Q2 2025 Byrna Technologies Inc Earnings Call
Good morning, welcome to burn as fiscal second quarter 2025 earnings Conference call. My name is Daryl and I will be your operator for today's call joining us for today's presentation are the company's CEO, Brian <unk> and CFO Lawrie Karnes following their remarks, we will open the call to.
Operator: Good morning.
Operator: Welcome to Byrna's fiscal second quarter 2025 earnings conference call. My name is Daryl, and I will be your operator for today's call.
Operator: Joining us for today's presentation are the company's CEO, Bryan Ganz, and CFO, Laurilee Kearnes. Following their remarks, we will open the call to questions.
Questions earlier today burner released results for its fiscal second quarter ended May 31, 2025, the copy of the press release is available on the Companys website.
Operator: Earlier today, Byrna released results for its fiscal second quarter ended May 31st, 2025. A copy of the press release is available on the company's website.
Operator: Before turning the call over to Bryan Ganz, Byrna Technology's Chief Executive Officer, I will read the Safe Harbor... Some discussions held today include forward-looking statements. Actual results could differ materially from the statements made today.
Lawrie Karnes: Before turning the call over to Brian gas burner technology, as Chief Executive Officer, I will read the Safe Harbor statement.
Some discussions held today include forward looking statements actual results could differ materially from the statements made today.
Operator: Please refer to Byrna'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.
Lawrie Karnes: Please refer to burners, most recent 10-K and 10-Q filings for a more complete description of risk factors that could affect these projections and assumptions.
Lawrie Karnes: The company assumes no obligation to update forward looking statements as a result of new information future events or otherwise.
Operator: 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 Now, I would like to turn the call over to Byrna's CEO, Bryan Ganz. Sir, please. Thank you, Daryl. And thank you, everyone, for joining us today.
Lawrie Karnes: This call will include references to non-GAAP results. Please see the press release in the investors section of our website.
Speaker Change: <unk> got burner dotcom.
Speaker Change: 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 burn our CEO, Brian <unk>. Sir. Please proceed.
Speaker Change: Thank you Daryl and thank you everyone for joining us today.
Bryan Ganz: 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 second quarter ended May 31, 2025.
Speaker Change: 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 second quarter ended May 31 2025.
Laurilee Kearnes: As usual, I will start by turning the call over to our CFO, Laurilee Kearnes, who will review our financial results for the period. Following her remarks, I'll discuss the operational highlights that drove our 41 percent year-over-year revenue growth and continued gap and non-gap EBITDA profitability for the quarter.
Speaker Change: As usual I will start by turning the call over to our CFO, Laura <unk>, who will review our financial results for the period.
Speaker Change: Following her remarks, I will discuss the operational highlights that drove our 41% year over year revenue growth and continued GAAP and non-GAAP EBITDA profitability for the quarter I will then offer insight into our strategy on a go forward basis before we open the call to questions from our covering research Andy.
Bryan Ganz: I will then offer insights into our strategy on a go-forward basis before we open the call to questions from our covering research analysts.
Laurie Karnes: Laurie Thank you, Brian and good morning, everyone. Let's review our financial results for the fiscal second quarter ended March 31st 2025, net revenue for Q2 2025 with $28 five.
Laurilee Kearnes: Laurie. Thank you, Bryan.
Laurilee Kearnes: Good morning, everyone. Let's review our financial results for the fiscal second quarter ended May 31, 2025. Net revenue for Q2 2025 was $28.5 million, a 41% increase from the $20.3 million reported in the fiscal second quarter of 2024. This $8.2 million increase was driven by the launch of the CL, increased dealer and chain store sales, and broader brand adoption. In Q2, direct-to-consumer revenues increased by $2.2 million through Byrna.com and Amazon.com compared to the prior year period. Additionally, sales to dealers increased by $3.9 million, or 106%. largely driven by initial stocking orders for Sportsman's Warehouse. Gross profit for Q2 2025 was $17.6 million or 62% of net revenue compared to $12.6 million or 62% of net revenue for Q2 2024.
Laurie Karnes: 41% increase from the 23 million reported in the fiscal second quarter of 2020 for this $8 2 million dollar increase was driven by the launch of the Seattle increased dealer and chain store sales and broader brand adoption in Q2 direct to consumer revenues increased by.
Laurie Karnes: $2 2 million to burn a dot com and Amazon dot com compared to the prior year period.
Laurie Karnes: Additionally, sales to dealers increased by $3 9 million or.
Laurie Karnes: 106%.
Laurie Karnes: Largely driven by initial stocking orders for Sportsman's warehouse.
Laurie Karnes: Gross profit for Q2, 2025 was $17 6 million or 62% of net revenue compared to $12 6 million or 62% of net revenue for Q2 2020 for the.
Laurilee Kearnes: The introduction of the Compact Launcher led to a favorable product sales mix that offset any decrease due to a change in channel mix from stronger dealer sales. Operating expenses for Q2 2025 were $14.2 million compared to $10.6 million for Q2 2024. The increase in operating expenses was driven by increased variable selling expenses, discretionary marketing spend, and higher payroll costs, as well as some expenses directly related to the launch of the Compact Launch. Net income for Q2 2025 was $2.4 million, compared to $2.1 million for Q2 2024. This increase was driven by the overall increase in product sales, which was partially offset with higher income tax expense for the quarter.
Laurie Karnes: The introduction of the compact lawn chair led to a favorable product sales mix that offset any decrease due to a change in channel mix from stronger deal ourselves.
Laurie Karnes: Operating expenses for Q2, 2025 were $14 2 million compared to $10 6 million for Q2 2024.
Laurie Karnes: The increase in operating expenses was driven by increased variable selling expenses discretionary marketing spend and higher payroll costs as well as some expenses directly related to the launch of the compact coloccia.
Laurie Karnes: Net income for Q2, 2025 was $2 4 million compared to $2 1 million for Q2 2020 for.
Laurie Karnes: This increase was driven by the overall increase in product sales, which was partially offset with higher income tax expense for the quarter.
Laurilee Kearnes: As mentioned in our last call, 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-gap metric for Q2 2025 totaled $4.3 million compared to $2.8 million for Q2 2024. Cash, cash equivalents, and marketable securities at May 31, 2025 totaled $13 million, compared to $25.7 million at November 30, 2024. The decrease reflects the planned increase in inventory ahead of the Compact Launcher release and normal seasonal working capital movement.
Laurie Karnes: As mentioned in our last call 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.
Laurie Karnes: Adjusted EBITDA and non-GAAP metrics for Q2, 'twenty twenty-five totaled $4 3 million compared to $2 8 million for Q2 2024.
Laurie Karnes: Cash cash equivalents in marketable securities at May 31, 2025 totaled 13 million compared to $25 7 million at November 32024.
Laurie Karnes: The decrease reflects the planned increase in inventory ahead of the compact launcher release and normal seasonal working capital movements inventory at May 31, 2025 totaled $32 3 million compared to 20 million at November 30 of 2024.
Laurilee Kearnes: Inventory at May 31, 2025 totaled $32.3 million compared to $20 million at November 30, 2025. The company has no current or long-term debt.
Laurie Karnes: Company has no current or long term debt.
I'll now turn it back to Brian.
