Byrna (BYRN) 12 Oct 232023 Q3 Earnings call transcript

Good morning. Welcome to Byrna's Fiscal Third Quarter 2023 Earnings Conference Call. My name is Rob, and I'll be your operator for today's call.

Joining us for today's presentation are the company's CEO, Bryan Ganz; and CFO, David North.

Following their remarks, we'll open the call for questions.

results fiscal released August quarter Byrna XXXX. XX, today, for third its ended Earlier the is press company's of copy A release website. available the on

Chief Before Ganz, the over call harbor Executive Technologies safe turning read Officer, to statement. I'll the Byrna Bryan

assumptions. risk Actual these filings today the company materially forward-looking complete for The today. refer a statements. made projections recent most of could to differ more future Some discussions result Byrna's obligation forward-looking factors XX-K events no results affect to held as Please include otherwise. statements and that of from could statements information, and new assumes description or XX-Q update a

for include in forward-looking statements further As will references this results release non-GAAP and reconciliations the the of results, call GAAP of please non-GAAP results. section press ir.byrna.com information see Investors to regarding to website our

call Now, to I over please Byrna's CEO, turn like proceed. to Ganz. Sir, would the Bryan

you, morning, issued XX-Q joining fiscal operator, for us business August and you, third press quarter release This a the thank with results providing with our ended today. for Thank accomplishment. key along financial our the everyone, SEC filed XX we and

To we And our usual, that, the additional from into insights at of as begin some a and taking and to open to offer over forward-looking And I'll share presentation. results our end of like today's discuss I'd including challenges. in greater we're recent developments, to strategy. pass call, following analysts detail. financial the actions the DTC the call to discussion address our performance recent marketing highlights the I'll publishing our the questions however, Afterwards, David will to floor

Okay.

months the banned interestingly, free was year. advertising $XX.X ago, restrictions quarter down just was $X.X X last revenue in primarily the of decline the and same due year. Google we Twitter, for from Byrna of speech, announced the total Meta imposed As And our in last also significant later. March by a period weeks This million, previously few advertising million self-proclaimed to this bastion third

had on In advertising through their XX,XXX web December still When these while impact X, it sessions platforms platforms, web averaged imposed sessions. bans, these XXXX, XX, approximately on we immediate could an daily negative we March major advertise the on period XXXX byrna.com. from daily

to just effect, April, advertising the dropped prior impact after to advertising Byrna ban purchases. daily months to we number to the site took the sessions. where ban XX,XXX several were In that It sales that back ban, consumers reached what continue the the come due for tail to negatively make call, to to, web more advertising

However, by through the had third a a to And quarter, in acquisitions, QX, specifically declined daily which in ban by just XX,XXX the significant declined acquisition new customer XX% from and our QX. decline just rate sales customer prior new in March, day. XX% sales, we advertising falling period to encountered the in $XX,XXX in averaged XX% to

changing We responded to -- pivoting strategy. by these our completely have advertising challenges

talk radio. and August customers, does afternoon show almost on advertising the commenced time, time advertising off our commenced September we than on to At on rather a social online non-social X. new on sites Sean efforts So as started advertising media kicked every effort. radio media Hannity reach same the in we business today, online potential We advertising rely drive

advertising owners. what sales, convenience to realtors, to runners, would advertising muted how the X had everything as RVers, online results This yet to against stick, see the across advertising understand optimize boaters, were we August of we to initially markets generated with creative. efforts threw store different veterans, our different wall Instead, spend. X our While pieces in additional some included

sales, certainly of our August a was ]. for dollar X.Xx, write $X.X approximately home to for spend, every spend, As advertising nothing meaning in [ result, return on or we combined about ROAS, had

That information significant others, observed spend said, use customer acquisitions. optimize and than were we sessions sales, in creatives our able much increase this in new to markets we certain in to a September, and and did September. better certain Almost immediately,

by Facebook, average increase September, and QX from XX,XXX, Twitter. to the we the media. period social daily ban being the matching increase off and XX% approximately For advertising to sessions before QX a $XX,XXX, of This in prior kicked from increased sales Instagram, to levels a Google nearly led daily average XX% of on saw XX% September from

new notably, to QX XX% our in rate from customer XX.X% Most rose September. acquisition

daily compared kicked first with off This have We for increase XX QX, the and a sessions of prior XXX% a continued is XX,XXX trend in of by period being hitting XX% media sessions. record upward social new Byrna. from days to represents to October, to increasing the this see daily

first-time X.XX% sales to and averaging $XXX,XXX, the for new X.XX% of prior visitors, rate daily conversion days XX staggering to first ban. QX, Average our up rate were a compared of XXX% the the October climbed climbed to our Despite from XX.X%. advertising to influx customer

they our also our seen have often listeners When Amazon. on We products similar on for ads, search Amazon. radio results hear

