Q4 2024 Byrna Technologies Inc Earnings Call
Good morning.
Kevin: Welcome to burn is fiscal fourth quarter and full year 'twenty 'twenty four earnings conference call. My name is Kevin and I'll be your operator for today's call.
Speaker Change: Joining us for today's presentation of the company's CEO, Brian Gans and CFO Lawrie Karnes following their remarks, we'll open the call to questions.
Speaker Change: Earlier today burner released results for its fiscal fourth quarter and full year ended November 30 of 'twenty 'twenty four a.
Speaker Change: A copy of the press release is available on the company's website.
Speaker Change: Before turning the call over to Brian Gaines Burner technologies, Chief Executive Officer, I will read the Safe Harbor statement.
Speaker Change: Some discussions held today include forward looking statements.
Speaker Change: Actual results could differ materially from the statements made today.
Speaker Change: Please refer to burn his 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.
Speaker Change: As this call will include references to non-GAAP results. Please see the press release and the Investor Relations section of our website IR got burned a dot 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 Brendan CEO, Brian Gaines Sir. Please proceed.
Speaker Change: Thank you Kevin and thank you everyone for joining us today, we will be filing our 10-K with the SEC today, we're not sure if it's going to get out before the open or after the close but it is a it is in for filing.
Speaker Change: And as Kevin mentioned, we've issued a press release, providing our financial results and business highlights for the fiscal fourth quarter and for the full year ended November 30, 2024, I'm going to start by turning the call over to our CFO, Lori <unk>, who will review our financial results for the period fall.
Speaker Change: During her remarks I'll discuss the operational highlights that drove our record $28 million in revenue.
Speaker Change: And continued GAAP and non-GAAP EBITDA profitability for the fourth quarter I'll, then offer insights into our strategy moving forward before we open the call to questions from our covering research analyst floors.
Brian: You, Brian and good morning, everyone.
Brian: Let's review our financial results for the fiscal fourth quarter and the full year ended November 32024.
Brian: Net revenue for the fourth quarter was 28 million% to 79% increase from the $15 6 million reported in the fiscal fourth quarter of 2023.
Brian: This $12 4 million dollar increase is primarily due to the transformational shift in our advertising strategy, which we began in September 2023.
Brian: And the resulting normalization of Burma, and then less lethal space generally.
Brian: In Q4 direct to consumer revenues increased by $8 9 million to a burn of dot com and Amazon Dot com compared to the prior year period.
Brian: For the full year of 2024, net revenue totaled $45 or $85 8 million up 101% from $42 6 million in 2023.
Brian: Gross profit for Q4, 2024 was $17 6 million or 62, 8% of net revenue.
Speaker Change: <unk>, two 9 million or 57, 8% of net revenue for Q4 2023.
Speaker Change: For the full year 2024, gross profit was $52 8 million or 61, 5% of net revenue compared to $23 6 million or 55, 5% of net revenue for the same period in 2023.
Speaker Change: The improvement in gross profit margin is largely attributable to additional sales through our higher margin DTC channels and intensive cost component reduction effort spearheaded by furnace engineering team and the economies of scale, resulting from increased production volumes.
Speaker Change: Operating expenses for Q4, 2024 were $13 5 million compared to $9 7 million for Q4 2023 for.
Speaker Change: For the full year 2024, operating expenses were $46 1 million compared to $31 4 million for the same period in 2023, reflecting a 47% increase year over year.
Speaker Change: The increase in operating expenses was driven by an increase in our variable selling costs, such as freight and third party processing fees credit card fees increased marketing spend and higher payroll expenses and marketing and engineering as the company has scale to handle increased sales and production volumes.
Speaker Change: Net income for Q4, 2024 was $9 7 million compared to a net loss of <unk> 8 million for Q4 2023 at $10 5 million dollar improvement. This increase was driven by higher revenue and a $5 $6 million income tax benefit the <unk>.
Speaker Change: Tax benefit arose from the release of tax valuation allowances related to net operating loss carryforwards and other tax assets.
For the full year 2024, net income was $12 8 million a $21 million improvement from a net loss of $8 2 million in the prior year.
Speaker Change: The increase in net income was driven by higher revenue and included a $5 $7 million income tax benefit due to the full release of U S tax valuation allowances.