Bryan Ganz: Thanks, Laurie. As our results demonstrate, the sales momentum from the launch of our compact launcher in May catapulted us to a new quarterly revenue record of $28.5 million. We achieved this significant 41% year-over-year growth despite the slowdown in consumer spending and the subdued sales in April that we saw while people waited for the launch of the Compact Launcher. It's important to note that we were able to achieve these record sales without yet selling the Compact Launcher on Amazon, which as everyone knows has been growing at a faster rate than Byrna.com. As of May 27th, however, the CL is now available on Amazon and is included in this week's Prime Day sales event.
Brian: Thanks Laurie.
Brian: As our results demonstrate the sales momentum.
Brian: From the launch of our compact launcher in May catapulted us to a new quarterly revenue record of $28 5 million.
Brian: We achieved this significant 41% year over year growth. Despite the slowdown in consumer spending and the subdued sales in April that we saw well people waited for the launch of the compact launcher.
Brian: Important to note that we were able to achieve these record sales without selling the compaq launch on Amazon, which as everyone knows has been growing at a faster rate than BARDA dot com.
Brian: As of May 27th However, the <unk> is now available on Amazon and is included in this week's Prime day sales event.
Bryan Ganz: We believe that having the compact launcher on Amazon will significantly increase product visibility and will help support future sales growth. As a reminder, the fee on products sold through Amazon is 15%. That said, we are somewhat agnostic as to whether we sell through Amazon or Byrna.com as our net margins are not that much different as there are several areas of savings on Amazon, including no credit card fees, no Shopify fees, and lower outbound freight. Additionally, our advertising costs are significantly lower on Amazon. Laurie spoke about Sportsman's Warehouse. That was another important driver for last quarter, and it was a solid start to our partnership with Sportsman's Warehouse.
Brian: We believe that having the compact long assurant Amazon will significantly increase product visibility and will help support future sales growth as a reminder, the fee on products sold through Amazon is 15% that said, we are somewhat agnostic as to whether we sell through Amazon or burden of dot com as our.
Brian: Net margins, our net margins are not that much different as there are several areas of savings on Amazon, including no credit card fees, no shopify fees and lower outbound freight. Additionally, our advertising costs are significantly lower than Amazon.
Brian: Lorie spoke about Sportsman's warehouse that was another important driver.
Brian: For last quarter.
Brian: It was a solid start to our partnership with Sportsman's warehouse Q2 dealer sales as Lorie mentioned were up 106% or $3 $9 million with the bulk of that coming from Sportsman's initial stocking order, which drove $2 4 million of the $3 9 million increase in dealer sales.
Bryan Ganz: Q2 dealer sales, as Laurie mentioned, were up 106% or $3.9 million, with the bulk of that coming from Sportsman's initial stocking order, which drove $2.4 million of the $3.9 million increase in dealer sales. During the quarter, we launched 21 store-within-a-store locations, 14 of which have a Byrna-supplied shooting pod. Another 34 stores have Byrna's point-of-sale display, which is a four-sided fixture. And finally, four more Sportsman stores use Sportsman-supplied end caps to offer Byrna products. This brings the total number of Sportsman locations that currently stock Byrna products to 59 stores. Even in the locations that only have a Byrna point of sale display or a Sportsman supplied end cap, Sportsman sales associates can let people test fire the Byrna in their archery range.
Brian: During the quarter, we launched 21 store within a store locations 14 of which have a burner supply shooting part another.
Brian: Another 34 stores have burn as point of sale display, which is a four sided fixture and finally four more sportsman stores use sportsmen supplied end caps to offer Berta products. This brings the total number of sportsman's locations that currently stock burn of products to 59 stores.
Brian: Even in the locations that only have a burn of point of sale display or a sportsman supplied encap sportsman sales associates can let people test fire the burner in their archery range and.
Bryan Ganz: And many of the Sportsman's locations have successfully taken advantage of this opportunity to allow potential customers to test fire the Byrna launchers. And as a result, some of the locations, that is the locations with just a point of sale display, are outperforming Sportsman's locations that have a Byrna shooting pod. We recently staffed 12 of the Sportsman's locations that have a store within a store with a Byrna representative, or what we call our Byrna Geniuses. These are representatives that can walk customers through the less lethal experience. It is our intention to provide Byrna Geniuses for every store with a shooting pod.
Brian: And many of the sports dislocations have successfully taken advantage of this opportunity to allow potential customers to test fired the burn of launchers and as a result, some of the Pos locations that as the locations with just a point of sale display are outperforming sportsman's locations that have a burn of shooting part.
Brian: We recently staff 12 of the Sportsman's locations that have a store within a store with a burner representative or what we call our burner geniuses.
Brian: These are representatives that can walk customers through the less lethal experience. It is our intention to provide burnett geniuses for every store with a shooting pod. We believe that this in store support will further strength in sales going forward.
Bryan Ganz: We believe that this in-store support will further strengthen sales going forward. I have to say that both Byrna and Sportsman are pleased with the initial results of the partnership and sales have grown every single week since we started off the program. As a result, we are looking to add nine more shooting pods in Sportsman's best locations over the next several months. At the same time, Byrna and Sportsman are working on outfitting an additional 72 stores with Byrna's POS displays, which would bring the total number of Sportsman stores that carry Byrna to approximately 140 locations by year end.
Speaker Change: I have to say that both Bernard and Sportsman's are pleased with the initial results of the partnership as sales have grown every single week. Since we started off the program. As a result, we are looking to add nine more shooting pods in Sportsman's best locations over the next several months at the same time berna in Sportsman's are working on outfit.
Speaker Change: An additional 72 stores with burn is Pos displays which would bring the total number of sportsmen stores that carry burner to approximately 140 locations by year end. It is important that we bring on the remaining sportsmen stores as quickly as possible as our celebrity endorsers such as <unk>.
Bryan Ganz: It is important that we bring on the remaining Sportsman stores as quickly as possible, as our celebrity endorsers, such as Tucker Carlson, are now telling their audiences that they can try and buy Byrna's range of non-lethal launchers at their nearest Sportsman's warehouse location. Other outdoor and sporting goods chains are starting to take notice of the success that Sportsman's Warehouse is having with Byrna, and while Byrna cannot offer these chains a shooting experience due to our exclusive arrangements with Sportsman's Warehouse, we are seeing increased interest in Byrna, which is translating into more stores carrying Byrna. Specifically, five sporting goods, a chain with over 400 locations, and Shields, who are already carrying Byrna products, are growing the number of stores stocking Byrna.
Carlson: Carlson, our now telling their audiences that they could try and buy burners range of non lethal launches at their nearest sportsman's warehouse location.
Carlson: Other outdoor and sporting goods chains are starting to take notice of the success that Sportsman's warehouse is having with burner and well burner cannot offer these changes shooting experience due to our exclusive arrangements with Sportsman's warehouse. We are seeing increased interest in <unk>, which is translating into more <unk>.
Carlson: Stores carrying burner.
Carlson: Specifically bill.
Speaker Change: <unk> sporting goods chain with over 400 locations and shields, who are already carrying burner products are growing the number of stores stocking burner.
Bryan Ganz: At the same time, they're expanding the range of products that each store will carry. We're also seeing interest from new chains that we've not worked before, including Dunham's Sports, a chain with 260 locations that is testing the market. Perhaps most interesting to me is we're seeing interest from chains that serve new markets, such as farming and ranching. This quarter, both Rural King with 123 stores and Family Farm and Home with 73 stores will be putting Byrna in a number of their stores as they test the market. Expanding our brick-and-mortar footprint is critically important in the current market environment as the retail market generally, and the firearms industry specifically, are facing economic headwinds due to falling consumer confidence driven in part by uncertainty over interest rates and the effect of tariffs.
