on August 15th that would have created two public companies.

 

 

Q: I know as part of your due diligence you took a trip to the new plant in Wisconsin, what did you think?
A: I’ve been buying Jagemann Brass and AMMO Brass for the last 13 years for Fiocchi. And I had no idea, I always knew it was top quality, but the facility that they built the investments that they’ve made, really is a state of the art, deep draw facility with a great management team on site, roughly 176,000 square feet, 200-yard indoor ballistic range, a lot of capabilities, and I think this is where the market is going into centerfire space. And it’s really the place to play going forward. So, the consolidation of the ammunition facilities, they’ve closed the Payson facility, and we are loading equipment up and shipping it to Wisconsin.

And then with where Gunbroker plays its part in all this, I don’t think there’s a brighter spot in the industry than there is at Ammo.

And the reason for that is AMMO has this amazing talent, so premium rifle cases, with the analytics coming over from Gunbroker, we instantly know what users are looking for what they’re buying. The states that they’re buying it in where the guns are being shipped to, the database that resides within Gunbroker. And the ability for expansion of Gunbroker to reach more users. So today Gunbroker is a buyer to seller transaction, and it’s a single gun to a single owner from one seller to some FFL. Well, in six months’ time Gunbroker is going to open the ability to shop a cart. So today I’m hunting for a 28-gauge side by side in Woodstock, I find the gun online, I find the buyer. But I’m a hot buyer looking to find 20-gauge ammunition, I can’t find it in the local store. So, I go on Gunbroker. I buy the gun, and then now I can start pushing ammunition. I can push accessories to that end user on the largest trading platform of both new and used guns in the United States. That data, those analytics, help the ammunition side start curtailing to not only the OEM brass market, but also the loading operation. And that’s really what sold me. It was the vision and the opportunity between the Gunbroker and the ammunition side and the Ammo side.

 

 

Q: So how do you handle the fulfillment of the ammo? Because you’re not right now and you’re not set up to do individual selling, shipping off to individual?
A: That’s correct. We do very … we do some of it. We do very, very little of it. The goal is not to sell ammunition Consumer Direct on Gunbroker. The goal with the ammunition side of the business, is to build out a multi-tiered ammunition company with pricing integrity, two-step distribution, retailing, retail box store dealer range, but we do it at a very niche space based upon brands that communicate to the customer built around niche products, and really focusing on premium rifle.

 

 

 

 

 

 

 

Q: With this Gunbroker situation, would you push someone that bought the gun in some way, shape or form for someone else?
A: We have to a have a dealer, but we don’t necessarily have to ship the gun, and all the products to that dealer. The goal is, you’re going to go pick up your gun from your local FFL, but we’ll ship you ammunition, whether it be from some fulfillment center like Sport South [Spelling??], or from some other online retailer, but not from me, necessarily. And that’s why that’s the agnostic piece of Gunbroker.

The ammunition, business cannot get in the way of the growth of Gunbroker, which really is a 900-pound gorilla on a 600-pound diet. And this cart ability and the ability for us to start doing credit card transfers, and that’s managing all that in house allows Gunbroker to grow to something that this industry just has not seen. It is the future and more of an Amazon of the gun industry.

 

 

Q: So when you came over from Fiocchi, what did you want to bring that you thought that when you listen to the Fred, talk about what he wants to do? What do you think you’re going to be able to bring over that’s something that Fred has even thought about?
A: My expertise from the ammunition manufacturing facility, and what Fiocchi is good at its supply chain management, its sales and operation. It’s basic blocking and tackling, of building up a sales team, building pricing integrity, and it is making institutional change, to enable a company to pick up its feet and run, its proper forecasting, and leading with data and market-oriented approaches, versus just producing ammunition, selling it online to whoever’s calling at the moment.

And that is a fundamental change from what we’re doing today. I’ve been with a company all of 15 days, so I don’t know what I don’t know. And I’ve still got to get in there and figure out and start building the team. But there is amazing talent within the four walls. And there are amazing capabilities. And that’s just got to be grounded with basic blocking and tackling.

 

 

Q: How are the relations between the Gunbroker people and the AMMO Inc. people? That was a shaky situation there,
A: What you’re talking about is the proxy fight. So that’s been resolved. And the Gunbroker team is a dedicated, talented group. I think everybody agrees on the vision going forward right now.

 

 

Q: Even Steve (Urvan)?
A: Even Steve. You know, I haven’t had a chance to meet with Steve yet. So I can’t say personally that, but I don’t think anybody can argue with a vision of where Gunbroker is going. And what it’s going to become.

 

 

Q: Why would put two companies together and then blow them up. The way it was envisioned,
A: I think the concept at the time was that they were going to get a higher valuation by the being split. And I think the reality is, is that the ammunition division, while certainly benefits from the Gunbroker relationship. The ammunition division needs to be somewhat standalone and feed off the data from Gunbroker. So, it’s extremely beneficial. And there is this direct-to-consumer model that we can follow. But I think the real reality of AMMO Inc. and Gunbroker is that Gunbroker needs to be agnostics and the market needs to see Gunbroker as this universal unifier within the industry to reach millions of customers downstream. That’s the real vision in my mind what Gunbroker is.

