Byrna Technologies Inc Stock

Good morning. Welcome to Byrna's Fiscal Second Quarter 2026 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, Conn Davis; and CFO, Lauri Kearnes. Following their remarks, we will open the call to questions.

Earlier today, Byrna released results for its fiscal second quarter ended May 31, 2026, and a copy of the press release is available on the company's website. Before turning the call over to Conn Davis, Byrna Technologies Chief Executive Officer, I'll read the safe harbor statement. Some discussions held today include forward-looking statements. Actual results could differ materially from the statements made today. 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.

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, further information regarding forward-looking statements and reconciliations of non-GAAP results to GAAP results. Now I'd like to turn the call over to Byrna's CEO, Conn Davis. Sir, please proceed.

Thank you, operator, and thank you, everyone, for joining us today. Q2 came in below our expectations with revenue of $16.4 million and did not reflect the level of performance we believe Byrna can deliver. We entered the quarter knowing it would represent the beginning of a transition period as we worked to improve direct-to-consumer conversion retail productivity and the discipline and structure of our operations. The quarter ultimately became a steeper reset than we originally expected, and the results reinforced why the transformation underway is necessary and why we are moving with urgency.

These results were driven by 2 things: first, the e-commerce pressure we discussed on our Q1 call continued with website traffic down 13% through the quarter year-over-year. Second, in retail, many partners entered the quarter with elevated inventory levels following meaningful post-holiday restocking in Q1, and sell-through during that quarter didn't support the level of reorders we had incorporated into our plan. Those challenges came together during the quarter and drove revenue below our expectations. Q2 sharpened our priorities and accelerated decisions. The results are important but they do not tell the full story of Byrna or the work underway across the business. During the quarter, we started implementing tactical changes to demand generation and our cost structure with more in motion as we transition the Byrna brand more fully during the balance of fiscal 2026. These changes will take time to show up in revenue, but we believe they are the right ones that will allow us to return to growth.

A few weeks ago, I issued my first 100-day shareholder letter. The letter, which is available in the Investor Relations section of our website, established a reference point for where Byrna stands today where execution has fallen short and what we are changing to position Byrna to capture the opportunity ahead in less lethal personal safety. Today, I want to build on the letter by connecting our 3 key near-term priorities directly to what Q2 showed us and detailing the work now underway against each. Our first priority is consumer conversion and retail productivity. Byrna has created a solid base of awareness with a core audience and our products were available in roughly 1,500 retailer and dealer locations nationwide at quarter end. Our focus now is on turning our expanding reach into purchases repeat engagement and consumer advocacy. We know that the strongest results come when consumers understand the product are able to compare options and experience burner directly. So our work under this priority is to make the consumer journey easier and more consistent online and in stores.

The second priority is changing how Byrna builds demand. The narrow reach behind our Q2 traffic softness reflects a structural issue. Historically, Byrna has relied too heavily on a relatively narrow audience and lack the visibility into which messages, media channels and partnerships actually produce to consumers. We are actively changing our message to consumers and the way sales and marketing operate with the goal of reaching more people without losing the core consumer. We are building a systematic approach to demand generation that will allow us to better attribute traffic, conversion and retail sell-through over time. The third priority is connecting demand more tightly to production, inventory and cash generation. We are building a rolling financial and operating model that brings together elements such as website trends, retail sell-through, partner inventory, confirmed orders and manufacturing capacity to help us produce and purchase against visible demand trends.

As the business returns to growth, our disciplined model should drive margin expansion, lower working capital and better cash conversion. These priorities are all connected. Better marketing brings more qualified consumers into the funnel, better online and retail execution turns new interest into sales more effectively and more refined forecasting and production lets those sales flow through to the bottom line more efficiently. When these pieces work together, Byrna becomes a more predictable and scalable business. Before getting into our progress against these priorities in greater detail, I'll turn it over to Lauri to walk through the financial results. Lauri?

Thank you, Conn, and good morning, everyone. Let's review our financial results the fiscal second quarter ended May 31, 2026. Net revenue for Q2 2026 was $16.4 million compared to $28.5 million in the prior year period. E-commerce sales through our website at Amazon decreased by $5.8 million or 35% compared to the prior year due to a reduction in traffic and lower conversion rates. Our domestic dealer channel, including dealers, distributors and chain stores decreased $3.5 million or 47%. This was mainly due to the slower reorder activity following substantial restocking in fiscal Q1 and slower-than-expected sell-through.

Product sales through our international dealer and distributor channel decreased $1.2 million or 43% due to large orders last year that were not repeated in the current year. Gross profit for Q2 2026 was $1.8 million or 11% of net revenue compared to $17.6 million or 62% of net revenue for Q2 2025. The reported gross margin included onetime $3.6 million inventory write-down, a $3.5 million impairment loss on manufacturing equipment and a $2.3 million inventory reserve due to strategic product rationalization. These were partially offset by a $1.1 million tariff refund recorded in cost of goods sold. Excluding these items, adjusted gross profit was $10.1 million, representing adjusted gross margin of approximately 62%. We expect our adjusted gross margin to remain near or above this level through the balance of the year. The inventory write-down of $3.6 million and the $3.5 million impairment loss were directly related to the closure of our Fort Wayne ammunition manufacturing facility. The additional $2.3 million inventory reserve was a combination of finished goods and raw materials that will either end of life or will not be used due to engineering process changes.

Operating expenses for Q2 2026 were $14.6 million compared to $14.2 million for Q2 2025, an increase of 3%. The increase primarily reflected an impairment charge of $1 million as well as continued investment in marketing, partially offset by the change in variable selling expenses associated with a decrease in sales. During the second half, we expect incremental expense as our new commercial and consumer acquisition programs ramped. Those investments will precede their full potential revenue contributions and outside of those targeted areas, we are managing spending against the current revenue base, and continuing to evaluate costs. Net loss for Q2 2026 was $10.1 million compared to net income of $2.4 million for Q2 2025. Net loss included noncash impairment and inventory write-down charges of $10.4 million related to the shutdown of our ammunition manufacturing facility in Fort Wayne and product rationalization. A tax benefit of $2.7 million was also recorded for the quarter.

Adjusted EBITDA, a non-GAAP metric for Q2 2026 was negative $600,000 compared to $4.3 million for Q2 2025. Cash, cash equivalents and marketable securities at May 31, 2026, totaled $10.4 million compared to $9.6 million at February 28, '26 and $15.5 million at November 30, 2025. Collections of accounts receivable supported cash during the quarter, and we ended the quarter with no debt. Inventory on May 31, 2026, totaled $30.4 million compared with $33.1 million at February 28, 2026, and $32.7 million at November 30, 2025. The decline in reported inventory primarily reflected the write-down discussed earlier. We remain focused on reducing physical inventory and improving working capital efficiently. We continue to expect inventory turns to approach 2x by year-end. I will now pass the call back to Conn to discuss what we learned during the quarter and the actions underway across the business. Conn?

Thank you, Lauri. At the time of our Q1 call, website traffic was generally holding and conversion was the primary issue. During Q2, traffic weakened as well. Byrna.com generated approximately 2.6 million sessions, down 13% year-over-year. Conversion averaged 0.59% compared with 1% in Q2 2025 and average order value declined 19% to approximately $302. Byrna.com sessions declined from approximately $1.1 million in March to roughly $783,000 in April and $779,000 in May.

During the quarter, we continued to spend through many of our historical media and influencer relationships. But those channels generated less traffic and fewer purchases. The performance reinforced our need to address both sides of the funnel, how we bring people to byrna.com and what happens after they arrive. Our find to the right launcher experience online shows the positive impact of better education. More than 150,000 responses have been completed, and those consumers continue to convert at approximately twice the rate of the overall website. The quiz responses are also telling us why consumers are considering Byrna, which products fit their needs and where the website might be leaving questions unanswered. Just over 7% of all byrna.com visitors are engaging with and completing our find the right launcher experience and we are working to highlight the experience better across the site.

More importantly, we are now using the data gained from this experience to improve product comparisons, landing pages, consumer onboarding and follow-up communications. Within the next 2 weeks, we will be launching personalized experiences and guided product selection across byrna.com. These are the first steps in an ongoing process to improve our digital experience and conversion using our proprietary data. Our limited "try before you buy" program addresses the same education gap through direct product experience. A consumer pays $50 to receive a demonstration unit, training ammunition, CO2 and educational materials for a 2-week trial. This fee covers the principal program costs and becomes a $50 purchase credit. The program has generated strong conversion near 30%. Most participants are new to Byrna and purchasers are generally adding ammunition and accessories at healthy rates. The test has been small and has not yet meaningfully contributed to revenue but we are currently evaluating the processes and economics required to expand it responsibly.

Given the success of the program, we are expanding it beyond an initial test so that 8x the number of consumers will be able to participate in the next phase of the program. The same core principle of improving education applies in our retail channel as well. Byrna performs better when consumers are able to understand the differences across the product lineup and receive useful guidance from store associates. During the quarter, we worked with one of our premier chain partners to move from basic shelf placements to dedicated Byrna in caps across more than 20 stores. Before the change, the partner averaged approximately 81,000 in monthly purchases. Purchases increased to approximately $200,000 in April, the first full month after the rollout and expanded product assortment. Every location with this chain partner has placed a stocking order since the new program begin. These results don't mean every retail store will produce these same increases, but they show how we can materially support partner load-ins and revenue.

We are applying our learnings across the footprint now and working more closely with our partners on inventory planning and improving sell-through. The CL platform continued to gain share during Q2 represented more than 40% of launcher sales in retail. The CL accounted for an even greater share in Byrna owned stores and at some of our higher performing partners. Looking at overall unit sales, the CL share grew by 11% from our fiscal second quarter of last year to this year. This mix shift supports our margin profile and provides another example of the value of focusing on and investing in product education. As more consumers understand the advantages of the CL platform, we believe it will continue to gain share. The work we are doing inside the sales funnel only matters if we are bringing the right people into it. Q2 showed that Byrna cannot reach its full potential by repeatedly targeting the same audience with the same message. Our core consumer is important, but we have still only reached a small portion of our addressable market in the United States.

With HLK support, we have identified several priority consumer segments with a strong potential fit for Byrna, including personal safety-minded urban professionals, security-minded suburban homeowners and preparedness focus outdoor enthusiasts. Together, these segments represent more than 50 million likely buyers that Byrna has not historically addressed in a focused way. Reaching those consumers requires more than simply placing Byrna in front of a larger audience. We need to explain where the product fits into their lives and communicate through the media channels with marketing campaigns that are relevant to them. And that's why we are shifting towards safety and use case first messaging across areas such as home protection, outdoor activity, travel and small business activity.

In June, we made organizational moves to transform the marketing and sales functions separating the 2 areas that we can build them back stronger with more accountability, focus and ownership. Q2 showed our prior organizational structure didn't create enough accountability within each function and channel. As performance fell short, the old system made it too difficult to isolate root causes and move quickly to address the changing demand environment. The teams will remain closely connected, but there will be a clear division of responsibility allowing us to respond more quickly and allocate resources more effectively. The separation should make problems easier to identify and faster to address. Our recent agency and media appointments support different parts of this new operating model.

HL is helping us define and refine our audiences, main use cases and creative expression to broaden Byrna's relevance. Acceleration Partners is building a more measurable creator and affiliate program in a way that will allow us to link individual partners and campaigns to traffic, conversion and revenue. We also announced the FOX Sports activation, which kicked off in recent weeks and was funded by reallocating dollars from relationships that were underperforming rather than adding incremental media expense. We are still on schedule to deliver the core brand repositioning work for the 2026 holiday season, followed by the complete brand and website experience in Q1 2027. We are already busy testing and implementing shorter cycle improvements in our creative, media allocations and owned channels. This broader approach to consumer acquisition is also supported by our definitive agreement to acquire HERO Defense Systems.

HERO adds a complementary less lethal self-defense product family that sets below and adjacent to our core Byrna Launcher platform. Today, all launchers serve consumers looking for a more robust, less lethal launcher solution. HERO would add smaller more discrete everyday carry options, including the HERO 2020 irritant Launcher and HERO Pepper Gel platform, which can appeal to consumers who are interested in personal safety but may not yet be ready to purchase a full longer system. Strategically, this gives us a fuller product ladder. We can meet consumers earlier in their personal safety journey, introduce them to the less lethal categories through a more accessible form factor and price point and then use our evolving marketing platform to support long-term engagement across our product ecosystem. HERO fits directly with our marketing redesign. As we move towards more targeted use case-driven messaging, HERO gives us another product family to match against specific consumer needs. Over time, this should allow us to build more relevant creative and a more effective consumer journey across channels.

