Company Provides Updates on the Continued
Success of Its Celebrity Endorsement Program
ANDOVER,
Mass., Feb. 14, 2024 /PRNewswire/ -- Byrna
Technologies Inc. ("Byrna" or the "Company") (Nasdaq:
BYRN), a personal defense technology company specializing in the
development, manufacture, and sale of innovative less-lethal
personal security solutions, today reported select financial
results for its fiscal fourth quarter ("Q4 2023") and full year
("FY 2023") ended November 30,
2023.
Fiscal Fourth Quarter 2023 and Recent Operational
Highlights
- Welcomed Glenn Beck, Judge
Jeanine Pirro, and Bill O'Reilly to Byrna's celebrity influencer
roster, building upon the success of the Sean Hannity partnership
and further enhancing the Company's direct-to-consumer marketing
program across multiple channels, with a focus on radio,
television, and social media.
- Increased daily average web sessions to 32,500 in Q4 2023, an
increase of 174% sequentially from 11,870 in Q3 2023 and a
year-over-year increase of 21.5% from 26,750 in Q4 2022.
- Secured a record $6 million
order, which included 5,000 Byrna launchers, from Córdoba
Provincial Police in Argentina
through Byrna's Argentine distributor. This is the largest single
order for Byrna launchers in the Company's history.
- Received the first order from the Hawaii Sheriff's Division, further
strengthening the Company's position in the domestic law
enforcement market.
- Added 25% more production workers at its Fort Wayne
manufacturing facility, increasing launcher production capacity
from 10,000 to 12,500 units per month during a single shift, in
response to rising demand resulting from the Company's celebrity
endorsement marketing campaign.
- Introduced the Byrna Universal Kit (legal in all 50 states and
Canada) for the Byrna LE and Byrna
SD launchers, simplifying online checkout for new customers and
cutting in half the number of SKUs that the Company must carry in
inventory.
Fiscal Fourth Quarter 2023 Financial
Results
Results compare the 2023 fiscal fourth quarter
ended November 30, 2023 to the 2022
fiscal fourth quarter ended November 30,
2022 unless otherwise indicated.
Net revenue for Q4 2023 was $15.6 million, compared to $16.0 million in the fiscal fourth quarter of
2022 ("Q4 2022"). The slightly lower net revenue resulted from the
exceptionally strong international sales recorded in Q4 2022,
including a $3.4 million stocking
order for the Company's distributor in Argentina. Setting aside this one-time surge
in international sales, Q4 2023 displayed strong growth, with
domestic revenue up 32% year-over-year from Q4 2022, and up 122%
sequentially compared to Q3 2023.
Gross profit for Q4 2023 was $9.0
million (58% of net revenue), up from $8.7 million (54% of net revenue) in Q4
2022. The increase in gross margin was primarily due to a higher
percentage of the Company's sales being derived from the higher
margin direct-to-consumer (DTC) channel.
Operating expenses for Q4 2023 were $9.7 million, compared to $8.8 million for Q4 2022. The increase in
operating expenses was primarily driven by an increase in marketing
spend as part of the Company's new celebrity endorsement
strategy.
Net loss for Q4 2023 was $(0.8)
million, compared to approximately breakeven for Q4 2022.
The slight increase in net loss was primarily due to the increase
in marketing spend and additional bonus accruals taken in Q4 2023,
stemming from improved sales associated with new marketing
campaigns.
Adjusted EBITDA1, a non-GAAP metric
reconciled below, for Q4 2023 totaled $0.4 million, compared to $1.4 million for Q4 2022.
Cash and cash equivalents at November 30, 2023 totaled $20.5 million compared to $13.7 million at August
31, 2023. Inventory at November 30,
2023 totaled $13.9 million
compared to $16.7 million at
August 31, 2023. The Company has no
current or long-term debt.
Fiscal Year 2023 Financial Results
Results compare
the 2023 fiscal year ended November 30,
2023 to the 2022 fiscal year ended November 30, 2022 unless otherwise
indicated.