Speaker Change: Adjusted EBITDA, a non-GAAP metric for Q4, 2024 totaled $5 2 million compared to 400000 for Q4 2023.
Speaker Change: This brings adjusted EBITDA for the full year to 11 point for the full year 2024 to $11 5 million compared to a negative $2 million in the prior year.
Speaker Change: Cash and cash equivalents at November 32024 totaled $16 8 million compared to 25 million at November 32020 through.
Speaker Change: The change in cash and cash equivalents is primarily due to an $8 9 million dollar investment into marketable securities.
Speaker Change: Cash and short term marketable securities totaled $25 7 million, which is an increase of $5 2 million compared to November 30th 2023.
Speaker Change: Inventory at November 30th 2024 totaled $20 million compared to $13 9 million at November 32023.
Speaker Change: Company has no current or long term debt.
I'll now turn it back to Brian.
Brian: Thank you Laurie.
Brian: Just to remark on her last comment there.
Although the cash levels were down cash and marketable securities were up significantly from the year before.
Brian: We took some of our excess cash and put it into short term paper.
As our results demonstrate 2024 was a standout year for burner for the last five quarters, we have grown revenue quarter over quarter.
Brian: Culminating in a $28 million quarter in Q4 of last year.
Brian: Totaling $85 8 million for the year more than double our 2023 revenue.
Brian: This growth reflects our team's ability to market our products effectively and to scale our production to meet demand.
Brian: A key milestone, which we announced earlier this year was hitting the 500000 launcher sold Mark which we eclipsed in November this reinforces our progress normalizing less lethal alternatives.
Brian: And establishing them as a widely accepted category in personal self defense.
With 500000 larger sold this is no longer just a flash in the Pan This is a real market.
Brian: Selling our first larger in 2019, we've experienced a remarkable growth and we are just getting started.
Okay, our marketing strategy continues to be anchored by our celebrity endorsement program since launching this initiative in September 2023, we've seen a remarkable increase in both orders and brand awareness by carefully managing these partnerships. This year, we achieved more than a five times.
Brian: ROE as a return on our advertising spend across all advertising platforms.
Brian: This highly accretive threshold, who helped us achieve this record profitability and become a stable cash flowing enterprise.
Brian: We continue to refine our approach testing new influencers of new platforms in different markets, starting with an initial trial period before making a long term commitment.
Brian: Unfortunately, we recently terminated a few relationships with several celebrity endorsers that were unable to achieve our minimum ROE as requirements. However to date, we have not had to terminate any of our celebrity endorsers that were initially successful.
Brian: Rather the celebrity endorsers that we've had to terminate we're never able to achieve our minimum ROE as requirements. During the initial trial period.
Brian: Unfortunately, we did lose one very successful celebrity endorser Governor Mike Huckabee duty his appointment as ambassador to Israel.
Brian: We are excited to be Onboarding, new prominent voices in media and politics, including Megyn, Kelly, Charlie Kirk and Lara Trump as new partners in Q1 of this year with their strong engaged audiences and influential platforms, we expect them to drive meaningful brand awareness.
Brian: <unk> and deliver strong results for the upcoming period. We are also expanding the platforms. We are where we are running our advertisements as more and more cable and internet platforms are green lighting, our advertising campaigns.
Brian: In the fourth quarter most of the $21 3 million in web sales, our highest margin sales channel were directly attributable to our current roster of Influencers. These influencers spread the word about our mission to provide less lethal personal security solutions.
Brian: And they have helped us successfully build a very strong brand awareness.
Brian: This has also allowed us to build a more robust multichannel marketing strategy that now includes traditional media such as cable and broadcast networks prior to our advertising pivot we were not allowed to.
Brian: <unk> cast on traditional broadcast TV channels.
Brian: Fast forward to now and we are able to advertise regularly on new networks and we are also frequently featured in new stories as less lethal solutions become a larger part of the conversation.
Brian: Yesterday I just returned from Nashville, where we had a retail store grand opening.
Brian: And three of the four local affiliates covered the opening two of them came to the event.
Brian: Took video of the shooting in the range.
Brian: And that story played more than 20 times in the local market.
Brian: This change from a year ago demonstrates that more and more people are becoming familiar with our products.
