Good morning, and welcome to Byrna’s Fiscal First Quarter 2025 Earnings Conference Call. My name is Melissa and I will be your operator for today's call. Joining us for today's presentation are the company's CEO, Bryan Ganz; and CFO, Lauri Kearnes. Following their remarks, we'll open the call to questions. Following their remarks, we will open the call to questions. Earlier today, Byrna released results for its fiscal first quarter ended February 28, 2025. A copy of the press release is available on the company's website. Before turning the call over to Bryan Ganz, Byrna 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 statements made today. Please refer to Byrna'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 obligations 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.byrna.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 Byrna's CEO, Bryan Ganz. Please go ahead, sir.

Thank you, Melissa, 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 and business highlights for the fiscal first quarter ended February 28, 2025. I'll start today by turning the call over to our CFO, Lauri Kearnes, who will review our financial results for the period. Following her remarks, I'll discuss the operational highlights that drove our 57% year-over-year revenue growth and continued GAAP and non-GAAP EBITDA profitability for the quarter. I'll then offer insights into our strategy moving forward before we open the call to questions from our covering research analyst. Lauri?

Thank you, Bryan, and good morning, everyone. Let's review our financial results for the first fiscal quarter ended February 28, 2025. Net revenue for the Q1 2025 was $26.2 million, a 57% increase from the $16.7 million reported in the first fiscal quarter of 2024. This $9.5 million increase is primarily due to continuing sales momentum, channel expansion, and broader brand adoption. In Q1, direct-to-consumer revenues increased by $6.7 million through Byrna.com and Amazon.com, compared to the prior year period. While both channels have grown, we are starting to see our Amazon.com sales grow at a faster rate than our Byrna.com sales. Additionally, sales to dealers increased $1.9 million or 78% with the largest increase coming in the category of chain stores, which increased $700,000, this was primarily driven by sales to Bass Pro shops. Gross profit for Q1 2025 was $15.9 million, or 61% of net revenue, compared to $9.6 million, or 58% of net revenue for Q1 2024. We continue to see the gross margin improvement due to our efforts in the middle of 2024 focused on designing for manufacturability, as well as increased production volumes. Operating expenses for Q1 2025 were $14.2 million, compared to $9.8 million for Q1 2024. The increase in operating expenses was driven by increased variable selling expenses, discretionary marketing spend, and higher payroll costs. Higher payroll costs included an increase in employee benefits and the company 401(k) match of $300,000. This was due to a combination of increased employees, increased health care costs, and the company implementing a 401(k) safe harbor matching program. Net income for Q1 2025 was $1.7 million, compared to $17,000 for Q1 2024. This increase was driven by an overall increase in product sales. Due to the release of our valuation allowance in Q4 2024, the company will transition into full taxpayer status in 2025, and we expect our effective tax rate to be approximately 23% for the year. Adjusted EBITDA, a non-GAAP metric, for Q1 2025 totaled $2.8 million compared to $1.2 million for Q1 2024. Cash, cash equivalents, and marketable securities at February 28, 2025 totaled $19.3 million compared to $25.7 million at November 30, 2024. The decrease reflects planned increases in inventory ahead of the Compact Launcher release and normal seasonal working capital movements. Inventory at February 28, 2025 totaled $23.2 million compared to $20 million at November 30, 2024. The company has no current or long-term debt. I'll now turn it back to Bryan.

Thanks, Lauri. As our results demonstrate, the sales momentum from fiscal 2024 continued into the first quarter of fiscal 2025 as we successfully grew revenue by 50% year-over-year to $26.2 million despite the first quarter being our traditionally slowest quarter. Well, it was not a sequential beat, sales for the first quarter were only 6% below our all-time record of $28 million in the fourth quarter of 2024. In 2023 and 2022, by comparison, Q1 sales were 47% and 29% below Q4 sales, respectively. As expected, sales softened post-holiday due to consumer fatigue, a general Trump slump for firearms post-election, and waning consumer confidence. That said, February daily DTC sales were better than January daily DTC sales, and March daily DTC sales were better than February daily DTC sales. This was despite the general market softness and the fact that some of our customers appear to be waiting for the release of our much anticipated Compact Launcher. On a related note, when speaking to investors recently at the ROTH Conference, several investors told me that they were using any one of a number of different apps to track Byrna credit card sales. I would just urge people using these apps to also be tracking our sales on Amazon as an increasing portion of our DTC sales are taking place on Amazon where we are not paid by credit card. In Q1 of 2024, Amazon sales represented 19.3% of Byrna's total U.S. DTC sales. By Q1 2025, Amazon sales represented 26.9% of Byrna's total U.S. DTC sales. And last month, Amazon sales climbed to 32.6% of Byrna's total DTC sales. There are a number of reasons for Amazon's strong relative performance. However, the most important reason is that, we are now treating Amazon as its own business center with a dedicated…

Thank you. The company will now be taking questions from sell-side analysts. [Operator Instructions] Our first question comes from the line of Jeff Van Sinderen with B. Riley Securities. Please proceed with your question.