Net revenue for FY 2023 was $42.6 million, compared to $48.0 million in the fiscal year ended
November 30, 2022 ("FY 2022"). This
decline was due to a $7.6 million
decline in international sales from South
Africa, South America, and
Asia, partially offset by a
$0.9 million increase in sales on
Amazon and a $0.4 million increase in
Fox Labs sales. Domestic dealer and distributor sales, which are
less dependent on online advertising than DTC sales, grew by
$1.6 million.
Gross profit for FY 2023 was $23.6
million (56% of net revenue), compared to $26.3 million (55% of net revenue) for FY
2022. Gross margins remained stable year-over-year as savings
recognized from reduced freight costs were largely offset by
unfavorable manufacturing variances resulting from lower production
volumes and challenges encountered during the initial rollout of
the Byrna LE launcher.
Operating expenses for FY 2023 were $31.4 million, compared to $34.0 million for FY 2022. The decrease in
operating expenses was largely the result of the reduction in
marketing expenses earlier in the year when Byrna was banned from
advertising on most social media sites.
Net loss for FY 2023 was $(8.2)
million, compared to $(7.9)
million for FY 2022. The slight increase in net loss was
primarily due to the decrease in revenue, largely offset by a
decrease in operating expenses.
Adjusted EBITDA1 for FY 2023 totaled
$(2.0) million, compared to
$(1.0) million for FY 2022. The
decrease in adjusted EBITDA was primarily due to
lower-than-expected sales during the first nine months of 2023.
1 See non-GAAP financial measures at the end of this
press release for a reconciliation and a discussion of non-GAAP
financial measures.
Management Commentary
Byrna CEO Bryan Ganz stated: "2023 was a transformational
year for Byrna. Early in the year, we encountered two significant
challenges. The first challenge stemmed from an early rollout of
the groundbreaking Byrna LE launcher. We eagerly introduced the
Byrna LE at SHOT Show in January
2023, where it received an enthusiastic reception and
generated a flood of orders. However, as we ramped up production in
late January, we encountered production and quality challenges that
necessitated a temporary halt in production. In response, we worked
closely with our vendors with an eye to improving DFM (design for
manufacturability), which would ensure greater ease of
manufacturability and higher incoming component quality. Following
these adjustments, we successfully relaunched in May, and since
then, the demand for and production of the Byrna LE has been
strong.
"The second challenge Byrna faced in early 2023 was an almost
total ban on the ability to advertise our products online.
Specifically, in March we were prohibited from advertising on most
major social media platforms, including Facebook, Google,
Instagram, and Twitter (X). This led to an immediate 60% drop in
web traffic. Initially, sales were somewhat resilient, supported by
the residual effect of our advertising prior to the ban, but by the
third quarter, we experienced a significant decline in online
sales. With this social media advertising ban, and the earlier
mainstream media advertising bans, Byrna faced a significant
challenge as the Company struggled to find an effective way to work
around these advertising prohibitions and communicate its
message.
"The Byrna management team was relentless in its pursuit of a
solution, exploring multiple options and considering a host of
marketing strategies which could be used to both educate the public
on the benefits of non-lethal self-defense and drive demand for
Byrna's suite of non-lethal self-defense products. In September of
2023, Byrna implemented the strategy of using celebrity endorsers
to build awareness and drive demand. This approach proved to be
extremely effective, almost from the start, helping the Company
post a record $15.4 million in
domestic sales in the fourth quarter, up 122% from the prior
quarter. I am extremely proud of the entire team at Byrna and what
they have accomplished. The early success of these programs is a
testament to not only their resiliency, ingenuity, and creativity,
but also their ability to react quickly, decisively, and
effectively under pressure.
"Our new marketing strategy, leveraging celebrity influencers
who are closely aligned with our brand and our mission of saving
lives, has boosted both web traffic and sales. In the fourth
quarter, daily web sessions jumped to 32,500, up 174% from 11,870
in the third quarter of 2023 and up 21.5% from 26,750 in the fourth
quarter of 2022, before the social media advertising ban took
place. Moreover, conversion rates have stayed relatively consistent
through the surge in web traffic, and our average order value (AOV)
has increased by 15.2%, driven by a 20% rise in sales to first-time
customers. This has contributed to a 41.2% increase in fourth
quarter DTC sales year-over-year.