The transaction is structured on a debt-free basis, with consideration consisting of $65,000 in cash and $625,000 in restricted shares of Byrna common stock and a performance-based royalty tied to future net sales of HERO products and derivative products. We expect the transaction to close within approximately 30 days, subject to customary closing conditions. Because these changes will influence revenue gradually over the coming quarters, we also acted during Q2 to align production with the current demand trends we see today. In May, we reduced launcher assembly from 4 production lines to 2. We are now producing below the current sales rate, which should allow physical inventory to decline while preserving the ability to add capacity as demand improves. We also stopped manufacturing ammunition in-house because purchasing it from qualified external suppliers cost less.

We completed a make versus buy analysis of ammunition production and qualified external suppliers that can produce the required ammunition at a lower fully loaded cost than our previous internal operation. The change does not affect our quality standards or ability to meet anticipated consumer demand. These decisions related to the larger planning change that I discussed earlier. We are rolling out a model that connects e-commerce trends and retail sell-through to production and inventory by product. We will be reviewing this model on a monthly cadence, allowing us to purchase components and plan manufacturing against real-time dynamic data rather than against a static assumption. The changes in our launcher production lines in May were a direct result of this process, and we expect our inventory level to work its way down, especially as the holiday season load-ins begin this fall.

We are applying the same discipline to production as well. We improved the CL's first pass yield by 6.5% from May to the end of June, with the expectation we can move it north of 90% in Q4. As Lauri mentioned, we had an inventory write-down this quarter. Some of that was connected to the parks we are now using with the CL. Instead of continuing to use parts that produced inconsistent results in our process, we went back to core manufacturing principles and a valued what was causing the issues. After a thorough assessment, we focused on remedying the top causes of fallout and made targeted improvements that led to major production improvements immediately. While there is still more work to be done, the higher first pass yield reduces rework, increases effective production capacity and lowers the cost required to produce each unit.

As we think about longer-term product development, we have moved from a hardware first development process towards one that starts with the consumer need and aligns R&D, marketing and operations before a product reaches launch. Further, we are including design for manufacturing as a core component of our product development process. So products launched with a higher quality at a lower manufacturing cost. The refined process has begun now in the development stage, and we are looking forward to demonstrating how a successful product launch can perform with this more modern approach. Turning to the remainder of the year. Based on current expectations, fiscal 2026 will not be a revenue growth year. Q2 reset the revenue baseline and we are continuing to execute our strategic transition against current demand signals and expanding the long-term opportunity rather than assuming a quick return to prior growth rates.

We expect improvement from the first half of the fiscal year to the second half results as retailers prepare for the holidays and more of the new marketing and consumer acquisition initiatives enter the market. The improvement will build in stages. Q3 remains a transition quarters as these initiatives ramp. While we expect Q4 to improve with the holiday season and the work we are doing across marketing, conversion and retail activation more fully deployed in the market. We are building from a more realistic baseline with the opportunity to outperform as the new initiatives begin to contribute. Our current focus and initiatives are centered around improving website traffic and conversion to the second half, along with retail sell-through and reorder cadence to support a return to revenue growth in the near term.

We still expect to exit fiscal 2026 with gross margins of approximately 62% and we are continuing to reduce inventory levels and improve cash flow. We move into the second half of the year with a stronger organizational structure, a production base aligned more closely with current demand and several consumer conversion and demand generation initiatives that are already in producing encouraging signs. The opportunity ahead remains as important as ever and we are now bringing the operating discipline required to continue leading the charge in less legal personal safety. We believe this reset positions us to finish fiscal 2026 on a stronger footing and enter fiscal 2027 with a business capable of delivering more consistent growth. We know confidence will grow from results, and our focus is now on executing against our 3-point plan and showing progress from the year.

With that, operator, we are ready to take questions.

[Operator Instructions]

And our first question is from the line of Jeremy Hamblin with Craig-Hallum.

So in terms of looking at the reorganization that's happening and obviously a significant amount of change. Can you talk to how you're looking at your operating expense structure, obviously, with lower expectations on revenue for the back half of the year and then starting to build off that into '27. How should we be thinking about your operating expense structure given the amount of heavy lift that you need to do in kind of reformulating your marketing, and kind of realigning the organization as a whole?

Should we assume that kind of that operating expense run rate that you -- we saw in Q2 is kind of where things might fall in Q3 and Q4? Or how are you addressing rightsizing your cost base?

Hi Jeremy, thanks for the question. So when we look at operating expenses for the back half of the year, you can kind of start with Q2 as a baseline, but we are going to be making some investments that we talked about with some of the marketing agencies as we move forward in this new plan. So some of those expenses are going to come ahead of when the revenue comes. So we will have some investment there to the tune of -- it's 250,000 or so a month, so 750,000 maybe a quarter.

As you know, we have variable selling expenses. So those will fluctuate in OpEx is kind of a roughly 10% of sales. So as sales increase, which especially in Q4 with the holiday, right? That piece will go up. rest of the OpEx we're trying to hold as much as possible. We do obviously have some investments in some of these new positions that we're trying to hire to support the sales and marketing. But I think if you use Q2 as a baseline and make those adjustments, that should be good for the back half of the year.

Got it. And then just looking at top line and relationships. So a little bit surprised certainly with where the wholesale revenue was in Q2. I know you signed a deal with Academy to roll out, and they've got roughly 300 locations across the U.S. Can you provide us with an update on the rollout with that large partner? And in terms of building back the wholesale business, which seems like kind of the area of potential growth on a go-forward basis, what other feedback are you getting from your retail partners when you talk about kind of retail sell-through that disappointed in the quarter, what else are they sharing that you feel like needs to change and be addressed to really drive that channel of business going forward?

Thanks, Jeremy. I mean, as you know, we don't have the same level of visibility into conversion at the retail side as we do on byrna.com or our own retail stores. But what we do know is that our product sells better when consumers can engage with it directly, and there's really strong education at the retail point of sale. So that's where we're focused from a sell-through point of view is really ramping our education and the ability for the consumer to learn about the product, frankly, on their own in that retail experience as they discover it.

Similarly, we've moved to more of an in-cap environment, more of an easy to discover environment than being in the gun case where it's a little bit more hidden. I spent some time in the quarter talking with all of our major retail partners. And frankly, all of them remain very excited about Byrna, what we can deliver and where we're going together. I will tell you that in the quarter, we really did enter with pretty high inventories in the retail channel following really strong demand through the holiday period last year. There was just really large restocking that occurred and throughout the quarter, we just didn't see the sell-through at that high of a level to generate as quickly of reordering there.

Reordering and sell-through remained consistent, but just not quite at a level to drive what we had hoped. As far as Academy, in that particular business, that shifted from a load in from Q2 into Q3 just from a timing and on their side.

Okay. Got it. And then in terms of the HERO acquisition, taking that, I wanted to see what type of annual revenues the business was doing prior to acquisition. And then their launchers are a little bit less expensive than the Byrna launchers. But in terms of thinking about the fit with the business and where Byrna goes from here. I don't know if kind of what you're hinting at is that part of the issue with Byrna is simply the price points being too high, for broadening the marketing to kind of a different audience than what your traditional kind of conservative gun owning customer has been over the last 5 years or so.

Thanks, Jeremy. I'm really excited about the HERO opportunity and what that represents for the business. And for me, it really goes back to kind of the 4 Ps of marketing and where we're going as an organization. HL is really leaning in to help us from a promotion point of view. How we talk about Byrna, the customers we're targeting and the media channels that we're moving through there. Similarly, what we're doing from a retail point of view and the door expansion is really driving our placement and making Byrna much more accessible.

Where HERO comes in is really on the product and the price point of view, as you say. We are a very tactical brand today, the way we show up in the marketplace. The product form factor of HERO is really a different, less gun forward product structure which really opens up a new consumer opportunity from us from just a product point of view. Similarly, if you look at it from a pricing point of view, you mentioned they come in slightly below where we are. Frankly, there's a pretty big gap in our portfolio from the sprays business that we have to the ST, right? That's a $20 price point to a $400 price point. What's nice about HERO is we've been able to dig into their product pretty deeply, and we believe there's an opportunity to significantly reduce the build cost of that product. and provide a solution for consumers in the $250-ish range that will really open up a new consumer opportunity for us there.

Our next questions are from the line of Matt Koranda with ROTH Capital Partners.

Maybe just attacking this from a different angle on channel. I wanted to hear a little bit more about the e-comm channel and how traffic and conversion has trended in June and July. I know you mentioned some of the trends in April and May come, but just any help with sort of what that looked like quarter-to-date? Any improvement that we've seen in terms of traffic or conversion metrics? And how much of the HLK messaging, I guess, has been rolled out? Or when do you expect that to roll out and start to impact traffic on a broader basis?

Thanks, Matt. Let me address the first part of that question. So from an HLK messaging point of view, we are still very much in the early stages of that and almost none of that is live at this point in time. That will be ramping throughout Q3 as we do the work to really understand what messages will resonate across the quarter and the new audiences that we're targeting. So I expect that to really ramp through Q3, both from a Byrna owned channel point of view and what we're doing from a social media partnership point of view with acceleration partners. So that's kind of where we are from that point of view.

Throughout Q2, we really were still focused and relied on some of the traditional media partnerships that we had. You saw us just a couple of weeks ago, launched the FOX Sports partnership, and that was really by reallocating previously committed dollars with one partner to a different outlet that they had. So that's kind of where we are right now. I expect that to continue to ramp as we go through Q3, and really have a lot of that messaging and new targeting in place as we enter the holiday period in Q4. When you think about how we've performed from an e-commerce point of view, I would tell you, traffic has still been fairly consistent from the end of Q2 into the start of Q3 and conversion roughly the same as well.

We are seeing an increased engagement on our "find the right launcher" quiz and our "try-before-you-buy" program. So those are tailwinds that will really ramp both end of last month and through July that we believe will meaningfully move the needle there throughout the quarter.

Okay. I appreciate that. And then maybe just if we're thinking about the HERO acquisition, when should we expect that to be, I guess, integrated into the Byrna website? Will it be and how should we expect the product to sort of roll out? Is it going to be with Byrna branding? Do you start with sort of the legacy Hero product and eventually add your branding once you kind of reengineer the product? How should we think about sort of how that unfolds over time?

No, that's great. Let me address one thing that I forgot to mention in your prior question as well. We are ramping up our TV as well from an advertising point of view. During the World Cup, it was a little expensive when they were all the games on, but now it's more cost effective for us to do that. So we're ramping that back up as well to drive traffic. When you think about Hero once we close that transaction, we will focus on the existing HERO product line as it is and really promoting that and driving that forward.

We will work to integrate the HERO product line into byrna.com so that we can sell it through that channel towards the end of Q3, Q4. But really, you'll see us in Q1 have that more tied in with the Byrna brand and the positioning overall and really tied into a unified experience.

Okay. And then maybe just last one for me. It sounds like with sort of sales trends kind of continuing from the second quarter, maybe we see a little bit of a seasonal ramp in the fourth quarter, but we're still ramping on the marketing expense seems like EBITDA profitability is going to be a little bit challenging for the rest of the year. How should we think about free cash flow?

Maybe Lauri, if you want to kind of address how much you think you can flush from inventory for the remainder of the year, how the cash balance looks toward the end of the year in light of that? How should we be thinking about those trends?

Sure. Thanks, Matt. So we really expect cash to kind of hold through Q3. Q4 is when you're really going to see us reduce inventory and then obviously, we'll have the holiday sales. So we're targeting a $5 million reduction in inventory to really generate cash. So we expect to end the year with more cash than we have at the moment. and keeping that steady through Q3. I mean we typically burn cash the first part of the year. But I think cash wise, we're in good shape and still with no debt.

Our next question comes from the line of Jeff Van Sinderen with B. Riley Securities.

So just to kind of follow up on the line of thinking with sales trends or engagement running pretty similar so far this quarter. Is your thought that Q3 will look something similar to Q2? Or do you think it will be down another notch from Q2? Or how -- I realize it's a tough question, tough to predict here, but just any other I guess, sort of directional thoughts you have around, kind of the sequential progression in Q3?

Yes. I mean we still see -- Q3 is always a challenge from a seasonality perspective, right? The summer tends to be the slower months for us anyway. But we do expect to see some of those load-ins for holiday start at the end of Q3. And then as Conn mentioned, there's actions we're taking that are fairly new. So the FOX Sports initiative acceleration partners, getting influencers up online, some of those smaller influencers to target, the website changes we're making and then the new TV advertising that quite literally just started in the last couple of days to ramp up.

So those are the things that we're doing and expect to see some of that improve. But there is certainly as well the seasonality. So we'll continue to work all of those channels through Q3 and Q4 is when we really expect to see revenue increase.

And then if maybe we can turn back to the HERO acquisition for a minute. Just curious having kind of looked at taking a quick look at some of the product. Just I guess, and I know you spoke to a $250 price point, but is there -- are you thinking product rationalization there? Are you thinking there's overlap? I'm just kind of looking at where they have a product price now that's by a little bit similar to Byrna, although I guess it only fires 2 rounds is what it looks like and then you have to put in a new cartridge. But just thoughts on the overall product line there as you're planning to rationalize and kind of how you position that versus the entry-level Byrna product?