Before averaging in the Amazon. advertising $XX,XXX ban sales on on social media, daily we were

the just During QX, XX% daily over took ban sales after to around $XX,XXX by day. a effect, dropped

and XX% Amazon and campaign However, XXX% period increase prior on a the with to from of daily to increase the online launch a average ban. have giving the the jumped the the advertising this our advertising X are trend first because somewhat sales September, $XX,XXX, first QX of from And of days has Prime Hannity only Days days outlier. October, I'm X the X and into an last in been and days persisted

During a record. sold Amazon setting non-Prime new we $XX,XXX than $XX,XXX a day. October, more the averaged Day on on X, days October company Amazon, sales first And of X

record Amazon, our holiday all-time for for an last Over have XX periods. a the which sales XX for the exceeded which Days. October period the XX-day In sales Days, Prime X any have last on days new days, on which $XXX,XXX, $XXX,XXX, record is us been Prime and sales exceeded Amazon, is XX, including

of site has become then, the Since production we sales the as Amazon, along launcher the sales. our our added the initially LE of the launcher on surpassing did the mid-July. start to LE we in believe LE, Byrna we offer Due slow direct-to-consumer Amazon SD. to not strategy, to Byrna in with refine sales our that will We rebound on in our continue Amazon, advertising leader the

why important? So so this all is

it can endorsements question media the announcement First, without customers on earnings our ban media. advertising relying effective, big was have rates. social the although confirms we And the X in at of a celebrity know call. on our that initiatives, proven sessions that of by the and we this wake conversion radio weeks into increase the be new reach highly I in improved last the are evident social only to

other as that identify, educate, speak cajole, X much approach audiences. you're media But we work celebrity more us individuals We that's contact, are in currently social teams. is paying to work vet, than honestly, charm simply must for. This these on discussions sites endorsers different with their closely placing with what and ads and

so of rates, our customers not because new the sessions in the all Secondly, as the see confirms campaign site. We did despite we current fruit to coming saturated success in any grew, did our that have low-hanging conversion captured market the decline significant too the or the sales. increase not

just saw we opposite. fact, In the

rate and XX%. averaged just quarter Since tells X.XX%. the to X.XX% both them get conversion if rate educate awareness to the first new we has us, and civilians website, customer our of to professionals In there alternative primary reliable rate September that calendar field force. X, conversion enforcement they paraphrase jumping to This increase to deadly our despite Byrna means of is averaged 'XX, that and safe, public of will our to This can dreams, effective buy. challenge our a is law

scratch that we so Hannity #X has reaches million each show regard. only to begun need to X.X well the in as all surface America. that the becomes in this reach Well, Americans known we've TASER. month. only I talk Byrna as He radio Americans, believe Sean

than team of of the adversity, out in XX% confidence rose few initiatives more the which When with that my the the price at significantly put fell the not new faced to seen everyone's daily the Thirdly, money. occasion sales, Byrna. company a team just when doing the these thousand to we've since here options was stock lows success in reaffirms dollars

we one threw No When every reduced forecast, nobody that towel. their believed up. around, when a drastically this turn no gave Byrna could and analyst in downgraded Byrna at here one

In team out fact, executed. The figured at the just the opposite. Byrna up challenge, and stepped a forward to way

team a tough, and down gets of thrives obstacles a when When going taught assure going, in I we when here on you get me This is path. a doesn't thrown group a are I that team adversity. the the was This their my Byrna. that at tough tough just boy, SOBs is have dad back there that can that

this So a go-forward on basis? mean what does

throughout the this year, And of increases tragedy lock all able year, wake to as of Hannity We despite being and Hannity's this in an Israel listener horrific raise in Hannity's committed we've election in profile will First, we've listenership fact, certainly in and XXXX were XXXX. active a audience the already seen increases. advertising viewership rate the base. traffic which from in on rise as same to

fresh his freshly with cooperation team, Sean broadcast. training This assistant, his created to platforms this promote Sean video will will content all Hannity, Byrna's on his training e-mail. Linda, expand our officers. We also developing website law and ex-SWAT Sean through radio through are us and enforcement which with allow his media Sean go social beyond and with will in Byrna video, Using

use ecosystem outside In to addition, be see we we'll Hannity the this fit. content able video as

to e-mail blasts even with the media entitled Hannity, appearance. ], As social a a part of posts agreement of certain we're and number [ live

on we increase see to our spend other as expand cooperation the ROAS these non-radio initiatives, that expect include we'll Hannity our further. We

