ANDOVER,
Mass., Oct. 12, 2023 /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 third quarter ("Q3 2023") ended August 31, 2023.
Fiscal Third Quarter 2023 and Recent Operational
Highlights
- Partnered with Sean Hannity, a
loyal customer and supporter of Byrna, to amplify the Company's
less-lethal security solutions through his nationally syndicated
radio show and various Hannity platforms. Through the first five
weeks of the partnership, Byrna.com has seen a 94% increase in web
traffic compared to the preceding five-week period.
- Launched Byrna LE, the Company's flagship product, on Amazon.
In the month of September, Byrna LE contributed $8,924 per day to Amazon daily sales.
- Expanded premier dealer count to 16 in Q3 2023, building on the
success of brick-and-mortar stores that derive more than 50% of
their revenue from Byrna products.
- Sold 1,000 launchers to the Cordoba Provincial Police and 500
to the City of Buenos Aires,
expanding Byrna's presence in Argentina as the country shifts towards
less-lethal alternatives.
Fiscal Third Quarter 2023 Financial Results
Results
compare the 2023 fiscal third quarter ended August 31, 2023 to the 2022 fiscal third quarter
ended August 31, 2022 unless
otherwise indicated.
Net revenue for Q3 2023 was $7.1 million compared to $12.4 million in the fiscal third quarter of 2022
("Q3 2022"). The decrease in revenue is primarily attributed to
challenges in the Company's direct-to-consumer ("DTC") marketing
efforts, resulting from advertising bans on Meta and Google
platforms, and reduced international sales to South Africa, Asia, and Latin
America.
Gross profit for Q3 2023 was $3.2
million (45% of net revenue) compared to $6.9 million (55% of net revenue) for Q3 2022.
The decrease in gross margin is primarily due to $0.6 million of charges to costs of goods sold
for inventory write-downs and additions to reserves for excess and
obsolete inventory recorded during Q3 2023. Taking these one-time
adjustments into consideration, gross margins are consistent with
the prior year period.
Operating expenses for Q3 2023 were $7.3 million compared to $8.3 million for Q3 2022. The decrease in
operating expenses was primarily due to reduced marketing spend and
ongoing cost management efforts.
Net loss for Q3 2023 was $(4.1)
million compared to $(1.5)
million for Q3 2022. The increase in net loss was primarily
due to the decrease in revenue.
Adjusted EBITDA1, a non-GAAP metric
reconciled below, for Q3 2023 totaled $(2.4)
million compared to $0.3
million for Q3 2022. The decrease in adjusted EBITDA was
primarily due to the increase in net loss previously noted.
1 See non-GAAP financial measures at the end of this
press release for a reconciliation and a discussion of non-GAAP
financial measures.
Cash and cash equivalents at August 31, 2023 totaled $13.7 million compared to $15.4 million at May 31,
2023. Inventory at August 31,
2023 totaled $16.7 million
compared to $17.5 million at
May 31, 2023. The Company currently
has no current or long-term debt.
Management Commentary
"Altered dynamics in our social
media marketing landscape presented significant challenges in our
direct-to-consumer marketing efforts, resulting in what we expect
to be a temporary dip in our overall sales this quarter. In
response, we have taken swift and comprehensive actions to address
these hurdles and test new strategies," said Byrna CEO Bryan Ganz. "Early results have been promising.
Our web traffic has surged notably over the past several weeks,
primarily attributed to the successful launch of our partnership
with Sean Hannity and our increased
presence on YouTube. In September, our daily web sessions were up
89% from Q3, reaching levels similar to the pre-ad ban period. The
upward trend has continued into the first week of October, with
daily sessions increasing by 182% compared to Q3, a 41% increase
from the pre-ad ban period and a new record for Byrna.
"Looking ahead, we are eager to build upon our radio presence,
capitalizing on the positive results achieved with Hannity.
Additionally, we are exploring the expansion of our influencer
strategy to further enhance our market reach. We will continue to
closely monitor the return on advertising spend as we fine-tune and
optimize our marketing strategy for scalability. As we move into
the end of the year and outline our initiatives for 2024, we plan
to continue ramping our discretionary marketing spend in key areas
to reinvigorate sales.
"Concurrently, we are actively expanding our reach through our
highly successful dealer network. At the end of Q3, we totaled 16
premier dealers, of which 15 were onboarded in the last five
months. Additionally, we're placing a stronger emphasis on our Side
Hustle program, which is becoming an important pillar of our
strategy moving forward. These dealers, operating without
brick-and-mortar locations, possess valuable networks that align
with Byrna's mission. This alignment allows them to not only earn a
living but also support our mission effectively. Notably, our Side
Hustle dealers are demonstrating pathways toward becoming premier
dealers, which strengthens our mission to provide civilians and
public safety professionals with effective less-lethal alternatives
for protection, all while expanding and strengthening the Byrna
network.
