ANDOVER,
Mass., July 11, 2023 /PRNewswire/ -- Byrna
Technologies Inc. ("Byrna" or the "Company") (Nasdaq:
BYRN), a technology company specializing in the development,
manufacture, and sale of innovative non-lethal personal security
solutions, today reported selected financial results for its fiscal
second quarter ended May 31, 2023
("Q2 2023").
Fiscal Second Quarter 2023 and Recent Operational
Highlights
- Commenced production of the new, more powerful Byrna LE
launcher and successfully worked through the backlog and waitlist
of 5,800 units from the first quarter of 2023, shipping out 6,235
Byrna LE Kits during Q2 2023. Byrna is continuing to ramp up
production of the Byrna LE and intends to release it on Amazon this
week.
- Commenced production and shipment of its revolutionary new
12-gauge less-lethal round during the quarter. The round was voted
"BEST OF SHOT 2023 – Top 21 Defense Loads" and was recently
favorably reviewed by Firearms News.
- Drawing upon the success of Byrna's retail store and its Dealer
of the Year "Live Safe Hawaii," Byrna instituted its new "Premier
Dealer" program signing three new Premier Dealers. Premier Dealers
are owner operated brick-and-mortar stores that derive more than
50% of their revenue from Byrna products. To date these dealers,
including a dealer with a less-lethal training facility, have
generated more than $180,000 in
business and are part of the reason for the strong growth in
Byrna's Dealer Sales Division this quarter as less-than-lethal
options become more prevalent.
- Secured the Company's first law enforcement contract in
Australia, marking a significant
milestone for Byrna's regional expansion and establishing a
promising foundation for increased market penetration in the
Australian market and broader Asia-Pacific region.
Fiscal Second Quarter 2023 Financial
Results
Results compare 2023 fiscal second quarter end
(May 31, 2023) to 2022 fiscal second
quarter end (May 31, 2022) unless
otherwise indicated.
Net revenue for Q2 2023 was $11.5 million compared to $11.6 million in the fiscal second quarter of
2022 ("Q2 2022"). The slight decrease in sales was primarily due to
a $1.4 million decline in
international orders which was offset by a $0.9 million increase in sales to domestic
dealers and distributors as well as revenue contributed from the
sale of Fox Labs products, which the Company acquired in
May 2022.
Gross profit for Q2 2023 was essentially unchanged
year-over-year at $6.2 million (53.9%
of net revenue) compared to $6.1
million (52.7% of net revenue) for Q2 2022. The gross profit
percentage of 53.9% for Q2 2023 was down from 62.0% in Q1 2023 due
to both customer mix (a larger percentage of lower margin dealer
and international sales in Q2) as well as unfavorable manufacturing
variances resulting from lower production volumes and resulting
scrap as the factory worked to get the Byrna LE into serial
production.
Operating expenses for Q2 2023 were $7.0 million compared to $8.7 million for Q2 2022. The decrease in
operating expenses was primarily due to a reduction of $0.6 million in non-stock compensation payroll
costs, a reduction in marketing spend of $0.6 million and lower professional fees and
insurance costs of $0.4 million.
Net loss for Q2 2023 improved to $(1.1) million compared to $(3.0) million for Q2 2022. The improvement in
net loss was primarily due to the decreased operating expenses
noted previously.
Adjusted EBITDA1, a non-GAAP metric
reconciled below, for Q2 2023 totaled $739,000 compared to $(909,000) for Q2 2022. The improvement in
adjusted EBITDA was primarily due to a decrease in operating
expenses.
Cash and cash equivalents at May
31, 2023 totaled $15.4 million
compared to $14.4 million at
February 28, 2023. Inventory at
May 31, 2023 totaled $17.5 million compared to $18.0 million at February
28, 2023. The Company has no current or long-term debt.
Management Commentary
"In the second quarter, we
continued to make progress in several key focus areas. We entered
serial production for our Byrna LE and 12-gauge less-lethal rounds,
successfully working down our waitlist and backorders for these
products, which led to a more than $3
million sequential topline increase," said Byrna CEO
Bryan Ganz. "We were also able to
streamline our operations, reducing our cost structure as we
accelerate our path to sustained profitability. Finally, our
efforts in our dealer sales division resulted in an almost 50%
increase in year-over-year dealer sales.
"While we made good progress in production, cost management and
dealer sales, we faced a setback in direct-to-consumer sales. In
late March, Meta and Google simultaneously implemented a ban on any
advertising by Byrna on their platforms, classifying Byrna as a
'contraband' product. Google has since backed off its position
slightly, allowing ads that do not show the launcher to run on
YouTube; however, Meta has been unrelenting in its advertising on
all Meta platforms, including Facebook and Instagram.
