Byrna Technologies, Inc.

Greetings and welcome to the Berner Technologies Fiscal Year-End 2021 Earnings Conference Call and Webcast. As a reminder, this conference call is being recorded and all participants are in listen-only mode. Before turning the call over to Brian Ganz, Berner Technologies Chief Executive Officer, I will read the Safe Harbor Statement. Some discussions made today may include forward-looking statements. Actual results could differ materially from the statements made today. Please refer to Berna's most recent 10-K and 10-Q filings for a more complete description of risk factors that could affect these projections and assumptions. The company assumes no obligations to update forward-looking statements as a result of new information, future events, or otherwise. As this call will include references to non-GAAP results, please see the press release in the investor relations section of our website, ir.berna.com. for further information regarding forward-looking statements and reconciliations of non-GAAP results to GAAP results. I'll now turn the call over to Mr. Brian Ganz. Sir, please go ahead.

Thank you very much. Good morning, everyone. I just want to make one clarification. This is the first quarter fiscal year 2022 earnings call. David North will be discussing our Q1 fiscal year 2022 results, after which I will provide some additional color on the quarter and discuss recent developments. So I'd like to start by turning the call over to David so that he can discuss our first quarter financial performance. David and I will be taking questions at the conclusion of the presentation.

David? Thanks, Brian, and thanks everyone for joining us. Now I'll review the financial results for the fiscal first quarter ended February 28, 2022. Revenues were $8.0 million this quarter, a decrease of $0.9 million compared to $8.9 million in last year's first quarter. Orders received during the quarter increased substantially, however, up 45.6% to $8.9 million this quarter from $6.1 million in the first quarter of 2021 when sales included the fulfillment of $2.8 million of back orders received in prior quarters. Sales for the quarter were lower than expected due to a large $2.2 million order backlog that didn't ship by month end. In addition to $1.6 million of international orders that were held pending export permits, part of the backlog was comprised of the initial Sportsman Warehouse order, which shipped in March. Lower sales volume caused only a slight decrease in gross profit, which declined to $4.6 million compared to $4.7 million in the first quarter of last year. This is because gross profit margin has improved to 57.8% of revenue compared to 53.3% last year. The improvement in gross profit margin despite lower production volumes is due to improved operating efficiencies of the factories. These improvements were partially offset by higher inbound freight costs, which we believe peaked during this last quarter. We expect to see continued improvements in gross margins due to both increased production volumes and reduced per unit freight costs. Operating expenses were $8.0 million in the first quarter of 2022, up from $5.2 million in the first quarter of last year, but lower than $8.8 million in the fourth quarter of 2021. The increase in comparison to the same quarter a year ago is due to corporate growth over the last year that drove up structural costs, primarily payroll-related and non-cash compensations, and also drove up regulatory and insurance costs. That increase is also partially due to increased investment in discretionary marketing costs. Net loss this quarter was $3.2 million, or 14 cents per share, compared to a net loss of $0.3 million or 2 cents per share in the first quarter of 2021 due primarily to the growth in operating expenses. Excluding non-cash incentive and stock-based compensation and one-time severance costs, non-GAAP adjusted net loss for this quarter was $1.8 million or 7 cents per share compared to non-GAAP adjusted net income of $0.2 million or 2 cents per share in the first quarter of 2021. adjusted EBITDA was a loss of $1.7 million versus income of $0.3 million in the same quarter a year earlier. Taking a look at the balance sheet, cash and cash equivalents decreased $11.7 million from $56.4 million at the start of the quarter on November 30, 2021, to $44.7 million on February 28, 2022. Excuse me, 2022. $5.4 million or about half of this reduction was cash used to build inventory balances, which rose from $6.6 million at the fiscal year end to $12.1 million at the end of the first quarter. $2.7 million were used to repurchase 296,000 shares of stock during the quarter under a stock buyback plan announced earlier. This step of the plan was successfully completed during March with 1,050,249 shares purchased for $10 million. We have no plans currently to continue stock repurchases. The adjusted EBITDA loss accounted for another $1.7 million of negative cash flow, and another $0.9 million was used for capital expenditure. Now I'll hand it back over to Brian. Thank you, David.