Additionally, exploring reach slots more to diverse for engagements attempt other earlier, iHeartMedia are we and mentioned celebrity in endorsers with different talent as a an audience. I time

such for exploring enforcement the that are an audience is the is shift truckers, law comprised of overnight workers. the this believe a is rates. that the the dead about long-haul night officers, Byrna of of One fraction cost advertising show, of and We where engagement nurses graveyard Moreover, other guards, out they and security as daytime late in audience ripe is night. we're

We higher are iHeart other We move clear with we from our see from It outside Is advertising. to conversion do the the rate celebrity really Hannity drives influencers traffic a also that needle. the celebrity that with than the online with discussions stable. website with in Sean endorsers can of traffic work other

given believe that unique, we it to that Sean and him, America to on the is show. his is what talk inexpensive committed he extremely somewhat And not the radio #X advertise is is Hannity in following show

but of endorsers, is lower. because their we with their spend advertising achieve we our on celebrity as believe As not, a reach Hannity, result, large other as can because returns are same rates the it's types not

Now go particularly that and running the -- we our production reinvigorate to we have of as inventory opportunity expand into is initiatives holiday we smoothly, season. our finished advertising goods sales, ample intend to

and difficult Instagram. highly always when media social is the of dangerous far to we advertising Meta it encouraged advertise to to performance And are X extrapolate are Google Well, on ability by outpacing our ban. able we we Facebook, our Google, weeks' from and and overcome data, were worth Twitter

to we our closely continue and fine-tune will scalability. our We strategy optimize as marketing ROAS for monitor

with and premier confident the growth with resurgence we through that expansion channels despite and new are dealer And late our for revamped quarters. QX dip we strategies our the of with all upcoming Side enormous believe well a combined positioned way global we navigated Byrna, Hustle challenges. in during are in of opportunities have overall temporary successfully sales we our of in and sales a addition So the that dealers marketing QX, frankly, for the these

then, back go any out international dealer last I'd of for the way. over Before and about initiatives and And our David? financial the to to David to come to further, of get some talk I like results side. our call other quarter discuss the turn the in that I'll

you, Thank Bryan.

the of discuss revenue $X.X attributed Google to from to the direct-to-consumer challenges Let's and efforts, prior-year $X.X which XXXX. fiscal this Meta revenue XXXX for million in company's company's third sales reduced fiscal decline $XX.X months the in the platforms. Direct-to-customer decrease Net in of was and primarily bans on our financial out during is advertising the website the QX get compared quarter resulted way. the third quarter accounted marketing X the period. for from Amazon and million results for The million of since on

$X.X QX sales or million during $X.X QX reserves for at to million. Gross XXXX were of due profit lower Another to QX of net difference characterized to to to International in compared infrequent The million charges of additions quarter year only was this revenue $X.X of $XXX,XXX in at or XX% decrease million, $X.X third goods orders, are by approximately of XX% margin high cost sales. XXXX. obsolete write-downs revenue QX was and the very of low of due large million for recorded in gross net XXXX of but for of primarily was for which international were of inventory, XXXX. excess sold and inventory which $X.X the

primarily of reserve to consisted slow-moving a addition inventory. about charge $XXX,XXX to the cover This specifically

As new yet our for specifically a company, inventory. of we haven't relatively a [indiscernible] had reserve slow-moving

efforts. of the of in The third non-GAAP loss primarily due levels in one-time reduced prior drop addition turns valuation to third decrease a third to add is increase and the adjustments for management expenses to to loss for the consideration, for EBITDA, non-GAAP into to $X.X necessary compared period. Operating of decrease low which $X.X operating marketing the the XXXX the to The to consistent -- The XXXX. quarter quarter noted. due to However, margins adjusted it a of primarily QX was and Taking was revenue recent prior-year QX due secondarily, was a XXXX quarter $X.X these metric, this EBITDA XXXX of for million makes for QX compared million inventory XXXX. the now. component inventory of $X.X loss million for to $X.X are previously in and gross $X.X the earnings in primarily cost with in spend high net were expenses Net ongoing compared to was the increase million totaled million loss net reserves. Adjusted year. reserve million

