Byrna Technologies, Inc.

Greetings and welcome to the Berna Technologies first quarter 2023 earnings conference call and webcast. As a reminder, this conference call is being recorded and all participants are in a listen-only mode. Before turning the call over to Brian Gantz, Berna Technologies Chief Executive Officer, I will read the Safe Harbor Statement. Some discussions made today 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 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 results, please see the press release in the Investors 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 Gantz. Please go ahead.

Thank you. Good morning, everyone, and thank you for joining us for BRNA's fiscal year 2023 first quarter earnings call. Our CFO, David North, will be discussing our Q1 results, after which I will provide some additional color on the quarter. I'd like to start by turning the call over to David so they can discuss our results and financial performance for the first quarter. David and I will be taking questions at the conclusion of the presentation. David?

Thanks, Brian, and thanks all who have joined us today. Let's start with a review of the income statement for the first fiscal quarter. Revenues for the first quarter of 2023 were $8.4 million. That's a 5.4% increase over the $8.0 million for last year's first quarter. Gross profit increased 13.7% to $5.2 million from $4.6 million in last year's first quarter, while gross margin, which is gross profit as a percentage of sales, improved to 62.4% of net revenue from 57.8% in last year's first quarter. The improvement in gross profit as a percentage of sales is primarily due to realization of significant cost reductions in switching from air freight to ocean freight and to lower cost suppliers for raw materials. Operating expenses declined 9.8% or $0.8 million to $7.2 million compared to $8.0 million in last year's first quarter. Costs were managed lower in payroll and compensation, discretionary marketing, professional fees, public company costs, and insurance premiums. A combination of higher revenue, a higher gross margin percentage, and a reduction of operating expenses resulted in improved profitability. Loss from operations for the first quarter was $2.0 million, an improvement of $1.4 million compared to the operating loss of $3.4 million in the first quarter of fiscal 2022. On January 10th of this year, the company partnered with the owners of Argentinian gunsmiths Bursa S.A. to form a new joint venture created to manufacture its products within the Mercosur trade zone to expand the company's operations and presence in South American markets. The company holds 51% of the stock in the joint venture entity, and our 51% share of startup expenses this quarter was $167,000, shown as other expenses on our income statement. Net loss after tax was $2.1 million compared to a net loss of $3.2 million in last year's first quarter. Excluding long-term stock-based compensation and one-time severance costs, adjusted EBITDA, which is a non-GAAP measure that excludes non-cash stock-based compensation and one-time severance costs, was a loss of $0.6 million for the quarter compared to a loss of $1.8 million in the first quarter of last year. Now to our balance sheet and financial position. We ended the first quarter with $14.4 million of cash and cash equivalents. This is a decrease of $5.6 million from the balance of $20.0 million at the end of the fiscal year on November 30th, 2022. This was principally due to three uses of cash. First, accounts payable and accrued expenses decreased by $2 million due to payments of certain annual expenses that come due in the first quarter. Second, we used $2.1 million to fund our new LATAM joint venture with a half million dollars in capital and a million and a half dollar loan. And third, inventory increased by two and a half million dollars. Well, the first two of these were according to our plans. The increase in inventory was the result of the long lead time between committing to the purchase by putting a ship on the water and delivery of the inventory at our plant. Actual sales demand and inventory consumption during the first quarter when the inventory arrived were not as great as had been expected when the inventory was committed to and shipped. As a consequence, we find we have several months of inventory on hand. At quarter end, there was no current or long-term debt. And with that, I'll turn it back over to Brian.