Speaker Change: At the same time, they are expanding the range of products at each store will carry we are also seeing interest from new chains that we've not worked before including denim sports a chain with 260 locations that is testing the market. Perhaps most interesting to me is we are seeing interest from change that serve new markets.
Speaker Change: Such as farming and ranching this quarter, both rural King with 123 stores and family farm at home with 73 stores, we'll be putting burner in a number of their stores as they test the market.
Speaker Change: Expanding our brick and mortar footprint is critically important in the current market environment as the retail market generally.
Speaker Change: Firearms industry, specifically are facing economic headwinds due to falling consumer confidence driven in part by uncertainty over interest rates and the effect of tariffs.
Bryan Ganz: By growing the number of outdoor and sporting goods stores carrying Byrna and by expanding the range of products that they carry, and perhaps most importantly, by expanding the markets that we're able to go after, such as the farm and ranch market, we can continue to grow our top and bottom line, even in the wake of a softer retail environment. For our company-owned stores, these stores have performed exceptionally well and are ahead of where we anticipated them to be at this point in the year. Just five months after opening, our stores in Scottsdale, Nashville, and Fort Wayne are already profitable, and we expect our Salem store to become profitable in the near future.
Speaker Change: By growing the number of outdoor and sporting goods stores carrying burnout and by expanding the range of products that they carry.
Speaker Change: Perhaps most importantly by expanding the market. So we're able to go after such as the farm <unk> Ranch market. We can continue to grow our top and bottom line, even in the wake of a softer retail environment.
Speaker Change: Our company owned stores.
Speaker Change: These stores have performed exceptionally well.
Speaker Change: We are ahead of where we anticipated them to be at this point in the year just five months after opening our stores in Scottsdale, Nashville, and Fort Wayne our already profitable and we expect our sale in store to become profitable in the near future when combined all five of our retail stores averaged 60.
Bryan Ganz: When combined, all five of our retail stores averaged $69,000 in sales in May, which annualizes to approximately $800,000 per store, which is way above their break-even point. We are incredibly encouraged by the success of these stores. Scottsdale, in particular, is already running at the same level as our long-standing Las Vegas store. While we don't have any immediate plans to expand our company-owned store model, we see long-term potential for these stores in select markets that are not really served by our retail partners. We also want to use what we learn at our company-owned stores to assist our premier dealers.
Speaker Change: $9000 in sales in May which annualized to approximately $800000 per store, which is way above their breakeven point. We are incredibly encouraged by the success of these stores Scottsdale in particular is already running at the same level as our longstanding Las Vegas store.
Speaker Change: Well, we don't have any immediate plans to expand our company owned store model, we see long term potential for these stores.
Speaker Change: Select markets that are not really served by our retail partners. We also want to use what we learned at our company owned stores to assist our premier dealers.
Speaker Change: That's all.
Bryan Ganz: that are running a very similar type of store to our retail stores. We are in the process of rolling out a revised premier dealer program with more generous pricing, including price protection, in exchange for higher annual commitment.
Speaker Change: We are running a very similar type of store to our retail stores. We are in the process of rolling out a revised.
Speaker Change: Premier dealer program with more generous pricing, including price protection in exchange for higher annual commitments.
Bryan Ganz: On the international markets, we generated $2.6 million in international sales this quarter. This is an 86% increase from the prior year period. This included a one-time bump in royalties from our partners in Latin America. As you may remember, last year we sold our ownership stake in Byrna Latam while retaining an option to buy back the entire company. Byrna Latam is now simply a distributor and Byrna licensee. Under our agreement, we both sell product to Byrna Latam and we earn royalty income on products they produce under license from Byrna, which include the Byrna SD, the Byrna Mission 4, and CertNamo.
Speaker Change: On the international markets, we generated $2 6 million in international sales. This quarter. This is an 86% increase from the prior year period. This included a onetime bump in royalties from our partners in Latin America.
Speaker Change: As you May remember last year, we sold our ownership stake in burn of Latam, while retaining an option to buy back the entire company burden Latam is now simply a distributor and burn a licensee under our agreement we both sell product to burn of Latam and we earn royalty income on products they produce under license from <unk>.
Speaker Change: <unk>, which includes the burner SD the Burnham mission for and certain ammo.
Bryan Ganz: We are extremely encouraged by the success that Byrna Latham is seeing in South America, and as a result, we do expect to exercise our call option at some point in the future where Byrna Latham is both consistently profitable and honestly can pass a U.S. public company audit.
Speaker Change: We are extremely encouraged by the success. The Berta Latam is seeing in South America and as a result, we do expect to exercise our call option at some point in the future where burner Latam as both consistently profitable honestly can pass the U S public company audits.
Speaker Change: To support our growth we have continued to expand our marketing efforts.
Bryan Ganz: To support our growth, we've continued to expand our marketing efforts. Last month, we brought on Tucker Carlson to our roster of celebrity influencers. Tucker, like Sean Hannity and other successful influencers, has a large audience of primarily conservative listeners. So far, the early results of the partnership have been encouraging. We are also currently in ongoing discussions to bring on a few marquee celebrity endorsers that have enormous audiences that cover a much wider swath of the American public. We will keep you informed of our progress as these negotiations progress. In addition to expanding our influencer strategy, we have begun using AI to quickly scale content production and increase the frequency of our advertising across various platforms. This has helped us produce more tailored content both faster and more efficiently as we react to the acceptability and effectiveness of our ads.
Speaker Change: Last month, we brought on Tucker Carlson to our roster of celebrity and Influencer.
Speaker Change: <unk> like Sean Hannity and other successful Influencers has a large audience of primarily conservative listeners. So far the early results of the partnership had been encouraging. We are also currently in ongoing discussions to bring on a few mark key celebrity endorsers that have enormous audiences that cover a much <unk>.
Speaker Change: Wider swath of the American public.
Speaker Change: And we will keep you informed of our progress as these negotiations progress.
Speaker Change: In addition to expanding our Influencer strategy, we have begun using AI to quickly scale content production and increase the frequency of our advertising.
Speaker Change: <unk> various platforms.
Speaker Change: This has helped us produce more tailored content, both faster and more efficiently as we react to the acceptability and effectiveness of our ads I am not sure if you've seen our new banana commercial in which potential victims are carrying a banana rather than a BARDA not only does this allow us to get around.
Bryan Ganz: I am not sure if you've seen our new banana commercial in which potential victims are wearing a banana rather than a Byrna. Not only does this allow us to get around the sensors that won't permit advertising that shows a weapon, it is sufficiently intriguing to get people to come to our website to see what the Byrna really is. This piece of creative, which has proven extremely effective and is generating a very high ROAS, was produced entirely using AI programs, allowing us to produce a 30-second commercial in hours at essentially no cost that would have otherwise taken several months and would have cost several hundred thousand dollars to produce.
Speaker Change: The sensors that won't permit advertising that shows a weapon. It is sufficiently intriguing to get people to come to our website to see what the burner really is this piece of creative which has proven extremely effective and is generating a very high ROE as was produced entirely using AI programs, allowing us to <unk>.