"Our strategic partnership with key influencers has led to an
impressive return on advertising spend (ROAS), driving significant
sales growth, especially with new customers. Since implementing the
celebrity endorsement campaign, our ROAS has consistently exceeded
our minimum threshold of 5.0X. Specifically, our ROAS was 7.5X for
the fourth quarter of 2023. In the first two months of fiscal 2024
(December and January), we maintained this momentum with a 5.9X
ROAS, an impressive feat during the post-holiday shopping period,
when sales are typically slower. During Q4 2023, our first-time
customer rate rose significantly, reaching 66.5% of daily orders,
up from 55.5% in the same period the prior year. This 11% increase
in first-time customers drove a higher average order value (AOV)
and has given us the opportunity to target these new customers with
special offers on ammo and accessories to realize their lifetime
value.
"Beyond direct-to-consumer sales, our dealer sales have also
increased, which we also attribute to the celebrity endorsement
campaign. We are seeing positive momentum in the public safety
market as well, with orders from Argentina, Mexico, and Hawaii. These law enforcement wins clearly
indicate Byrna's growing relevance among public safety
professionals.
"In anticipation of growing demand in 2024, we have added to the
headcount of production workers in Fort Wayne, increasing our daily
launcher production capacity by 25% while still operating on a
single shift. This gives Byrna significant additional production
capacity if needed. We are also taking proactive measures to expand
our ammo production by adding additional resources in both the U.S.
and South Africa.
"Byrna's strong financial footing provides a stable foundation
to pursue our growth plan. With over $23.0
million in cash and cash equivalents at the end of
January 2024, and no debt, we believe
that our robust balance sheet positions us for growth in 2024."
Conference Call
The Company's management will host a
conference call today, February 14,
2024, at 9:00 a.m. Eastern
time (6:00 a.m. Pacific time)
to discuss these results, followed by a question-and-answer
period.
Toll-Free Dial-In: 877-709-8150
International Dial-In: +1 201-689-8354
Confirmation: 13743409
Please call the conference telephone number 5-10 minutes prior
to the start time of the conference call. An operator will register
your name and organization. If you have any difficulty connecting
with the conference call, please contact Gateway Group at
949-574-3860.
The conference call will be broadcast live and available for
replay here and via the Investor Relations section of Byrna's
website.
About Byrna Technologies Inc.
Byrna is a technology
company specializing in the development, manufacture, and sale of
innovative less-lethal personal security solutions. For more
information on the Company, please visit the corporate
website here or the Company's investor relations
site here. The Company is the manufacturer of the Byrna® SD
personal security device, a state-of-the-art handheld CO2 powered
launcher designed to provide a less-lethal alternative to a firearm
for the consumer, private security, and law enforcement markets. To
purchase Byrna products, visit the Company's e-commerce store.
Forward-Looking Statements
This news release
contains "forward-looking statements" within the meaning of the
securities laws. All statements contained in this news release,
other than statements of current and historical fact, are
forward-looking. Often, but not always, forward-looking statements
can be identified by the use of words such as "plans," "expects,"
"intends," "anticipates," and "believes" and statements that
certain actions, events or results "may," "could," "would,"
"should," "might," "occur," or "be achieved," or "will be taken."
Forward-looking statements include descriptions of currently
occurring matters which may continue in the future. Forward-looking
statements in this news release include but are not limited to our
statements related to our ability to continue to grow web traffic
and sales as a result of our celebrity endorser marketing strategy,
our ability to continue to expand our presence in the law
enforcement market, our ability to further expand production
capacity, and our ability to pursue our growth plan with existing
cash resources. Forward-looking statements are not, and cannot be,
a guarantee of future results or events. Forward-looking statements
are based on, among other things, opinions, assumptions, estimates,
and analyses that, while considered reasonable by the Company at
the date the forward-looking information is provided, inherently
are subject to significant risks, uncertainties, contingencies, and
other factors that may cause actual results and events to be
materially different from those expressed or implied.
