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AXIL Brands Earnings Surge Y/Y in Q2, Cash Position Improves
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Shares of AXIL Brands, Inc. (AXIL - Free Report) have gained 0.4% since the company reported its earnings for the second quarter of fiscal 2025. This compares favorably with the S&P 500 index’s 1.5% decline over the same time frame. However, over the past month, AXIL shares have slipped 1.2%, narrower than the S&P 500's 6.9% drop, signaling relative resilience amid broader market turbulence.
Revenue & EPS Analysis
AXIL Brands reported second-quarter fiscal 2025 diluted earnings per share of 8 cents, reflecting a 60% surge from 5 cents in the year-ago quarter, driven by the higher weighted average share count.
The company reported net sales of $7.73 million, down 8.2% from $8.42 million in the year-ago quarter. It attributed this decline to timing differences in post-Thanksgiving sales events, now recognized in the third quarter instead of the second quarter as in prior years.
AXIL Brands, Inc. Price, Consensus and EPS Surprise
Hearing Enhancement & Protection: This segment, which is AXIL’s largest, generated $7.45 million in revenues, down 9.1% from $8.19 million in the second quarter of fiscal 2024. Gross profit for the segment declined 12.5% to $5.32 million from $6.09 million in the prior-year quarter, with a lower gross margin due to increased sales of lower-margin products.
Hair & Skin Care: The segment contributed $284,545 to revenues, a 23.3% increase from $230,741 in the second quarter of fiscal 2024. Segmental gross profit increased slightly year over year to $173,507 from $172,583. The segment benefitted from higher distributor sales, offsetting the broader decline in direct-to-consumer sales.
Key Business Metrics
The company’s gross profit declined 12.1% year over year to $5.5 million in the reported quarter, and the gross margin fell to 71.1% from 74.3% in the second quarter of fiscal 2024. The decrease in the gross margin was largely driven by higher cost of sales and increased discounts as a percentage of revenues.
Operating income declined 46.8% to $0.7 million from $1.26 million in the second quarter of fiscal 2024. This led to an operating margin of 8.7%, down from 15% in the prior-year period. Net profit margin fell to 8.2% from 12.1% in the year-ago quarter, reflecting the combined impacts of lower sales and higher costs.
Adjusted EBITDA was $1.01 million in the second quarter of fiscal 2025, down 28.9% year over year from $1.43 million. The adjusted EBITDA margin also contracted from 17% in the second quarter of fiscal 2024 to 13.1% this quarter. The decline in profitability metrics reflects the impacts of fixed cost absorption issues due to lower sales volumes.
Costs & Expenses
Total operating expenses for the quarter were $4.83 million, representing a 3.4% decline from $5 million in the second quarter of fiscal 2024. This reduction largely resulted from a decrease of $220,000 in advertising costs and forgiveness of accounts payable. However, savings were partially offset by higher stock-based compensation and consulting fees related to geographic expansion initiatives.
The company’s selling, general and administrative expenses decreased 2.7% to $3.97 million from $4.08 million in the prior-year quarter. Research and development expenses were flat year over year at $0.86 million.
Cash & Debt
As of Nov. 30, 2024, AXIL Brands held $5.21 million in cash and cash equivalents, a significant increase from $3.25 million as of May 31, 2024. The improved cash position was attributed to effective working capital management and reduced advertising spend. Total debt remained relatively stable at $3.81 million compared with $3.80 million six months earlier, reflecting the company’s disciplined approach to leveraging its balance sheet.
AXIL’s net cash position improved to $1.4 million as of the quarter-end from a net debt position of $0.55 million at the end of the second quarter of fiscal 2024, providing it with additional financial flexibility to support growth initiatives.
Management Commentary & Outlook
Management emphasized its continued focus on expanding its geographic footprint and product offerings. Notably, approximately $130,000 in consulting fees were incurred in the quarter to support these expansion efforts. However, the company admitted that the benefits from these initiatives have yet to fully materialize.
AXIL Brands also highlighted its efforts to optimize e-commerce strategies and diversify sales channels through partnerships and retail distribution networks. Management remains optimistic about achieving longer-term growth and capturing a larger market share.
Factors Influencing Results
The timing of sales recognition for post-Thanksgiving events played a significant role in the quarterly revenue shortfall. Rising stock-based compensation expenses and increased costs associated with new product lines added to the margin pressures. On the positive side, cost reductions in advertising and administrative expenses relieved the bottom line.
Other Developments
In the second quarter of fiscal 2025, AXIL transitioned to a new corporate headquarters and warehouse, signaling its commitment to operational growth and efficiency. The company also noted no major changes in its product warranty or revenue recognition policies. AXIL Brands’ ongoing strategic shift to focus on high-tech hearing and audio enhancement products continues to be a key growth driver.