Brian: And they are beginning to see us as the solution to the epidemic of gun violence.
Brian: We also believe that the changes that have occurred in both public sentiment and the position of some of the social media platforms. Since the new administration was elected bode well for burner, we have traditionally been banned from advertising on social media and on most of the mainstream media platforms.
Brian: But with both social media and mainstream media relaxing their restrictions in the wake of the election, we are hopeful that a number of these channels will open up to US we are already seeing some movement with a number of the cable television networks and we have started to take advantage of these channels. We believe the burn has proven track record and saving lives.
Brian: <unk>, coupled with the normalization of the product category and the shift in public sentiment will allow us to continue to expand our advertising efforts and in turn the size of the audience that we were able to reach.
Brian: Additionally, we are building out our physical store presence to reach our customers in new ways. We have strong data from Las Vegas, Our first store, which in 2024 did in excess of $1 million in sales at a gross margin of more than 65%.
Brian: <unk>.
Brian: To support our thesis that when potential customers have the chance to fire the launcher and experienced less lethal difference we have decided to open an additional four stores as I mentioned, we just opened our Nashville store and I was there for the Grand opening.
Brian: We will be opening stores in the Scottsdale, Arizona and.
Brian: Salem, New Hampshire locations in the next few weeks in fact, Scottsdale will have its grand opening on February 19th and.
Brian: Salem, New Hampshire will have its grand opening on March 5th.
Brian: Our Fort Wayne, Indiana store is expected to come online in the March April timeframe, while we had initially planned to open a store in Pasadena, California, we had to pause those plans, while we evaluate the impacts of the recent wildfires.
Speaker Change: And in response to these wildfires Burnett donated 10% of the sales from a designated week in January to support those affected as our Chief marketing Officer, Lou and pharma, Los Angeles Native said Bernas mission has always been about protecting people and that includes supporting them when they're in need of help.
Speaker Change: As previously mentioned each of the stores. We are opening we will have a fire range four to five burner employees simple slapped wall design showcasing our less lethal products with these brick and mortar investments, we do expect our capital expenditures to be elevated in the first quarter, but we expect them to provide immense value in the long.
Speaker Change: Term.
Speaker Change: Similarly to the store in Las Vegas, we expect contribution margins to be in the 20% to 25% range from each store once they are fully ramped up which we expect to take four to six months after opening.
Speaker Change: If any of our investors our nearest store location I would urge you to go to the store and experienced this firsthand.
Speaker Change: On our last call I mentioned that we upgraded.
Speaker Change: But we were upgraded by our national accounted bass pro and Cabela's to all of their locations.
Speaker Change: Today I am pleased to share that we recently signed a letter of intent to form a new partnership with Sportsman's warehouse starting in the second quarter, we expect to be launching a burnout store within a store model at 11, Sportsman's warehouse locations across the United States.
Speaker Change: If this initial pilot program succeeds as we expect it will we plan to expand into 50 additional locations by the end of 2025 and 100 locations total by the end of 2026. This concept modeled after the success of Ralph Lauren's.
Speaker Change: Store within a store program is designed to rollout our.
Our brick and mortar experience more quickly than we would be able to do with our own retail presence.
Speaker Change: As part of this agreement each sportsman's warehouse will convert its existing archery range into a burner firing range, where customers can experience. Our launchers. We believe that this is a critical component to the program's success as the conversion rate in our brick and mortar stores is around 80%, while our conversion rate online.
Speaker Change: <unk> is a little over 1% burner has agreed to fund 50% of the build out of the store within a store.
Speaker Change: Locations.
Speaker Change: Each of Sportsman's stores, where they carry the store within a store model.
Speaker Change: Our confidence in this initiative is supported by our Las Vegas store data and also by a case study by a traditional gun store last year, where we opened up a store within a store.
Speaker Change: <unk> sporting goods in round Lake New York approached Us in May of 2020 for wanting to be a premier a burn of premier dealer.
Speaker Change: Because the axis, primarily a gun store they did not meet our premier dealer requirement. We then settled on trying a store within a store model and it quickly became a success in just seven months. The store had sales of $400000 of burn a product now as axis projecting more than a million dollars of sales.
Speaker Change: <unk> products in 2025. This is the type of success, we hope to replicate at Sportsman's warehouse with our initial 11 stores.