Speaker Change: <unk>, a 32nd commercial in hours at essentially no cost that would have otherwise taken several months and would have cost several hundred thousand dollars to produce.
Bryan Ganz: Next month, we plan to introduce ByrnaCare. ByrnaCare will be a source of recurring revenue in which we will offer to replace the Byrna launcher, no questions asked, if it is lost, stolen, damaged, or confiscated. This will be our first foray into the recurring revenue model, which we hope to augment next year when we install a chipset in the CL that will be able to contact the authorities in the event that the launcher is used in self-defense. We also saw an uptick this quarter during the ICE protests in June. As many television news stations were covering events, less lethal was at the forefront of the national conversation, and Byrna naturally appeared as a trusted leader in this space.
Speaker Change: Next month, we plan to introduce burn occur.
Speaker Change: Burnett care will be a source of recurring revenue in which we will offer to replace the burner launch or no questions asked if it has lost stolen damaged or confiscated this will be our first foray into the recurring revenue model, which we hope to augment next year when we install a chipset.
Speaker Change: Yet in the CL that we'll be able to contact the authorities in the event that the launch or issues in self defense.
Speaker Change: We also saw an uptick.
Speaker Change: This quarter during the ice protests in June as many TV news stations recovering events less lethal was at the forefront of the national conversation and burn a nationally appeared as a trusted leader in this space. These type of events further normalize, but less lethal market and highlight <unk> role in that.
Bryan Ganz: These type of events further normalize the less lethal market and highlight Byrna's role in the personal safety market. The continued normalization of our product category generally, and of Byrna specifically, has allowed us to garner significant earned media. In fact, last night I was on the NBC Evening News to discuss tariffs, which drove thousands of incremental sessions. It was the night before I was on Fox News, also discussing tariffs. Our goal is that through increased...
Speaker Change: Personal safety market.
Speaker Change: The continued normalization of our product category generally and of burner, specifically has allowed us to garner significant earned media in fact last night I was on the NBC evening news to discuss tariffs, which drove thousands of incremental sessions. The night before I was on Fox News also discussing tariffs.
Speaker Change: Our goal is that through increased.
Speaker Change: Ladies and gentlemen, please standby for technical difficulties.
Bryan Ganz: Ladies and gentlemen, please stand by for technical difficulties. please stand by. Okay, thank you. We are all set. Laurie, Bryan, you're good to go. Okay, I apologize. It appears that we got disconnected. I believe we were disconnected when I was talking about production. As we move into the second half of the year, we are actively working to keep our production in line with demand. Ahead of the Compact Launcher debut, production was running at 24,000 units a month as we worked to build up inventory. We now have a solid inventory position in place. We've reduced production to a steady state of 15,000 units per month across all of our various launchers, and we have the ability to adjust to changes in demand on a real-time basis.
Speaker Change: Please standby.
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Speaker Change: Okay. Thank you we are all set.
Speaker Change: Laurie Brian Youre good to go.
Speaker Change: Okay I apologize it appears that.
Speaker Change: Got disconnected I believe we are disconnected when I was talking about production.
Speaker Change: As we move into the second half of the year.
Speaker Change: We are actively working to keep our production in line with demand.
Speaker Change: Ahead of the compact lodger debut production was running at 24000 units a month as we work to build up inventory. We now have a solid inventory position in place we've reduced production to a steady state of 15000 units per month across all of our various launches.
Speaker Change: And we have the ability to adjust to.
Speaker Change: Changes in demand on a real time basis.
Bryan Ganz: Following the Compact Launcher debut, we've seen what we expected, which is some cannibalization of the LE Launcher, given the relatively small price difference between the LE at $479 and the Compact Launcher at $549. This has caused customers to gravitate to the Compact Launcher. Honestly, the Compact Launcher has better margins, so we're just as happy to see people gravitating away from the LE to the CL. The CL, in fact, is 38% smaller, 36% lighter than the Byrna SD. Our entry-point launcher, yet it is just as powerful in terms of energy density, or joules per square inch, as our most powerful launcher, the Byrna LE.
Speaker Change: Following the compact launcher.
Speaker Change: Debut.
Speaker Change: Seeing what we expected which is some cannibalization of the early launch or given the relatively small price difference between the <unk> at $4 79, and the comp backlogs are at $5 49.
Speaker Change: This has caused customers to gravitate to the comp at launch or honestly the compact larger has better margins. So we're.
Speaker Change: We're just as happy to see people gravitating away from the LTE to the CL.
Speaker Change: The Seattle in fact is 38% smaller 36% lighter than the burner SDR entry point launcher. Yes. It is just as powerful in terms of energy density or joules per square inch as our most powerful larger Barnett Ali It's also 27% now.
Bryan Ganz: It's also 27% narrower than our current pistols, which make it ideal to conceal carry. As I said, we don't really mind the cannibalization. The CL helps our margins with a 7% to 8% point advantage over the other launchers. Additionally, we shifted production away from traditional assembly lines to a more efficient assembly pod-based manufacturing system, which is reducing our labor requirements and improving our first-pass yield. This initiative, along with our on-shoring or re-shoring initiatives, is improving, as Looking ahead, while we expect consumer sentiment to remain subdued, which may impact what I refer to as same-store sales, I believe that we will continue to grow our top line between 25% and 40% as a result of more stores carrying an increasing array of Byrna products and as a result of the continued normalization of our product category and the impact of earned media.
Speaker Change: Lower than our current pistols, which make it ideal to conceal carry.
Speaker Change: As I said, we don't really mind, the cannibalization of the CL helps our margins with a seven to eight percentage point advancements over the other launches.
Speaker Change: Additionally, we shifted production.
Speaker Change: Away from traditional assembly lines to a more efficient assembly pod based manufacturing system, which is reducing our labor requirements and improving our first pass yield.
Speaker Change: This initiative, along with our onshoring or re shoring initiatives easy improving as I said first pass yield.
Speaker Change: Reducing manufacturing variances and improving.
Speaker Change: And quality.
Speaker Change: Looking ahead, while we expect consumer sentiment to remain subdued which may impact what I.
Speaker Change: I referred to with same store sales I believe that we will continue to grow our top line between 25% and 40% as a result of more stores carry an increasing array of BARDA products.
Speaker Change: As a result of the continued normalization of our product category and the impact of earned media. We also plan to rollout several variations of our new CLO launch or both.
Bryan Ganz: We also plan to roll out several variations of our new CL Launcher, both up and down the pricing spectrum, as we target a broader demographic. This is going to result in our cash position rebounding quickly as our inventory levels normalize over the coming months and quarters. While the third quarter is typically a slower period for Byrna, we continue to focus on executing against operational priorities, expanding market awareness, and setting the stage for a strong finish to the year.
Speaker Change: Both up and down the pricing spectrum as we target a broader demographic.
Speaker Change: This is going to result in our cash position rebounding quickly as our inventory levels normalize over the coming months.
Speaker Change: And quarters well in the third quarter is typically a slower period for burner.
Speaker Change: We continue to focus on executing against operational priorities expanding market awareness and setting the stage for a strong finish to the year.
Bryan Ganz: That concludes my prepared remarks.
Speaker Change: That concludes my prepared remarks, Daryl I'll turn it back to you for questions.
Operator: Daryl, I'll turn it back to you for questions. Thank you.
Speaker Change: Thank you the company will now be taking questions from sell side analysts. If you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue.
