Byrna Technologies Inc
For the period ended Aug 31, 2024. Filed Oct 11, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Aug 31, 2024 · Filed Oct 11, 2024
BYRN$3.83+2.4%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-05-31; filed 2024-07-09.
0001437749-24-022351
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-08-31; filed 2024-10-11.
0001437749-24-031111
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 69 previous paragraphs and 70 current paragraphs.
46 unchanged; 22 reworded; 2 added; 1 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 3 previous and 3 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (2)
Current report
On July 31, 2024, our Board of Directors approved a plan to buy back up to $10 million worth of shares of our common stock (the “Stock Buyback Program”). The Stock Buyback Program is intended to return capital to shareholders and to minimize the dilutive impact of stock options and other share-based awards. The Stock Buyback Program will expire on the sooner of the two-year anniversary of its initiation or until we reach the aggregate limit of $10 million for the repurchases under the program.
Current report
Nine months ended August 31, 2024 as compared to nine months ended August 31, 2023:
Removed paragraphs (1)
Previous report
Six months ended May 31, 2024 as compared to six months ended May 31, 2023:
Reworded paragraphs (22)
Previous wording
On January 10, 2023, the Company created a new joint venture ("Byrna LATAM") with Fusady S.A. ("Fusady") located in Uruguay, to expand the Company's operations and presence in South American markets. The Company holds 51% of the stock in Byrna LATAM, and the remaining 49% of stock in Byrna LATAM is held by Fusady. Under the terms of the joint venture, the Company does not control the entity.
Current wording
On January 10, 2023, we created a new joint venture ("Byrna LATAM") with Fusady S.A. ("Fusady") located in Uruguay, to expand our operations and presence in South American markets. We held 51% of the stock in Byrna LATAM, and the remaining 49% of stock in Byrna LATAM was held by Fusady. Under the terms of the joint venture, we did not control the Byrna LATAM. On August 19, 2024 we sold our 51% ownership interest to Fusady S.A. for $1 and entered into an exclusive distribution, manufacturing and licensing agreement with Byrna LATAM. The LATAM Licensing Agreement allows Byrna LATAM to exclusively manufacture the Byrna SD launcher and ammunition in certain South American countries and requires Byrna LATAM to pay us a royalty on Byrna products manufactured. The LATAM Share Purchase Agreement also includes put and call rights based on defined triggers that expire August 19, 2029.
Previous wording
Revenues were $20.3 million in the fiscal quarter of 2024 which represents an increase of $8.8 million as compared to the prior year period revenues of $11.5 million. Most of the increase in revenue can be attributed to a new marketing strategy, implemented in September of 2023, shifting advertising efforts away from social media platforms and to celebrity endorsers. Direct to customer sales, via Amazon and the Company’s website, increased by $8.0 million from $6.8 million in the fiscal quarter of 2023 to $14.8 million in the fiscal quarter of 2024. Sales to domestic dealers and retailers also improved, increasing by 24% to $3.8 million from $3.1 million in the three months ended May 31, 2023. Sales to Canadian customers increased by $0.2 million or 65% to $0.6 million as compared to $0.3 million in the three months ended May 31, 2023. Sales to all other international markets decreased slightly from $1.3 million in the three months ended May 31, 2023 to $1.1 million in the three months ended May 31, 2024.
Current wording
Revenues were $20.9 million in the third fiscal quarter of 2024 which represents an increase of $13.8 million, or 194%, as compared to the prior year period revenues of $7.1 million. Most of the increase in revenue can be attributed to a new marketing strategy, implemented in September of 2023, shifting advertising efforts away from social media platforms and towards celebrity endorsers. Direct to customer sales, via Amazon and our website, increased by $11.0 million, or 216%, from $5.1 million in the fiscal quarter of 2023 to $16.1 million in the fiscal quarter of 2024. Sales to domestic dealers and retailers also improved, increasing by 107% to $3.4 million from $1.7 million in the three months ended August 31, 2023. Sales to Canadian customers increased by $0.2 million or 100% to $0.4 million for the three months ended August 31, 2024, as compared to $0.2 million in the three months ended August 31, 2023. Sales to all other international markets increased from $0.2 million in the three months ended August 31, 2023 to $0.9 million in the three months ended August 31, 2024.
Previous wording
Cost of goods sold was $7.7 million in the fiscal quarter of 2024 compared to $5.3 million in the prior year period. This $2.4 million increase is due to the increase in sales volumes.