Right. If you think about the HERO product line, that will really be a more basic, straightforward lower feature product line than the core Byrna launchers, you're not going to be able to upgrade them like you can the SD, the CL and the L However, they're going to really fit in well below from a price point where Byrna is today and really open up access to a more accessible marketplace overall.

What's also interesting about that product line. When you look at the Aero product as well, again, work has to be done to bring the price point on that down. But that would really get you down to a much more form factor, less like a gun and a much more accessible price point as well. So I believe these will be filtered in kind of as a different part of the product line below the core Byrna launcher in a more simple, straightforward, less capable, but still effective personal safety solution.

And then anything you can share about kind of the revenue that HERO generates now? Were they Were they profitable? Are the gross margins similar? And then I guess anything around how you expect the consumable part of that business to be? Because it looks like there is a consumable part. How are the margins on that? Just anything else -- any other color you can give us there?

Sure, Jeff. So I would say from a margin perspective, similar to where Byrna is at. As Conn mentioned though, we're going to do some things to take the cost out as we bring the price down, right? So we want to target a price for consumers, but keep maintaining the same similar margins. So they have been profitable. I mean, it was a small company. So really, these are people, the founders didn't invest enough in marketing.

We think we have a great opportunity with the Byrna brand behind it with our marketing engine and to get that out and through our retail partners as well. So we're really excited for this, especially in 2027. 2026, we have a little bit of work to do to get that all integrated. But the consumables, there are consumables there. They are more of a cartridge rather than the ammunition. But I would expect it to perform similar to Byrna as far as being the same kind of percentage of sales.

The next question is from the line of Eric Wold with Texas Capital.

A couple of questions. Just one following up on HERO. How do you kind of market those products to consumers? Will they be marketed completely separate and different products and different channels to different customer target customers? Or do you expect to kind of market holistic kind of portfolio of options out there, including Byrna and HERO kind of simultaneously kind of give that consumer choice up and down the scale as opposed to kind of being too targeted?

So when you think about the HERO product line specifically itself, I think that's a product that will appeal to a certain consumer type, again, probably outside of the majority of the core of the current Byrna consumer. That being said, we really want to set up byrna.com so that you can find that product regardless of which launches you're looking for. And what's exciting about that is when we see people come to byrna.com and potentially abandon carts with a core launcher product in there. This gives us the opportunity to retarget them at a lower price point with a still capable product to pull them into the Byrna ecosystem which we believe there's a clear upgrade path over time across these products.

Got it. Helpful. And then a multi-part question on the ammunition manufacturing. So is the expectation that the shift in manufacturing to third party is the kind of long-term permanent solution, given that you found a kind of a cheaper manufacturing kind of all-in cost. What do you expect kind of the improvement in margins? Or what is the difference in margins versus manufacturing in-house? I know that one of the benefits we did bring -house was everything is now kind of made in the U.S.A. Is that still the case with the third parties?

And then lastly, was the annual inventory write-down, was that because the inventory was impaired in any way? Or is there still inventory that could be still in the future?

Thanks, Eric. Let me address kind of the first part of that question. I'll turn it over to Lauri on the impairment. When you think about where we're going from an ammo point of view at this point, this is the long-term solution, we believe, from an ammo perspective. Throughout kind of the first part of the year, we really found that a new supply of ammunition came online that just wasn't there when the original ammo facility decision was made. And so that lower cost ability to source that, it is international. Right now, and I think that will continue to be the case. And so when we look at that, it's really an opportunity for us to lower the overall cost of the ammo portfolio while still maintaining the levels of quality that we would expect. Let me turn it over to Lauri real quick.

Eric, Yes. I think the impairment, what we really had is more raw materials that we had. So the thinness goods that we have will continue to sell through. That's not what was impaired. It was just because we're not going to manufacture them anymore, it was more raw material write down.

Perfect. And on the margin question, I know there's a lot of subquestions out there. What do you think the margin delta will be?

Sorry, what did you say?

The margin delta between -- gross margin between manufacturing in-house and now using a third party?

Yes. I mean based on the cost that we have now and where we can buy it, we're going to see improvement in margin. So I think that was something that was hurting our gross margin. So the targets that we gave from an overall gross margin perspective of being -- we were at roughly 62%. We expect it to be at or above that for the rest of the year.

At this time, this concludes our question-and-answer session. I'd now like to turn the call back over to Mr. Davis for closing remarks.

Thank you all very much for joining us today. That concludes our call.

Thank you for joining us for Byrna's Fiscal Second Quarter 2026 Conference Call. You may now disconnect.

Good morning. Welcome to Byrna's Fiscal First Quarter 2026 Earnings Conference Call. My name is Sherry, and I will be your operator for today's call. Joining us for today's presentation are the company's CEO, Con Dimas; and CFO, Lauri Kearnes.

Following their remarks, we will open the call to questions. Earlier today, Berner released results for the fiscal first quarter ended February 28, 2020 A copy of the press release is available on the company's website. Before turning the call over to Conn Davis Byrna Technologies Chief Executive Officer, I will read the safe harbor statement. Some discussions held today include forward-looking statements. Actual results could differ materially from statements made today. .

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

Now I would like to turn the call over to Byrna's CEO, Conn Davis. Please go ahead, sir.

Thank you, Sherry, and thank you, everyone, for joining us today. I want to start by saying how excited I am to be here. This is my first earnings call as CEO of Byrna, and I could not be more energized about the opportunity in front of us. Over my first several weeks in a row, I have spent a great deal of time listening, assessing the business and aligning with the team on where I see the greatest opportunities ahead and where we need to sharpen execution. Before I go further, though, I want to take a moment to acknowledge Brian Ganz. While Brian built here over the past several years is remarkable. He took this company from its NASDAQ listing to 1 that generated $118 million in revenue last year and built the category leader in less legal personal defense. I am grateful for his leadership and the role he played in building Byrna into what it is today.

Now as I've spent time with the business, it has become even clearer to me why this opportunity is so compelling and why this is the right time for me to step into the role. Byrna is entering a phase where marketing e-commerce and operating execution matter enormously. And those are the areas where I believe my experience and skill set can help the business sharpen its focus and improve performance. When I was evaluating this opportunity, 4 things in particular soft to me. First, the company's mission spoke to me. At Byrna, we empower people to protect themselves and live safely without the need for legal force. The opportunity to both empower individuals and save lives was truly meaningful to me.

Second, the market is enormous relative to where our sales are today. At the core of this opportunity is our launcher platform, which addresses a real and growing need for less lethal personal defense. We have built a strong product and early brand awareness, but the reality is we have only scratched the surface of what this brand can become. There are entire consumer segments we have yet to meaningfully engage and that represents a significant growth opportunity. Third, this company has important strengths already in place. The balance sheet is in great shape. We have a truly differentiated product offering that addresses a real consumer need and stands apart in the market. We have a talented and dedicated team in place. We have a strong manufacturing footprint right here in the United States and we have a growing retail and dealer footprint that gives us multiple avenues to reach customers. These are the hallmarks of a business that is poised to accelerate.

Fourth, and perhaps most importantly, I believe Byrna is at a phase where stronger execution can translate the strengths already in place into more consistent growth. The dealer channel is growing, the retail channel is growing and we have the product innovation pipeline and operational infrastructure to support the next phase of expansion. Taken together, this is a business with meaningful opportunity ahead. But realizing that opportunity will require sharper execution than the company has demonstrated recently. With that context, let me walk you through how I'm thinking about the business' priorities. First, I am focused on driving deeper penetration to our retail and dealer channels.

I believe this represents our single biggest growth opportunity over the next 12 to 18 months. We are continuing to expand our brick-and-mortar presence, and we are focused on improving productivity within that footprint. We are investing in store shooting experiences that bring the product to life for new customers, and working closely with our retail partners to ensure they have the inventory, education and tools they need to sell effectively. The data we are gathering from our own retail locations is already informing how we approach merchandising, marketing and sell-through, and we intend to use those proprietary insights to sharpen our approach across every channel.

Second, we are working to broaden our brand message to reach new audiences and customer segments. Historically, Byrna has spoken most effectively to a narrower slice of the market, and there is a much wider audience that this product and mission can and will resonate with. We see evidence that Byrna can resonate more broadly when customers engage with the product in a more intuitive and effective way. whether that is in our own stores and stronger retail presentations or through guided tools like our new find the right launcher quiz on Byrna.com. I will come back to that new tool in a moment, but it is 1 example of how we can do a better job helping a broader audience understand what product is right for them and why. Whether it's an early morning runner, a college students walking to their car or a family on a camp out we believe Bernard can become a more relevant and accessible solution for a wider set of customers. That means evolving our message to be more emotionally resonant and more relevant to people's everyday lives. We want our customers to understand and feel that [indiscernible] launchers are there to keep them safe and provide confidence in their ability to protect themselves in real-world situations.

As 1 part of this change we plan to evolve our influencer strategy to be more inclusive, reaching a broader and more diverse set of customers through a new and more impactful media channels. The less legal personal defense category should speak to far more people than it currently does, and we intend to lead that conversation. Third, we are establishing a clear financial algorithm that will help ensure our growth flows through to the bottom line. We will be disciplined in how we deploy capital, focused on improving inventory turns and committed to leveraging our cost structure so that every incremental dollar of revenue drives meaningful improvement in EBITDA and cash generation.

Growth is important, but profitable growth is the goal. With that in mind, we are working to ensure our expanding retail footprint grows the top line and meaningfully improves our cash conversion. Additionally, with our $33 million in inventory, we have a significant opportunity to optimize our working capital and use that cash to invest in our brand strategy. I also want to be clear about our capital allocation philosophy. The highest and best use of our investment dollars right now is in the core of the Byrna business. We are long on the launcher market, and we will continue to invest accordingly. That said, we will remain thoughtful about selective opportunities that can enhance our product portfolio and expand how we address the needs of the marketplace. We have an incredible opportunity ahead of us. and I am excited to be here to help capitalize it.

With that, I will turn the call over to our CFO, Lauri Kearnes, to walk you through the financial results for the quarter. Lauri?

Thank you, Conn, and good morning, everyone. Let's review our financial results for fiscal Q1 ended February 28, 2026. Net revenue for Q1 2026 was $29 million, an 11% increase from the $26.2 million the first quarter of 2025. The increase was driven primarily by continued sales expansion across dealer and chain store channels, partially offset by typical post-holiday seasonal moderation in the quarter and lower conversion rates on our website.

Gross profit for Q1 2026 was $17.4 million or 60% of net revenue compared to $15.9 million or 61% of net revenue for Q1 2020. The increase in gross profit was driven by the increase in overall sales. The modest change in gross margin was primarily due to the greater contribution of dealer and chain store sales. We do expect to see gross margin expansion in the back half of the year, given continued changes in the product mix, modest price increases that we implemented late in the first quarter and continued efficiency improvement in manufacturing.

Operating expenses for Q1 2026 were $16.5 million compared to $14.2 million for Q1 2025. The 16% increase reflects higher advertising expenses and marketing costs to support revenue growth through the expansion of retail distribution and initiatives aimed at increasing brand awareness and conversion. We also incurred higher costs for legal and other professional fees during the quarter. Net income for Q1 2026 was $0.8 million compared to $1.7 million for Q1 2025. Adjusted EBITDA and non-GAAP metric for Q1 2026 totaled $2.2 million compared to $3 million for Q1 2025.

Cash, cash equivalents and marketable securities at February 28, 2026, totaled $9.6 million compared to $15.5 million at November 30, 2025. The decrease in cash was primarily driven by payment of year-end bonuses and other approved payables. Inventory on February 28, 2026, totaled $33.1 million compared to $32.7 million on November 30, 2025. As Tom mentioned, we are focused on decreasing the inventory levels to improve our working capital. I will now pass the call back to Conn for additional insights into our performance and future. Conn?

Thank you, Lauri. Our first quarter results reflect real demand for our solutions while also highlighting areas where we see clear opportunities to improve execution. I'd like to address a few specific areas from the quarter. On e-commerce, Byrna.com remains our flagship digital destination and our most mature channel. Conversion did not perform to our expectations in the quarter, and we are taking direct action to address that. The underlying issue is not a lack of interest in the product, through much of '25 and into the start of 2026, traffic to burner.com remained relatively stable outside of promotional periods, but conversion moved materially lower, and average order value also began to come under pressure in fiscal Q1.