Operator: The company will now be taking questions from cell side analysts. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two to remove yourself. participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions.
Speaker Change: May press star two to remove yourself from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys, one moment, please while we poll for questions.
Speaker Change: Our first questions come from the line of Matt Koranda with Roth Capital Partners. Please proceed with your questions.
Matthew Koranda: Our first questions come from the line of Matt Koranda with Roth Capital Partners. Please proceed with your question. Hey guys, good morning. I just wanted to start off with the June trends that you mentioned, Bryan, and your prepared remarks. I think you said maybe you saw some strength around the civil unrest that we saw in June. Maybe, could you give us a sense for growth in June and quarter to date? And I think you mentioned at the end of your prepared remarks there, 25 to 40 percent is sort of the sustained growth rate you expect.
Matt Koranda: Hey, guys good morning.
Matt Koranda: Maybe just wanted to start off with the June trends that you mentioned, Brian in your prepared remarks, I think you said, maybe you saw some strength around the civil unrest that we saw in June maybe could you give us a sense for growth in June and quarter to date and I think you mentioned at the end of your prepared remarks, there 25%.
Matt Koranda: 40% is sort of the.
Matt Koranda: Sustained growth rate you expect is that sort of the range, we can kind of pencil in for the near term.
Bryan Ganz: Is that sort of the range we can kind of pencil in for the Matt, thanks for the question. We did see strength during the week where the riots were occurring in Los Angeles, but that's not surprising. Whenever there is civil unrest, we see much stronger sales. I would say during that week sales were probably up by 40% versus the prior week. That said, it's a very transitory trend. It happened that week during the riots, and then sales returned exactly to where they were before the riots. You can use 25 to 40%. Last quarter we were up 41%, slightly more, but I think 25 to 40% is a very good range for the year.
Matt Koranda: Yes, Matt Thanks for the question.
Matt Koranda: We did see.
Matt Koranda: The strength during the week, where the rights were occurring in Los Angeles, but that's not surprising whenever there is civil unrest.
Matt Koranda: We see.
Matt Koranda: Much stronger sales I would say during that week sales will probably up by 40%.
Matt Koranda: Versus the prior week.
Matt Koranda: That said it's a.
Matt Koranda: A very transitory trend it happened that week during the riots and then sales returned exactly to where they were before the riots.
You can use 25% to 40% last quarter, we were up 41% slightly more but I think 25% to 40% is a very good range for the for the year.
Bryan Ganz: So yeah, I would work with that. Again, as I said, there is some softness that we're seeing in the market and that other CEOs that I speak to are seeing in the market. That said, we are growing dramatically in terms of our distribution channel, the number of celebrity endorsers. the places where you can buy Byrna. So I think even in a softer market, 25% to 40% is a safe bet. Okay, fair enough. And then maybe just since you mentioned softness and the prepared remarks. here in the Q&A. Curious, where do you see that showing up, I guess?
Matt Koranda: So, yes I would.
Matt Koranda: I would work with that again as I said there is some softness.
Matt Koranda: We are seeing in the market and the other.
Matt Koranda: That I speak to are seeing in the market that said, we are growing dramatically in terms of our <unk>.
Matt Koranda: Distribution channel.
Matt Koranda: Number of celebrity endorsers.
Matt Koranda: And.
Matt Koranda: The places where you couldn't buy burn off so I think even in a softer market, 25% to 40% is a safe.
Speaker Change: Is it safe bet.
Speaker Change: Okay Fair enough and then maybe just since you mentioned softness in.
Speaker Change: The prepared remarks and then.
Speaker Change: Here in the Q&A.
Speaker Change: Curious, where do you see that showing up I guess is that like in between promotional periods.
Bryan Ganz: Is that like in between promotional period? where you're on promotion with some of the launchers. Is that a trade down into sort of maybe the SD from people that might have bought the CL? Just curious, maybe. Sure. We are a very, very data-driven company. We analyze in great detail the activity of all of the people that come onto our website, you know, how much time they spend on a page, what pages they look at, you know, abandoned cart rates. What we're seeing are indications inside our numbers that, for example, we're seeing a slightly higher level of abandoned carts.
Speaker Change: Where youre on promotion with some of the launchers.
Speaker Change: The trade down into sort of maybe DSD from people that might have bought the CL.
Speaker Change: Just curious maybe if you could expand on the comments there.
Speaker Change: We are a very very data driven company, we analyze in great detail.
Speaker Change: The activity of all of the people that come onto our website, how much time they spend on a page what page is they look at.
Speaker Change: Abandoned cart rates.
Speaker Change: We're seeing our indications in all of our numbers.
Speaker Change: For example, we're seeing a slightly higher level of abandoned carts theres, a little bit of sticker shock when people are seeing pricing. So although we are seeing growth.
Bryan Ganz: There's a little bit of, you know, sticker shock when people are seeing pricing. So although we are seeing growth, you know, and on the surface it looks like, you know, there's no issues, you can see underlying, in terms of some of the particular statistics of people's activity on the website, that it's softer. And also, we're just seeing this in talking to our customers, that, you know, the market is a little bit softer right now. And I don't think that's a surprise to anybody. That said, we're also in the summer, and, you know, in our industry, there's kind of the dog days of summer.
Speaker Change: And on the surface it looks like Theres no issues you can see underlying in terms of some of the particular statistics of People's activity on the website and its softer and also we're just seeing this in talking to our customers.
Market is a little bit softer right now.
Speaker Change: And I don't think Thats, a surprise to anybody.
Speaker Change: We are also in the summer and.
Speaker Change: Our industry. There is part of the dog days of summer. So this is a traditionally slower quarter.
Bryan Ganz: So this is a traditionally slower quarter. Nevertheless, we do expect to see significant growth. Okay, fair enough.
Speaker Change: Nevertheless, we do expect to see significant growth this quarter.
Speaker Change: Okay Fair enough and then maybe just last one for me.
Matthew Koranda: And then maybe just last one for me. When we think about the ramp up with sportsman's you throw out a lot of numbers and the prepared remarks in terms of locations that you'll you'll be expanding to. Can you just clarify in terms of shop and shops where we're going to be at the end of the third quarter? Is that number 22? It's the 10 in addition to the 12 that you currently have. And maybe just curious about sort of you mentioned there might even be and the POS locations that's even better than where the shooting pods are, which I assume are shop and shops.
Speaker Change: When we think about the ramp up with sportsman, you threw out a lot of.
Speaker Change: Numbers in the prepared remarks in terms of locations that you'll have you'll be expanding too can you just clarify in terms of shop in shops, where we're going to be at the end of the third quarter is that number 22 10. In addition to the 12 that you currently have and maybe just curious about sort of you mentioned there might even be some perf.
Speaker Change: Formats at the POS locations, that's even better than where the shooting bugs are which I assume are shallow jobs. Maybe just is there a big relative difference between pls locations and shop in shops.
Bryan Ganz: Maybe just, is there a big relative difference between POS locations and shop and shops? I'm trying to get a sense for how we should think about the ramp up there as we get to the, I think you said 140 locations overall. Okay, so keep in mind that there is a difference between store-within-a-store and shooting pods. So every shooting pod is part of a store-within-a-store, but not every store-within-a-store has a shooting pod. So currently, there are 14 shooting pods, but there are 22 store-within-a-store locations. The ones that don't have a shooting pod have a whole Byrna store, but they use the archery range for the try-before-you-buy experience.
