Freedom Munitions Bankruptcy

[cedartop]

I had quit using them recently anyway. Was having a lot of light primer strikes. I assumed it was my gun and changed everything related to making it go bang and still had issues (no problems with other ammo). Here is the kicker, it only happened when it was below about 40 degrees. Really weird. Still thought it was my gun, have since talked to 3 other people at matches who were having the same issues. Switched to American Eagle 147 for match use and have not had one issue since.

 

[masterdekoy]

Figured freedom was doing well with all the sponsorships they are throwing out (youtubers mostly). Their prices aren’t amazing I agree, and would rather buy factory new from a more established company if given the option. Heck, with the deals I’ve seen lately on aluminum case federal it’s hard to buy any other practice ammo.

 

[Redlinetoys]

Curious who is saying this... I’ve had thousands of Rd’s that shot clean and reliably... as has our local law enforcement and others.

I was extremely happy with Freedom and bought regularly from them but it seems the prices have gotten more and more expensive during the last few years while others were reducing prices.

For that reason, they dropped off my radar as a supplier.

 

[brchixwing]

Highly likely they levered up, not likely bootstrapped so quickly from operating cash flows: https://www.freedommunitions.com/about-us

[video=vimeo;83528221]https://vimeo.com/83528221[/video]

By any chance did they take on big debt to (over) expand during the great ammo shortage of 2013-2014?

 

[brchixwing]

Ordered a case yesterday, $158 shipped from Brownells!

https://gun.deals/product/federal-champion-aluminum-9mm-luger-115gr-fmj-1000-rounds-2-x-500-case-16498-shipped-wcode-n#comments

I've been ordering from Octane Munitions, have never had an issue and have shot 6000 rounds of their 115GR but looks like they are also paring back. My last order was $320 for 2000 shipped.

Figured freedom was doing well with all the sponsorships they are throwing out (youtubers mostly). Their prices aren’t amazing I agree, and would rather buy factory new from a more established company if given the option. Heck, with the deals I’ve seen lately on aluminum case federal it’s hard to buy any other practice ammo.

 

[gregkl]

Highly likely they levered up, not likely bootstrapped so quickly from operating cash flows: https://www.freedommunitions.com/about-us

[video=vimeo;83528221]https://vimeo.com/83528221[/video]

can you explain to someone that isn’t as educated as you are in these things what “layered up” and “not likely bootstrapped “ means ? Thanks.

 

[brchixwing]

Apologies for confusion, just meant they probably borrowed money because its unlikely they were able to invest that much in their facilities (so fast) out of profits generated from the business or their own pockets.

Just found this link: Howell Munitions filing for bankruptcy protection | Northwest | lmtribune.com

"In 2016, the borrowers failed to comply with certain financial covenants contained in the bank loan agreements," according to Howell's declaration. "Moreover, the revolving loan became due on July 26, 2016, and the bank declined to extend the revolving loan. The bank alleges an outstanding balance owed by the borrowers in the approximate amount of $16.7 million."

can you explain to someone that isn’t as educated as you are in these things what “layered up” and “not likely bootstrapped “ means ? Thanks.

 

[Areoflyer09]

To expand on the above, as companies borrow against their assets they become leveraged (levering up). There are several ways leverage is measured, the most common I’ve seen is the debt-to-equity ratio, debt divided by equity. Typically investors like to see this ratio under 2, but that varies by industry. High numbers can be a sign that growth was heavily financed.

It’s been awhile since I’ve gotten to use this part of my degree. The above is why I’d like to see the financials, there a slew of ratios that can be worked out to give a fair assessment of the risk and health of a company. Sadly, I’m not sure they are public records for this one.

 

[gregkl]

Thanks to both of you!

 

[brchixwing]

Yeah, Freedom violated some covenants / rules around the money they borred from Zions (big public traded Salt Lake bank). Since most of the money was probably borrowed for equipment & this kind of equipment is hard to liquidate, the bank probably had a lot of covenants around Debt versus their Profits, probably 4-5x. (divide how much you owe by your cash flow or "EBITDA", which is how much the company profited before subtracting interest, tax & depreciation). The more stable a business or the more liquid assets are involved, the more debt you can have relative to your profits. Similar concept with most American households having 3-4x household income in debt, aka making $50K and having $200K in mortgage/car loans. Banks like that really have to follow the rule book because they answer to shareholders, which is why they took over managing the company / laying people off / liquidating a lot of their stuff to recoup the money owed.

To expand on the above, as companies borrow against their assets they become leveraged (levering up). There are several ways leverage is measured, the most common I’ve seen is the debt-to-equity ratio, debt divided by equity. Typically investors like to see this ratio under 2, but that varies by industry. High numbers can be a sign that growth was heavily financed.

It’s been awhile since I’ve gotten to use this part of my degree. The above is why I’d like to see the financials, there a slew of ratios that can be worked out to give a fair assessment of the risk and health of a company. Sadly, I’m not sure they are public records for this one.

 

[HoughMade]

Ahem...

By any chance did they take on big debt to (over) expand during the great ammo shortage of 2013-2014?