Hi. Good morning, everyone and thank you for going through so much in your prepared comments. Just to clarify, I wanted to circle back on the Q2 early sales trend data. I think you mentioned that March grew sequentially from February. Wondering if there's anything new in the first week of April? And then I guess as you look at the ROAS data, can you give us any more color on how you're planning to manage and adapt that spend in the near term, particularly around the new CL launcher?

Jeff, thank you very much for the question. Our ROAS is always lower in the beginning of the year. We hit our 5 times ROAS because Q4 has such a strong ROAS. So, our overall ROAS for the first quarter is in the mid-3s. This is not unusual. We would expect it to be there, given that this is always our weakest quarter. That said, we do not think that we need very much advertising to promote the CL. We have over 700,000 opt in e-mail subscribers at Byrna. So we are initially going to be focused on selling the CL to our existing customer base as part of a very important refresh cycle. So, advertising spend should be going down, frankly, I've instructed to really not initiate anything new until at least August as we think most of the demand is going to be driven from our existing customer base through our e-mail and website. By that point, when we want to start going after new customers for the CL, we'll be ramping our advertising spend back up. But that will be sort of as we get into the very, very profitable Q4 time period.

Okay. Great. And then, I think you mentioned the inventory build around some of that -- it seems like a fair number of moving parts there, but maybe you could just touch on how the rollout will go. I know you mentioned various components there, whether it's through Sportsman's or your website. But can you just run us through kind of the sequence of events in rollout of the new CL?

Okay. So it was important to us to have 25,000 to 30,000 units on the shelf before we release the CL, because there's very, very high anticipated demand, and we didn't want to have the inventory depleted with the very first orders. So, as I mentioned, our dealer team is already set up calls. They will be getting on the phone with all of our dealers, some of the big stores will be individually like Bass Pro. Others will be in groups, we'll be talking to all the premier dealers as a group. And we will start taking their orders today. We have allocated 10,000 of the 30,000 launchers to our dealers. Those launches will start going out the door at the Byrna factory on April 21. By the 24th, we should have shipped all dealer orders so that they have time to get them and stock them before the May 1 release date. On April 15, we will be sending out overnight a box of two launchers, an orange one and a black one to all of our celebrity endorsers like Sean Hannity, Glenn Beck, et cetera and to a number of our YouTube influencers, as well as to every store that offers a shooting experience so people can go and try out the Byrna and put orders in before the actual release date. So there should be 50-something stores where people can try the Byrna if they would like. We will start actually taking orders online. We'll accept preorders starting April 17. We'll be accepting orders online starting April 24, and then May 1, we will start shipping the Byrna. This would give us time to ship all 30,000 Byrna during the month of May, if necessary.

Okay. And then if I could just squeeze in one more. And I know this is a little bit of a difficult question at this moment. But all else being equal, based on everything that you're seeing today -- by the way, you guys have done an amazing job avoiding tariffs. Would you think that Q1 was probably the low pointed revenues for the year? Do you still think that traditionally holds true this year?

You're right. It's a very difficult question. If you're asking me, my personal opinion is, yes, that was the low point of the year. I think like you, everybody wants to see how this CL launcher does. Every indication that we have is that this is going to be an enormous home run. It is the reason that we didn't release it when there were currently 11,000 launches in stock. It's the reason we're holding off because we don't want to have a bad customer experience, where we ship the first batch out and then there's no launches for anybody else. So we anticipate that that this will be a sequential growth year where every quarter will be bigger than the next.

Excellent. Thank you for taking my questions.

Thank you, Jeff.

Thank you. Our next question comes from the line of Matt Koranda with ROTH Capital Partners. Please proceed with your question.

Hi. It's Joseph on for Matt today. Just going back into your Sportsman shop-in-shops, could you remind us how many of that is currently up and running? And what are the learnings that you guys have for these types of stores versus your own branded stores additionally for the potential of the 30 store expansion by August, what do you need to see from these first stores to expand to those additional 30?