Speaker Change: I'm trying to get a sense for how we should think about the ramp up there as you get to the I think you said 140 locations overall.
Speaker Change: Okay. So.
Speaker Change: Keep in mind that there is a difference between store within a store and shooting pause.
Speaker Change: So every shooting pod as part of a store within a store, but not every store within a store has a shooting pod.
Speaker Change: Currently there are 14 shooting pods, but there are 22 store with those store locations the ones that don't have a shooting part.
Speaker Change: Burnt store, but they use the archery range for the.
Speaker Change: Try before you buy experience.
Matthew Koranda: We have an additional nine. shooting pods that have been constructed, that are going to be shipped to sportsmen that will be installed in their best locations. So they will go from 24 store within a store to 33 store within a store, of which there will be 14 plus the 9, there will be 23 shooting pod locations. Okay, super clear and very helpful. I'll leave it there. Thank you.
Speaker Change: We have an additional nine.
Speaker Change: Shooting pods that have been constructed they're going to be shipped sportsman's.
Speaker Change: Will be installed in the best locations. So they will go from <unk>.
Speaker Change: 24 store within a store the 33 store within a store of which there will be.
Speaker Change: 14, plus the non there'll be 23 shooting part locations.
Speaker Change: The other locations have just this point of sale display. So there is no.
Speaker Change: Shelving and store experience.
Speaker Change: As a point of sale display and there is an archery range. So in some of these stores with point of sale display and the archery range. We are seeing them actually outperform some of the other locations with store that have a store within a store now obviously, we need to understand why is it.
Speaker Change: A function of these or just better sportsman with locations. They have more traffic is it a function of the personnel are they simply better salespeople and theyre getting people in the archery range.
Speaker Change: We are in the process of putting people on the road going to all of the Sportsman's locations to really spend time understanding.
Speaker Change: The.
Speaker Change: Understand the operational effectiveness of each of the stores. Both those stores that are doing well in those stores that are not doing well.
Speaker Change: We are also providing <unk> to the <unk>.
Speaker Change: Store employees to give them some incentive to sell the burner product because look for sportsman's and bass pro and big five.
Speaker Change: They are in the business.
Speaker Change: Demand they are not in the business of creating demand for and it is in the business of creating demand. So the thing thats interesting for Sportsman's warehouse and other locations.
Speaker Change: They have an opportunity to sell to customers that may have walked into the store not even knowing what BARDA is not thinking about buying a pharma they have an opportunity to take their existing customer and augment the <unk>.
Speaker Change: Lifetime value of that customer to do that we need an educated salesforce, we need a motivated sales force. That's the purpose of one providing bernie geniuses and two sniffing. The sales personnel. So we are in the very very early innings of this.
Graham: Graham with Sportsman's warehouse.
Speaker Change: I do not see any reason honestly why these locations that have hundreds of people a day coming into them.
Not be as effective as our retail stores, which have tens of people coming into them. So we're doing $800000 annually on average with our retail stores.
Speaker Change: That are in a strip mall and half a dozen people walking in the front door.
Speaker Change: We certainly should be able to do three four or $500000 a day in the certainly the bigger sportsmen stores.
Speaker Change: But it's not going to happen overnight. It is going to take some work as we educate our sales team.
Speaker Change: We build out the stores, but we do expect to have.
Speaker Change: Probably a 140 of 146 stores and adversely all of the major sportsman stores, we do expect to have BARDA presence, whether it's the form of a Pos display or whether it's a store within a store that uses an archery range or whether it's a store within a store that uses a shooting part.
Speaker Change: We will be in essentially all of the sportsman stores by the end of the year.
Speaker Change: Okay Super clear and very helpful. I'll leave it there.
Speaker Change: Yeah.
Speaker Change: Thank you. Our next question is coming from the line of Jeff Van <unk> with B Riley Securities. Please proceed with your questions.
Jeff Van Sinderen: Our next question has come from the line of Jeff Van Sinderen with B-Rally Securities. Please proceed with your question.
Bryan Ganz: Oh, I guess I Good morning, everyone. A little bit of a tough question, but wondering how you're thinking about the evolution of channel mix in second half with all the moving parts. You know, as I said, we are seeing, and in Q2, we saw our fastest growth in brick and mortar. We think brick-and-mortar will continue to be the faster-growing segment of Byrna. Within the DTC segment of the business, the online segment of the business, we expect Amazon to continue to grow at a faster rate than Byrna. When we talk about DTC, one of the things we didn't really focus on is that Sportsman's also has a DTC operation.
Speaker Change: Yes, hi, good morning, everyone.
Speaker Change: Little bit of a tough question, but wondering how you're thinking about the evolution of channel mix.
Speaker Change: Second half with all the moving parts.
Speaker Change: As I said, we are seeing in Q2, we saw our fastest growth in brick and mortar.
Speaker Change: We think brick and mortar will continue to be the faster growing segments of <unk>.
Speaker Change: Within the DTC segment of the business. The online segment of the business, we expect Amazon to continue to grow at a faster rate than BARDA.
Speaker Change: We talk about DTC one of the things we didn't really focus on is.
Speaker Change: Is that Sportsman's also has a DTC operation and whereas Bernie has a 8 million.
Bryan Ganz: And whereas Byrna has a million... plus visitors a month coming to our website. Sportsman's has seven and a half million people a month coming to their website. We are really expert in DTC operations. This is not Sportsman's primary focus. For them, DTC is generally people that order a firearm and then have to go to a Sportsman's to pick it up. So our team is working very closely with the Sportsman's team to help them really improve their online presence, particularly for Byrna because they have access to seven and a half million people a month that probably very little overlap with the million people a month that we have access to.
Speaker Change: Plus visitors a month coming to our website Sportsman's has $7 5 million people a month coming to their website.
Speaker Change: We are really expert in.
DTC operations this is not <unk>.
Speaker Change: Sportsman's primary focus for them DTC is generally people that order a firearm and then have to go to a sportsman's to pick it up so our team is working very closely with the sportsman's team to help them really.
Speaker Change: Improve their online presence, particularly for BARDA, because they have access to seven 5 million people a month.
Speaker Change: Probably very little overlap with the million people a month do we have access to so there's a huge untapped market for <unk> through the Sportsman's warehouse e-commerce effort.
Bryan Ganz: So there's a huge untapped market for Byrna through the Sportsman's warehouse e-commerce effort. So again, I think we're gonna see faster growth in brick and mortar than we see online. With the online segment, we'll see faster growth with Amazon than with Byrna. And I do think sort of the wild card will be Sportsman's. Is this gonna be a few sales a day or is this gonna be 100 sales a day? The jury is out right now, but I think there's enormous potential there.
Speaker Change: Again, I think we're going to see faster growth in brick and mortar than we see online with the online segment will see faster growth with Amazon that with BARDA and I do think sort of the wildcard will be sportsman's, because it was going to be.
Speaker Change: A few sales of day or is this going to be you know a 100 sales a day the.
Speaker Change: Jury is out right now, but I think there is enormous potential there.
Bryan Ganz: Okay, and then Sportsman's, just a point of clarification, the stores with the pods, I know there's got moving parts too with more pods coming in, but the the stores with the pods versus the archery ranges, just I wasn't clear on the performance there, were you saying that the archery range performance was sometimes Greater than the store with the pod performance? You know, we don't have enough data yet, Jeff, to say that conclusively. It would make no sense to me that the Archery Ranger would perform better than the pod because the pod is, you know, graphically, you know, and cosmetically it looks great.