"These challenges resulted in an immediate falloff in web
traffic on Byrna.com, Byrna.ca and Amazon.com. On Byrna.com, daily
web traffic fell from an average of about 26,000 sessions in the
first three months of calendar 2023 to an average of about 12,000
sessions in the second three months of calendar 2023, a 55%
decline. Amazon sessions declined by 10.4% during the same period.
Despite the significant decline in sessions, sales on Byrna.com
were off less than 1.0% compared to the same period last year while
Amazon sales were off 5.5% compared to the same period last year.
Though we were pleased with the resilience of our e-commerce sales,
we recognize that over time, fewer sessions will result in lower
sales.
"We do not know when Meta's ban on the advertising of Byrna's
products will be lifted. Accordingly, we are working to find
effective alternatives to the large social media sites to reach
potential customers. This plan includes advertising on Twitter and
niche market websites that cater to Byrna's demographic as well as
increasing our print media advertising and placing a greater
emphasis on gun shows, trade shows and other events through Byrna's
"Side Hustle" dealers. Last year, Byrna's Side Hustle program
produced $1.2 million in sales while
dramatically increasing Byrna's visibility with its core
constituents. We believe that by devoting more resources to this
program we can both grow Side Hustle sales and increase Byrna's
visibility.
"We firmly believe that Byrna provides a solution to America's
epidemic of gun violence. We're actively striving to overturn
existing bans on advertising, marketing and even discussion of
less-lethal weapons on certain social media platforms such as Meta.
We believe it is crucial that we educate consumers as to the viable
non-lethal alternatives to traditional firearms, as any time
someone uses a non-lethal device rather than a traditional firearm
to defend themselves and their family, a potential tragedy is
averted.
"On July 6th, Byrna
kicked off a campaign using email, billboards, print media and
social media sites such as Twitter to try to get Meta to reconsider
their position. You can find this campaign at
https://byrna.com/pages/stop-censoring-byrna. Our goal is to
convince Meta that their decision to ban advertising by less-lethal
weapons companies robs consumers of the opportunity to learn about
less-lethal alternatives to traditional firearms. In this case,
'Free Speech Saves Lives!'
"As our results show, through a diligent focus on cost
management, we've been able to reduce operating expenses and
improve our profitability for the quarter to the tune of a
$1.6 million increase in adjusted
EBITDA over Q2 of last year. Byrna will remain vigilant in its cost
control efforts to remain profitable while the Company works to
find alternate ways to get its message out to consumers.
"Byrna is currently cash flow positive with over $15.4 million of cash and cash equivalents and no
debt. In the coming quarters, we expect to work through our
sizeable inventory, which will free up additional cash providing an
ample cushion. This solid financial foundation provides us with the
ability to navigate current challenges while we position ourselves
to invest in key areas of our business and still maintain a robust
cash flow trajectory."
1 See non-GAAP financial measures at the end of this
press release for a reconciliation and a discussion of non-GAAP
financial measures.
Fiscal 2023 Outlook
Due to the uncertainty created by
the ban on advertising of Byrna's products from all Meta platforms,
Byrna has decided to withdraw its previously communicated guidance
for fiscal year 2023.
Byrna still expects to improve its top- and bottom-line
performance in fiscal 2023. The Company plans to reevaluate its
approach to providing financial projections on an ongoing basis and
may provide an updated outlook at a later date. Byrna is dedicated
to maintaining transparency and fostering open communication with
its shareholders. Updates on key milestones and achievements will
be provided, ensuring that stakeholders are kept informed of the
Company's progress and future prospects.
Conference Call
The Company's management will host a
conference call today, July 11, 2023,
at 9:00 a.m. Eastern time
(6:00 a.m. Pacific time) to discuss
these results, followed by a question-and-answer period.