Any number of risk factors could affect our actual results
and cause them to differ materially from those expressed or implied
by the forward-looking statements in this news release, including,
but not limited to, disappointing market responses to current or
future products or services; prolonged, new, or exacerbated
disruption of our supply chain; the further or prolonged disruption
of new product development; production or distribution disruption
or delays in entry or penetration of sales channels due to
inventory constraints, competitive factors, increased
transportation costs or interruptions, including due to weather,
flooding or fires; prototype, parts and material shortages,
particularly of parts sourced from limited or sole source
providers; determinations by third party controlled distribution
channels, including Amazon, not to carry or reduce inventory of the
Company's products; determinations by advertisers or social media
platforms, or legislation that prevents or limits marketing of some
or all Byrna products; the loss of marketing partners; increases in
marketing expenditure may not yield expected revenue increases;
potential cancellations of existing or future orders including as a
result of any fulfillment delays, introduction of competing
products, negative publicity, or other factors; product design or
manufacturing defects or recalls; litigation, enforcement
proceedings or other regulatory or legal developments; changes in
consumer or political sentiment affecting product demand;
regulatory factors including the impact of commerce and trade laws
and regulations; and future restrictions on the Company's cash
resources, increased costs and other events that could potentially
reduce demand for the Company's products or result in order
cancellations. The order in which these factors appear should not
be construed to indicate their relative importance or priority. We
caution that these factors may not be exhaustive; accordingly, any
forward-looking statements contained herein should not be relied
upon as a prediction of actual results. Investors should carefully
consider these and other relevant factors, including those risk
factors in Part I, Item 1A, ("Risk Factors") in the Company's most
recent Form 10-K and Part II, Item 1A ("Risk Factors") in
the Company's most recent Form 10-Q, should understand it is
impossible to predict or identify all such factors or risks, should
not consider the foregoing list, or the risks identified in the
Company's SEC filings, to be a complete discussion of all potential
risks or uncertainties, and should not place undue reliance on
forward-looking information. The Company assumes no obligation to
update or revise any forward-looking information, except as
required by applicable law.
[Financial Tables to Follow]
BYRNA TECHNOLOGIES
INC.
Condensed Consolidated Statements of Operations and Comprehensive
Loss
(Amounts in thousands except share and per share data)
(Unaudited)
|
|
|
|
|
|
|
|
For the Three Months
Ended
November 30,
|
|
For the Years
Ended
November 30,
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Net revenue
|
|
15,640
|
|
16,018
|
|
42,644
|
|
48,036
|
Cost of goods
sold
|
|
(6,596)
|
|
(7,355)
|
|
(18,997)
|
|
(21,758)
|
Gross profit
|
|
9,044
|
|
8,663
|
|
23,647
|
|
26,278
|
Operating
expenses
|
|
9,729
|
|
8,796
|
|
31,437
|
|
33,733
|
INCOME/(LOSS) FROM
OPERATIONS
|
|
(684)
|
|
(133)
|
|
(7,790)
|
|
(7,455)
|
OTHER INCOME
(EXPENSE)
|
|
|
|
|
|
|
|
|
Foreign currency
transaction loss
|
|
(32)
|
|
(23)
|
|
(270)
|
|
(87)
|
Interest income
(expense), net
|
|
168
|
|
190
|
|
693
|
|
201
|
Income/(Loss) from
joint venture
|
|
22
|
|
—
|
|
(603)
|
|
—
|
Other
expenses
|
|
27
|
|
(15)
|
|
(57)
|
|
(310)
|
INCOME/(LOSS) BEFORE
INCOME TAXES
|
|
(499)
|
|
19
|
|
(8,027)
|
|
(7,651)
|
Income tax (provision)
benefit
|
|
(330)
|
|
(153)
|
|
165
|
|
(234)
|
NET LOSS
|
|
(829)
|
|
(134)
|
|
(8,192)
|
|
(7,885)
|
|
|
|
|
|
|
|
|
|
Foreign exchange
translation adjustment
|
|
205
|
|
19
|
|
(436)
|
|
(604)
|
COMPREHENSIVE
LOSS
|
|
(624)
|
|
(114)
|
|
(8,628)
|
|
(8,489)
|
|
|
|
|
|
|
|
|
|
Net loss per share –
basic and diluted
|
|
(0.04)
|
|
(0.01)
|
|
(0.37)
|
|
(0.35)
|
Weighted-average number
of common shares outstanding during the year – basic and
diluted
|
|
21,991,313
|
|
21,339,369
|
|
21,919,624
|
|
22,364,201
|
BYRNA TECHNOLOGIES
INC.