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AXIL Brands Earnings Surge Y/Y in Q2, Cash Position Improves
Shares of AXIL Brands, Inc. (AXIL - Free Report) have gained 0.4% since the company reported its earnings for the second quarter of fiscal 2025. This compares favorably with the S&P 500 index’s 1.5% decline over the same time frame. However, over the past month, AXIL shares have slipped 1.2%, narrower than the S&P 500's 6.9% drop, signaling relative resilience amid broader market turbulence.
Revenue & EPS Analysis
AXIL Brands reported second-quarter fiscal 2025 diluted earnings per share of 8 cents, reflecting a 60% surge from 5 cents in the year-ago quarter, driven by the higher weighted average share count.
The company reported net sales of $7.73 million, down 8.2% from $8.42 million in the year-ago quarter. It attributed this decline to timing differences in post-Thanksgiving sales events, now recognized in the third quarter instead of the second quarter as in prior years.
AXIL Brands, Inc. Price, Consensus and EPS Surprise
AXIL Brands, Inc. price-consensus-eps-surprise-chart | AXIL Brands, Inc. Quote
Segmental Performance
Hearing Enhancement & Protection: This segment, which is AXIL’s largest, generated $7.45 million in revenues, down 9.1% from $8.19 million in the second quarter of fiscal 2024. Gross profit for the segment declined 12.5% to $5.32 million from $6.09 million in the prior-year quarter, with a lower gross margin due to increased sales of lower-margin products.
Hair & Skin Care: The segment contributed $284,545 to revenues, a 23.3% increase from $230,741 in the second quarter of fiscal 2024. Segmental gross profit increased slightly year over year to $173,507 from $172,583. The segment benefitted from higher distributor sales, offsetting the broader decline in direct-to-consumer sales.
Key Business Metrics
The company’s gross profit declined 12.1% year over year to $5.5 million in the reported quarter, and the gross margin fell to 71.1% from 74.3% in the second quarter of fiscal 2024. The decrease in the gross margin was largely driven by higher cost of sales and increased discounts as a percentage of revenues.
Operating income declined 46.8% to $0.7 million from $1.26 million in the second quarter of fiscal 2024. This led to an operating margin of 8.7%, down from 15% in the prior-year period. Net profit margin fell to 8.2% from 12.1% in the year-ago quarter, reflecting the combined impacts of lower sales and higher costs.
Adjusted EBITDA was $1.01 million in the second quarter of fiscal 2025, down 28.9% year over year from $1.43 million. The adjusted EBITDA margin also contracted from 17% in the second quarter of fiscal 2024 to 13.1% this quarter. The decline in profitability metrics reflects the impacts of fixed cost absorption issues due to lower sales volumes.
Costs & Expenses
Total operating expenses for the quarter were $4.83 million, representing a 3.4% decline from $5 million in the second quarter of fiscal 2024. This reduction largely resulted from a decrease of $220,000 in advertising costs and forgiveness of accounts payable. However, savings were partially offset by higher stock-based compensation and consulting fees related to geographic expansion initiatives.
The company’s selling, general and administrative expenses decreased 2.7% to $3.97 million from $4.08 million in the prior-year quarter. Research and development expenses were flat year over year at $0.86 million.
Cash & Debt
As of Nov. 30, 2024, AXIL Brands held $5.21 million in cash and cash equivalents, a significant increase from $3.25 million as of May 31, 2024. The improved cash position was attributed to effective working capital management and reduced advertising spend. Total debt remained relatively stable at $3.81 million compared with $3.80 million six months earlier, reflecting the company’s disciplined approach to leveraging its balance sheet.
AXIL’s net cash position improved to $1.4 million as of the quarter-end from a net debt position of $0.55 million at the end of the second quarter of fiscal 2024, providing it with additional financial flexibility to support growth initiatives.
Management Commentary & Outlook
Management emphasized its continued focus on expanding its geographic footprint and product offerings. Notably, approximately $130,000 in consulting fees were incurred in the quarter to support these expansion efforts. However, the company admitted that the benefits from these initiatives have yet to fully materialize.
AXIL Brands also highlighted its efforts to optimize e-commerce strategies and diversify sales channels through partnerships and retail distribution networks. Management remains optimistic about achieving longer-term growth and capturing a larger market share.
Factors Influencing Results
The timing of sales recognition for post-Thanksgiving events played a significant role in the quarterly revenue shortfall. Rising stock-based compensation expenses and increased costs associated with new product lines added to the margin pressures. On the positive side, cost reductions in advertising and administrative expenses relieved the bottom line.
Other Developments
In the second quarter of fiscal 2025, AXIL transitioned to a new corporate headquarters and warehouse, signaling its commitment to operational growth and efficiency. The company also noted no major changes in its product warranty or revenue recognition policies. AXIL Brands’ ongoing strategic shift to focus on high-tech hearing and audio enhancement products continues to be a key growth driver.