Speaker Change: We are also committed to providing training for the employees and support them with.
Speaker Change: Demo rounds and C. O two so that they can really get a lot of the traffic that goes into the sportsman's warehouse stores into the burner range.
Speaker Change: We are also leveraging strategic partnerships beyond retail recently at the shot show in Las Vegas, We announced our partnership with the U S. CCA, the United States concealed carry association to promote our less lethal solutions. The U S. CCA has nearly 1 million members and they will now.
Speaker Change: Access to burnout.
We believe that many of their members will be interested on our less lethal products. Because these are the most responsible gun owners gun owners that want to take training gun owners that want to have insurance in case something goes wrong.
Speaker Change: These are the people that are interested in the.
Speaker Change: Non lethal burner solution.
Speaker Change: Likewise, our customers will now have the opportunity to learn.
Speaker Change: From the C U S CCA from trading and education to self defense liability insurance.
Speaker Change: <unk>.
Speaker Change: Altogether, our momentum in retail expansion influencer marketing strategic partnerships positions us to attract new customers and convert them into long term supporters of burner and the less lethal movement.
Speaker Change: To support our growth initiatives, we successfully increased monthly launch of production. This year to 24000 units a 33% increase from our previous capacity of 18000 units to do this we implemented a second shift at our Fort Wayne, Indiana facility.
Speaker Change: Where we have been able to attract and retain top talent by increasing wages, 10% in the second half of last year.
Speaker Change: Which made us one of the higher paying manufacturers in the Fort Wayne.
Speaker Change: <unk>.
Speaker Change: Yes.
Speaker Change: In addition to expanding launch of production. We also opened our domestic ammunition facility just four miles down the road from our launch of facility in Fort Wayne The Onshoring of our ammo production is part of burners overall made in America strategy.
Speaker Change: This brings me to the recent discussions around the tariffs on goods.
Speaker Change: Coming in from China, Canada, and Mexico.
Speaker Change: You have raised questions.
Speaker Change: About the potential impact on burner.
Speaker Change: To clarify this these tariffs do not affect our current production costs in any meaningful way.
Speaker Change: <unk> sources, no components or launcher for its launches or ammunition for Mexico orphan, Canada with the only exception being the five count ammo tubes, which are produced in Canada and cost only nine to.
Speaker Change: The three tubes per kit totaled 27 cents so.
Speaker Change: A hypothetical 25% tariff would only add seven to eight kids.
Speaker Change: And as I said doesn't manufacturer any products in Mexico currently with regards to China burners exposure is very limited while we currently source certain magazine components from China, we have implemented a dual sourcing strategy securing production for the magazines in both India and South Africa as well this is <unk>.
Speaker Change: Sure as it burn is not dependent on China for any critical components mitigating the risk of increased tariffs.
Speaker Change: Accordingly, we would actually welcome higher tariffs on Chinese goods.
Speaker Change: As many of our competitors produce their products in China.
Speaker Change: As a result, the announced duties on China, Canada, and Mexico will have no impact on our production cost from a sales standpoint will potential retaliatory tariffs from Canada, and Mexico could impact our projected growth in these markets. We don't anticipate significant disruptions at this time.
Speaker Change: In 2024 furnace sales in Mexico grew to 890000 from 300000 the prior year. We expect this figure to at least double in 2025 in Canada sales grew from 1.3 dollars 6 million in 2023 to $2 $4 7 million in 2024.
Speaker Change: And we expect these sales to grow to approximately $4 million in 2025.
Speaker Change: That said, we are currently working with a partner to bring in and distribute our DTC launchers from inside Canada, which would significantly reduce the impact of any new tariffs or duties. We are keeping a close eye on involving evolving trade policies.
Speaker Change: But our diversified supply chain and strategic sourcing approach position us well to navigate through any potential shifts with minimal or no disruption.
Speaker Change: On a related note, even though China is not the sole supplier for anything we use in our launches our ammo we remain committed to exiting China by mid year and being in the position to source virtually 100% of the components needed for production of the burner SD early in CL models from you.
Speaker Change: Suppliers by the end of 2025, this transition will fully insulate us from any potential tariffs as well as create well paying jobs for American workers reduce lead times eliminate risks associated with unreliable foreign suppliers and supply chains and finally, it will allow us to advertise the burner.