Hi, Joseph, it's Lauri. Thanks for the question. So currently, there is one store operational, the rest are going to be operational, those first 13 by the 1st of May. So they'll start rolling on over the next few weeks to have those operational. Additionally, we said there was the 41 additional stores that will just have our point-of-sale display, but we'll have a shooting experience as well. So I think what we need to see is we just need to see that there is momentum. We need to see that there's interest. They opened the first store and had sales the first day of that first store opening. So I think we're off to a good start there. We expect these to continue to roll out. They've got the foot traffic that our stores -- we struggle to get the foot traffic in to begin with as we open our stores, and they've already got that foot traffic. So it's really getting the interest. And we believe having someone in the store who is that Byrna genius, who understands they can get people interested, they can have the conversations, encourage them into the shooting experience lane, and that will help drive the sales.

Yes, Joseph, just to reiterate, Lauri brought up a very, very good point here. The biggest issue that we have in growing our own stores is foot traffic. Our conversion rate remains very, very consistent. Our AOV, average order value remains very, very consistent. We know if we can get people into the store, we can convert them at the rate of around 80% based on groups, but even on individuals between 50% and 70%. Sportsman's has hundreds of people visiting each of its stores every day. When they hear the bang, bang, bang of these rounds being fired and draws their attention to it, if we can get people into that range, we know we will convert them that I'm certain of. So we're extremely excited about this as are the folks from Sportsman's. And I think this is the reason that we've -- that we want to put a Byrna genius in every store, because we think that there's going to be a lot of interest from the Sportsman's customers.

Got it. Thank you. And then just for an additional question, just talking about your point-of-sale displays. How is that going to differ in terms of the shooting lines? Is it -- will it be the same layout for what you have in your shop-in-shops? Or will there be any significant differences there?

Well, for the 13 stores, the idea is to create a stand-alone Byrna shooting experience in the middle of the store, and we have developed a number of shooting pods which we can assemble right in the middle of the store. These pods have glass along the side, so people can see the shooter, they can hear what's going on, there is counter and flat walls and the whole -- a true store within a store. With the point-of-sale displays, this is going to be a kiosk that has approximately $8,000 of Byrna product on us. There's not going to be anybody devoted to selling Byrna. And if somebody is interested and they ask, they'll be shown the archery range, and they'll be able to try the Byrna. So it will provide an opportunity for a shooting experience. But it will not be drawing people into the shooting experience in the same way that a store within a store would. My guess is that these 41, they're going to have the point-of-sale display, if we continue to roll out, they will probably be the next 41 to be converted into stores within a store.

All right. Thank you, Bryan. We will go ahead and take the rest offline. And congrats on another good quarter.

Thank you.

Thank you. Our next question comes from the line of Jon Hickman with Ladenburg Thalman. Please proceed with your question.

Hi, Bryan. Most of my questions were just answered. I had questions about the difference between the stores in the store and then just the kiosk. But I would -- maybe I missed this earlier, but what's the MSRP going to be on this new CL versus the current products?

Sure. John, it's Lauri. So the new CL, the base price will be $549.99, the LE is currently at $479.99 and the LE as at $379.

Okay. And then the ammo is the same -- is there the same margin on the ammo, is it any different?

The ammo is slightly smaller, 61 caliber is 27% smaller, but it really doesn't cost dramatically different. Maybe there's a few pennies difference in the cost of the raw materials, but insignificant. We are selling the same quantities at the same prices, whether it's 61 caliber or 68 caliber. But the interesting thing is, with 68 caliber, we know that a lot of people buy cheap Chinese ammo to -- because it's much less expensive than high-quality Byrna ammo for the 68 caliber. For 61, at least for the foreseeable future, there is nobody else that makes a 61 caliber round. We will capture 100% of the ammo probably for the rest of this year and maybe well into next year.

And the new launcher comes in orange and black or...

It comes in orange and black currently. Pink will be released later this year, and we intend to bring out other colors. The other thing with this launcher is it can be serecoted unlike our earlier launches, which means we can make virtually any color. We can do camaflage launchers. There's a huge amount of things that we can do. In fact, there's a full array of very, very exciting accessories that we are not bringing out with the initial launch of the CL, but we'll be rolling out so that we can go back to people that have made initial purchases with an opportunity for them to add red dots and special holsters and special grips for the launcher. So it is a launcher that can be much more easily customizable than our current launchers.

Okay. And then one last question. The CO2 cartridge, does that still the same.

Same 8 grams. So that CO2 that we use for the FD will also work for the CL.

Okay. Thank you. And nice quarter. Appreciate all the commentary.

Thank you, Jon.

Thanks, Jon.

Thank you. Ladies and gentlemen, that concludes our question-and-answer session. I'll turn the floor back to Mr. Ganz for any final comments.

Thank you, Melissa, and thank you, everyone. We really appreciate your continued interest in the company and your continued support. I look forward to catching up with many of you after this call.

Thank you. This concludes today's call for Byrna's fiscal fourth quarter and full year 2024 conference call. You may now disconnect your lines. Thank you for your participation.