Byrna Technologies, Inc.

Good morning. Welcome to Berna's fiscal second quarter 2026 earnings conference call. My name is Rob and I'll be your operator for today's call. Joining us for today's presentation are the company's CEO, Conn Davis, and CFO, Laurilee Kearnes. Following their remarks, we will open the call to questions. Earlier today, Berna released results for its fiscal second quarter ended May 31st, 2026. A copy of the press release is available on the company's website. Before turning the call over to Conn Davis, 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 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.brna.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 Brna CEO, Conn Davis. Sir, please proceed.

Thank you, Operator, and thank you, everyone, for joining us today. Q2 came in below our expectations, with revenue of $16.4 million, and did not reflect the level of performance we believe Berna can deliver. We entered the quarter knowing it would represent the beginning of a transition period as we worked to improve direct-to-consumer conversion, retail productivity and the discipline and structure of our operations. The quarter ultimately became a steeper reset than we originally expected and the results reinforced why the transformation underway is necessary and why we are moving with urgency. These results were driven by two things. First, the e-commerce pressure we discussed in our Q1 call continued with website traffic down 13% through the quarter year over year. Second, in retail, many partners entered the quarter with elevated inventory levels following meaningful post-holiday restocking in Q1 and sell-through during that quarter didn't support the level of reorders we had incorporated into our plan. Those challenges came together during the quarter and drove revenue below our expectations. Q2 sharpened our priorities and accelerated decisions. The results are important, but they do not tell the full story of Berna or the work underway across the business. During the quarter, we started implementing tactical changes to demand generation and our cost structure with more in motion as we transition the Berna brand more fully during the balance of fiscal 2026. These changes will take time to show up in revenue, but we believe they are the right ones that will allow us to return to growth. A few weeks ago, I issued my first 100 day shareholder letter. The letter, which is available in the investor relations section of our website, established a reference point for where Berna stands today where execution has fallen short and what we are changing to position BRNA to capture the opportunity ahead in less lethal personal safety. Today, I want to build on the letter by connecting our three key near-term priorities directly to what Q2 showed us in detailing the work now underway against each. Our first priority is consumer conversion and retail productivity. Berna has created a solid base of awareness with the core audience, and our products were available in roughly 1,500 retailer and dealer locations nationwide at quarter end. Our focus now is on turning our expanding reach into purchases, repeat engagement, and consumer advocacy. We know that the strongest results come when consumers understand the product, are able to compare options and experience Berna directly. So our work under this priority is to make the consumer journey easier and more consistent online and in stores. The second priority is changing how Burna builds demand. The narrow reach behind our Q2 traffic softness reflects a structural issue. Historically, Burna has relied too heavily on a relatively narrow audience and lacked the visibility into which messages, media channels, and partnerships actually produced consumers. We are actively changing our message to consumers and the way sales and marketing operate with the goal of reaching more people without losing the core consumer. We are building a systematic approach to demand generation that will allow us to better attribute traffic, conversion and retail sell-through over time. The third priority is connecting demand more tightly to production, inventory, and cash generation. We are building a rolling financial and operating model that brings together elements such as website trends, retail sell through, partner inventory, confirmed orders, and manufacturing capacity to help us produce and purchase against visible demand trends. As the business returns to growth, Our disciplined model should drive margin expansion, lower working capital, and better cash conversion. These priorities are all connected. Better marketing brings more qualified consumers into the funnel. Better online and retail execution turns new interests into sales more effectively. And more refined forecasting and production lets those sales flow through to the bottom line more efficiently. When these pieces work together, Thurna becomes a more predictable and scalable business. Before getting into our progress against these priorities in greater detail, I'll turn it over to Laurie to walk through the financial results. Laurie?

Thank you, Conn, and good morning, everyone. Let's review our financial results for the fiscal second quarter ended May 31st, 2026. Net revenue for Q2 2026 was $16.4 million, compared to 28.5 million in the prior year period. E-commerce sales through our website and Amazon decreased by 5.8 million or 35% compared to the prior year due to a reduction in traffic and lower conversion rates. Our domestic dealer channel, including dealers, distributors, and chain stores decreased 3.5 million or 47%. This was mainly due to the slower reorder activity following substantial restocking in fiscal Q1 and slower than expected sell through. Product sales through our international dealer and distributor channel decreased 1.2 million or 43% due to large orders last year that were not repeated in the current year. Gross profit for Q2 2026 was 1.8 million or 11% of net revenue. compared to $17.6 million or 62% of net revenue for Q2 2025. The reported gross margin included one-time $3.6 million inventory write-down, a $3.5 million impairment loss on manufacturing equipment, and a $2.3 million inventory reserve due to strategic product rationalization. These were partially offset by a $1.1 million tariff refund recorded in cost of goods sold. Excluding these items, adjusted gross profit was $10.1 million, representing adjusted gross margin of approximately 62%. We expect our adjusted gross margin to remain near or above this level through the balance of the year. The inventory write-down of $3.6 million and the $3.5 million impairment loss were directly related to the closure of our Fort Wayne ammunition manufacturing facility. The additional $2.3 million inventory reserve was a combination of finished goods and raw materials that will either end of life or will not be used due to engineering process changes. Operating expenses for Q2 2026 were $14.6 million compared to $14.2 million for Q2 2025, an increase of 3%. The increase primarily reflected an impairment charge of $1 million, as well as continued investment in marketing, partially offset by the change in variable selling expenses associated with a decrease in sales. During the second half, we expect incremental expense as our new commercial and consumer acquisition programs ramp. Those investments will precede their full potential revenue contributions, and outside of those targeted areas, we are managing spending against the current revenue base and continuing to evaluate costs. Net loss for Q2 2026 was $10.1 million, compared to net income of $2.4 million for Q2 2025. Net loss included non-cash impairment and inventory write-down charges of $10.4 million related to the shutdown of our ammunition manufacturing facility in Fort Wayne and product rationalization. A tax benefit of $2.7 million was also recorded for the quarter. Adjusted EBITDA, a non-GAAP metric for Q2 2026, was negative $600,000 compared to $4.3 million for Q2 2025. Cash equivalents of marketable securities at May 31, 2026 totaled $10.4 million compared to $9.6 million at February 28, 2026 and $15.5 million at November 30, 2025. Collections of accounts receivable supported cash during the quarter and we ended the quarter with no debt. Inventory on May 31, 2026 totaled $30.4 million compared with $33.1 million at February 28, 2026 and $32.7 million at November 30, 2025. The decline in reported inventory primarily reflected the write down discussed earlier. We remain focused on reducing physical inventory and improving working capital efficiently. We continue to expect inventory turns to approach two times by year end. I will now pass the call back to Conn to discuss what we learned during the quarter and the actions underway across the business. Conn?