Speaker Change: As a made in America products.
Speaker Change: This new state of the art ammo facility will house total of eight manufacturing machines that are capable of reducing both 68 caliber rounds, and 61 caliber rounds, which will need for our new compact launcher as well as 61 caliber finned tail payload rounds used in our.
Speaker Change: Payload 12 gauge less lethal ammunition.
Speaker Change: We believe that the interaction of the burn of Pepper and Max 12 gauge rounds, coupled with sportsman store their store partnership will help spur the sale of our less lethal 12 gauge rounds. In total these eight machines, we'll be able to produce 10 million payload.
Speaker Change: Rounds incur.
Speaker Change: Including $1 5 million.
Speaker Change: Until rounds for the 12 gauge once they are fully operational later this year.
We will this will help us keep up with the demand we see both here and internationally.
Speaker Change: Speaking of which we have seen significant success in Argentina on the ammunition side, the Cordoba Providence police committed to purchasing $1 7 million rounds of payload ammunition.
Speaker Change: Last month, this order, which will be shipped in 200000 round increments through the balance of 2025 underscores. The fact that the 13500 burner launchers sold to the Cordoba police departments have been deployed and are being used extensively to apprehend dangerous criminals.
Speaker Change: Pain the piece in Argentina.
Speaker Change: As a reminder, in 2024, we sold our stake in the joint venture Burner Latam.
Speaker Change: Which allows us to book the sales, we make to burn in Latam and to collect royalties on every launch or that they produce we believe that there is still significant untapped potential in these markets and our partners at Bertolli Tam will help us reach new customers and expand with our current customers as previous.
Speaker Change: As we reported we have left the door open to reacquire.
Speaker Change: The whole of burn of Latam.
Speaker Change: Should they reach critical scale and implement the accounting and internal controls appropriate for U S company.
Speaker Change: Looking ahead, we expect future growth to continue in both the United States and the international markets are compact launch remains on schedule and we believe that this new launch will provide us with significant sales booth and higher margins later in this year.
Speaker Change: As well as unlocking an audience.
Speaker Change: That is looking for a smaller launcher that is better concealed for a better suited for concealed carry.
Speaker Change: In conclusion, we are optimistic about the trajectory of the business. The ongoing success of our marketing efforts that resulted in less lethal becoming a much more widely accepted personal self defense category. In fact, we believe that the market for less lethal weapons among gun owners in the U S is in the tens of millions of consumers.
Speaker Change: This growing market coupled with the growth of our online presence the expansion of our retail presence and our growing international opportunities all reinforce our confidence in the long term demand for less lethal weapons generally and for burn of products in particular, well the first quarter historically experiences a seasonal slowdown in consumer.
Kevin: Spending we do expect to achieve very strong year over year growth as we continue executing on our strategic initiatives. We believe that burn is well positioned to generate additional cash and expand our profitability in 2025 and beyond that includes my prepared remarks, Kevin.
Speaker Change: Thank you have a company will that'd be taking questions from sell side analysts if you'd like to be placed in the question queue. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. One moment. Please while we poll for questions. Our first question is coming from Matt Koranda from Roth Capital partners.
Kevin: Line is now live.
Kevin: Sure.
Kevin: Hey, good morning team.
Kevin: Just curious if you could speak to any demand in sales trends in the first quarter to date curious.
Kevin: Curious specifically in January I guess since you probably have a full month of data there and then any notable changes since the new administration took office.
Kevin: Any context, you can provide around the loss of huckabee as well would be helpful.
Kevin: Yes.
Matt Koranda: Thank you very much Matt.
Speaker Change: We've been we've had five consecutive growth quarters, and I do not expect there to be a sixth consecutive growth quarter.
Speaker Change: As Q1 is traditionally a slower quarter for us that said.
Speaker Change: Q1 will be a record quarter, but for Q4. So it is a very strong quarter it will be well above the.
The previous high watermarks that we had.
Speaker Change: Last year other than the the fourth quarter.
Speaker Change: <unk>.
Speaker Change: There has been nothing really remarkable since the change in administration other than the willingness of more and more platforms to accept our advertising. So we think that that that shift is a very positive shift for us.
Speaker Change: Obviously by <unk>.