XX, prepared August it remarks. May The on totaled to $XX.X current Bryan. at XXXX. equivalents XX, or million $XX.X $XX.X And compared no that XXXX. million debt. totaled Inventory has at I'll million XXXX at million, XX, turn cash company my and XXXX $XX.X May Cash long-term currently to August XX, concludes back

you, some additional I'd like to QX. Thank David. updates provide from operational

build of success At DTC which to program, of had XX on the to the QX, last of our addition launched In marketing second X months. the a we in continue of onboarded which of Premier quarter. XX dealership in the total we we efforts, our end these Premier were strong . Dealers,

of products. brick-and-mortar stores. stores reminder, derive words, that than their Byrna they're revenue other a as from are more Byrna XX% Just these In dedicated

in members serve in Side pivotal authorized dealers, We that But participants Hustle with with products. our expanding offerings a increase as days reach sales as long-term of to to rollout. Premier the minimal become number significantly conjunction more the our have, with channel community dealers our Dealer upfront Byrna program, are our early in the integrated these Byrna's The Premier empowers Dealers we advocates expect costs. and program Hustle for our growth. These in role we this of play to and resellers Side customer we continue Byrna become as contribute of

at shows their individuals shows, state any contacts. of only alignment store, and fairs, but traditional events effectively to and them means valuable shows, typically livelihood provides without of products gun dedicated showcasing contributes Byrna a capitalizing physical boating network our trade with strategy. not growth on operate other These a This

to dealers growth of explored increasing During the witnessed our individuals business Hustle program. the possibility substantial in Side of the becoming third we an of number this as quarter, segment Byrna's

sales strategic growth. pillar Hustle pathways to Side key to on expands looking Side the our premier investments are and Byrna's a Notably, program in Dealer becoming also stronger Side placing simply advertising we're dealers development that our beyond And Premier are that Hustle the recognizing demonstrating stimulate clear strengthens spending made network. and program of further program, strategy. We've ahead, Hustle a dealers, emphasis a

to I Amazon First, a and about we've individual. at spoke portion attribute manage earlier dedicated I added of some of the Amazon to sales member the web efforts success sales, this that the

media campaigns our and We to hire our outreach. e-mail looking are channel managers social for currently similar

We sales new count X our sales QX, inside our team. have representatives, inside current bringing to also added X. In we expanded

to trucking team to including is XXXX. owner-operated stores, and the Our various outdoor XX members dealers across potential security customers of see agencies. protection. stores, for dealers, goods who onboarding gun We end to to in dedicated Byrna are sporting companies by open connect boating these a having have goal even with This stores, identifying private personal is sectors, sales inside places smaller and

seeking this with promise addition has to quarter. our new our team In shown Byrna which sales inside dealers, Side Hustle tasked business, tremendous is growing

I week, dealer than weekend. that fair one $XX,XXX of one local a a our started of was dealers In as fact, Hustle in more last that products notified had sold Side at life

our Hustle this receivables. With Side yielded our customer Side base, dealer, by Hustle markets, and we customer $X.X really the our dealers base at our payments are and best regard Like margins, passionate periodically to about most card, initiative, Hustle in international This credit opportunity. initiative, via million made the America. advertise most any emerge South business from eliminating story of Side is to this

our in appear our in our in do While, methodology, is line our particularly accounting America success, Latin Argentina to noteworthy. sales for not XXXX due revenue

In XXXX, sold of X,XXX We Cordoba significant we contracts Buenos Aires. city as the of Argentina. secured press in have release announced well being in a Province capital launchers the as recently to enforcement law

Aires. police Tigre, of are selling all near Ezeiza, departments to We also Lanus, municipalities Buenos

cases less of suspects, According in Cordoba experienced the disarm in early documented than police provincial far, been market. this have to there situations So to deploying of success various need the for the being more apprehend solutions have Byrna underscoring the the lethal used significant Cordoba Chief Byrna Police, launchers. XX and

this less presidential stop in for the Argentina to Our candidates And lethal effectiveness and, to way really in a been is promoting which by injury. Byrna enforcement Argentina demand has crime or been law foothold a life the as testament globally. amplified street success taking permanent in multiple presidential have solutions risk frankly, of further campaign, growing in the without region and causing our a

sales community. These just less our lethal large is that in enforcement mission Argentina law within it opportunity the validation represent shows how saves lives, of and the

the while these venture underscore sales importance are LATAM potential wins reflected for said, I Byrna's these of yet internationally. growth As recent in the and strategic joint Byrna's not numbers, Byrna reported long-term

solutions advancing as commitment progress expand across furthering we presence view particularly a lethal We less in security our stepping Argentina to America. Brazil, Latin stone South America, our into as our in

this Okay. substantial that There's our new that lot well for we've And and are inside on strategies, talked made we've media initiatives with progress Obviously, since I we believe Dealers last firmly update a call. the about ban we've Premier been our these Hustle ongoing expanding with the social dealers. team, growth. Side and overcome marketing implementing in advertising, sales positioned