"We remain committed to effective cost management while
navigating evolving marketing dynamics. Byrna maintains a robust
balance sheet with over $13.7 million
in cash and cash equivalents and no debt. As we work through our
remaining excess inventory, we expect to generate additional cash
flow in the coming quarters. This financial foundation not only
grants us flexibility in exploring new marketing channels but also
positions us to strategically invest in key areas of our business.
Our focus remains on maintaining a robust cash flow trajectory as
we move forward."
Conference Call
The Company's management will host a
conference call today, October 12,
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.
Toll-Free Dial-In: 877-709-8150
International Dial-In: +1 201-689-8354
Confirmation: 13741156
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 preliminary revenue and margin results for
the third fiscal quarter of 2023, the expected benefits of the
Company's partnership with Sean
Hannity, the shift towards less-lethal defense alternatives
in the Argentinian market, the duration and degree of the impact of
social media marketing bans on revenue, expected increases in
discretionary marketing spend, expectations related to the Side
Hustle program, expectations regarding additional cash flow in
future quarters, the ability to strategically invest in the
Company's business, and the Company's ability to maintain a robust
cash flow trajectory. 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
|
|
|
For the Nine Months
Ended
|
|
|
|
August
31,
|
|
|
August
31,
|
|
|
|
2023
|
|
|
2022
|
|
|
2023
|
|
|
2022
|
|
Net revenue
|
|
$
|
7,085
|
|
|
$
|
12,422
|
|
|
$
|
27,004
|
|
|
$
|
32,018
|
|
Cost of goods
sold
|
|
|
3,927
|
|
|
|
5,545
|
|
|
|
12,402
|
|
|
|
14,403
|
|
Gross profit
|
|
|
3,158
|
|
|
|
6,877
|
|
|
|
14,602
|
|
|
|
17,615
|
|
Operating
expenses
|
|
|
7,267
|
|
|
|
8,283
|
|
|
|
21,522
|
|
|
|
25,045
|
|
LOSS FROM
OPERATIONS
|
|
|
(4,109)
|
|
|
|
(1,406)
|
|
|
|
(6,920)
|
|
|
|
(7,430)
|
|
OTHER INCOME
(EXPENSE)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency
transaction gain (loss)
|
|
|
(54)
|
|
|
|
28
|
|
|
|
(238)
|
|
|
|
(67)
|
|
Interest income
(expense)
|
|
|
239
|
|
|
|
(3)
|
|
|
|
525
|
|
|
|
10
|
|
Loss from joint
venture
|
|
|
(287)
|
|
|
|
—
|
|
|
|
(625)
|
|
|
|
—
|
|
Other
expenses
|
|
|
(7)
|
|
|
|
(3)
|
|
|
|
(270)
|
|
|
|
(183)
|
|
LOSS BEFORE INCOME
TAXES
|
|
|
(4,218)
|
|
|
|
(1,384)
|
|
|
|
(7,528)
|
|
|
|
(7,670)
|
|
Income tax (provision)
benefit
|
|
|
124
|
|
|
|
(150)
|
|
|
|
165
|
|
|
|
(82)
|
|
NET LOSS
|
|
|
(4,094)
|
|
|
|
(1,534)
|
|
|
|
(7,363)
|
|
|
|
(7,752)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency
translation adjustment for the period
|
|
|
585
|
|
|
|
(639)
|
|
|
|
(641)
|
|
|
|
(624)
|
|
COMPREHENSIVE
LOSS
|
|
$
|
(3,509)
|
|
|
$
|
(2,173)
|
|
|
$
|
(8,004)
|
|
|
$
|
(8,376)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share –
basic and diluted
|
|
$
|
(0.19)
|
|
|
$
|
(0.07)
|
|
|
$
|
(0.34)
|
|
|
$
|
(0.34)
|
|
Weighted-average number
of common shares outstanding - basic and diluted
|
|
|
21,960,163
|
|
|
|
21,751,879
|
|
|
|
21,895,815
|
|
|
|
22,704,565
|
|
BYRNA TECHNOLOGIES INC.