Speaker Change: Signing up large trumpf and Charlie Kirk we're trying to go after more of that audience that voted for.
And Trump, but we don't see any significant change in demand as a result, one way or the other as a result of the election with regard to our governor Huckabee well, we're sorry to.
Speaker Change: Let's see might go.
Speaker Change: Mike was a TVN, which is a relatively small network and although is ROE as was excellent. He was a relatively small endorser for us didn't.
Speaker Change: We're certainly not on the scale of a Sean hannity or Glen back so.
Speaker Change: Well, we will miss him on a personal level.
Speaker Change: I don't see that there's going to have any significant impact on our numbers.
Speaker Change: Okay very helpful.
Speaker Change: And then the flow through on your EBITDA was pretty impressive for the quarter.
Speaker Change: Obviously, you can see a lot of that coming from the good gross margin pull through that you guys had mentioned in sort of the production improvements curious also on the operating expense side, where you guys are getting the most leveraged as he mentioned leaning into marketing side assume theres not really leverage on that front.
Speaker Change: Maybe just discuss how we can think about incremental margins going forward as we head into fiscal 'twenty five.
Speaker Change: Sure Matt.
Speaker Change: Good to talk to you.
Speaker Change:
Speaker Change: You are right, we will continue to see our marketing increase throughout the year as we're leaning into the marketing. So I would expect to see that our variable selling expenses are remaining at 10% of sales.
Speaker Change: <unk> has been pretty consistent and we will continue.
Speaker Change: The rest of the expenses, we will have some elaborates the one call out I would say is as we open. These retail stores, we do have operating expenses related to those so.
Speaker Change: People in the labor costs associated with lease costs associated with that and we do expect some time before they run.
Speaker Change: Really ramp up to full revenue. So if you think about on a quarterly basis, that's probably four or $500000 incremental expense that we have on the retail stores and its probably a six month timeframe before those get ramped up to full speed.
Speaker Change: Okay, Alright, thats helpful. The rest of the explorer.
Speaker Change: Youll see a little bit.
Speaker Change: Some incremental I mean, we've done raises so you also see a few percentage points of increase but nothing drastic.
Speaker Change: If I could just add I think the biggest issue is these store openings. So as I mentioned I was just out of Nashville.
Speaker Change: Yes.
Speaker Change: We just had the grand opening on Wednesday, we've had staff there for going on two months now.
Speaker Change: So we've had people that have been setting up the store that had been training that had been traveling to Las Vegas to train.
Speaker Change: And then sales just started this week they start to have one to two launches a day you know.
Speaker Change: Las Vegas is up over 10 launches a day so we expect.
Speaker Change: We expect Nashville to be there over the next four to six months, but in the beginning as with any new business. We expect these to be loss leaders.
Speaker Change: And that's going to have some negative impact on our.
Speaker Change: Operating expense.
Speaker Change: Percentage.
Speaker Change: Okay fair enough.
Speaker Change: If you could maybe just speak a little bit more to the Sportsman's partnership.
Speaker Change: In terms of the impact.
Speaker Change: Do you expect on the.
Speaker Change: <unk> timing of the rollout it sounds like <unk> is kind of when we start seeing the 11 initial stores how quickly could we see the additional 50 that you mentioned, Brian in the prepared remarks, what do you need to see out of the partnerships and the initial 11 two to hit that next stage of the 50.
Speaker Change: And then maybe just lastly, if you could touch on how this may impact your own store rollout.
Speaker Change: Going forward and how we should be thinking about that in light of the partnership.
Speaker Change: The sportsman store rollout is very very important to us.
Speaker Change: Because these are existing stores. So the thing that slows us down with rolling out the burn of store is that.
Speaker Change: The amount of time it takes to secure lease to get approval from the police Department the fire Department to do the tenant improvements to.
Speaker Change: The higher the personnel so from the time, we select the city to the time that we can open up a store probably is six months.
Speaker Change: Our Sportsman's warehouse, where there is already an existing location already customer flow theres already space. There, there's an archery range and all that needs to be done is the conversion of this space from an archery range into a burn of store we're looking at three.
Speaker Change: Three or four weeks to take our location and turn it into an active store. So that's one of the things that's very very attractive about the deal with Sportsman's warehouse is that for us to rollout 100 stores could take us multiple years, whereas sportsman's could frankly roll them out as quickly as 12 months.