Speaker Change: Okay, and then at Sportsman's, just a point of clarification the stores with the pods and others moving parts to its more parts coming in but.
Speaker Change: The stores with the pods versus the archery range is just I wasn't clear on the performance. There were you, saying that the archery range performance was some times greater than the store with the pod performance.
Speaker Change: We don't have enough data, yet Geoff to say that conclusively it would make no sense to me that the archery range would perform better than the part because the pod is.
Speaker Change: Graphically.
Speaker Change: Cosmetically it looks great.
Bryan Ganz: It's got glass windows on the side. It's placed in the center of the store. When you're there, you hear the bang, bang, bang when it hits the targets. So it draws people into the pod in a way that the Archery Ranger does not. That said, you know, most things with Most things with business, you know, come down to human beings. I think, you know, when we get the Byrna geniuses into these stores We will, you know, the store should perform, you know, more efficiently, more effectively, and we'll have a much better sense. But my guess is, all things being equal, the stores with the shooting pods will perform the best.
Speaker Change: Glass windows on the side its place in the center of the store. When you were there you hear the Bang Bang Bang when it hits the.
Speaker Change: Targets. So it draws people into the pod in a way that the archery range.
Speaker Change: It does not.
Speaker Change: That said.
Speaker Change: Most things with.
Speaker Change: Most things with business.
Speaker Change: Come down to human beings I think when we get the burn of geniuses into these stores, we will the stores should perform.
Speaker Change: More efficiently more effectively and we will have a much better sense, but my guess is all things being equal the stores with the shooting pause will perform the best.
Bryan Ganz: But it's too early yet to say that conclusively.
Speaker Change: But the debt, but but it's too early yet to say that conclusively.
Speaker Change: Okay makes sense.
Matthew Koranda: Okay, makes sense.
Bryan Ganz: And then I just, I wonder if you could touch just finally on your mention of the new iterations of the CL, anything you can elaborate on there. Okay, so, we came out with... a particular model of the CL with fiber optic sites in a ready kit. We are looking to move both up and down the pricing spectrum. So the CL comes ready to be equipped with a red dot site, with laser sites, with Hogue grips, and we expect to bring out a more bespoke version of the CL. At the same time, we expect to bring out a lower-priced version of the CL that doesn't come with fiber-optic sites, it comes in a more basic box, doesn't come with additional CO2 and ammo and magazines, so that we can catch a broader spectrum of our customer base.
Speaker Change: And then I just I wonder if you could touch just finally.
Speaker Change: You mentioned, the new iterations of the CL.
Speaker Change: You can elaborate on there.
Speaker Change: Okay. So we came out with.
Speaker Change: Our model of the CL.
Speaker Change: With fiber optic side in a ready kits.
Speaker Change: We are looking to move both up and down the pricing spectrum. So the outcomes ready to be equipped with a red dot sight with laser sights with Hoegh grips.
Speaker Change: And we expect to bring out a more bespoke version of that.
Speaker Change: At the same time, we expect to bring out a lower priced version of the C. L.
Speaker Change: Is it a it doesn't come with fiber optic sights. It comes at a more basic box it doesn't come with additional.
Speaker Change: C O two in ammo and magazines, so that we can catch a broader spectrum of our customer base.
Bryan Ganz: We recognize that $550 is expensive. We can see it at checkout, where there is a higher abandoned cart rate, the more expensive the sale is. Somebody goes to checkout and it's a $700 sale, there can be sticker shock, so we want to be able to price the CL across a broader range of prices. We've done this with our other launchers. We came out with a basic box for the SD. That performed very well. We're just applying that same strategy to the CL, and that will probably happen later this quarter.
Speaker Change: We recognize that $550 as expenses.
Speaker Change: Can see it at checkout, where there is a higher a banding part right the more expensive.
Speaker Change: Is somebody goes to check out and a 700 dollar sale there can be sticker shock. So we want to be able to price the CL across a broader range of prices.
Speaker Change: We've done this with our other launchers, we came out with a basic box for the SD that performed very well.
Speaker Change: Just applying that same strategy.
Speaker Change: Two the CL and that will probably happen later.
Speaker Change: Later this quarter.
Speaker Change: Okay. Thank you for taking my questions and continued success.
Operator: Okay, thank you for taking my questions and continued success. Thank you, Jeff. Thank you. As a reminder, if you would like to ask a question, please press star 1 on your telephone keypad.
Jeff Van: Thank you Jeff.
Speaker Change: Thank you as a reminder, if you would like to ask a question. Please press star one on your telephone keypad.
Jon Hickman: Our next question has come from the line of Jon Hickman with the Lattenberg-Thalman. Please proceed with your question. Hi. Brian, could you elaborate a little bit on your about recurring revenue with the CL. Is this like an insurance program?
Speaker Change: Our next question is come from the line of Jon Hickman with Ladenburg Thalmann. Please proceed with your questions.
Speaker Change: Yeah.
Speaker Change: Hi.
Speaker Change: Brian could you elaborate a little bit on your comments about.
Speaker Change: Recurring revenue with the CIO.
Speaker Change: Just like an insurance program.
Speaker Change:
Speaker Change: That's my first.
Speaker Change: Yeah, sure I'm going to I'm going to let you take that because honestly. So much of this first thing is back office.
Speaker Change: So I'll, let her talk about this and then I'll talk about.
Speaker Change: The more SaaS aspect of the recurring revenue model Okay. Thanks, John.
Speaker Change: Yeah, the burden of care that we're going to come out with is it's kind of like an insurance policy. It's really just think of the insurance policy and extended warranties. So people will pay a monthly fee and they can pay an annual amount are monthly. So we're kind of working on the backend to get this kind of setup for the recurring subscription fee.
Speaker Change: It gets the auto charge to their card and yes, if they lose it stolen if.
Speaker Change: If it breaks for any reason and previously like our current warranty only covers if you use berna ammo burner.
Speaker Change: This one we won't restrict it for that.
Speaker Change: So it will be a way that they can pay a monthly fee and it is an expensive product. So that they can have coverage of that similar to any other products. When you go and check out and they say do you want the protection plan, that's really what it is so it will be recurring and we're just working on setting up kind of that auto charge capability and interestingly one of them.
Speaker Change: People that get through to the CEO of BARDA and Unfortunately, one of the reasons people get through to me is they've got some sad story, where.
Speaker Change: The thing fell off the boat into the water I lost it I can't afford to get a new there's a lot of people for whom.
The end up either.
Speaker Change: Imaging or losing their burner, we've actually had a bunch that were stolen.
Speaker Change: So this is a way to address that problem and also to start their recurring.
Speaker Change: <unk> revenue model.
Speaker Change: The much bigger source of recurring revenue will be next year, when we start installing a chipset in the Barnett. This is something that we've been working on and had planned from the very beginning of the development of the C. L.
Speaker Change: And what we want to be able to do and this is not.
Speaker Change: Cutting edge technology, the technology exists.
Speaker Change: But what we want to be able to do is to have your burn would be able to speak with your phone. So then if you're out and about and it sets itself defense mode.
Speaker Change: For example out in Boston.
Speaker Change: Burner.
Speaker Change: Walking with my wife, and I get a cost did I use my burnup.