Condensed Consolidated Balance Sheets
(Amounts in thousands, except share and per share data)
(Unaudited)
|
|
|
|
|
|
|
November 30,
|
|
|
|
2023
|
|
|
2022
|
|
ASSETS
|
|
|
|
|
|
|
|
|
CURRENT
ASSETS
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
20,498
|
|
|
$
|
20,068
|
|
Accounts receivable,
net
|
|
|
2,945
|
|
|
|
5,915
|
|
Inventory,
net
|
|
|
13,890
|
|
|
|
15,462
|
|
Prepaid expenses and
other current assets
|
|
|
868
|
|
|
|
1,200
|
|
Total current
assets
|
|
|
38,201
|
|
|
|
42,645
|
|
|
|
|
|
|
|
|
|
|
Deposits for
equipment
|
|
|
1,163
|
|
|
|
2,269
|
|
Right-of-use-asset,
net
|
|
|
1,805
|
|
|
|
2,424
|
|
Property and equipment,
net
|
|
|
3,803
|
|
|
|
3,309
|
|
Intangible assets,
net
|
|
|
3,583
|
|
|
|
3,872
|
|
Goodwill
|
|
|
2,258
|
|
|
|
2,258
|
|
Investment in joint
venture
|
|
|
—
|
|
|
|
—
|
|
Loan to joint
venture
|
|
|
1,473
|
|
|
|
—
|
|
Other assets
|
|
|
28
|
|
|
|
272
|
|
TOTAL ASSETS
|
|
$
|
52,314
|
|
|
$
|
57,049
|
|
LIABILITIES
|
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES
|
|
|
|
|
|
|
|
|
Accounts payable and
accrued liabilities
|
|
$
|
6,158
|
|
|
$
|
7,708
|
|
Operating lease
liabilities, current
|
|
|
644
|
|
|
|
757
|
|
Deferred
revenue
|
|
|
1,844
|
|
|
|
458
|
|
Total current
liabilities
|
|
|
8,646
|
|
|
|
8,923
|
|
|
|
|
|
|
|
|
|
|
LONG TERM
LIABILITIES
|
|
|
|
|
|
|
|
|
Deferred revenue,
non-current
|
|
|
91
|
|
|
|
340
|
|
Operating lease
liabilities, non-current
|
|
|
1,258
|
|
|
|
1,792
|
|
Total
Liabilities
|
|
|
9,995
|
|
|
|
11,055
|
|
|
|
|
|
|
|
|
|
|
COMMITMENTS AND
CONTINGENCIES (NOTE 19)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS'
EQUITY
|
|
|
|
|
|
|
|
|
Preferred stock, $0.001
par value, 5,000,000 shares authorized, no shares issued
|
|
|
—
|
|
|
|
—
|
|
Common stock, $0.001
par value, 50,000,000 shares authorized. 24,168,014 shares
issued
and 22,002,027 outstanding as of November 30, 2023 and, 24,018,612
shares issued and
21,852,625 outstanding as of November 30, 2022
|
|
|
24
|
|
|
|
23
|
|
Additional paid-in
capital
|
|
|
130,426
|
|
|
|
125,474
|
|
Treasury stock
(2,165,987 shares purchased as of November 30, 2023 and
2022)
|
|
|
(17,500)
|
|
|
|
(17,500)
|
|
Accumulated
deficit
|
|
|
(69,575)
|
|
|
|
(61,383)
|
|
Accumulated other
comprehensive loss
|
|
|
(1,056)
|
|
|
|
(620)
|
|
|
|
|
|
|
|
|
|
|
Total Stockholders'
Equity
|
|
|
42,319
|
|
|
|
45,994
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
$
|
52,314
|
|
|
$
|
57,049
|
|
Non-GAAP Financial Measures
In addition to providing financial measurements based on
generally accepted accounting principles in the United States (GAAP), we provide an
additional financial metric that is not prepared in accordance
with GAAP (non-GAAP) with presenting non-GAAP adjusted EBITDA.