currently quarters. This flexibility we focus, that our expect make outreach. coming to and $XX.X forward. financial mentioned $XX.X to exploring was strong our move in it us remains flow on million cash us positive. are and foundation $XX.X however, end as excess At our gives business, we strong position key end campaigns our bringing at cash of in of areas e-mail as a maintaining inventory September, media to new on that number and And cash trajectory manage We robust including social cash our quarter. allows work And marketing in the people yesterday, investments had channels million. in we to improvement And of continued as flow see million. the of was continue the through of David we

we strong holiday frankly, finish So what that off for premier today despite of we are, taking results, very we'll disappointing And the XXXX security committed personal actions we that that in growth, enter Byrna we solutions. position remain year provider And believe the and less as the season. company believe sustainable into forward. lethal the headwinds to the going we encountered despite we're the making extremely

So you like Operator, to call I'd turn if the to now, over questions. please?

from with Van [Operator question is Riley first Instructions] Securities. Our B. Sinderen Jeff

what bit on And other to or about web speak great sessions terms Google the hear new build you're you recently. I'm versus And in the looking the more the in platforms about you're previously? everyone. seeing increase marketing saw testing. little and conversion speak you then a morning, wondering, Good that Meta also marketing with into of maybe more about can marketing

Yes.

rate. but the climbed of I our first end I X.XX% recently, And about of have that quarter As is second to consistent numbers the front were don't our March. conversion quarter said, of think has in that with the we beginning I through X.X%, in conversion and rate which me, the long-term

the website thing customers a see we is when to expect they conversion returning high with So the so something. because rates intent come have lot buy we interesting to the of to that's

So to and rate what have we so of is the customers, encouraging percentage the high is visitors and new first-time very we're now conversion that seeing website increase. a yet

conversion are rate, In an we order addition to average an increase value. seeing increase in in

average So was order our in $XXX.XX. September, value

returning For look order a our and value the COX period buying of more we XX $XXX order ammo of accessories. days the was $XXX.XX. during customers closer at had advertising our value on were was as and I more And October, Meta, much first lot average more if that were we average where to

Jeff, going -- to website, get answer we can I if we to is, the think I get to purchasers. find market, that be people convert them was lot I new saturated out, is of we at a I historical investors? think it had, to a to convert. answer point And difficult we know concern, as rates. And the again, get investors can them I that think was had new So And to there the tried the can

I was, campaign. part the think, most encouraging new of that this So advertising

then And if And Okay. XX-gauge? I'm on mentioned you then the if could ammos. color also you to wondering any touch on there's ammo just give hear. other can us you Good sales?

going ammo a say when overall sales mean, our consistent. higher it's -- become remain to of to ammo start stopped percentage Yes. I growing. I we've sales have sales, we our that mean to our that

our and change buy any will of accessories. not growth, seen come ammo rapid are new obviously, kits, of and periods returning percentage But ammo in these significant during back customers people sales. So we've buying

about XX% sales. accessories consistently Yes. ammo have XX%. and in QX, that was of And remained

XX-gauge, in disappointing. terms that have less-lethal is honestly, is market civilians. of a for less-lethal sales, XX-gauge discovered thing not been for And is The XX-gauge on XX-gauge existing -- the a What a law enforcement cycle. making is law we're lengthy really good And said, XX-gauge, with I've although very enforcement as law inroads always . we've sales is market. this enforcement

So over I overcoming remain convinced good But waking and in media moment not for term. our that seen flagship over market our advertising has our several social XX-gauge a pivot iconic products. significant there the it focus every honestly, the last and long is currently. And trying any we've increase and been ban, this months been to advertising focusing has approach, on

XX-gauge. launchers. we the Byrna have of done for really has on been At point, advertising attracting So new not everything this focused really any customers

wanted then to with you're more in, I generative inventory? could in doing you what squeeze that just including think one to confirm, QX, said And just be Okay. if I it you expect cash

correct. That's

rest the take offline. I'll

Thank you, Jeff.

call over our this I'd At remarks. concludes question-and-answer Mr. time, his Ganz back now this closing the to session. Instructions] to [Operator like turn for

just to everybody very for what's during the support difficult company. a for been thank period their I want

Again, are in As were I able I've we believe implemented we much. everybody's see back I that and you will both problem, relatively Thank on to here time. our solution as that Byrna. short growth of support. identify a trajectory period the appreciate expressed, find the I have increase. believe in a team we complete very and faith cash sales I at

XXXX Call. for Fiscal for Quarter Byrna's today Third joining Conference Thank us you

may now You disconnect.