 

 

Q: AMMO is a public company and Fiocchi was not? It’s a whole different kettle of fish?
A: I have a big learning curve.

 

 

Q: How’s that going?
A: I’ve been with the company for eight days. And I think the markets responded incredibly well. I think the suppliers that I’ve worked with for the last 13 years, one of the biggest issues with the ammunition division is that the entire supply chain, we couldn’t get powder domestically, we’re having to source primers, we didn’t have the relationships with the bullet manufacturers. And I think there’s been an overwhelming and outpouring support of where AMMO is going. And this vision of, ‘Hey, I bought powder from you for the last 13 years, AMMO is a growing brand with amazing opportunity. And all the suppliers that I know, we’re all jumping on board.

We’ve got great relationships with VISTA, we’ve got great relationships with Hornady, I’ve got great relationships with Fiocchi. And it really goes back to this, we all must play in the space, the supply chain for this industry doesn’t support where this market can really grow. And you really fall back on those key relationships to get the materials that you need, in a timely manner, to respond to market opportunities.

 

 

Q: What are the two biggest challenges?
A: It’s hard to just say two. The two biggest challenges are, the market is right in front of us and ramping up quickly. It’s refocusing the team on strong margins and profitable growth. The supply chain will always be a problem with the ammunition industry. But the demand for premium rifle ammunition outpaces the market. And the war, conflict in Europe, is pulling out rifle capacity out of the United States. So the ammo division is on solid footing with a better supply chain going forward. Thanks to the partners that we have in the industry, not as a standalone entity. And because we’re an OEM brass supplier, we make good margins in OEM brass. That that’s an area that allows us to go out and sell out the rest of the factory and go out and make the relationships with the Fiocchi’s that we already have the Beretta’s, the Vista’s, the Hornady’s, the Winchesters and I think I’m the right person to do that.

 

 

Q: Where are you guys on capacity in regard to the plant in Wisconsin?
A: Well, I’ve made two trips to the plant, and I think the total unprimed case capacity is close to a billion at full capacity for unprimed rifle and some pistol cases.

 

 

Q: So, assuming you get close to that 90%, how does that change the profitability of the company and how does it change your stock price?
A: I have not been in the company long enough to talk stock price. Just I’m not there. I think the vision and the future of Ammo Inc. is extremely bright. And right now, we’re running a third to half capacity of the full utilization of the factory.

 

 

Q: Is that because of demand, or is that because of …
A: Its supply chain, it’s all the issues that we’ve seen over the last few years. It’s labor, we couldn’t get enough powder, we couldn’t get enough primers. We were closing facilities and opening up new facilities and blending teams and resources and that stuff just takes time. It takes a year and a half to two years to sort out for the best factories. I’d say sit and watch because it’s going to be really exciting.

 

 

Q: Is the stock price going to somehow be part of your management process? Your stock price is all over the map?
A: All I can say is that my goal, and what I’ll be doing is building long term shareholder value. And the stock market at some point is going to see what we’re doing with Gunbroker. And it’s going to respond.

 

 

Q: How do you reconcile, you’ve got a 90-day window to fix that. You’re trying to think long term because that’s the way manufacturing must operate. How do you reconcile those two?
A: I think you got to throw in another recession, inflation. And there’s a lot of things affecting the market today. But the way you build a company is step by step. It’s fixing supply chain, its onboarding great talent, it’s building a brand, it’s forecasting, it’s delivering on your orders to your customers. Let’s keep it simple. Let’s do it day by day. And the Gunbroker side, by July, the cart is going to be opened. And we’re going to be servicing clients not with just a peer-to-peer transaction. On the ammunition side, I got inventory that we have to work through. We’ve got teams that we have to build, we must reorient the mix of the products that we’re making, I got to go meet with all the suppliers and make sure that the supply chain side even though it’s getting better and better, and we have those relationships. Switching out tooling takes time. But once again, we’re focused on the long-term shareholder value.

 

 

Q: Let me drop out of continuity here. President and COO does that mean you have operating authority over Gunbroker, as well?
A: Yes.

 

 

Q: But if that’s the case, it seems odd that you haven’t met with Steve?
A: Well, I would have liked to have met with Steve here … what happens at the board, that takes time, and I got to go in and make all those relationships. I’ve literally sat in one board meeting, I’m not on the board today. And I’ve got to go meet the entirety, not just one chairman. And what we must do that’s in front of us is focused on the day-to-day business, and I’ve got to learn the business before I go.

 

 

Q: You’ve got two strong individuals. There’s a balancing act there that we’ve already seen it out of balance in a very public way. Are you the steadying influence in it?
A: I will be. Once again, I haven’t met the entire board. My motives are simple — long-term shareholder value, building relationships, and building a team and bringing on some more people. How do you argue with that? I don’t have a dog in the fight. I’ve got my reputation and honesty; integrity has got to lead with that. And that’ll come out in the end.

 

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