Current wording
Cost of goods sold was $7.8 million in the fiscal quarter of 2024 compared to $3.9 million in the prior year period. This increase of $3.9 million, or 100%, is primarily due to the increase in sales volumes.
Previous wording
Gross profit is calculated as total revenue less cost of goods sold and gross margin is calculated as gross profit divided by total revenue. Included as cost of goods sold are costs associated with the production and procurement of products, such as labor and overhead, inbound freight costs, manufacturing depreciation, purchasing and receiving costs, and inspection costs. Gross profit was $12.6 million in the fiscal quarter of 2024, or 62.0% of net revenue, as compared to gross profit of approximately $6.2 million, or 53.9% of net revenue, in the prior year period. The improvement in gross profit as a percentage of sales is primarily due to the increase in the proportion of high margin direct to customer sales, from 62% of total sales in the prior year period to 75% of sales in the fiscal quarter of 2024. The improvement was also due to higher absorption of fixed costs by increased production volume and due to reduced reliance on price discounts for sales promotions.
Current wording
Gross profit is calculated as total revenue less cost of goods sold and gross margin is calculated as gross profit divided by total revenue. Included as cost of goods sold are costs associated with the production and procurement of products, such as labor and overhead, inbound freight costs, manufacturing depreciation, purchasing and receiving costs, and inspection costs. Gross profit was $13.0 million in the third fiscal quarter of 2024, or 62.4% of net revenue, as compared to gross profit of approximately $3.2 million, or 44.6% of net revenue, in the prior year period. The improvement in gross profit as a percentage of sales is primarily due to the increase in the proportion of high margin direct to customer sales, from 67% of total sales in the prior year period to 77% of sales in the third fiscal quarter of 2024. The improvement was also due to higher absorption of fixed costs by increased production volume and due to reduced reliance on price discounts for sales promotions.
Previous wording
Operating expenses were $10.6 million in the fiscal quarter of 2024, an increase of $3.5 million, as compared to the prior year period expenses of $7.2 million. The increase is due to an increase of $1.9 million in marketing expenses, an increase of $1.1 million in variable expenses, which increase in proportion to sales volume, an increase of $1.1 million in accrued employee compensation costs. These cost increases were offset by a decrease of $0.6 million in stock compensation expense.
Current wording
Operating expenses were $12.2 million in the third fiscal quarter of 2024, an increase of $4.9 million, as compared to the prior year period expenses of $7.3 million. The increase is due to an increase of $2.6 million in marketing expenses, an increase of $1.2 million in variable expenses, which increase in proportion to sales volume, an increase of $1.2 million in accrued employee compensation costs. These cost increases were offset by a decrease of $0.9 million in stock compensation expense.
Previous wording
The Company recorded $0.2 million of foreign currency translation loss during the three months ended May 31, 2024 compared to $0.05 million of foreign currency translation loss during the three months ended May 31, 2023. The Company recorded $0.3 million of interest income during the three months ended May 31, 2024 compared to $0.1 million in the three months ended May 31, 2023. The Company recorded a gain of $0.06 million from its South American joint venture investment as compared to a loss of $0.2 million in the three months ended May 31, 2023.
Current wording
We recorded $0.1 million of foreign currency translation loss during the three months ended August 31, 2024 compared to $0.05 million of foreign currency translation loss during the three months ended August 31, 2023. We recorded $0.3 million of interest income during the three months ended August 31, 2024 compared to $0.2 million in the three months ended August 31, 2023. We recorded a loss of $0.06 million from our South American joint venture investment as compared to a loss of $0.2 million in the three months ended August 31, 2023.
Previous wording
For the three months ended May 31, 2024 and 2023, the Company recorded a nominal amount and $0.02 million of income tax expense, respectively. For the three months ended May 31, 2024 and 2023, the effective tax rate was 0.1% and 1.6%, respectively. The Company’s tax rate differs from the statutory rate of 21.0% due to the effects of state taxes net of federal benefit, the foreign tax rate differential as a result of Byrna South Africa, effects of permanent non-deductible expenses, the recording of a valuation allowance against the deferred tax assets generated in the current period, and other effects.
Current wording
For the three months ended August 31, 2024 and 2023, we recorded a nominal amount and $0.1 million of income tax benefit, respectively. For the three months ended August 31, 2024 and 2023, the effective tax rate was 0.1% and 2.8%, respectively. Our tax rate differs from the statutory rate of 21.0% due to the effects of state taxes net of federal benefit, the foreign tax rate differential as a result of Byrna South Africa, effects of permanent non-deductible expenses, the recording of a valuation allowance against the deferred tax assets generated in the current period, and other effects.
