Release Date: April 05, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Net revenue for Q1 2024 was $16.7 million, up 98% from the $8.4 million reported in the first fiscal quarter of 2023.
- Gross profit for Q1 2024 was $9.6 million or 58% of net revenue compared to $5.2 million for Q1 2023.
- Net income for Q1 2024 was $17,000 compared to a net loss of approximately $2.2 million for Q1 2023.
- Cash and cash equivalents on February 29th, 2024, totaled $24.2 million compared to $20.5 million on November 30th, 2023.
- Byrna Technologies Inc has no current or long-term debt.
Negative Points
- Operating expenses for Q1 2024 were $9.8 million compared to $7.2 million for Q1 2023, driven by an increase in marketing spend.
- The company is concerned about outstripping current production capacity despite increasing capacity by 25%.
- Sales are continuing to outpace production, as evidenced by current two-week shipping times posted on the website.
- The company's CFO, David North, has announced his retirement, which introduces a period of transition.
- The company is cautious about expanding into law enforcement unless it can be done profitably, indicating potential untapped market segments.
Q & A Highlights
Q: What are the expectations for gross margin in Q2 and as the year progresses?
A: (David North - CFO) The gross margin for Q1 2024 was 58%, which is an improvement from the full year 2023 average of 55%. The increase is due to higher sales volume, which better absorbs fixed costs, and a focus on direct-to-customer channels that have higher margins. The expectation is to maintain around this level for the remainder of the year.
Q: Can you discuss the plans for evolving production, and do you need to go to two shifts?
A: (Bryan Ganz - CEO) Currently, there is no need for two shifts. The company can produce 18,000 units a month on one shift by fully utilizing the second production line and hiring additional personnel. The factory is capable of producing between 36,000 and 40,000 units a year, so there is potential for significant growth.
Q: What are you seeing in ammunition sales?
A: (David North - CFO) Ammunition sales, combined with accessories, constituted 22.6% of Q1 sales, which is lower than the typical 25% due to a higher proportion of new customers.
Q: How many premium dealers and company-owned stores do you have now?
A: (Bryan Ganz - CEO) There are currently 20 premier dealers and one company-owned store in Las Vegas. Plans are underway to open three new company-owned stores in Boston, Houston, and Fort Wayne.
Q: Can you provide an update on the non-lethal 12-gauge program?
A: (Bryan Ganz - CEO) There has been no significant change since last quarter. The success of the 12-gauge program is expected to be largely driven by law enforcement, and the company is considering devoting more resources to this market.
Q: What is the sales breakdown between the LE and SD models on your website?
A: (Bryan Ganz - CEO) The breakdown is approximately 60% SD and 40% LE. The demand for the LE model has been higher than expected.
Q: Do you have a price for the new compact launcher, and when will it be available?
A: (Bryan Ganz - CEO) The price for the compact launcher has not been decided yet. It is a premium product and is in preproduction. It will not be available in 2024 but is expected to be released early in 2025.
Q: Will the compact launcher be available at the SHOT Show?
A: (Bryan Ganz - CEO) The compact launcher may potentially be ready for production prior to the SHOT Show, but it will not be released until there are more than 10,000 units on the shelf to ensure a smooth launch and to not undermine sales of the SD and LE during the holiday period.