To put that more concretely, average daily sessions in January, February and March were approximately $37,000 a 40,000 and 34,500, respectively, while conversion was about 0.68%, 0.64% and 0.54%. The March traffic was roughly in line with April 2025 when average daily sessions were also about 34,500 and but conversion in March was materially lower than the roughly 0.94 conversion we saw last April and the roughly 1.17% we saw in May of last year. That tells us the issue is not simply traffic generation. It is how effectively we are converting that traffic. We're over-indexed on a static audience. And when new customers do arrive, we're still speaking to the gun enthusiast, failing to align the brand to their needs or educate them on the product. T

hat is a clear execution issue and 1 we are actively addressing. We are investing to meaningfully improve the online experience by making it easier for customers to understand the product, compare our launcher lineup and ultimately make a purchase with confidence. Customers who can't experience the product in person need to feel that same level of confidence online. We've recently launched a [ Findlater, ] experience on Byrna.com to guide consumers to the right choice for their needs and location. That tool has already generated more than 30,000 responses and is converting it roughly twice the rate of the overall site, while also giving us richer data on who is coming to byrna.com, what they are looking for and how familiar they are with the category.

We think that is an important first step in improving education strengthening conversion and building a better website experience over time. We've also begun shifting the landing page message away from a weapon first framing toward a safety and use case first approach. One that will be more emotionally resident with a broader audience. This initial change is part of a much broader shift that you will see across our materials in the coming months. We also launched the Byrna CL XL in February. This is a product we are continually excited about. And while early customer engagement in-store has been strong, overall performance to date has not yet met our expectations. Just like the Byrna CL, we have found that when customers see it in our company-owned retail locations, they gravitate towards it strongly.

In fact, during March, in our retail stores, the combined CL and CL XL made up almost 80% of longer sales. The challenge is that we are not yet telling that story effectively online or with our retail partners. We are not drawing a clear enough contrast between our launchers or giving customers a compelling reason to choose the CO XL over our other products. That is a marketing and merchandising challenge. Not a product challenge, and it is 1 we are actively working to solve. Turning to our big box retail distribution. We continue to be encouraged by the trajectory of these relationships. The holiday season provided important lessons around inventory planning and stocking levels, and we are working closely with our partners to ensure they are well positioned heading into the rest of the year. We are seeing encouraging early indicators of sell-through across key partners, particularly in stores where customers are engaging with the product directly.

At 1 retail partner, where we now have year-over-year comparables same-store sales increased roughly 164% in Q1 and 92% in March, even before the benefit of additional in-cap or shelf display programs. Similarly, stores with dedicating shooting experiences are generating roughly 3x the sales of nonshooting experience stores. Those data points reinforce our view that merchandising decisions can materially improve awareness, education and overall retail velocity. At this stage, our priority is optimizing performance within our existing store base through better inventory planning, appropriate in-stock positioning and closer coordination with our partners on stock levels and reorder cadence. We are continuing to support our partners with the tools and the merchandising needed to drive productivity at the store level. We are also seeing encouraging data in our Byrna owned retail stores. In March, sales across Byrna owned retail grew 16% year-over-year and conversion approved from the low 60s in April 2025 to the high 60s in March 2026.

Our existing store base also gives us a much stronger platform from which to further expand the physical footprint in 2026. We entered 2025 with approximately 200 chain stores and a 700 total store footprint. We entered 2026 and with approximately 900 chain stores and a 1,500 total store footprint. And we expect to expand that further this year through additional chain store growth and targeted dealer additions. By the end of 2026, we currently expect Byrna to be in around 2,000 total locations, including big box retail and dealers nationwide. Included in this growth. We are excited about our new partnership with Academy Sports and outdoors. We are beginning with an initial rollout of approximately 50 stores during Q2 with the opportunity to expand from there. Regionally, Academy has a strong presence in Texas and across the Southeast U.S., an area where Byrna has not historically had a strong store presence. By the end of we are targeting Byrna to be available at roughly to 250 academy locations.

However, our expansion in retail isn't just about store count. It's about retail velocity. At Bass Pro, for example, we are moving from behind the glass in the firearm section to test high-traffic end caps. This is a critical distinction. Behind the class requires a salesperson while on the end cap allows for self-discovery. Moreover, it provides us with another opportunity to leverage enhanced merchandising to express the burn a brand and educate consumers in the retail setting. As we scale towards 2,000 total stores by year-end, our focus is to continue driving toward an experiential and frictionless retail model ensuring Byrna is seen as an accessible, easy-to-use personal safety device rather than a weapon. We have also recently added [ Murdoch Ranch ] and home supply, a regional retailer with strong presence across the Mountain West and we look forward to building that relationship further.

Our initial rollout with Murdoch will be in 14 of their locations with freestanding displays by the end of Q2. and we are targeting Byrna to be available in approximately 30 locations by year-end. From a geographic perspective, we are becoming well established across much of the Western United States and we continue to evaluate targeted visible store expansions to fill in gap strategically. Historically, much of our dealer growth was driven by a passive inbound approach. Dealers frequently come to us and to date, the strategy was to evaluate and launch in areas where an incremental dealer may be accretive. We've now shifted to a proactive outbound strategy and we will be looking to add dealers in selected white space markets where we believe additional dealer coverage can support broader brand awareness and retail productivity. We are seeing healthy momentum in our dealer channel overall.

In Q1, our premier dealers grew 60% year-over-year, and our top 20 dealers grew 55% year-over-year. While that is not a perfect same-store comparison, it reinforces our view that the opportunity in physical distribution is substantial and sell-through remains strong. The expected year-over-year growth in our brick-and-mortar channel this year is meaningful. -- and it will be an important step in broadening Byrna's brand presence in 2026. On the channel mix more broadly, we expect our brick-and-mortar sales to continue growing faster than our most mature channel, Byrna .com. In 2026. This is a normal and healthy evolution for a brand at stage. But as I mentioned earlier, we have an immediate focus on further improving conversion on Byrna.com and making sure that channels work together more effectively. We are also seeing a continued shift in product mix with the CL platform representing an increasing percentage of unit sales across the portfolio.

From the SD to the LE to the CL and the CL XL, we offer a range of products at different price points, allowing us to serve a broad set of customers and use cases. The SD and LE continue to serve as important entry points, particularly for more price-sensitive customers, while the CL platform is contributing to the mix shift towards higher-margin products. We are seeing that the higher end CO is performing particularly well in retail environments where customers can engage with the product directly, reinforcing our focus on expanding and optimizing our physical store performance with improved in-store presentation, merchandising and customer education.

Turning to marketing. We are prioritizing the evolution of our message. This is a key area for us, and we see it as 1 of the most important levers to drive improved performance across the business. We believe there is meaningful opportunity to improve how we communicate the value of our products and convert that into real, sustainable demand. Historically, Byrna has focused on the early adopter, the tactical and self-defense enthusiasts. While that core remains important, our future growth lies in the normalization of less legal protection for more everyday use cases. We know our products resonate with a wider audience when they are presented, merchandised and explained effectively.

Our focus is now on translating that broader relevance into more consistent sales by improving how the customers encounter, understand and purchase the product across every touch point. To be effective, these changes will extend across all of our go-to-market channels as we build an integrated brand and experience everywhere customers interact with Erna. Our goal is to meet customers wherever they are. and ensure they can engage with and purchase our products in a simple, convenient way for them. To accomplish this, we are refining how we approach marketing to reach customers more effectively across channels. This includes shortening and improving the effectiveness of our creative, so it is more impactful, enhancing the website experience to better guide customers through the lineup and educate consumers who are new to the category. Optimizing our influencer strategy and messaging to better align with the customer segments we are targeting as we broaden the brand, shifting our media and messaging towards more effective channels, including social media, and being more targeted in how we deploy media in markets where we have strong retail store coverage.

More broadly, we are focused on allocating marketing dollars more effectively and building a more structured data-driven approach where we can track performance and demonstrate progress over time. Our objective is to better connect awareness to conversion, whether that incurs online or in-store and to do that with more consistency than we have demonstrated recently. On the manufacturing side, we are continuing to drive lean manufacturing and continuous improvement initiatives at our Fort Wayne facility to deliver margin improvement. We believe this, combined with a tighter focus on inventory planning will help improve inventory turns and support stronger cash conversion over time. We have already taken steps to reduce our build rate so that inventory can come down rather than continue to grow. And we have reduced head count at the plant accordingly.

We are also making progress on our next-generation modular platform, which is intended to simplify the launcher architecture, significantly reduced component count and labor requirements and ultimately, lower costs. The initial platform will be centered around our 61 caliber system and we are making strong progress towards the launch in the beginning of 2027 with the broader rollout extending through next year. It's early but we're encouraged by the progress and believe this platform will be a meaningful step forward in both product performance and manufacturing efficiency.

Looking ahead to Q2, I have spent my first week on the job aligned around 1 clear objective, winning the fight for revenue while simultaneously building the long-term foundation. Based on what we are seeing today, Fiscal Q2 is developing materially below our expectations and below both the year-over-year and sequential improvement, we would ultimately expect this business to deliver. Part of that reflects a tougher comparison against last year's fiscal second quarter, which benefited from the CL launch and initial load-in orders with new retail partners of roughly $2.7 million. To help offset this, we will have our initial retail load-in orders from new partners in Q2 and expect total retail load-in orders in the quarter to exceed $300,000.

These orders will help boost our floor for the quarter. But given the recent conversion data for March, we understand that we need to be thoughtful and expedious about the changes we are making to how we manage demand generation website conversion, retail productivity and inventory. We believe those changes are necessary, and they make near-term results more variable and less suitable for providing formal quarterly guidance until we have a better operating consistency and stronger visibility. Performance is not where we want it to be, and I want to be direct about the primary reasons for that. First, the business exited fiscal Q1 with a weaker starting point for Q2 than we should have, in part because of late quarter promotional and merchandising actions concentrated more purchases into Q1 than would normally be the case.

Second, [ Erni.com ] continues to underperform our expectations. Site traffic has remained relatively stable. However, conversion has declined materially partially due to the growth of our retail channel and average order value has come under pressure. This tells us the issue is not simply demand generation, but the effectiveness of our website and our conversion path. Third, while our retail and dealer expansion continues to build a larger base for growth, the contribution from newer chain store openings is expected to build more meaningfully in the back half of 2026 and consistent with ramp patterns we saw in 2025.

The operational changes we are making are necessary to improve the business over time, but they are not changes that will fully move through the system in a matter of weeks. We are focused on improving conversion, strengthening retail productivity and executing more effectively across channels, which we believe will better position us to build top line momentum as we move through the back half of the year. Just as importantly, we are going to be much more active in identifying areas for improving improvement, addressing them directly and making the changes needed to improve the business. We are actively working to improve the quarter in front of us, but we are doing so in a way that supports stronger execution and healthier our momentum through the balance of 2026. Going forward, we do not plan to continue the prior practice of preannouncing quarterly revenues.

During this period of tightening operational execution and strengthening forecasting capability, we believe providing a single early revenue data point can provide an incomplete picture of the business. Our focus is on improving the underlying operations, financial forecasting and visibility needed to provide investors with better context through our regular reporting process. In closing, we are aligning the entire organization around a clear set of objectives and measures. These are not glamorous initiatives, but they are the right ones to drive consistent performance, and they will compound. We believe this is the right moment for Bernard to lean in and execute with focus. We are investing in the customer experience, working to expand our reach to new audiences and strengthening the operational foundation of the business. That is the mindset of a category leader, and that is what we intend to be.

I am incredibly proud to be a part of this team. [Audio Gap]

[Operator Instructions] Our first question is from Jeremy Hamblin with Craig-Hallum Capital Group.

So just wanted to start off by seeing if we can get a little more detail behind the revenue commentary. It sounds like you're expecting sales to be down in Q2 on a year-over-year basis. based on what you saw in the March period, presumably you're expecting wholesale to be up on a year-over-year basis, but DTC channel to be meaningfully down. It sounds like you're kind of targeting something more $25 million range. But I wanted to see if you could provide at least a little more color. I know you're not providing formal guidance per se, but just based on the commentary around conversion rates, which sound like they're down pretty steeply, is that a pretty fair interpretation of what you're saying?

Jeremy, it's Lauri. Thanks for the question. Yes, I would agree that, that's what we're seeing. We do expect to be down meaningfully year-over-year and compared to Q1. Remember, we did have, and as Tom pointed out, we had inventory load-in for some of the new retail partners that 2.7 million versus we're going to have 300,000 this year. So that's a pretty meaningful change. And really, burner.com and what we're seeing online, the conversion rates are much lower with similar web traffic coming to the store. So we did benefit in Q2 last year of the CL launch coming out that had some significant sales. So we do have that year-over-year pressure, but we do expect it to be benign.

And then to that point, I wanted to get underneath the average order values declining, in particular online. So just help us understand that, given that it sounds like the CL has been taking share overall, but maybe that's not the case in the DTC channel. I wanted to see if you could comment on that or if the AOVs are falling because you're not getting the same type of accessory attachments in those orders. But just help us to understand why those AOVs are falling given that you have a more expensive CL launcher now? And you've taken price, I believe, in early 2026 on the SD and LE?

