Byrna Technologies, Inc.

Good morning and welcome to Berna's fiscal second quarter 2024 earnings conference call. My name is Kevin and I'll be your operator for today's call. Joining us for today's presentation are the company's CEO, Brian Ganz, CFO, David North, and CFO designee, Lori Kearns. Following their remarks, we'll open the call to questions. Earlier today, Berna released results for its fiscal second quarter ended May 31st, 2024. A copy of the press release is available on the company's website. Before turning the call over to Brian Gans, Berna's 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 filings for 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 Investor 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 would like to turn the call over to Burner's CEO, Brian Gans. Sir, please proceed.

Thank you, Kevin, and thank you, everyone, for joining us today. This morning we filed our 10-Q with the SEC and issued a press release providing our financial results for the fiscal second quarter ended May 31, 2024, as well as highlighting key business accomplishments from the year so far. I'll start by passing the call to David North, our CFO, who will discuss our financial results for Q2. Following his remarks, I'll review our record-breaking quarter, highlighted by $20.3 million in revenue and continued GAAP profitability. I will then offer insights into our operation and discuss our go-forward strategy. Lastly, we'll open the call to questions from research analysts. David?

David North, CFO Alphabet and Google, Thank you, Brian, and good morning, everyone. Let's discuss our financial results for the second fiscal quarter ended May 31st, 2024. Net revenue for Q2 2024 was $20.3 million. That's up 76% from the $11.5 million we reported in the fiscal second quarter of 2023. This $8.8 million increase is primarily due to the transformational pivot in our advertising strategy, which we kicked off in September of 2023. The success of our celebrity endorsement strategy resulted in a $7.9 million increase in direct to consumer revenues through our website and Amazon compared to the prior year period. Gross profit for Q2 2024 was $12.6 million or 62% of net revenue compared to $6.2 million or 54% of net revenue for Q2 2023. The increase in gross profit margin is largely attributable to additional sales through our higher margin direct to consumer channels and was further improved by an intensive component cost reduction effort spearheaded by Berna's engineering team, as well as the economies of scale resulting from increased production volumes. Operating expenses for Q2 2024 were $10.6 million, compared to $7.2 million for Q2 2023. The increase in operating expenses was driven by an increase in variable selling costs such as freight and sales transaction processing fees, an increase in marketing spend as part of the company's new advertising strategy, and an increase in payroll primarily in marketing and engineering as the company improves its capabilities in these areas. Net income for Q2 2024 was $2.1 million, a $3.2 million improvement from the net loss of approximately $1.1 million for Q2 of 2023. Adjusted EBITDA, which is a non-GAAP metric for Q2 2024, totaled $2.9 million compared to negative $0.8 million for Q2 2023. Cash and cash equivalents at May 31, 2024 totaled $24.8 million compared to $20.5 million at November 30, 2023. And inventory at May 31, 2024 totaled $15.5 million compared to $13.9 million at November 30, 2023. The company continues to have no current or long-term debts. As mentioned during our last call, I'll be retiring at the end of this week. I am truly proud of the work we've done at Berna and the financial milestones we've achieved. We took sales from less than a million dollars in the entire fiscal year of 2019 to $20.3 million in this second quarter of 2024. And we've turned Berna into a thoroughly profitable enterprise. I want to thank Brian for the opportunity to be part of this incredible journey and for his leadership in driving Berna's mission forward. As a shareholder, I'm confident in the future of the company with Lori Kearns leading our financial department. Lori has extensive experience as a public company executive and is well suited to help take Berna to new heights. I'll be staying on as a consultant to ensure a smooth transition and supporting Lori as needed. And now, Lori, the floor is yours.