Previous wording
Net income was $2.1 million for the three months ended May 31, 2024, an improvement of $3.2 million compared to the net loss of $1.1 million for the three months ended May 31, 2023.
Current wording
Net income was $1.0 million for the three months ended August 31, 2024, an improvement of $5.1 million compared to the net loss of $4.1 million for the three months ended August 31, 2023.
Previous wording
Revenues were $36.9 million in the first half of 2024, an increase of $17.0 million or 85% from revenues of $19.9 in the first half of 2023. Most of the increase in revenue can be attributed to a new marketing strategy, implemented in September of 2023, shifting advertising efforts away from social media platforms and to celebrity endorsers. Direct to customer sales, via Amazon and the Company’s website, increased by $14.6 million from $13.0 million in the first half of 2023 to $27.5 million in the first half of 2024. Sales to domestic dealers and retailers also improved, increasing by 33% to $6.4 million from $4.8 million in the first half of 2023. Sales to Canadian customers increased by $0.4 million or 49% to $1.1 million as compared to $0.7 million in the first half of 2023. Sales to all other international markets increased from $1.4 million in the first half of 2023 to $1.9 million in the first half of 2024.
Current wording
Revenues were $57.8 million in the nine months ended August 31, 2024, an increase of $30.8 million or 114% as compared to the prior year period revenues of $27.0 million. Most of the increase in revenue can be attributed to a new marketing strategy, implemented in September of 2023, shifting advertising efforts away from social media platforms and to celebrity endorsers. Direct to customer sales, via Amazon and our website, increased by $25.9 million, or 140%, from $18.5 million in the nine months ended August 31, 2023, to $44.4 million during the nine months ended August 31, 2024. Sales to domestic dealers and retailers increased by 58% to $9.8 million in the nine months ended August 31, 2024, from $6.2 million in the nine months ended August 31, 2023. Sales to Canadian customers increased by $0.4 million or 60% to $1.1 million during the nine months ended August 31, 2024, as compared to $0.7 million in the nine months ended August 31, 2023. Sales to all other international markets increased from $1.6 million in the nine months ended August 31, 2023, to $2.5 million in the nine months ended August 31, 2024.
Previous wording
Cost of goods sold was $14.7 million in the first half of 2024 compared to $8.5 million in the prior year period. The increase is due to the increase in sales volume.
Current wording
Cost of goods sold was $22.6 million in the nine months ended August 31, 2024 compared to $12.4 million in the prior year period. The increase of $10.2 million, or 82%, is primarily due to the increase in sales volume.
Previous wording
Gross profit is calculated as total revenue less cost of goods sold and gross margin is calculated as gross profit divided by total revenue. Included as cost of goods sold are costs associated with the production and procurement of products, such as labor and overhead, inbound freight costs, manufacturing depreciation, purchasing and receiving costs, and inspection costs. Gross profit was $22.2 million in the first half of 2024, or 60.1% of net revenue, as compared to gross profit of approximately $11.4 million, or 57.5% of net revenue, in the prior year period. The improvement in gross profit as a percentage of sales is primarily due to the increase in the proportion of high margin direct to customer sales, from 68% of total sales in the prior year period to 76% of sales in the first half of 2024. The improvement was also due to higher absorption of fixed costs by increased production volume and due to reduced reliance on price discounts for sales promotions.
Current wording
Gross profit is calculated as total revenue less cost of goods sold and gross margin is calculated as gross profit divided by total revenue. Included as cost of goods sold are costs associated with the production and procurement of products, such as labor and overhead, inbound freight costs, manufacturing depreciation, purchasing and receiving costs, and inspection costs. Gross profit was $35.2 million during the nine months ended August 31, 2024, or 60.9% of net revenue, as compared to gross profit of approximately $14.6 million, or 54.1% of net revenue, in the prior year period. The improvement in gross profit as a percentage of sales is primarily due to the increase in the proportion of high margin direct to customer sales, from 66% of total sales in the prior year period to 77% of sales in the nine months ended August 31, 2024. The improvement was also due to higher absorption of fixed costs by increased production volume and due to reduced reliance on price discounts for sales promotions.
Previous wording
Operating expenses were $20.5 million in the first half of 2024, an increase of $6.0 million, as compared to the prior year period expenses of $14.4 million. The increase is due to an increase of $3.8 million in marketing expenses, an increase of $1.6 million in variable expenses, which increase in proportion to sales volume, an increase of $1.5 million in employee compensation costs. These cost increases were offset by a decrease of $1.2 million in stock compensation expense.