Jeremy, thank you for that. I would say there are a couple of factors driving that. First, you're right. We did take some price but the CL mix is not as high online as it is in our retail stores. And that goes back to the conversation I was having earlier where we aren't telling the story well enough on Byrna.com to drive that upsell into the CL platform. The other piece of this, and I think it's important to understand is -- from a marketing perspective, we've been targeting the same audience for a while now. And we are seeing that audience still come back to Byrna.com, but they're buying more things like ammunition and accessories for their existing launcher instead of adding another launcher to the cart. And so what we're seeing there is just kind of a shift a little bit into the mix in the bag. Lauri, do you have any more detail? .

I think about fair. I think as we have this new tool to find the right launcher, and more education online to help people really differentiate the launchers. We know they can differentiate them in store. We want to help them differentiate that online as well, and we believe that will help to drive the average order value increase.

Just a clarifying question. What is the CL mix online versus at retail.

So at retail, I think we pointed to our retail stores, which is really -- we don't really have necessarily store-level detail on all of our partners.

Overall, we were seeing for the quarter, we were seeing the CL at 40% roughly of total overall unit sales. But we know in our stores that we mentioned, given a month of data, it was 80% in our own retail stores.

I can follow you, Jeremy, on the breakdown.

I appreciate that. And then just 1 last 1 here. In terms of the gross margin improvement, if you are seeing so much more traction at brick-and-mortar, and that has a low -- carries a lower gross margin profile. Why would you expect the gross margin to improve from 60%? It would seem like it would be just kind of stuck in that range, unless you're assuming that there's going to be a much better mix of DTC in the back half of the year?

So I mean, obviously, the back half of the year, we get better DTC just because of the holidays themselves, right? So that's part of it. But really -- we are continuing to see that mix change and the CLO is a higher-margin product. So as the percentage of CL grows and as we do more to grow that percentage of CL, we expect to see that with the product mix and we also are really working on the manufacturing efficiencies, and we believe that will lead to higher gross margins as well. I'm not saying they're going up to drastically, but they're definitely through the back half, the second half of the year, you'll see some improvement in that.

Our next question is from Eric Wold with Texas Capital Securities. Eric, can you hear us? We lost Eric. So we're moving on to Jeff Van Sinderen with B. Riley Securities.

Yes. I just wanted to follow up on a couple of things you said at Bass Pro, I think you said you're shifting to end caps, and I'm wondering about the thought process of behind the glass, you sort of are engaging with the salesperson, if it's on the end caps and just open, which is what it sounds like you're doing. How do you engage a salesperson to sort of teach in that product .

Great. Thank you for the question, Jeff. I will tell you that when it's behind the glass, you almost have to have a sales person to drive that purchase. When you've got an in-cap like that, you've got the opportunity to pull a salesperson in if you have questions. But we also have the opportunity to tell the story right there in store with merchandising materials tied to that in cap. So it creates a lot better option for self-discovery but also does not create a purchase barrier by having to get a sales person involved.

And then I wanted to follow up a little bit more on marketing. Maybe you could just walk us through the pathway to get on social media? Because I think there's been some challenges there in the past, but just wondering what you're planning to do there.

Absolutely. So as we pivot kind of our brand messaging and our target audience to a wider, more inclusive audience, that audience lives on social media, a lot of it does. And we're going to have to be present there and be native to where our customers are actually going to be able to see and engage and visualize the product.

Now as you mentioned, Byrna historically has been limited from a paid advertising on social media channels. I don't see that changing in the short term. So we're going to have to leverage a much more intentional organic social media presence and rely on social media influencers that have the right audience. By tapping a social media influencer crowd, we'll really be able to generate more lifestyle stories about how the Byrna can really impact people's daily lives, and we believe that will be very resonant with the target audience.

Okay. And then 1 thing I didn't hear much about today and I realize you guys have a lot to do, but -- any sense or any update you can give us regarding plans to launch more recurring revenue lines of business? I know that was talked about previously. I'm just wondering how that might take shape over the next year or so. .

Yes. So I think as we look at kind of investment in the business overall, as I mentioned, Jeff, I'm long on the launcher platform. I think that is our best near-term opportunity to continue to grow this business and this brand. That being said, we have recently hired a new Head of R&D, who has a lot of experience in connected devices and recurring revenue places. I think thinking about how we can do that thoughtfully and intentionally from an organic point of view, will be the path forward there rather than trying to go out and purchase, call it a connected devices platform, which as I'm sure you're aware, are very expensive from a multiple point of view.

Our next question is from Eric Wold with Texas Capital Securities.

We'll try 1 more time for the technical good school dies. So a couple of questions on the retail channel. You mentioned, Tom, that 1 of the retailers that you have line of sight to last year's results. are seeing strong same-store sales year-over-year in Q1 and so far in March. Anything that retailer is doing differently than the other retailers or maybe it's a bit geographical areas?

Just trying to get a sense of why those trends may or may not you translate to some of the other regional partners.

Eric, what's exciting about that is they haven't historically done much of anything differently, and their footprint is fairly wide based. So I think that, that's going to see translation kind of across the retail category. What's exciting about that partnership, though is because of the success we've had we are now able to go in and lean more heavily into kind of merchandising opportunities with counter displays and really get buy-in from that retailer in order to accelerate faster.

Got it. And then I know the exclusive agreement with Sportsman's runs through August of next year. You mentioned that the retailers that have the shooting experiences are doing 3x the sales of the other stores that are not. How quickly are retailers on their own moving to make that offering available? What percentage currently offer an in-sourcing experience and how many you think could be there by year-end?

Thanks, Eric. I will tell you that beyond the Sportsman's experience, where you really see that have picked up in the dealer channel. And our premier dealers all pretty much have shooting experiences in their facilities right there and available. And Lauri, what's the percentage of our dealers now that are.

Very small percentage that has to be better, it's definitely less than 10%.

Sub-10% from a dealer point of view. I would say beyond that, obviously, other retailers are starting to explore what that looks like. I don't have a specific rollout at this point in time for experiences and other mass market retailers. That will be on a store-by-store basis for those retailers, what they choose to do.

And just a quick follow-up on that. What is the main pushback or any reason why a retailer is not offering is -- is it space? Is it cost? What's the reason why you're hearing that retail audit seller is not moving off.

Eric, you're a little garble to me. I just want to make sure I understood. Are you asking us, what are we hearing from the retailers that have not yet adopted a shooting experience?

Yes. What reason are they possibly giving for not moving quickly on that, if you're seeing if the results are there. Is it the space in the store? Is it the cost involved in doing so, personnel? Anything you can say on that?

Yes. It's not really the cost. The cost to do it is not all that expensive. That being said, the space is what's challenging and kind of resetting the stores. and planning for that. So just -- it's a longer lead time for that to get done. And I think a lot of those retailers are seeing the success we're having and having more and more thoughts and conversations in that direction.

Our next question is from Matt Koranda with ROTH Capital Partners.

Just wanted to hear a little bit more about the near-term conversion trends that you shared, Con. Maybe just -- did you implement any significant changes in March to the messaging that sort of impacted conversion -- and then what changes can you make, I guess, on the website, specifically to improve conversion in the near term? Or is this something that's likely going to take a bit longer before we start to see a lift in conversion? .

Thank you, Matt. I will tell you, we are doing the tactical things we can do now, and I'll give you a couple of examples of that. One, the find your launcher quiz that we have put in place. we are seeing significant engagement with that online. I mentioned we're north of 30,000 completions on that now. That is largely only been available for the past few weeks online. We had tested it before, but it was fairly hidden. We're getting great data around what the consumer is looking for coming to the website when they are trying to learn more about the platform.

We are going to leverage that to create specific landing pages and educational pages here in the near term in order to help drive that conversion. Today, we are seeing consumers who take that quiz, convert it wise the rate of the overall website experience. we anticipate being able to continue to drive that up through tactical changes.

Additionally, we've pivoted some of the messaging on the website, and we have more work to do there. But from a starting point of view, you used to come to the website -- and the first thing you would see was a launcher which they obviously look like a pistol and a lot of information around some of our historic influencers that turns some consumers off. We have already pivoted that messaging to be much more lifestyle focused and about how Byrna can be an enabler of safety and confidence, and we're seeing some traction there as well. So I think more to come there, Matt. We're doing the tactical things now. But over time, you're going to see a much bigger shift in reset and the experience online.

Okay. Wanted to get your thoughts on, on the product portfolio and the progression there. It sounds like no change in terms of your posture towards the launch or -- and it sounds like you're signaling probably more of an organic development process on connected device. Any thoughts on sort of how long that organic process could take to get something connected device wise we're looking at something maybe over the next year plus in terms of introduction. Just how should we think about the progression of product portfolio under your leadership? .

No, I appreciate the question, Matt. Clearly, I think the focus in the near-term attention is definitely on the launcher platform and optimizing that. That being said, I would anticipate us testing and learning in that connected devices market at some point before the end of this year, but I don't have any specific timing on what that looks like. But before we were to make a big push there, I think you're right, it's probably a next year time period if we see success in the test and learn.

Okay. Fair enough. And then maybe if I could squeeze 1 more in. Lauri, just any thoughts on progression of cash flow for this year, I noticed the inventory balance and what you said in the prepared remarks, -- but maybe just if you could put a finer point on how we should be thinking about free cash flow this year in light of some of the demand comments you guys also made that would be helpful. .

Yes. I mean I think we expect free cash flow to end up being in the mid-teens. Some of that coming from EBITDA, some of it really coming from working capital. So I would say that's our base minimum that we're looking for this year. Q1 is obviously always the quarter that we use cash. That's not unusual. But as we continue to work through the inventory changes, I mean, we're targeting a meaningful reduction in inventory. We've already taken steps on the production side. So that's where we're looking at for the year.

And Matt, just to be clear, it's a big focus of mine and an initiative to drive that and be much more effective. We're already doing -- taking steps to tie production much more closely to what we're seeing from a demand point of view.

Our next question is from Jon Hickman with Ladenburg Salmon.

So this will conclude our question-and-answer session. I would like to turn the call back over to Mr. Davis for closing remarks.

Thank you. We appreciate your continued interest in Byrna. I want to take this opportunity to thank our investors, customers, vendors, partners and employees. This journey is only possible because of their tremendous support and belief in our mission of saving lives.

Thank you for joining us for today's Byrna's Fiscal First Quarter 2026 Conference Call. You may now disconnect.

Good morning. Welcome to Byrna's Fiscal Fourth Quarter and Full Year 2025 Earnings Conference Call. My name is Kevin, 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, Lauri Kearnes. Following the remarks, we'll open the call for questions.

Earlier today, Byrna released results for its fiscal fourth quarter and full year ended November 30, 2025. A copy of the press release is available on the company's website.

Before turning the call over to Bryan Ganz, Byrna Technologies' Chief Executive Officer, I'll read the safe harbor statement. Some discussions held today include forward-looking statements. Actual results could differ materially from the statements made today. 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. As this call will include references to non-GAAP results, please see the press release in the Investors section of our website, ir.byrna.com for further information regarding forward-looking statements and reconciliations of non-GAAP results to GAAP results.

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

Thank you, Kevin, and thank you, everyone, for joining us today. This morning, we issued a press release providing our financial results and business highlights for the fiscal fourth quarter and full year ended November 30, 2025.

I'll start this morning by turning the call over to our CFO, Lauri Kearnes, who will review our financial results for the period. Following her remarks, I'll discuss the operational highlights that drove our $35.2 million in revenue and continued GAAP and non-GAAP EBITDA profitability for the fourth quarter. I'll then offer insights into our strategy moving forward before we open the call to questions from our covering research analysts. Lauri?

Thank you, Bryan, and good morning, everyone. Let's review our financial results for fiscal Q4 and the full year ended November 30, 2025. Net revenue for Q4 2025 was $35.2 million, a 26% increase from the $28 million reported in the fiscal fourth quarter of 2024. The $7.2 million increase is primarily due to strong dealer and chain store performance with direct-to-consumer and international channels contributing solid year-over-year growth. The comparison also reflects growth over a particularly strong fiscal fourth quarter of 2024 when demand was elevated around the U.S. election. For the full year 2025, net revenue totaled $118.1 million, up 38% from $85.8 million in 2024. This increase was driven by the company's expanded brand visibility, the broadening physical retail presence and the successful launch of the Byrna CL.

Gross profit for Q4 2025 was $21.1 million or 60% of net revenue compared to $17.6 million or 63% of net revenue for Q4 2024. The increase in gross profit was driven by the increase in overall sales. Gross margin decline was primarily due to the greater mix of dealer and chain store sales as well as the continued amortization of start-up costs associated with the introduction of the CL Launcher and transfer of the ammunition factory from South Africa to Fort Wayne, Indiana. For the full year 2025, gross profit was $71.5 million or 61% of net revenue compared to $52.8 million or 62% of net revenue for the same period in 2024. This $18.7 million increase in gross profit was due to the increase in total revenue for the year. The 1% decrease in gross profit margin was once again primarily due to the amortization of product costs associated with the introduction of the groundbreaking new CL Launcher and the start-up of our new ammunition facility in Fort Wayne, Indiana.

