Byrna Technologies Reports Fiscal Second Quarter 2023 Results
- Byrna Technologies reported a slight decrease in net revenue for Q2 2023 compared to Q2 2022.
- Gross profit remained unchanged year-over-year, but the gross profit percentage decreased due to customer mix and manufacturing variances.
- Operating expenses decreased significantly, leading to an improvement in net loss for Q2 2023.
- Adjusted EBITDA improved to $739,000 for Q2 2023.
- The company's cash and cash equivalents increased to $15.4 million.
- Inventory decreased slightly to $17.5 million.
- None.
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 - 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 broaderAsia-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
Gross profit for Q2 2023 was essentially unchanged year-over-year at
Operating expenses for Q2 2023 were
Net loss for Q2 2023 improved to
Adjusted EBITDA1, a non-GAAP metric reconciled below, for Q2 2023 totaled
Cash and cash equivalents at May 31, 2023 totaled
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
"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
"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
"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
"Byrna is currently cash flow positive with over
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.
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
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, | — | — | ||||||
Common stock, | 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
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.
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