Speaker Change: It will immediately speak to my phone Geo locate with my phone contact a call center that will contact pre.
Speaker Change: Pre program numbers either.
Speaker Change: 911, or potentially if you're a student maybe campus security.
Speaker Change: Or you or a family member.
Speaker Change: And that's something that maybe.
Speaker Change: Maybe at $5 99, a month.
Speaker Change: There have been other things, we're looking at like the ability to talk to your smartphone so John you're at home and your.
Speaker Change: Your wife says here's something downstairs, you pulled the burner you take the safety off it talks to your smart home turns out all the lights 399, a month. So these are not new ideas. These are ideas that are used and frankly I think there are other companies that are currently doing similar things.
Speaker Change: But we think given the fact that theres already over 650000 partners in the market. I mean, this is something where we're going to have tens of thousands of customers theyre going to want to be able to take it to the next step and have there.
Speaker Change: Their burn or be a smart launch or that is able to speak with their smart home or their phone.
Speaker Change: Okay I think.
Laurilee Kearnes: Okay, thanks. Laurie, could you also elaborate? It sounds like from Bryan's remarks that there's some cost savings that are non recurring costs. due to the launch of the CL and inventory and the ramp in the manufacturing that now we're excited. Can you help us out with our, you know, kind of model for the coming quarter as far as? The expenses go. Sure, Jon. So, really, the expenses, we had a few hundred thousand dollars of extra expenses in the quarter, just specifically because of the Compact Launcher release. That being said, it'll really be probably replaced in Q3 with increased marketing spend.
Lori Karnes: Lori could you also elaborate.
Lori Karnes: It sounds like from Brian's remarks that there's some cost savings that are nonrecurring costs.
Lori Karnes: Due to the launch of the CEO and inventory in.
Lori Karnes:
Lori Karnes: The ramp in the manufacturing side.
Lori Karnes: Can you help us out with her.
Lori Karnes: Kind of model for the coming quarter as far as.
Lori Karnes: The expenses go.
Lori Karnes: Sure John So really the expenses, we had a few hundred thousand dollars of extra expenses in the quarter, just specifically because of the compact answer release that being said I won't really be probably replaced in Q3 with increased marketing spend as we move through the year, we increased our marketing spend.
Laurilee Kearnes: As we move through the year, we increase our marketing spend. So, I don't know that you'll see a much change on the OPEX. On the inventory side of things, we did use a lot of cash to build our inventory. As you saw, it's kind of a record-high inventory at the end of the quarter. And we've reduced our production, and we expect, through the balance of this year, to start to pull that inventory level down and increase our cash position. I think I've got that.
Lori Karnes: So I don't know that Youll see a much changed on the Opex on the inventory side of things. We did use a lot of cash to build our inventory as these types of kind of a record high inventory at the end of the quarter and we've reduced our production.
Lori Karnes: Expect through the balance of this year to start to pull that inventory levels down and increase our cash position.
Lori Karnes: Okay I got that now.
Bryan Ganz: Now, um oh could you elaborate on why you think this the Scottsdale store is doing so well. kind of vis-a-vis expectations and your other your other stores or your other experiences. You know, first, it's a great location. It's a very, very heavily trafficked street. I think the traffic on that street is probably 2x the traffic on the streets in front of our other stores. Secondly, it's just a good market. Scottsdale has, you know, got a lot of people with our demographic, gun owners, you know, more conservative population. It is a wealthy community. And there's always, you know, part of it is the human element.
Lori Karnes: Let's see.
Lori Karnes: Hum.
Speaker Change: Could you elaborate on why you think that's the Scottsdale store is doing so well.
Speaker Change: Kind of easily expectations in your other.
Speaker Change:
Speaker Change: Your other stores or other experiences.
Speaker Change: Okay.
Speaker Change: First it's a great location to very very heavily traffic Street I think the traffic on that street is probably two X the traffic on the streets in front of our other stores.
Speaker Change: Secondly, it's just a good market Scottsdale has got a lot of people with our demographic gun owners.
Speaker Change: More conservative.
Speaker Change: Population it is a wealthy.
Speaker Change: Community.
Speaker Change: There is always.
Speaker Change: Part of it is the human element, we have a couple of very good salespeople.
Bryan Ganz: We have a couple of very good salespeople in Scottsdale. And, you know, it's telling us that we've got to continue to find good salespeople in all of our various stores. But it is encouraging for us to see there wasn't something unique about Las Vegas. You know, our biggest concern with Las Vegas doing well is, you know, is it just people that won 10 grand at the craps table last night that went in and bought a launcher? And the answer is no. You know, all of the stores have done well.
Speaker Change: Scottsdale and.
Speaker Change: Telling us that we've got to continue to find good salespeople and all of our various stores.
Speaker Change: But it is encouraging for us to see.
Speaker Change: Wasn't something unique about Las Vegas, our biggest concern with Las Vegas doing well is.
Speaker Change: Is it just people that <unk> brand at the Kraft stable last night that went in and bought a launcher and the answer is no you know all of the stores have done well I'll tell you.
Bryan Ganz: I'll tell you, the little engine that could, though, is Fort Wayne. You know, Fort Wayne is a relatively small community. It is not a particularly wealthy community. It is doing extremely well. You know, it's even outperforming the Salem store, despite the fact that its footprint is probably half of what the Salem store is. So, yeah, it's, there's a lot of factors with each store. But, you know, overall, the performance is extremely encouraging. And it's encouraging, not just for our retail stores. It's encouraging for what we can do with premier dealers. It's encouraging for what we should be able to do with Sportsman's Warehouse.
Speaker Change: Little engine that could though is fort Wayne.
Speaker Change: Fort Wayne is a relatively small community. It is not a particularly wealthy community. It is doing extremely well.
Speaker Change: It's even outperforming the sale in store despite the fact that it's a <unk>.
Speaker Change: Foot print is probably half of what the sale in the store is.
Speaker Change: Yes.
Speaker Change: There's a lot of factors with each store, but.
Speaker Change: Overall.
Speaker Change: The performance is extremely encouraging.
Speaker Change: And it's encouraging not just for our retail stores, it's encouraging for what we can do with premier dealers, it's encouraging for what we should be able to do at Sportsman's warehouse, it's telling us that this model works.
Bryan Ganz: It's telling us that this model works.
Speaker Change: Okay, Hey, thank.
Jon Hickman: Okay. Hey, thanks. That's it. Thanks, Jon. Thank you.
Speaker Change: That's it for me.
Speaker Change: Thanks, John.
Speaker Change: Thank you at this time. This concludes our question and answer session I would now like to turn the call back over to Mr. Gans for his closing remarks.
Bryan Ganz: At this time, this concludes our question and answer session. I'd now like to turn the call back over. Ganz for his closing. Darryl, thank you very much, and I just want to thank all of our investors and customers for their support, and we will keep you apprised of our progress. Thank you very much.
Speaker Change: Daryl Thank you very much and I just want to thank all of our investors.
Speaker Change: Customers for their support and.
Speaker Change: And we will keep you apprised of our progress. Thank you very much.
Speaker Change: Thank you for joining us today for <unk> fiscal second quarter 2025 Conference call you may now disconnect.
Operator: Thank you for joining us today for Byrna's fiscal second quarter 2025 conference call. You may now disconnect.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Okay.
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Speaker Change: [music].
Speaker Change: Sure.
Speaker Change: Okay.