Closing the South African operation is expected to save the company $1.5 million in 2026. Byrna expects margin improvement in fiscal 2026 as onetime start-up costs associated with the new CL Launcher and the new ammunition factory are completed. Additionally, we implemented a broad-based price increase of 4% to 5% as of February 1, 2026. And at the same time, we introduced the new Byrna CL XL, expanding the number of variants for the high-margin Byrna CL Launcher.

Operating expenses for Q4 2025 were $17.1 million compared to $13.5 million for Q4 2024. The increase reflected higher advertising expenses and marketing costs to support the rollout of more than 500 additional chain store locations in Q4. The company also increased headcount in its marketing and engineering department as part of its strategic investment in exciting new products and the new markets they will open for Byrna. This investment is expected to drive significant growth starting later in 2026 and beyond. For the full year 2025, operating expenses were $59.6 million compared to $46.1 million for the same period in 2024, reflecting a 29% year-over-year increase to support our growth. The $13.5 million increase supported the revenue increase and was used to drive consumer awareness of both Byrna and the less lethal product category. At the same time, the company invested in retail, marketing and engineering.

Net income for Q4 2025 was $3.4 million compared to $9.7 million for Q4 2024. This decrease was primarily driven by a $5.6 million income tax benefit that occurred in the prior year period. The tax benefit arose from the release of tax valuation allowances related to net operating loss carryforwards and other tax assets. For the full year 2025, net income was $9.7 million, down from $12.8 million in the prior year period. Excluding the $5.6 million tax benefit from Q4 2024, net income improved by $2.5 million.

Adjusted EBITDA, a non-GAAP metric for Q4 2025 totaled $6 million compared to $5 million in Q4 2024. This brings adjusted EBITDA for the full year 2025 to $16.8 million compared to $11.5 million in the prior year.

Cash, cash equivalents and marketable securities at November 30, 2025, totaled $15.5 million compared to $25.7 million at November 30, 2024. Inventory at November 30, '25, totaled $32.7 million compared to $20 million at November 30, 2024. We expect the end of the fiscal first quarter to be a low point in inventory, and then we will begin to build it back up to support the ramping demand. Subsequent to quarter end, the company entered into a $20 million credit facility with Texas Capital Bank. This is made up of a $5 million revolving line of credit and a $15 million delayed term draw. This credit facility is intended to support strategic growth initiatives, including potential acquisitions.

I will now pass the call back to Bryan for additional insights into our performance. Bryan?

Thank you, Lauri. Fiscal 2025 was truly a landmark year for Byrna. We scaled Byrna from a largely direct-to-consumer business model, driven by conservative leaning celebrity endorsers into a more diversified multi-platform model focused on reaching a broader audience through our nationwide dealer base and expanded advertising opportunities. For the year, we achieved a remarkable 38% revenue growth, and we finished the year up 26% in the fourth quarter, even when compared to an extremely strong 2025 Q4 that benefited from the uncertainty surrounding the election last year. The 38% year-over-year growth came on the heels of our extraordinary 100% plus growth in 2024. demonstrating the continued momentum of Byrna and the growing acceptance of less lethal personal safety solutions as a mainstream product category. The strong results we delivered in Q4 capped off what has been an exceptional year of execution across all areas of the business.

Let me start by discussing our brick-and-mortar outlets, which have been one of the key drivers of our growth this past year. For 2025, Byrna's brick-and-mortar sales increased from $15.2 million in fiscal year '24 to $31 million in fiscal year 2025, an increase of more than 100%. This represents approximately half of our year-over-year revenue growth in 2025. This increase was the result of strong performance across all areas of Byrna's brick-and-mortar dealer base, with our show dealers up 20.9%, our premier dealers up 40.4% our traditional dealers, which include both chain stores and independent dealers serviced both directly and through distributors, up 73.4% and Byrna's company-owned retail stores up 186.5%. From a dollar standpoint, the largest contributor to our extremely strong brick-and-mortar performance was our chain store sales as we expanded from around 200 chain store locations at the start of 2025 to approximately 900 locations by year-end.

Of particular importance was our partnership with Sportsman's Warehouse, which we kicked off halfway through 2025. What makes Sportsman so special is the ability for their customers to test fire the complete range of Byrna's handheld launchers as part of our Try Before You Buy campaign. Due to the success of this initiative, Sportsman's is rolling out the Byrna program to all but a handful of their locations this year, giving virtually all of Sportsman's customers the opportunity to test via the Byrna launchers in 2026. In addition, we will be installing our self-contained shooting pods in a number of additional Sportsman's Warehouse locations, essentially doubling in 2026, the number of stores outfitted with Byrna's custom enclosed shooting experience.

We expect the growth in our brick-and-mortar sales to continue unabated in 2026 due to three factors: First, our sales were heavily back-end loaded as most of the locations carrying Byrna were not online until the third or fourth quarters of 2025. This year, we are starting out with 900 chain stores carrying Byrna. Second, we are going deeper with our current roster of dealers as they expand the range of Byrna products they offer, including our brand-new Byrna CL XL. Third, we are continuing to sign up new dealers as they see the success of our existing dealer base.

At SHOT Show, we received verbal commitments from large chains representing an additional 500-plus locations. For the most part, these chains are in regions of the country where our current dealers do not have significant coverage, including most importantly, the state of Texas. Two years ago, as we look to expand our brick-and-mortar footprint, we contemplated rolling out up to 100 company-owned stores. While the five company-owned stores that we currently operate are extremely successful, generating approximately $800,000 in annual revenue on average, setting up these stores is expensive and time-consuming. In addition, finding landlords that will allow us to offer a shooting experience has been difficult. Through our strategic partnerships with big box retailers such as Sportsman's, we have been able to scale rapidly with minimal capital investments and without the hassle of securing and building out new locations. And while our top line margin is slightly lower, selling through our dealers rather than our company-owned stores, our net margin is similar as there is very little in the way of ongoing operating costs once these stores have been set up and personnel have been hired and trained.

The strong performance across these chain stores has been encouraging, particularly during the holiday season when both Sportsman's and Bass Pro set new weekly sales records for Byrna products. In fact, a few of the individual stores are approaching Byrna's company-owned stores in terms of top line revenue. In addition to the iconic chain stores that carry Byrna, there are another 600-plus brick-and-mortar locations where customers can purchase Byrna launchers. These locations are comprised of independent dealers, premier dealers, show dealers and company-owned retail stores. Altogether, they bring our total footprint to more than 1,500 retail locations where you can touch, feel and often shoot a Byrna before you buy. And as I mentioned, we expect that number to grow to approximately 2,000 locations in 2026.

With respect to our company-owned retail stores, we rolled out four new locations in the second quarter of 2025. These stores ramped quickly, delivering a strong performance for the year. Our Byrna owned and operated flagship locations in Las Vegas, Scottsdale, Nashville, Salem and Fort Wayne are generating approximately $800,000 in annualized sales per store on average. These locations, along with our Sportsman's Warehouse and premier dealers have demonstrated the strength of the experiential retail model and validated the economics of operating our own stores. In addition to the strong economics, these stores have also allowed us to gain valuable information about our customers.

While we don't have immediate plans for the wholesale expansion of company-owned -- of the company-owned store model, we are open to establishing additional stores in select markets where we do not have adequate representation. We see our company-owned stores as a valuable test bed for merchandising strategies, customer sales techniques and product launches that we can then share with our premier dealer and strategic retail partners.

To support Sportsman's Warehouse and our other dealers that offer a shooting experience, in 2025, we intentionally directed people from our website to our company-owned stores and to authorize Byrna dealers that offer a shooting experience. While this may be considered a cardinal sin in the world of e-commerce and likely had some impact on our byrna.com growth rate this year, the strategy allowed us to prime the pump by giving our dealers a kick start. At the same time, we're able to take advantage of the substantially higher conversion rate at brick-and-mortar locations when customers have an opportunity to test via the Byrna.

As a result of this initiative and the rollout of 600 additional brick-and-mortar locations, brick-and-mortar dealers were the fastest-growing segment of our business in '25, as I said, growing more than 100% year-over-year and climbing from 17.7% of sales in 2024 to 26.7% of sales in 2025. We expect this to continue throughout 2026 and well into 2027 as brick-and-mortar dealers should remain the fastest-growing domestic consumer segment of our business. Although still a small part of our overall business, international sales also continue to show strong momentum, generating 66% growth from the prior year.

With regard to our DTC channels, both byrna.com and amazon.com continued to show strong momentum throughout the fiscal year, growing by 18.4% despite our Try Before You Buy campaign, where we intentionally sent online customers to authorized Byrna dealers. Amazon continues to grow faster than byrna.com, clocking in at 46.9% year-over-year growth for the year. This was due in part to the fact that only byrna.com had a dealer locator that urged consumers to try before they buy at one of our company-owned stores or authorized dealer locations. As a result of this faster growth in 2025, Amazon now accounts for 28.6% of our DTC sales, up from 23.2% last year.

As we mentioned in the past, we are somewhat agnostic about whether the sale takes place on amazon.com and byrna.com as our net margins are somewhat similar due to the savings in advertising, freight, credit card processing fees and Shopify fees. Also, due to Amazon's quicker delivery times for its prime customers, we typically see a boost in Amazon sales as we get closer to Christmas because they can deliver in time for Christmas for an additional four to five days longer than we can at byrna.com.

The overall increase in sales in 2025, especially in the second half of the year, can be attributed in part to the effectiveness of our AI-enabled advertising campaigns, including our now iconic We Don't Sell Bananas commercial. With these ads, we are able to easily modify our content to meet the different requirements of cable and streaming networks where we could not previously advertise. This allowed us to expand the number of channels where we could advertise, allowing for broader distribution to a wider audience.

This has resulted in Byrna being able to secure a Super Bowl commercial spot in the Pittsburgh market for the game this coming Sunday. This will be the first time we're able to run an ad of this prominence, and we are optimistic that we will not only generate immediate sales, but also build brand awareness. This year, the purpose is to test the effectiveness of advertising in this iconic event in a single regional market. If it proves to be cost effective, we look to expand our Super Bowl advertising budget significantly in 2027. The Super Bowl ad is just one more example of our willingness to be creative as we look to new ways of getting our message out.

Several years ago, when we were banned from advertising on Meta and Google properties, we turned to our celebrity endorsement model with an emphasis on conservative leaning radio talk show personalities. This program continues to be an important part of our marketing strategy. Our roster has remained relatively unchanged this past year, but we are pleased to welcome back Dan Bongino. Dan stepped away from the podcast during his time with the administration. But prior to his departure, he was one of our highest performing influencers. We are excited to resume work with Dan and his team and believe his return will provide meaningful promotional impact for the brand, especially as we expect him to draw a large audience interested to hear about his time in the administration.

As part of our effort to expand our marketing advertisement to broaden our consumer reach, we are exploring product placement opportunities. Byrna recently was featured in an unsolicited cameo appearance on the HBO hit I Love LA, underscoring the progress that we have made over the last few years in making Byrna part of the mainstream conversation regarding personal self-defense. This has led to our decision to help finance a small independent film that will prominently feature our launchers. Viewer of this film will see the product in use in numerous real-life scenarios. More importantly, we will be able to show the product being used in advertisements that promote the movie, something we cannot do when we advertise the product itself.

These advertisements will drive people to the website for the movie where they will be able to watch the full trailer listen to interviews with actors discussing the Byrna and the value of non-lethal self-defense and see the products that were used in the film. We view this initiative as a creative way to reach a new audience, leverage on-screen talent and further expand the awareness of Byrna and the less lethal product category.

I'd also like to address our manufacturing initiatives this past year. To support our continued growth, we are increasing monthly production by 33%. We ramped up -- temporarily ramped up production early in 2025 to support the launch of the Compact Launcher. We are now making permanent changes and refinements to our assembly process, moving from an assembly line process to more -- to more efficient production cells that allow each employee to perform a greater number of operations. This has improved product quality and boosted morale, which should ultimately result in improved margins, margins, which will be further enhanced as we scale production. As a reminder, our Fort Wayne facility has the flexibility to significantly increase output as needed by going to a second or even third shift.

With the production cells, we can also easily flex production between the compact launcher, the Byrna SD and Byrna LE models based on real-time demand trends. I'm also pleased to report that our new ammo factory in Fort Wayne is now the most advanced payload projectile ammunition factory in the world. We can produce both 0.61 caliber and 0.68 caliber ammunition in a lights off hermetically sealed clean rooms. With our new capabilities, the highly anticipated 12-gauge payload rounds will be going into production this month.

As we continue to refine our proprietary robotic assembly, welding, inspecting and packing equipment, we are seeing continued productivity gains. And for the first time since we opened the U.S. ammo factory, we are generating favorable manufacturing variances.