U.S. dial-in: 201-689-8354
International dial-in: 877-709-8150
Confirmation: 13739361
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 non-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,
LE, EP, TCR and Mission 4 personal security devices,
state-of-the-art handheld CO2 powered launchers designed to provide
a non-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 the Company's ability to increase production of
the Byrna LE and the timing of its release on Amazon, expectations
regarding the Company's market penetration in Australia and the Asia-Pacific region, the impact of marketing
bans on direct-to-consumer sales, whether Meta will continue to ban
advertisement of Byrna products, the growth of Side Hustle sales
and resulting visibility, the Company's ability to sell existing
inventory, the Company's ability to invest in key areas of its
business, the Company's ability to improve top and bottom-line
performance during fiscal 2023, the Company's gross profit margins
and future profitability, and the Company's operating expenses and
the components thereof. 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 or delays in
entry or penetration of sales channels due to inventory
constraints, competitive factors, pandemic-related factors, civil
unrest, increased shipping costs or freight interruptions;
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 to prohibit marketing of some or all
Byrna products; 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 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; import-export related matters or sanctions or
embargos that could affect the Company's supply chain or markets;
delays in planned operations related to licensing, registration or
permit requirements; 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, 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.
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
|
|
|
For the Six Months
Ended
|
|
|
|
May
31,
|
|
|
May
31,
|
|
|
|
2023
|
|
|
2022
|
|
|
2023
|
|
|
2022
|
|
Net revenue
|
|
$
|
11,508
|
|
|
$
|
11,619
|
|
|
$
|
19,919
|
|
|
$
|
19,596
|
|
Cost of goods
sold
|
|
|
5,309
|
|
|
|
5,495
|
|
|
|
8,475
|
|
|
|
8,858
|
|
Gross profit
|
|
|
6,199
|
|
|
|
6,124
|
|
|
|
11,444
|
|
|
|
10,738
|
|
Operating
expenses
|
|
|
7,015
|
|
|
|
8,739
|
|
|
|
14,255
|
|
|
|
16,762
|
|
LOSS FROM
OPERATIONS
|
|
|
(816)
|
|
|
|
(2,615)
|
|
|
|
(2,811)
|
|
|
|
(6,024)
|
|
OTHER INCOME
(EXPENSE)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency
transaction loss
|
|
|
(46)
|
|
|
|
(274)
|
|
|
|
(184)
|
|
|
|
(96)
|
|
Interest
income
|
|
|
143
|
|
|
|
13
|
|
|
|
286
|
|
|
|
14
|
|
Loss from joint
venture
|
|
|
(171)
|
|
|
|
—
|
|
|
|
(338)
|
|
|
|
—
|
|
Other
expenses
|
|
|
(209)
|
|
|
|
(69)
|
|
|
|
(263)
|
|
|
|
(180)
|
|
LOSS BEFORE INCOME
TAXES
|
|
|
(1,099)
|
|
|
|
(2,945)
|
|
|
|
(3,310)
|
|
|
|
(6,286)
|
|
Income tax (provision)
benefit
|
|
|
(17)
|
|
|
|
(51)
|
|
|
|
41
|
|
|
|
69
|
|
NET LOSS
|
|
|
(1,116)
|
|
|
|
(2,996)
|
|
|
|
(3,269)
|
|
|
|
(6,217)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency
translation adjustment for the period
|
|
|
(641)
|
|
|
|
9
|
|
|
|
(1,226)
|
|
|
|
14
|
|
COMPREHENSIVE
LOSS
|
|
$
|
(1,757)
|
|
|
$
|
(2,987)
|
|
|
$
|
(4,495)
|
|
|
$
|
(6,203)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share –
basic and diluted
|
|
$
|
(0.05)
|
|
|
$
|
(0.13)
|
|
|
$
|
(0.15)
|
|
|
$
|
(0.27)
|
|
Weighted-average number
of common shares outstanding - basic and diluted
|
|
|
21,866,260
|
|
|
|
23,097,150
|
|
|
|
21,863,263
|
|
|
|
23,443,766
|
|
BYRNA TECHNOLOGIES
INC.
