Byrna Technologies Reports Fiscal Fourth Quarter and Full Year 2023 Results
- Celebrity partnerships with Glenn Beck, Judge Jeanine Pirro, and Bill O'Reilly enhanced direct-to-consumer marketing.
- Record $6 million order from Córdoba Provincial Police in Argentina for 5,000 Byrna launchers.
- Increased launcher production capacity by 25% in response to rising demand.
- Introduced Byrna Universal Kit simplifying online checkout and reducing inventory SKUs.
- Net revenue for Q4 2023 was $15.6 million, with domestic revenue up 32% year-over-year.
- Gross profit increased to $9.0 million (58% of net revenue) in Q4 2023.
- Operating expenses rose to $9.7 million in Q4 2023 due to increased marketing spend.
- Net loss for Q4 2023 was $(0.8) million compared to breakeven in Q4 2022.
- Adjusted EBITDA for Q4 2023 was $0.4 million, down from $1.4 million in Q4 2022.
- Net revenue for FY 2023 was $42.6 million, with a decline in international sales partially offset by domestic growth.
- Gross profit for FY 2023 was $23.6 million (56% of net revenue).
- Operating expenses decreased to $31.4 million in FY 2023.
- Net loss for FY 2023 was $(8.2) million compared to $(7.9) million in FY 2022.
- Adjusted EBITDA for FY 2023 was $(2.0) million, down from $(1.0) million in FY 2022.
- None.
Insights
The recent announcement by Byrna Technologies Inc. regarding their fiscal fourth quarter and full year financial results, as well as operational highlights, presents a mixed picture that warrants a nuanced analysis from a market perspective. The introduction of celebrity endorsements has notably increased web traffic and domestic sales, with a significant 122% sequential domestic revenue increase in Q4 2023 and a 21.5% increase year-over-year. This strategic pivot to celebrity-driven marketing appears to have effectively circumvented the challenges posed by the social media advertising ban, which is an interesting case study in adaptive marketing strategies.
However, despite the increase in web traffic and sales, the company reported a net loss for both Q4 2023 and FY 2023. The reported increase in operating expenses, particularly marketing spend, is an investment that the company seems to be banking on for future growth. The increase in gross margin, attributed to a higher percentage of direct-to-consumer sales, is a positive indicator of improved profitability per unit sold. Additionally, the significant order from the Córdoba Provincial Police in Argentina could signal potential for international market penetration and the diversification of revenue streams beyond direct consumer sales.
From an inventory management standpoint, the reduction in inventory levels from $16.7 million to $13.9 million, combined with no current or long-term debt, suggests a healthy liquidity position. This could provide Byrna with the flexibility to respond to market demands and invest in further growth initiatives.
Byrna Technologies Inc.'s financial performance and strategic decisions in Q4 2023 and FY 2023 reflect a company in a transitional phase, aiming to leverage celebrity endorsements to offset the impact of advertising restrictions. The net revenue decrease in FY 2023 compared to FY 2022, primarily due to a decline in international sales, is a concern that highlights the volatility and unpredictability of international markets. It is important to monitor how Byrna's international strategy evolves to mitigate such risks in the future.
The reported net loss for both Q4 2023 and FY 2023, despite a higher gross margin, indicates that the increased marketing expenses have not yet translated into sufficient revenue to achieve profitability. Investors should consider whether the company's marketing strategy will lead to sustainable long-term growth or if it will require further adjustments. The reported Adjusted EBITDA decline for FY 2023 compared to FY 2022 also raises questions about the company's operational efficiency and the scalability of its current business model.
Byrna's strong cash position, with an increase in cash and cash equivalents from $13.7 million to $20.5 million, provides the company with a buffer to finance its growth strategies without the need for external financing. This could be a point of confidence for investors, as the company has the means to invest in new opportunities and navigate market uncertainties without incurring debt.
Byrna's encounter with advertising restrictions on major social media platforms is a significant legal and regulatory hurdle that has had a direct impact on their business operations. The company's shift to a celebrity endorsement strategy represents a creative legal workaround to these restrictions. This approach, while potentially effective in the short term, may expose the company to different legal challenges, such as compliance with endorsement regulations and potential liabilities associated with celebrity partnerships.
The large order from the Córdoba Provincial Police through Byrna's Argentine distributor also underscores the importance of understanding and navigating international legal frameworks and export regulations for defense-related products. The company's ability to secure such contracts suggests a competent legal strategy in place for international business dealings, which is crucial for expanding their law enforcement market segment.
Finally, the absence of current or long-term debt is a positive indicator from a legal risk management perspective, as it implies lower financial risk and potential legal complications associated with debt covenants and obligations.
Company Provides Updates on the Continued Success of Its Celebrity Endorsement Program
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 of21.5% from 26,750 in Q4 2022. - Secured a record
$6 million 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
Gross profit for Q4 2023 was
Operating expenses for Q4 2023 were
Net loss for Q4 2023 was
Adjusted EBITDA1, a non-GAAP metric reconciled below, for Q4 2023 totaled
Cash and cash equivalents at November 30, 2023 totaled
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
Gross profit for FY 2023 was
Operating expenses for FY 2023 were
Net loss for FY 2023 was
Adjusted EBITDA1 for FY 2023 totaled
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
"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
"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
"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
"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
"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
"Byrna's strong financial footing provides a stable foundation to pursue our growth plan. With over
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. | ||||||||
For the Three Months Ended | For the Years Ended | |||||||
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. | ||||||||
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, | — | — | ||||||
Common stock, | 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
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.
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