I would now like to speak about our new product development. The release of the Compact Launcher in May was a pivotal moment for Byrna. This launcher represents the most revolutionary less lethal launcher ever made because of its small form factor and significant stopping power. Never in the history of less lethal weapons has so much stopping power been available in such a small piece of real estate. It is the only truly concealable less launch less lethal launcher on the market today.

Anything designed for self-defense, of course, is only a value if you have it when you need it. Most alterations occur outside the home. It was for this reason that we wanted to give our customers something that they could always carry with them and the concealability of the CL launcher has been the driving force behind its success.

We are now excited to announce that we are releasing a second variant of the CL, the CL XL. This slightly larger model is still concealable. It will feature, however, a larger magazine with a 7 plus 1 shot capacity, greater overall shot capacity and more power than the base CL. With the CL XL, customers can quickly fire 15 shots in rapid succession, if necessary. This enhanced version of the CL was developed based on feedback we received from our customers. And as a result, it is no surprise that the CL XL was an overwhelming hit at SHOT Show where we debuted it just a few weeks ago. At Byrna, of course, we never sleep as evidenced by the introduction of the CL in May and now the CL XL. We are constantly looking at ways to improve our launchers and our accessories to enhance the user experience.

Towards that end, I'm pleased to report that just this week, we assembled the first production prototype of our next-generation launcher, and I plan to test fire it next week. It is essentially the same size as the CL, but will feature a modular design that will allow us to easily install different engines in the same chassis. In this way, we can offer different levels of performance, of course, at different price points using the same chassis in much the same way that Porsche does with its 911 model. Most importantly, this new launcher will have far fewer parts, be easier and quicker to assemble and most importantly, cost around 40% less to produce.

Moving to a single chassis that can accept different engines, we can reach the price point, midpoint and high-end points of the less lethal market with a single platform. This will significantly simplify factory operations and dramatically reduce component inventory. We plan to start rolling out the price point launch version of this revolutionary new modular launcher towards the end of 2026, quickly followed by our mid-level and high-level variants.

With regard to accessories, every so often, I get a call from a Byrna customer, Byrna owner that has used their launcher in a case of self-defense and yet they get arrested as the assailant claims that the Byrna owner attacked them. If there are no witnesses, it becomes the case of he said, she said. To help combat that situation and provide Byrna owners with the proof that they acted in self-defense, Byrna will be bringing out a Byrna cam in late Q2 or Q3 of this year. Well, there are already cameras that fit on the picatinny rail of a handgun, these cameras today are very bulky and quite expensive as they must be able to withstand the rigors of firearm recoil.

Since Byrna has no recoil, we can make a smaller, less expensive camera that will fit on the picatinny rail of our micro compact CL and sell for less than $200. When a Byrna owner needs to defend themselves, they can switch on the camera and capture the encounter on both video and audio if they so desire. If they are pointing their weapon at the ground, the camera will show that, allowing them to refute someone that claims he pointed his weapon at me. We introduced the product to our dealer council members last month, a meeting that I attended, and we received overwhelming and enthusiastic support. We have high hopes for this accessory when we introduce it in late Q2 or early Q3 as we continually look to enhance the user experience.

Along the same line, I'm extremely excited about our new subscription-based products that should be the next evolution of Byrna.

Regarding the fiscal outlook, as we look ahead to fiscal 2026, we are confident in our ability to continue to deliver strong top line growth while expanding profitability. Our balance sheet is strong with cash increasing $6.5 million from $9 million at the end of Q3 to $15.5 million at the end of Q4 despite spending over $1 million buying back our own stock. We expect the cash balance to continue to grow throughout 2026 as sales are projected to increase year-over-year each quarter and as we work through the inventory that we built up in preparation of the CL launch that occurred halfway through 2025.

In addition to our strong and growing cash balance, we just announced a new $20 million credit facility with Texas Capital Bank. $15 million is earmarked specifically for acquisitions and $5 million is for working capital should the need arise. While I do not have anything on the acquisition front that I can announce at this time, we are continually looking for strategic opportunities that would help us further our goals with regards to the development of new products, new markets and new technologies.

In conclusion, many of you are familiar with the Rule of 40, whereby growth companies should maintain growth rates and EBITDA margins that when added together exceed 40%. It is understood that as companies become larger, growth rates tend to moderate while at the same time, EBITDA margins expand. We have been well above the 40% threshold the last couple of years, and we expect to be well above this threshold in 2026 as we continue to grow revenues while simultaneously expanding our margins.

We exited fiscal 2025 with tremendous momentum, highlighted by the strong demand we saw on Black Friday and Cyber Monday. The timing of these events falling over the final weekend of fiscal 2025 and into the start of 2026, drove high order volumes and provided a good start for Q1 2026.

Building on this strong start, there are several encouraging catalysts that bolster our outlook for fiscal 2026, including our expanded retail footprint, as we start the year with more than 1,500 brick-and-mortar locations carrying Byrna, strong post-holiday dealer restocking orders, increasing brand awareness driven by both more mainstream advertising placements and new creative ways of reaching the market and the continued development of new products, including the Byrna cam, our new modular launcher as well as subscription-based devices as we plan for another strong year.

From a profitability standpoint, we are laser-focused on expanding gross margins in 2026. We expect to be able to increase margins by several percentage points due to: one, a more favorable product mix this year as the higher-margin Compact Launcher represents a growing share of our launcher sales; two, continued manufacturing efficiencies and the economies of scale that will reduce manufacturing costs; and three, the price increases that just went into effect a few days ago.

On the operating expense side, while we continue to invest in marketing and selectively add headcount to support new initiatives, we expect to see meaningful leverage as our operating costs are projected to grow at a significantly slower rate than our revenue.

We remain in the very early innings of penetrating what we believe is a massive market. Today, there are more than 775,000 Byrna launchers in customers' hands. And we believe that the less lethal personal safety category is becoming more universally accepted, and Byrna is becoming widely recognized as the leader in the less lethal personal self defense space.

Harvard Business School and Stanford released a study in October that looked at the attitudes of gun owners. Interestingly, they found that fully 43% of gun owners preferred a weapon that would incapacitate and not kill. As such, the Byrna was mentioned numerous times throughout the study, and we were the only less lethal company to be mentioned. This strong desire for nonlethal options, coupled with Byrna's growing recognition should allow Byrna to benefit as the less lethal market continues to expand. As we continue to normalize the category, expand our product offerings across multiple price points and build out a recurring revenue model, we see a clear and compelling path to sustained multiyear growth.

In closing, fiscal 2025 was truly a transformational year for Byrna. We achieved record revenues, expanded our retail presence to more than 1,500 stores nationwide, successfully released the compact launcher, brought ammunition production onshore and laid the foundation for new devices that we believe will significantly augment Byrna's growth in the years to come. I want to thank our team for their exceptional execution, our retail partners for their continued support, our endorsers and influencers for helping us reach new audience and most importantly, our customers who have embraced Byrna as their personal safety solution of choice. We appreciate your continued support and look forward to the year ahead.

Now before I open this up to Q&A, I want to address a question that I have been asked recently regarding my personal plans. As many of you know, my contract with Byrna is up later this year, and I turn 68 next month. First, let me assure everyone that I plan to remain involved for as long as the company needs me. As a significant shareholder, I have and will continue to have for some time, a substantial personal and financial stake in the future success of Byrna, and I remain 100% committed to the future success of the company. At the same time, the Board and I are conducting a process to identify my successor. I am pleased to report that we have made good progress. And as soon as we have something to announce, you will hear it directly from me.

I want to emphasize that any future transition when it occurs, will be smooth and seamless as I will do whatever is necessary to ensure the company's ongoing success.

2025 was a great year for the company, and I'm doing everything I can to make sure that we keep up the momentum and continue building on the strong foundation we created as we execute our plan and work to make Byrna the undisputed world leader in the less lethal space.

With that, I am now prepared to take questions from our covering analysts.

Thank you. The company will now be taking questions from sell-side analysts. [Operator Instructions] Our first question today is coming from Jeremy Hamblin from Craig-Hallum Capital.

Congrats on really strong results and a great year in '25. Turning to 2026. I thought I might start with the new CL XL Launcher and get a sense for the price point that you're expecting increased shot capability, can see the demand for that, but also just understand how does the margin profile for the CL XL compare to, let's say, the CL and your other launcher products?

That's a great question, Jeremy, and thank you very much for your kind remarks. The CL XL has about a 5/8 inch extension on it that allows it to accept a 12-gram CO2, which is much more readily available and also provides for greater shot capacity. It also accepts a 7 plus 1 round magazine. Now that magazine will fit in any CL. So existing owners can buy this 7 plus 1 magazine, and we think that there will be a strong aftermarket demand. In fact, I think most seal owners will probably buy at least one 7 plus 1 round magazine.

With this 7 plus 1 round magazine and the 12-gram CO2, you would be able to quickly fire off 15 rounds with two magazines. It will also, because it has a barrel that's 5/8 inch longer, propel the projectile at 20 feet per second faster. This will give the projectile more force than the current CL. So for a launcher that has a 5/8 inch extension on the end of the barrel, all you're paying for is the Boost adapter, the slightly longer barrel, which is measured in pennies, and we're creating a 7 plus 1 magazine rather than the five round magazine.

As a result, there is not a significant cost difference between these two launches. We plan to introduce this at $579.99, so $30 more than the current CL. As such, the margins will be essentially identical to the current CL, but it is a strong value proposition for the consumer because if they were to buy the boost and the extra magazine separately, that would be an $80 increase.

Understood. Okay. And then in terms of other new products that you're launching this year, with the connected devices, can you give us a sense for how you're expecting to price the connected device products? And what you expect the kind of the cost uptake of that initiative to be and whether or not the potential to look at acquisition candidates is more or less related to connected devices or some other area of interest?

Yes. First, let me just say that we're really not at the stage where we can talk about the pricing of these products. We are certainly looking at products where maybe we give away the product for free if there is subscription-based revenue attached to it. But that's premature.

In terms of the build versus buy model, I mean, that's something that companies deal with all the time. We have a history of buying. We bought Fox Labs when we want to get into the pepper spray business. We bought Mission Less Lethal when we wanted to get into the long gun segment of the market. But we have not made any decisions on build versus buy. We are moving down the development path of these launches internally. But if the right strategic opportunity came up, we would certainly consider that.

Got it. And then just last one for me. You mentioned really strong reorder rates here at the start of Q1. You guys are in the last month of the quarter, and it sounds like you're expecting some pretty solid growth here in the quarter. Typically, there's a seasonality at play in which Q1 is not nearly as strong as Q4. Can we assume that, that's likely to be the case again despite the clear increase in the number of retail doors that you're going to be selling through?

Yes. Q1 is clearly a very soft quarter as people are kind of spent from Christmas. And you're absolutely right. We will have a Q1 that well above last year's Q1 is well below Q4. So it will come in between Q4 and below Q4 and above last year's Q1.

Next question is coming from Jeff Van Sinderen from B. Riley Securities.

Let me add my congratulations. I guess if we could maybe just kind of expand on -- I know you gave us some comments on Q1. But you also gave some comments on gross margin. Maybe just any more color you can give us on what you expect for gross margin trend over the next couple of quarters? And then what do you think is a good range to contemplate for revenue growth for 2026?

And then how would you expect EBITDA margins to develop this year considering gross margin expansion and OpEx leverage? I know there's a lot in there to unpack, but...

Yes. You know what, since this is such a difficult question, I'm going to hand it over to Lauri and let her answer it.

Jeff, let's start with the gross margin. So, I think, last quarter, we talked about that we expected our gross margin near the end of 2026 to get up to the 63% to 65% range. And I think we're still looking at that range Obviously, we'll kind of incrementally grow that throughout the year. We ended the fourth quarter around 60%. So we expect to see that kind of continually grow. Obviously, the price increase helps us. And then the channel mix is built into some of that. So we know we have the channel mix kind of as a headwind against us. The price increase is a tailwind. But then obviously, overcoming some of these manufacturing inefficiencies that we had here last year are helping us go forward. So I think we're still expecting the same range with an increase throughout the year.

As far as -- I mean, we're not giving revenue guidance. So I'll just say we're not doing that. We do expect to stay in growth mode. We expect, as we've said all along, as we increase our revenue, we expect to expand our EBITDA margins. we continually look for that positive leverage. So you saw this year, right? I mean our adjusted EBITDA is growing at a faster pace than our revenue is growing, and that's what we want to continue to see going forward and that we plan to see.

Yes. And just -- I mean, as Lauri said, we're not giving guidance. The one little bit of guidance I will give is that, as I said, if you look at our growth rates and EBITDA -- adjusted EBITDA margins were well above 40%. We suspect, project, plan that they'll be well above 40% this year as well.

Okay. That's helpful. I appreciate that. And then is there anything more you could tell us about the modular product plans? And then also, is there a recurring component that might be associated with the cam product that you're introducing?