Current wording
Operating expenses were $32.6 million in the nine months ended August 31, 2024, an increase of $11.1 million, or 52%, as compared to the prior year period expenses of $21.5 million. The increase is due to an increase of $6.4 million in marketing expenses, an increase of $2.8 million in variable expenses, which increase in proportion to sales volume, an increase of $2.7 million in employee compensation costs. These cost increases were offset by a decrease of $2.1 million in stock compensation expense.
Previous wording
The Company recorded $0.3 million of foreign currency translation loss during the first half of 2024 compared to $0.2 million of foreign currency translation loss during the first half of 2023. The Company recorded $0.6 million of interest income during the first half of 2024 compared to $0.3 million in the first half of 2023. The Company recorded a gain of $0.02 million from its South American joint venture investment that was formed during the first half of 2023 as compared to a loss of $0.3 million in the first half of 2023.
Current wording
We recorded $0.4 million of foreign currency translation loss during the nine months ended August 31, 2024 compared to $0.2 million of foreign currency translation loss during the nine months ended August 31, 2023. We recorded $0.9 million of interest income during the nine months ended August 31, 2024 compared to $0.5 million in the nine months ended August 31, 2023. We recorded a loss of $0.04 million from our South American joint venture investment during the nine months ended August 31, 2024, as compared to a loss of $0.6 million in the nine months ended August 31, 2023.
Previous wording
For the six months ended May 31, 2024 and 2023, the Company recorded an income tax expense of $0.01 million and income tax benefit of $0.04 million, respectively. For the six months ended May 31, 2024 and 2023, the effective tax rate was 0.2% and (1.3)%, respectively. The Company’s tax rate differs from the statutory rate of 21.0% due to the effects of state taxes net of federal benefit, the foreign tax rate differential as a result of Byrna South Africa, effects of permanent non-deductible expenses, the recording of a valuation allowance against the deferred tax assets generated in the current period, and other effects.
Current wording
For the nine months ended August 31, 2024 and 2023, we recorded $0.1 million of income tax benefit and income tax benefit of $0.2 million, respectively. For the nine months ended August 31, 2024 and 2023, the effective tax rate was 0.2% and 2.2%, respectively. Our tax rate differs from the statutory rate of 21.0% due to the effects of state taxes net of federal benefit, the foreign tax rate differential as a result of Byrna South Africa, effects of permanent non-deductible expenses, the recording of a valuation allowance against the deferred tax assets generated in the current period, and other effects.
Previous wording
Net income was $2.1 million for the first half of 2024, an improvement of $5.4 million compared to the net loss of $3.3 million for the first half of 2023.
Current wording
Net income was $3.1 million for the nine months ended August 31, 2024, an improvement of $10.5 million compared to the net loss of $7.4 million for the nine months ended August 31, 2023.
Previous wording
Cash and cash equivalents as of May 31, 2024 totaled $24.8 million, an increase of $4.3 million from $20.5 million of cash and cash equivalents as of November 30, 2023.
Current wording
Cash and cash equivalents as of August 31, 2024 totaled $20.1 million, a decrease of $0.4 million from $20.5 million of cash and cash equivalents as of November 30, 2023.
Previous wording
Cash provided by operating activities was $5.9 million for the six months ended May 31, 2024 compared to cash used in operations of $2.4 million during the prior year period. Net income was $2.1 million compared to net loss of $3.3 million for the six months ended May 31, 2024 and 2023, respectively. Significant changes in noncash and working capital activity are as follows:
Current wording
Cash provided by operating activities was $4.5 million for the nine months ended August 31, 2024 compared to cash used in operations of $3.6 million during the prior year period. Net income was $3.1 million compared to net loss of $7.4 million for the nine months ended August 31, 2024 and 2023, respectively. Significant changes in noncash and working capital activity are as follows:
Previous wording
Non-cash activity includes stock-based compensation expenses of $1.8 million for the six months ended May 31, 2024 compared to $3.0 million for the six months ended May 31, 2023; depreciation and amortization expense of $0.7 million for the six months ended May 31, 2024 compared to $0.6 million for the six months ended May 31, 2023, amortization of right-of-use assets of $0.3 million for the six months ended May 31, 2024 compared to $0.3 million for the six months ended May 31, 2023, and less than a $0.1 million of joint venture investment loss in the six months ended May 31, 2024 compared to $0.4 million during the six months ended May 31, 2023.