Speaker Change: If the numbers are there.
Speaker Change: So that brings us down to the question of what is it going to take to rollout additional stores.
Speaker Change: We think that these stores like Zacks could do a half a million dollars to $1 billion a year in each store I think sportsman's is looking at much lower numbers than that honestly I think that they would be happy rolling these stores out if they were in the <unk>.
Speaker Change: <unk> to $300000 range per store within a store and I think in speaking with management, there and speaking with the CEO Sportsman's.
Speaker Change: They're using these 11 stores for them to get comfortable with the concept, but they are fully committed to rolling these out into the full 100 stores as quickly as possible provided that the concept is economically viable.
Speaker Change: Okay. Thanks, a lot of sense.
Speaker Change: I'll leave it there and.
Speaker Change: Great quarter guys.
Speaker Change: Thank you.
Speaker Change: Thank you. Your next question is coming from Jeff Van <unk> from B Riley Securities. Your line is now live.
Speaker Change: Good morning, everyone and just a follow up on the Sportsman's warehouse.
Speaker Change: Have you thought about sort of a timeframe when you can declare success.
Speaker Change: Success hitting the targets is it six months out from now nine months out any sense you can give us there.
Speaker Change: We know from our own stores that we're looking at four to six months.
Speaker Change: To really get comfortable that these stores are hitting their stride.
Speaker Change: Sportsman's warehouse may happen more quickly than that because we have to drive traffic to our stores.
Speaker Change: <unk> set up a Billboard campaign in the greater Nashville area to make people aware of the store and to get them in we're starting with coffee splitting with Sean Hannity, Glenn back to make people aware that theres a store in Nashville.
Speaker Change: With Sportsman's you already have significant traffic.
Speaker Change: You already have customers in the store. So we would guess that it will happen more quickly that said, it's not going to happen overnight I mean, there is going to take some number of months.
Speaker Change: So I would be.
Speaker Change: I am hopeful that in the next three to four months.
Speaker Change: These stores will start to produce profits that would encourage sportsman's warehouse to roll them out to other locations.
Speaker Change: Okay, Great to hear and then if we can turn to production plans.
Speaker Change: <unk>.
Speaker Change: There for a moment.
Speaker Change: So wondering if there are any shortages in components in your supply chain.
Speaker Change: And then maybe if you could touch on inventory levels that you expect.
Speaker Change: Maintaining as you continue to grow.
Speaker Change: Okay sure.
Speaker Change: So as far as production levels, we mentioned that we're up to 24000, a month and we plan to continue that we don't have any shortage of parts. So we're keeping on top of that and getting parts and timely we do expect to grow inventory through the first quarter, mainly partially into the second quarter until we get to.
Speaker Change: The launch of our CLO as we are starting production of our Seattle.
Speaker Change: As we've mentioned previously we want to have 30000 of those produced and ready to go before that product launch, which we expect to be in the summer of this year. Some midyear this year.
So that will increase our inventory in the neighborhood of about $5 million, we expect.
Speaker Change: Okay helpful to know that $5 million is just for the compaq launch or.
Speaker Change: Just for the compact launch here.
Speaker Change: Okay fair enough.
Speaker Change: And then I know you guys generally don't provide guidance, but wondering if there's if you want to say anything about what level of revenue growth or gross margin seems attainable in 2025, and then maybe.
Speaker Change: Given some of the year.
Speaker Change: As to ramp retail, perhaps the level of EBITDA margin that seems feasible to Angela.
Speaker Change: Yes, we don't want to give any numerical guidance to the top line.
Speaker Change: But we can say that it's the same 100% growth we had in 'twenty four but it will be very strong double digit growth year, we're already seeing that in Q1, and we expect as we get into Q3 and Q4 with the implementation of the compact launcher that we'll see.
Speaker Change: Very very strong growth.
Speaker Change: In terms of margins.
Speaker Change: As you could see.
Speaker Change: We've been seeing increasing margins all the way through last year.
Speaker Change: We expect that to continue.
Speaker Change: We expect it to continue for a couple of reasons as Laurie pointed out.
Speaker Change: We've been doing a lot of work to reduce costs.
