Byrna Technologies, Inc.

Greetings and welcome to the Burner Technologies fourth quarter 2022 earnings conference call and webcast. As a reminder, this conference call is being recorded and all participants are in only mode. Before turning the call over to Brian Gantz, Burner Technologies Chief Executive Officer, I will read the safe harbor statement. Some discussions made today may include forward-looking statements. Actual results could differ entirely from the statements made today. Please refer to Berner'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 obligation to update forward-looking statements as a result of new information, future events, or otherwise. As this call will include references to non-GAAP, please see the press release in the Investors section of our website, ir.berner.com. for further information regarding forwarding statements and reconciliations of non-GAAP results to GAAP results. I'll now turn the call over to Mr. Brian Gantz. Sir, please go ahead.

Thank you. Good morning, everyone, and thank you for joining us for Berna's Fiscal 2022 Fourth Quarter Earnings Call. David North, our CFO, and I will be discussing our Q4 and full year 2022 results and I will be providing some additional color on both the quarter and the year and discuss recent developments. We'd like to start by turning the call over to David so that he can discuss the Q4 and full-year results and financial performance. David and I will be taking questions at the conclusion of the presentation. David?

Thanks, Brian, and thanks to all who have joined us today. Let's start with a review of the financial results for the fiscal fourth quarter. Revenues for the fourth quarter of 2022 were $16.0 million. That's a 43.5% increase over the $11.0 million for last year's fourth quarter. Gross profit increased by 52.0% to $8.7 million from $5.7 million in last year's fourth quarter. while gross margin improved to 54.1% of net revenue from 51.1% in last year's fourth quarter. The improvement in gross margin was driven by a reduced dependence on air freight and an improved product mix with higher margin ammo sales representing a greater percentage of overall sales. Operating expenses remained relatively flat at $8.7 million in the fourth quarter of 2022, compared to $8.8 million in the fourth quarter of last year. The combination of higher revenue and a higher gross margin percentage coupled with flat operating expenses resulted in improved profitability. Net loss for the fourth quarter was near break-even at $0.1 million or one cent per share compared to a net loss of $3.2 million or 14 cents per share in the fourth quarter of fiscal 2021. Excluding Long-term stock-based compensation and one-time severance costs are non-GAAP-adjusted EBITDA and was $1.4 million for the quarter, making this a second sequential fiscal quarter with positive non-GAAP-adjusted EBITDA. Taking a look now at the full-year financial results, revenues for the full year increased by 13.8% to 48.0%. million compared to 42.2 million in the prior year. In 2022, the company saw increases in international sales, dealer sales, and Amazon sales. Specifically, international sales increased by $5.7 million, or 164.6%. Dealer sales rose by $1.6 million, or 28.4%. And Amazon sales grew by $4.6 million, or 522.5%. This more than offset the decline in Berna website sales of $6.6 million or 20.9%. 2022 website sales were lower than in 2021 because 2021 benefited from a one-time $9 million spike in sales attributable to an unsolicited endorsement from Sean Hennedy in April of that year. Higher sales drove an increase in gross profit of $3.4 million to $26.3 million in fiscal 2022 as compared to gross profit of $22.9 million in fiscal 21. The gross margin percentage of the full year for fiscal 22 remained relatively consistent at 54.7% compared to 54.3% in fiscal 21 as the increase in the proportion of lower margin international and dealer sales was offset by lower freight costs and an improved product mix. Operating expenses rose by $7.5 million to $33.7 million in 2022 from $26.2 million in fiscal 21 due primarily to increased spending on marketing, which increased by $3.3 million. Non-cash stock compensation expense was up by $2.3 million, and variable selling expenses increased by $1.2 million due to the higher sales volume. Net loss for this fiscal year was $7.9 million compared to a net loss of $3.3 million in fiscal year 2021. Non-GAAP adjusted EBITDA loss was a loss of $1.0 million versus a profit of $1.3 million in fiscal 21. Finally, a look at our balance sheet and financial position. We ended the fiscal year with $20.1 million of cash on the balance sheet. Obviously, this is significantly lower than the $56.4 million in the balance sheet at the end of 2021 after having raised $56 million from the sale of 2.8 million shares of common stock in the third quarter of that year at $21 per share. In 2022, we used $17.5 million of cash to buy back 2.2 million of those shares at an average price of $8.08. The other main use of cash was to increase working capital levels. We increased inventory levels by $8.8 million from $6.6 million at the end of 2021 to $15.5 million at the end of 2022. That's allowed us to cut our reliance on exorbitant air freight for raw materials and to move to slower but far less expensive ocean freight. Our accounts receivable balance of $5.9 million was $4.3 million higher than the prior year end balance mainly due to large international sales in the fourth quarter. We also used $1.9 million of cash to enter the self-defense spray market with the acquisition of Fox Labs in May of 2022. At year end, there was no current or long-term debt. And with that, I'll turn it back over to Brian.