Current wording
Non-cash activity includes stock-based compensation expenses of $2.6 million for the nine months ended August 31, 2024 compared to $4.7 million for the nine months ended August 31, 2023; depreciation and amortization expense of $1.1 million for the nine months ended August 31, 2024 compared to $0.9 million for the nine months ended August 31, 2023, and less than a $0.1 million of joint venture investment loss in the nine months ended August 31, 2024 compared to $0.6 million during the nine months ended August 31, 2023.
Previous wording
Inventory increased during the six months ended May 31, 2024 by $1.6 million compared to increase of $2.7 million for the six months ended May 31, 2023. Accounts receivable decreased by $1.3 million during the six months ended May 31, 2024 as compared to a decrease of $1.3 million for the six months ended May 31, 2023. Accounts payable and accrued liabilities increased during the six months ended May 31, 2024 by $3.0 million compared to a decrease of $1.4 million for the six months ended May 31, 2023. Prepaid expenses and other current assets increased by $0.9 million during the six months ended May 31, 2024 compared to an increase of $0.1 million during the six months ended May 31, 2023. Operating lease liabilities decreased by $0.4 million during the six months ended May 31, 2024 compared to a decrease of $0.4 million during the six months ended May 31, 2023. Deferred revenues decreased $0.5 million during the six months ended May 31, 2024 compared to a decrease of $0.2 million for the six months ended May 31, 2023, respectively.
Current wording
Inventory increased during the nine months ended August 31, 2024 by $5.9 million compared to an increase of $2.3 million for the nine months ended August 31, 2023. Accounts receivable decreased by $0.8 million during the nine months ended August 31, 2024 as compared to a decrease of $2.0 million for the nine months ended August 31, 2023. Accounts payable and accrued liabilities increased during the nine months ended August 31, 2024 by $5.0 million compared to a decrease of $3.0 million for the nine months ended August 31, 2023. Prepaid expenses and other current assets increased by $1.2 million during the nine months ended August 31, 2024 compared to a decrease of $0.2 million during the nine months ended August 31, 2023. Operating lease liabilities decreased by $0.5 million during the nine months ended August 31, 2024 compared to a decrease of $0.5 million during the nine months ended August 31, 2023. Deferred revenues decreased $1.1 million during the nine months ended August 31, 2024 compared to a decrease of less than $0.1 million for the nine months ended August 31, 2023, respectively.
Previous wording
Cash used in investing activities was $0.7 million for the six months ended May 31, 2024 compared to $2.2 million for the six months ended May 31, 2023. The prior year period investing activities primarily relates to the investment in the joint venture and the corresponding loan while the current period relates to purchases of property and equipment.
Current wording
Cash used in investing activities was $1.4 million for the nine months ended August 31, 2024 compared to $2.4 million for the nine months ended August 31, 2023. The prior year period investing activities primarily relates to the investment in the joint venture and the corresponding loan while the current period relates to purchases of property and equipment.
Previous wording
Cash used in financing activities was $0.9 million for the six months ended May 31, 2024 compared to zero for the six months ended May 31, 2023. The current year amount was primarily composed of stock repurchases of $0.3 million and taxes paid on issuances of restricted stock units of $0.8 million.
Current wording
Cash used in financing activities was $3.9 million for the nine months ended August 31, 2024 compared to $0.5 million for the nine months ended August 31, 2023. The current year amount was primarily composed of stock repurchases of $3.2 million and taxes paid on issuances of restricted stock units of $0.8 million. The prior year amount was primarily composed of payroll taxes withheld on the vesting of restricted stock units.
Previous wording
Our unaudited condensed consolidated financial statements are based on the selection and application of significant accounting policies, which require management to make significant estimates and assumptions. Our significant accounting policies are outlined in Note 4, “Summary of Significant Accounting Policies,” in the Notes to Consolidated Financial Statements included in Item 8 of the 2023 Form 10-K. During the three and six months ended May 31, 2024, there were no significant changes to our critical accounting policies from those described in our 2023 Form 10-K.
Current wording
Our unaudited condensed consolidated financial statements are based on the selection and application of significant accounting policies, which require management to make significant estimates and assumptions. Our significant accounting policies are outlined in Note 4, “Summary of Significant Accounting Policies,” in the Notes to Consolidated Financial Statements included in Item 8 of the 2023 10-K. During the three and nine months ended August 31, 2024, there were no significant changes to our critical accounting policies from those described in our 2023 10-K.