|
Condensed
Consolidated Balance Sheets
|
(Amounts in
thousands, except share and per share data)
|
(Unaudited)
|
|
|
|
August
31,
|
|
|
November
30,
|
|
|
|
2023
|
|
|
2022
|
|
|
|
Unaudited
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
CURRENT
ASSETS
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
13,654
|
|
|
$
|
20,068
|
|
Accounts receivable,
net
|
|
|
3,642
|
|
|
|
5,915
|
|
Inventory,
net
|
|
|
16,687
|
|
|
|
15,462
|
|
Prepaid expenses and
other current assets
|
|
|
963
|
|
|
|
1,200
|
|
Total current
assets
|
|
|
34,946
|
|
|
|
42,645
|
|
LONG TERM
ASSETS
|
|
|
|
|
|
|
|
|
Intangible assets,
net
|
|
|
3,655
|
|
|
|
3,872
|
|
Deposits for
equipment
|
|
|
1,520
|
|
|
|
2,269
|
|
Right-of-use asset,
net
|
|
|
1,919
|
|
|
|
2,424
|
|
Property and equipment,
net
|
|
|
3,638
|
|
|
|
3,309
|
|
Goodwill
|
|
|
2,258
|
|
|
|
2,258
|
|
Loan to joint
venture
|
|
|
1,451
|
|
|
|
—
|
|
Other assets
|
|
|
204
|
|
|
|
272
|
|
TOTAL ASSETS
|
|
$
|
49,591
|
|
|
$
|
57,049
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES
|
|
|
|
|
|
|
|
|
Accounts payable and
accrued liabilities
|
|
$
|
4,558
|
|
|
$
|
7,708
|
|
Operating lease
liabilities, current
|
|
|
653
|
|
|
|
757
|
|
Deferred revenue,
current
|
|
|
651
|
|
|
|
458
|
|
Total current
liabilities
|
|
|
5,862
|
|
|
|
8,923
|
|
LONG TERM
LIABILITIES
|
|
|
|
|
|
|
|
|
Deferred revenue,
non-current
|
|
|
139
|
|
|
|
340
|
|
Operating lease
liabilities, non-current
|
|
|
1,367
|
|
|
|
1,792
|
|
Total
liabilities
|
|
|
7,368
|
|
|
|
11,055
|
|
|
|
|
|
|
|
|
|
|
COMMITMENTS AND
CONTINGENCIES (NOTE 21)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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. 24,143,014 shares issued
and 21,977,027 shares outstanding as of August 31, 2023 and,
24,018,612 shares issued and 21,852,625 outstanding as of November
30, 2022
|
|
|
24
|
|
|
|
23
|
|
Additional paid-in
capital
|
|
|
129,707
|
|
|
|
125,474
|
|
Treasury stock
(2,165,987 shares purchased as of August 31, 2023 and November 30,
2022)
|
|
|
(17,500)
|
|
|
|
(17,500)
|
|
Accumulated
deficit
|
|
|
(68,747)
|
|
|
|
(61,383)
|
|
Accumulated other
comprehensive loss
|
|
|
(1,261)
|
|
|
|
(620)
|
|
|
|
|
|
|
|
|
|
|
Total Stockholders'
Equity
|
|
|
42,223
|
|
|
|
45,994
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
$
|
49,591
|
|
|
$
|
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
|
|
|
|
August
31,
|
|
|
|
2023
|
|
|
2022
|
|
Net
loss
|
|
$
|
(4,094)
|
|
|
$
|
(1,534)
|
|
|
|
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
Interest (income)
expense
|
|
|
(239)
|
|
|
|
3
|
|
Income tax provision
(benefit)
|
|
|
(124)
|
|
|
|
150
|
|
Depreciation and
amortization
|
|
|
301
|
|
|
|
250
|
|
Non-GAAP
EBITDA
|
|
|
(4,156)
|
|
|
|
(1,131)
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation expense
|
|
|
1,738
|
|
|
|
2,689
|
|
Non-cash incentive
compensation expense
|
|
|
—
|
|
|
|
(1,415)
|
|
Severance/Separation
|
|
|
—
|
|
|
|
138
|
|
Other
expenses
|
|
|
—
|
|
|
|
3
|
|
Non-GAAP adjusted
EBITDA
|
|
$
|
(2,418)
|
|
|
$
|
284
|
|
|
|
For the Nine Months
Ended
|
|
|
|
August
31,
|
|
|
|
2023
|
|
|
2022
|
|
Net
loss
|
|
$
|
(7,363)
|
|
|
$
|
(7,752)
|
|
|
|
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
Interest expense
(income)
|
|
|
(525)
|
|
|
|
(10)
|
|
Income tax provision
(benefit)
|
|
|
(165)
|
|
|
|
82
|
|
Depreciation and
amortization
|
|
|
921
|
|
|
|
638
|
|
Non-GAAP
EBITDA
|
|
|
(7,132)
|
|
|
|
(7,042)
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation expense
|
|
|
4,689
|
|
|
|
4,061
|
|
Impairment
loss
|
|
|
176
|
|
|
|
—
|
|
Severance/Separation
|
|
|
52
|
|
|
|
556
|
|
Other
expense
|
|
|
—
|
|
|
|
183
|
|
Non-GAAP adjusted
EBITDA
|
|
$
|
(2,215)
|
|
|
$
|
(2,242)
|
|
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SOURCE Byrna Technologies Inc.