Management uses this non-GAAP financial measure, in addition
to GAAP financial measures, to understand and compare operating
results across accounting periods, for financial and operational
decision making, for planning and forecasting purposes and to
evaluate our financial performance. We believe that this non-GAAP
financial measure helps us to identify underlying trends in
our business that could otherwise be masked by the effect of
certain expenses that we exclude in the calculations of the
non-GAAP financial measure.
Accordingly, we believe that this non-GAAP financial
measure reflects our ongoing business in a manner that allows
for meaningful comparisons and analysis of trends in the business
and provides useful information to investors and others in
understanding and evaluating our operating results, enhancing the
overall understanding of our past performance and future
prospects.
This non-GAAP financial measure does not replace the
presentation of our GAAP financial results and should only be used
as a supplement to, not as a substitute for, our financial results
presented in accordance with GAAP. There are limitations in the use
of non-GAAP measures, because they do not include all the expenses
that must be included under GAAP and because they involve the
exercise of judgment concerning exclusions of items from the
comparable non-GAAP financial measure. In addition, other companies
may use other non-GAAP measures to evaluate their performance,
or may calculate non-GAAP measures differently, all of which could
reduce the usefulness of our non-GAAP financial measure as
a tool for comparison.
Adjusted EBITDA
Adjusted EBITDA is defined as net (loss) income as
reported in our condensed consolidated statements of operations and
comprehensive (loss) income excluding the impact of
(i) depreciation and amortization; (ii) income tax
provision (benefit); (iii) interest income
(expense); (iv) stock-based compensation expense, (v)
impairment loss, and (vi) one-time, non-recurring other expenses or
income. Our Adjusted EBITDA measure eliminates potential
differences in performance caused by variations in capital
structures (affecting finance costs), tax positions, the cost and
age of tangible assets (affecting relative depreciation expense)
and the extent to which intangible assets are identifiable
(affecting relative amortization expense). We also exclude certain
one-time and non-cash costs. Reconciliation of Adjusted EBITDA to
net (loss) income, the most directly comparable GAAP measure, is as
follows (in thousands):
|
|
For the Three Months
Ended
|
|
|
|
November
30,
|
|
|
|
2023
|
|
|
2022
|
|
Net
loss
|
|
$
|
(829)
|
|
|
$
|
(134)
|
|
|
|
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
Interest (income)
expense
|
|
|
(168)
|
|
|
|
(190)
|
|
Income tax provision
(benefit)
|
|
|
330
|
|
|
|
153
|
|
Depreciation and
amortization
|
|
|
341
|
|
|
|
241
|
|
NON-GAAP
EBITDA
|
|
|
(326)
|
|
|
|
70
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation
|
|
|
686
|
|
|
|
1,363
|
|
Severance/separation
expense
|
|
|
30
|
|
|
|
—
|
|
NON-GAAP adjusted
EBITDA
|
|
$
|
390
|
|
|
$
|
1,433
|
|
|
|
|
|
|
|
For the Years
Ended
|
|
|
|
November
30,
|
|
|
|
2023
|
|
|
2022
|
|
Net
loss
|
|
$
|
(8,192)
|
|
|
$
|
(7,885)
|
|
|
|
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
Interest (income)
expense
|
|
|
(693)
|
|
|
|
(201)
|
|
Income tax provision
(benefit)
|
|
|
(165)
|
|
|
|
234
|
|
Depreciation and
amortization
|
|
|
1,262
|
|
|
|
855
|
|
NON-GAAP
EBITDA
|
|
|
(7,458)
|
|
|
|
(6,997)
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation
|
|
|
5,375
|
|
|
|
5,424
|
|
Severance/separation
expense
|
|
|
82
|
|
|
|
556
|
|
NON-GAAP adjusted
EBITDA
|
|
$
|
(2,001)
|
|
|
$
|
(1,017)
|
|
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SOURCE Byrna Technologies Inc.