Condensed
Consolidated Balance Sheets
(Amounts in
thousands, except share and per share data)
(Unaudited)
|
|
|
|
May
31,
|
|
|
November
30,
|
|
|
|
2023
|
|
|
2022
|
|
|
|
Unaudited
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
CURRENT
ASSETS
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
15,360
|
|
|
$
|
20,068
|
|
Accounts receivable,
net
|
|
|
4,193
|
|
|
|
5,915
|
|
Inventory,
net
|
|
|
17,466
|
|
|
|
15,462
|
|
Prepaid expenses and
other current assets
|
|
|
1,215
|
|
|
|
1,200
|
|
Total current
assets
|
|
|
38,234
|
|
|
|
42,645
|
|
LONG TERM
ASSETS
|
|
|
|
|
|
|
|
|
Intangible assets,
net
|
|
|
3,727
|
|
|
|
3,872
|
|
Deposits for
equipment
|
|
|
1,850
|
|
|
|
2,269
|
|
Right-of-use asset,
net
|
|
|
2,091
|
|
|
|
2,424
|
|
Property and equipment,
net
|
|
|
3,336
|
|
|
|
3,309
|
|
Goodwill
|
|
|
2,258
|
|
|
|
2,258
|
|
Investment in joint
venture
|
|
|
183
|
|
|
|
—
|
|
Loan to joint
venture
|
|
|
1,556
|
|
|
|
—
|
|
Other assets
|
|
|
188
|
|
|
|
272
|
|
TOTAL ASSETS
|
|
$
|
53,423
|
|
|
$
|
57,049
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES
|
|
|
|
|
|
|
|
|
Accounts payable and
accrued liabilities
|
|
$
|
6,153
|
|
|
$
|
7,708
|
|
Operating lease
liabilities, current
|
|
|
731
|
|
|
|
757
|
|
Deferred revenue,
current
|
|
|
424
|
|
|
|
458
|
|
Total current
liabilities
|
|
|
7,308
|
|
|
|
8,923
|
|
LONG TERM
LIABILITIES
|
|
|
|
|
|
|
|
|
Deferred revenue,
non-current
|
|
|
199
|
|
|
|
340
|
|
Operating lease
liabilities, non-current
|
|
|
1,467
|
|
|
|
1,792
|
|
Total
liabilities
|
|
|
8,974
|
|
|
|
11,055
|
|
|
|
|
|
|
|
|
|
|
COMMITMENTS AND
CONTINGENCIES (NOTE 20)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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. 24,032,248 shares issued
and 21,866,261 shares outstanding as of May 31, 2023 and,
24,018,612 shares issued and 21,852,625 outstanding as of November
30, 2022
|
|
|
23
|
|
|
|
23
|
|
Additional paid-in
capital
|
|
|
128,425
|
|
|
|
125,474
|
|
Treasury stock
(2,165,987 shares purchased as of May 31, 2023 and November 30,
2022)
|
|
|
(17,500)
|
|
|
|
(17,500)
|
|
Accumulated
deficit
|
|
|
(64,653)
|
|
|
|
(61,383)
|
|
Accumulated other
comprehensive loss
|
|
|
(1,846)
|
|
|
|
(620)
|
|
|
|
|
|
|
|
|
|
|
Total Stockholders'
Equity
|
|
|
44,449
|
|
|
|
45,994
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
$
|
53,423
|
|
|
$
|
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
|
|
|
|
May
31,
|
|
|
|
2023
|
|
|
2022
|
|
Net
loss
|
|
$
|
(1,116)
|
|
|
$
|
(2,996)
|
|
|
|
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
Interest (income)
expense
|
|
|
(143)
|
|
|
|
(13)
|
|
Income tax provision
(benefit)
|
|
|
(17)
|
|
|
|
(51)
|
|
Depreciation and
amortization
|
|
|
300
|
|
|
|
206
|
|
Non-GAAP
EBITDA
|
|
|
(976)
|
|
|
|
(2,854)
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation expense
|
|
|
1,487
|
|
|
|
560
|
|
Non-cash incentive
compensation expense
|
|
|
—
|
|
|
|
943
|
|
Impairment
loss
|
|
|
176
|
|
|
|
69
|
|
Severance/Separation
|
|
|
52
|
|
|
|
373
|
|
Non-GAAP adjusted
EBITDA
|
|
$
|
739
|
|
|
$
|
(909)
|
|
|
|
For the Six Months
Ended
|
|
|
|
May 31,
|
|
|
|
2023
|
|
|
2022
|
|
Net loss
|
|
$
|
(3,269)
|
|
|
$
|
(6,217)
|
|
|
|
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
Interest expense
(income)
|
|
|
(286)
|
|
|
|
(14)
|
|
Income tax provision
(benefit)
|
|
|
41
|
|
|
|
69
|
|
Depreciation and
amortization
|
|
|
582
|
|
|
|
381
|
|
Non-GAAP
EBITDA
|
|
|
(2,932)
|
|
|
|
(5,781)
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation expense
|
|
|
2,951
|
|
|
|
1,373
|
|
Non-cash incentive
compensation expense
|
|
|
—
|
|
|
|
1,415
|
|
Impairment
loss
|
|
|
176
|
|
|
|
180
|
|
Severance/Separation
|
|
|
52
|
|
|
|
419
|
|
Non-GAAP adjusted
EBITDA
|
|
$
|
247
|
|
|
$
|
(2,394)
|
|
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SOURCE Byrna Technologies Inc.