 

[markiemark]

I would be interested to see if any of the YouTube channels they support will be impacted. Seemed that many of the ones I followed used their ammunition. I have used there ammo in the past but as many others have said, online sale prices were commonly priced lower.

 

[Floivanus]

I would be interested to see if any of the YouTube channels they support will be impacted. Seemed that many of the ones I followed used their ammunition. I have used there ammo in the past but as many others have said, online sale prices were commonly priced lower.

maybe they’d have better prices if they weren’t giving away so many rounds to Youtubers

 

[brchixwing]

Gun influencers on social media probably cost effective on the marketing side getting their brand out there, vs. building a brand with ads/commercials/trade shows.
Just ballparking, if you gave an average of 12K rounds a year / 1k a month (some get more, some get less) across 50 dudes for 3 years, 1.8 million rounds at an average cost of $0.15 shipped (unknown mix of 556 vs. 9mm)= $270K.
They were more recently trying to salvage as a resaler vs. pure reloader using the traffic and recognition they got lol, thinking maybe they could be an amazon of ammo?

We all now know the death blow simply ammo prices and they borrowed at peak then saw the ammmo glut once we all stopped hoarding post scares / election.
Just looking at 9MM, we saw boxes shoot to $15 then $20 ($0.40/rd), so reloads costing $0.15 made a ton of sense at $0.20-$0.30 if you could source brass and made the investment in equipment.
Its just like any other manufacturing setup, or even looking at oil & gas projects from when oil was over $100, we saw tons of companies went bankrupt past few years!

maybe they’d have better prices if they weren’t giving away so many rounds to Youtubers

 

[markiemark]

Can’t argue your point as a way of marketing. But wonder if those folks will now have to find new brands to back them. Also found it interesting they tried to break off into specialty ammo lines when they seemed to start off focused low cost ammo. Will be worth seeing how it all turns out.

Gun influencers on social media probably cost effective on the marketing side getting their brand out there, vs. building a brand with ads/commercials/trade shows.
Just ballparking, if you gave an average of 12K rounds a year / 1k a month (some get more, some get less) across 50 dudes for 3 years, 1.8 million rounds at an average cost of $0.15 shipped (unknown mix of 556 vs. 9mm)= $270K.
They were more recently trying to salvage as a resaler vs. pure reloader using the traffic and recognition they got lol, thinking maybe they could be an amazon of ammo?

We all now know the death blow simply ammo prices and they borrowed at peak then saw the ammmo glut once we all stopped hoarding post scares / election.
Just looking at 9MM, we saw boxes shoot to $15 then $20 ($0.40/rd), so reloads costing $0.15 made a ton of sense at $0.20-$0.30 if you could source brass and made the investment in equipment.
Its just like any other manufacturing setup, or even looking at oil & gas projects from when oil was over $100, we saw tons of companies went bankrupt past few years!

 

[WebSnyper]

Can’t argue your point as a way of marketing. But wonder if those folks will now have to find new brands to back them. Also found it interesting they tried to break off into specialty ammo lines when they seemed to start off focused low cost ammo. Will be worth seeing how it all turns out.

I'm assuming specialty market = higher margin, and that's what just about everyone tries to do. Get into a market as a lower cost alternative and then offer higher margin products as they build brand rep. Toyota, Honda, did it in the car market.

 

[KLB]

Pretty sure they're gonna stay in business. The website is still up and taking orders.

Freedom Munitions has been my go to for 147gr 9mm since I got my first 9mm silencer. Couldn't find it anywhere else at a better price. It's 99.9% reliable and quiet.

I started with them, but I've been buying Speer Lawman 147gr from SGAmmo for less than Freedom wanted.

The Freedom seems a bit underpowered in comparison too.

 

[Spear Dane]

Can’t argue your point as a way of marketing. But wonder if those folks will now have to find new brands to back them. Also found it interesting they tried to break off into specialty ammo lines when they seemed to start off focused low cost ammo. Will be worth seeing how it all turns out.

I specifically brought that up with MrGnG but he didn't say anything useful. MAC is banking mad money just on Patreon alone. He can afford to buy plenty of ammo.

 

[LP1]

I've shot thousands of rounds of their ammo (9, 45, and 38) without issue. I don't get the "price" comments - I shop around and I've always found their prices to be competitive after shipping costs are figured in, especially when they run specials. Can't tell you how many times I've started a cart with other online ammo dealers and cancelled it when I saw their shipping charge.

But I haven't ordered from Freedom recently because so many items have been out of stock. I'd like to say "well, that makes sense now", but trying to turn around a bad financial situation by having nothing to sell doesn't sound like a sound business strategy.

 

[KLB]

Probably hard to get raw materials when you aren't paying your suppliers.

As for price
SGAmmo Speer Lawman 147gr 1000rds $189.80 + $16 shipping = $205.80 or just under .21 a rd.

Freedom shows their cheapest brass 147gr 9mm as .25 a rd before shipping right now. They list their steel 147gr as just over .21 a rd before shipping.