Byrna Technologies, Inc.

Good morning. Welcome to Berna's Fiscal Fourth Quarter and Full Year 2023 Earnings Conference Call. My name is Shamal, and I will be your operator for today's call. Joining us for today's presentation are the company's CEO, Brian Gans, and CFO, David Norton. Following their remarks, we will open the call to questions. Earlier today, Berna released results for its Fiscal Fourth Quarter and Full Year ended November 30th, 2023. A copy of the press release is available on the company's website. Before turning the call over to Brian Gans, Berna Technologies' Chief Executive Officer, I'll read the Safe Harbor Statement. Some discussions held 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 filing 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 investment section of our website, ir.berna.com, for further information regarding forward-looking statements and reconciliations of non-GAAP results to GAAP results. Now, I'd like to turn the call over to Berna's CEO, Brian Gantz. Sir, please proceed.

Thank you, Operator, and thank you, everyone, for joining us today. This morning, we issued a press release providing our financial results for the fiscal fourth quarter and full year ended November 30, 2023, along with key business accomplishments for 2023 and an update on Q1 2020 performance, 2024 performance. We will also be filing our 10-K with the SEC later today. I'm going to begin this morning by passing the call to David North, our CFO of to discuss our financial results for both the fourth quarter and the full year 2023. Following that, I'll review what was a very eventful year and offer insights into our operations and go-forward strategy. Lastly, we'll open the call to questions from our publishing analysts. David?

Thank you, Brian, and good morning, everyone. Let's discuss our financial results for the fiscal fourth quarter and full year of 2023, ended November 30th, 2023. Net revenue for the fourth quarter in 2023 was 15.6 million compared to 16.0 million in the fiscal fourth quarter of 2022. The slightly lower net revenue is primarily attributed to exceptional international sales in Q4 of 2022, which included a $3.4 million stocking order for the company's distributor in Argentina. Total international sales in Q4 of 2023 were 225,000. compared to $4.3 million in the prior year. Without this one-time surge in international sales in the prior year, the fourth quarter displayed strong growth. Domestic revenue in the quarter totaled $15.4 million. That's a 32% increase from Q4 of 2022, and it's a quarterly record. Gross profit for Q4 2023 was $9.0 million, or 58% of net revenue compared to $8.7 million or 54% of net revenue for Q4 of 2022. The increase in gross margin primarily resulted from much smaller percentage of lower margin international sales. Operating expenses for Q4 2023 were $9.7 million compared to $8.8 million for Q4 of 2022. The increase in operating expenses was primarily driven by an increase in marketing spend as part of the company's influencer partnership strategy. Net loss for Q4 2023 was negative $800,000 compared to negative $100,000 for Q4 of 2022, and the increase in net loss was primarily due to the increase in marketing spend. Adjusted EBITDA, which is a non-GAAP metric for Q4 of 2023, totaled $0.4 million compared to $1.4 million for Q4 of 2022. Net revenue for the full year totaled $42.6 million compared to $48.0 million for the prior year. This decline was, again, largely due to a $7.6 million decrease in international sales from South Africa, South America, and Asia. which are characterized by large but infrequent orders, as experienced in the prior year. This impact was partially offset by a $900,000 increase in sales on Amazon and a $400,000 increase in Fox Lab sales, despite temporary headwinds from social media advertising bans. Domestic dealer and distributor sales, which are less dependent on online advertising, grew by $1.6 million. Gross profit for the full year ended 2023 was $23.6 million or 56% of net revenue compared to $26.3 million or 55% of net revenue for the prior year period. Gross margins remained stable as the increase in lower margin dealer and distributor sales was counterbalanced by the reduction in lower margin international sales. For the full year, operating expenses were $31.4 million, which is a decrease from $33.7 million in the previous year. This $2.3 million decrease was largely achieved through strategic realignments and cost optimizations in key areas. Notably, sales and marketing expenses were reduced by approximately $920,000 due to the lower advertising spend earlier in the year resulting from the social media advertising ban. Additionally, professional fees including legal and accounting service were reduced by $680,000 while insurance costs decreased by $510,000 due to renegotiated premiums. Payroll expenses decreased by $340,000, contributing to our overall more efficient cost structure. Looking ahead, we are focused on maintaining a balanced approach to managing our operating expenses. We are preparing for a measured uptick in these costs as part of our strategic investment to drive revenue growth. Net loss for the full year was $8.2 million compared to a loss of $7.9 million for the prior year. The slight increase in net loss was primarily due to the decrease in revenue, partly offset by a decrease in operating expenses. For the full year, adjusted EBITDA totaled negative $2.0 million compared to negative $1.0 million in the prior year. The decrease in adjusted EBITDA was primarily due to the increase in net loss previously noted. Cash and cash equivalents. Here I wanted to call attention to a complete reversal of the trend of declining cash balances that prevailed through the first quarter, three quarters of the year, due to declining sales and high inventory balances. The balance of cash and cash equivalents was $13.7 million at the end of the third quarter on August 31st, 2023. By year end on November 30th, 2023, cash and cash equivalents had risen to $20.5 million due to the increase in sales, and also to our ability to sell down high inventory levels. Inventory at November 30, 2023, totaled $13.9 million, compared to $16.7 million at August 31, 2023. The company currently has no current or long-term debt. And that concludes my prepared remarks. I'll turn it back over to Brian.