Speaker Change: We've been benefiting from economies of scale as we grow the business and.
Speaker Change: And frankly, as we bring out the compact launch or.
Speaker Change: We're going to be bringing out a higher margin product so as we get into the third and fourth quarter.
Speaker Change: We expect margins to exceed where we ended up at the end of 2024.
Speaker Change: We had talked about just sort of EBITDA margins historically that you know as we hit a $100 million, we should be in the mid teens as we hit $125 million, we should be in the high teens as we get up to $150 million, we should be in the low.
Speaker Change: <unk>.
Speaker Change: And probably a terminal gross margin of somewhere close to 30% that we will hit when we're at the $175 $200 million Mark.
Speaker Change: Okay. That's helpful. Thanks for taking my questions I'll take the rest offline.
Jeff Van: Thank you Jeff thank.
Jon Hickman: Thank you next question is coming from Jon Hickman from Ladenburg Thalmann. Your line is now live.
Jeff Van: Hi.
Speaker Change: Nice results.
Jeff Van: So congratulations.
Jeff Van: Just one question about the sports.
Jeff Van: Partnership.
Jeff Van: Are any of the employees in those store within a store is going to be burning employees or are they all going to be sportsmen.
Jeff Van: Kind of control.
Jeff Van: Yeah.
Speaker Change: Performance, Yes, that's a very good question John they are not going to be sportsman's theyre not going to be burnt employees. They are going to be sportsman's employees and thats one of the benefits for US now we have committed to significant training and it is in our best interest to train. So we are involved in the design of the store.
Speaker Change: <unk> the look of the store the feel of the store, we will train all the personnel and we will train them using what we call a tier three or train the trainer program. So that each of these employees that we train will then be able to train other employees in the store.
Speaker Change: Sportsman's warehouse has committed to having many of their employees in the store be trained to operate the range and to sell burners.
Speaker Change: So we're going to be very involved we have also agreed to having burn of personnel on site at least twice a year in each of the locations.
Speaker Change: To provide demo days using our trailer and other ways to support.
Speaker Change: Sportsman's.
Speaker Change: But the real benefit here is that.
Speaker Change: We're able to use the sportsman's footprints and we're able to use the sportsman's balance sheet to grow our business.
Speaker Change: Okay.
Speaker Change: So back.
Speaker Change: Back to the build out there.
Speaker Change: I think he said that each of your life.
Speaker Change: Like the Nashville storm et cetera, that's a 400 or 500000 dollar spend.
Speaker Change: Whether you want to save for the expense for the Sportsman's store within a store.
Speaker Change: Hi, John will play so just one correction or our build out of our stores are in the 200 to $250000 range for most of our retail stores okay.
Speaker Change: Sportsman's, though because they already had to start all they're doing is reconfiguring space and changing some of the the fixtures and furniture fixtures and they're estimating to be about 15000 of which we're going to pay. So it's 7500 per store. This is not a large expense for us.
Speaker Change: Okay and then.
Speaker Change: They're going to carry all your product your rightful all the ammo that kind of thing.
Speaker Change: Their agreement is as with the Premier dealers to carry a full representative range of products that may not mean every single product we carry in every single location.
Speaker Change: But very very close so the intention is to carry everything that sells.
Speaker Change: And this is four.
Speaker Change: For Sportsman's.
Speaker Change: Creating a whole personal safety personal self defense division so.
Speaker Change: They've been focused almost exclusively on hunting hunting is five months of year season.
Speaker Change: Personal safety is 12 months, a year 365 days a year.
Speaker Change: And Bernard will sort of be the anchor for this personal safety.
Speaker Change: Segment of their marketing campaign, so they do want to carry everything.
Speaker Change: Arsenal safety related.
Speaker Change: Okay and.
Speaker Change: I guess, that's it for me Thank you and thank you John.
Speaker Change: Okay.
Speaker Change: Thank you we reached end of our question and answer session I'd like to turn the floor back over for any further or closing comments.
Kevin: Okay, Kevin Thank you.
Kevin: I appreciate your continued interest in Buena.
Kevin: And I want to thank all of our investors and customers for your continued support thank you very much.
Kevin: Thank you that does conclude today's teleconference and webcast you may disconnect. Your lines at this time and have a wonderful day, we thank you for your participation today.