First off, the modular product, we are extraordinarily excited about. Let me just say that our 0.61 caliber Byrna CL has been extremely popular, and the popularity is growing. Although it is not the majority of our launchers in units, it is in terms of dollars. And if you look at the locations where you can test fire the launcher, the CL is by far our biggest seller. So when people have a chance to actually hold it and fire it, the CL is extremely important.

What we've demonstrated is that we can go to a narrower launcher with the 0.61 caliber round and still be extremely effective. The reason 0.68 caliber is so popular is this industry started with the conversion of paintball guns. But honestly, 0.61 caliber makes much more sense. It allows us to create a concealable launcher and still have sufficient stopping power and payload to take down an assailant. Our goal is to come up with a range of -- the entire range based on our 0.61-caliber platform. And what we've been working on for the last year or so is a launcher where we [Technical Difficulty]

Pardon me, are you able to hear me?

I can hear you now.

I do apologize. I did lose the speaker line. Just give me one moment, please. This is the operator, please do not disconnect. Let me reconnecting the speaker line, okay? This is the operator, please do not disconnect. Let me reconnecting the speaker line now. Ladies and gentlemen, I'm reconnecting the speaker line. Please proceed.

Okay. I'm sorry, I didn't realize that the line had cut out. Jeff, where did I lose you? Or where did you lose me?

Sure. No, you were speaking about the range of products based on the 0.61caliber platform and then you cut off.

Yes. So, look, what I said is Lauri and the accounting team are very excited about it because with a single chassis, we will have far fewer components. A lot of these components will be able to be used across the entire platform. So we will have a much simpler inventory, smaller inventory and the cost, both the BOM, the bill of materials and the time it takes to build the launcher will be significantly lower. So we expect to be able to see significant savings in the cost of these launches and significant reduction in the inventory that we need to carry.

As I said, the first fireable prototype version is being built this week. I expect to fire it with the team. next week, I'm sure we'll go through a number of iterations, but we are very confident that we'll be able to release this launcher before the end of 2026. And then I think in relatively rapid succession, we would come out with the midpoint and high end of the market. But our first goal is to come out with something that's less expensive so that we can address the price point end of the market while maintaining or frankly, improving margins.

Did you say -- somehow I thought you said something about a 40% reduction in cost to manufacture, did I miss that?

No, you got that absolutely correct. So far, the BOM that we have today is 40% less than the BOM for our current launches, which are all relatively similar.

So, yes, it's a significant savings. We don't know the exact savings in labor, but we know that it's a much simpler design to build. So we expect to see both a savings in labor and an improvement in first pass yield. And the improvement in first pass yield will result in, one, better quality; but two, more efficiency in terms of producing the launchers. There will be fewer launchers that have to go through a rework.

Next question is coming from Matt Koranda from ROTH Capital Partners.

Several have been asked, but I guess maybe we'll focus on the retail expansion for a moment here. It just sounds like you're focused on both deepening the relationships with the existing chain stores that you have, but you also mentioned another, I think, 500 locations, some coming in Texas. Just wanted to hear a little bit about how you think about the contribution of growth in that channel between existing and new partners and how that translates to growth this year.

All right. Lauri, can you handle that?

Yes. Matt, so I think that we're expecting both. We're expecting both this expansion with more chain stores, but also really deepening the chain stores that we have. So as we said, we started the year at just over 200 chain stores. We ended at 900. So halfway -- the first half of the year, we didn't have most of those stores last year. So we'll see expansion with that. I think also working with all of these retail partners with the new products, getting kind of product and inventory optimized and making sure that they have the support that they need, whether that be retail stands, whatever information that they need to continue to help with the sell-through. So I think we've got both of those factors going into 2026.

Okay. Makes sense. I wanted to hear a little bit more about the rollout of the camera or connected product that you mentioned and have discussed a little bit. It sounds like potentially midyear is sort of the timing. Do you need to acquire anything to launch midyear? Or can you do this organically entirely?

And then also, I guess, maybe, Bryan, if you could talk about how this could open up incremental advertising channels for you? I know that you're limited in sort of the channels that you can advertise the launchers on, but would the connected device open up a new channel for you?

First, with regard to the cameras, this is something we've been working on for some period of time. This, of course, will not be built in-house. This is something that we have been commissioning with a third-party vendor, specifically designed for the Byrna. As I said, there are cameras available today that work with firearms, but they're much bulkier, bigger, bulkier and much, much more expensive.

Again, I feel strongly that this will come out either late Q2, May or sometime June, July. This will not be a connected device. This will be just a camera where you can record something and download it if you want to use it. So we have much greater visibility on that.

With regard to connected devices, this is a more complicated area. This is an area that we've not been involved in. The technology is new for us. And although we've made great progress, and I'm hopeful that we'll see this as a contribution for '26, it's premature for us to put a date on when we would be able to release that device.

Now having said that, you're absolutely right, both the camera and any device or frankly, any accessory, we can advertise everywhere. So I'm sure you've all heard the commercial for Life Alert. I've fallen and I can't get up. So these type of devices or cameras, we can advertise in places we could not advertise the Byrna. And I think that it is really important as we look for creative ways to get the word out that we can find new products that will expand our advertising.

The other thing that's somewhat interesting about it is that it will allow us to go after the market for consumers that might not buy a weapon and get them into the ecosystem. So we're hopeful that if we could provide something to somebody that wants a panic button, then maybe down the road, we could sell them a Byrna. So, yes, it's something that the team is working on. It's an important strategy for us, but it's premature for us to put a particular date as to when it's going to come out.

Okay. Maybe just last one on the modular launcher. Just wanted to hear a little bit about how that slots in with the existing assortment. It sounds like there's probably a lower price point, one that could kind of fill out the existing assortment. Could you also manufacture the SD, LE and CL on that -- like on that chassis on that platform? Is that how we should be thinking about it as it may replace the existing assortment over time? Or is it really just an entirely new platform?

It's both. I think that there are going to be certain customers that want the 0.68-caliber launchers. The rounds have 27% more payload. Just as you see that although 9-millimeter is the most popular handgun, there are still people that want a 44 or 45. So we would not have any plans to discontinue these launches. But we do believe that they will be alongside the launchers. There will be a launcher that's 0.61 caliber that is priced at relatively the same level as the SD. There'll be a launcher that is 0.61 caliber that will be priced relatively similar to the LE. And then ultimately, we'll have to make a decision on the CL because that's already 0.61 caliber. That is potentially the only launcher where the new platform may be the next gen of the launcher.

That said, the CL just came out recently. It's extremely popular. So I think that this still has a couple of year run ahead of it before we would replace it. But we do think that these things will augment it. They'll be incremental to our existing line.

Our next question is coming from Jon Hickman from Ladenburg Thalmann.

Can you hear me okay?

We can, Jon.

So, congratulations. Nice quarter, nice year. Can you elaborate a little bit more on this? Most of my questions have all been answered, of course. But talk about the movie a little bit. When do you expect this to come out? Do you have a working title? Is it direct to TV or...

Okay. So, with regard to the movie, it is expected to come out later this year. That said, we're not that interested in the success of the film itself. We are more interested in the advertising capabilities it provides to us. Now we do have 1.9 million e-mail subscribers, and we will certainly push them to see the movie. The goal would be for it to be released in a small theatrical release, maybe 400 theaters, but primarily on one of the streaming services. But honestly, Jon, we're not really involved in that. That's the producer of the film.

What we have is the BTS, the behind-the-scenes rights. So whenever they're filming a scene that involves the Byrna, we have our own people there, and they're taking video of these stars using the Byrna. We then get an opportunity to interview them. And those interviews will be on the movie site.

So, again, we'll be able to advertise, send people to the movie site where they'll hear about people using the Byrna, their experience, their thoughts on less lethal -- and there'll also be an ability to see the weapons that were used in the film and then to go to the Byrna website. So it is really more of an advertising platform for us. That said, I hope the movie does very, very well.

Okay. Okay. Is there a title?

There's only a working title. And honestly, I can't share that.

Okay. Well, the rest of my questions -- one more. You said that you repeated the 40% kind of gross margin or gross margin improvement. But you said something about -- I'll just take the rest of my questions offline.

Okay. Thanks, Jon.

We reached the end of our question-and-answer session. I'd like to turn the floor back over to Mr. Ganz for any further or closing comments.

Yes. I just want to thank everyone. We really appreciate your continued interest in Byrna. And again, I want to thank our investors, our customers, our vendors, our partners and very importantly, our employees. This journey is only possible because of their tremendous support and their firm belief in our mission of saving lives. So thank you very much.

Good morning. Welcome to Byrna's Fiscal Third Quarter 2025 Earnings Conference Call. My name is Donna, and I will be your operator for today's call. Joining us for today's presentation are the company's CEO, Bryan Ganz and CFO, Lauri Kearnes. Following their remarks, we will open the call to questions.

Earlier today, Byrna released results for its fiscal third quarter ended August 31, 2025. A copy of the press release is available on the company's website. Before turning the call over to Bryan Ganz, Byrna Technology's 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. 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.

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

I will now turn the call over to Byrna's CEO, Mr. Ganz.

Thank you, operator, and thank you, everyone, for joining us today. This morning, we filed our 10-Q with the SEC and issued a press release providing our financial results and business highlights for the fiscal third quarter ended August 31, 2025.

I'll start today by turning the call over to our CFO, Lauri Kearnes, who will review our financial results for the period. Following her remarks, I'll discuss the operational highlights that drove our 35% year-over-year revenue growth and continued GAAP and non-GAAP EBITDA profitability for the quarter.

I'll then offer insights into our strategy moving forward before we open the call up to questions from our covering research analysts. Lauri?

Thank you, Bryan, and good morning, everyone. Let's review our financial results for the fiscal third quarter ended August 31, 2025. The Net revenue for Q3 2025 was $28.2 million, a 35% increase from the $20.9 million reported in the fiscal third quarter of 2024. The $7.2 million increase was driven largely by strong change store and dealer sales tied to our expanding retail presence.

The success of our new advertising initiatives and broader brand adoption. Web traffic began to build late in the quarter and has continued into fiscal Q4. Gross profit for Q3 2025 was $16.9 million or 60% of net revenue compared to $13 million or 63% of net revenue for Q3 2024. Gross margin performance reflects the changing channel mix, which saw a much stronger dealer and international sales for the quarter.

The onetime start-up costs associated with the Compact Launcher release and related manufacturing ramp-up costs as well as the start of Amal manufacturing in Fort Wayne. We anticipate that the compact launcher and Amal margins will continue to grow as production volumes increase and manufacturing processes become more efficient.

Operating expenses for Q3 2025 were $14.1 million compared to $12.2 million for Q3 2024. The increase in operating expenses was driven primarily by increased variable selling expenses and discretionary marketing investment to support the growth. Net income for Q3 2025 was $2.2 million, up from $1 million for Q3 2024.

This increase was driven by the overall increase in product sales, we continue to expect our effective tax rate to be approximately 23% for the year. Adjusted EBITDA and non-GAAP metric totaled $3.7 million, which was up from $1.9 million for Q3 2024. Cash, cash equivalents and marketable securities at August 31, 2025, totaled $9 million compared to $25.7 million at November 30, 2024.

Cash has been increasing since the end of the third quarter, which primarily reflects just normal seasonal working capital timing and collection subsequent to quarter end as well as the planned drawdown of inventory. We expect the drawdown of inventory and increasing cash to accelerate throughout the fourth quarter. The company has no current or long-term debt.

Accounts receivable on August 31, 2025, totaled $8.9 million compared to $2.6 million at November 30, 2024, driven largely by the increase in dealer sales. Inventory at August 31, 2025, totaled $34.1 million compared to $20 million at November 30, 2024. Reflecting our strategic builds ahead of the holiday season and the compact launcher rollout. Mix dynamics this quarter favored the Byrna SD more than initially anticipated, leading to additional purchases of SD-related part.

We saw the high point of inventory at the end of July with the reduction since that time of over $3.5 million. We expect inventory to normalize as we move through the peak season and into fiscal Q1 2020. I'll now turn it back to Bryan.

Thank you, Lauri. First, an advertising update, our Q3 growth of 35% year-over-year is due to several factors, including the growth of our dealer network the impact of our new advertising initiatives and the growing awareness of Byrna brands. In August, our AI-enabled advertising campaign expanded our reach across new channels that up until now, we're off limits to Byrna.

The growing awareness generated by this advertising campaign, including the now iconic we don't sell bananas ad, lifted average daily sessions on Bernard.com from 3,000 a day to more than 50,000 a day. That momentum is carried into early fiscal Q4 with web sessions on byrna.com, averaging 58,000 sessions per day in the month of September. This surge in web traffic has grown Byrna's opt-in e-mail list to 1.9 million subscribers.

We plan to leverage this expanded audience to drive Q4 sales through targeted outreach for our October black and orange sale and our Black Friday Cyber Monday promotions. We don't sell bananas ad was the first campaign we created with the help of AI. By combining this technology with our own proprietary processes, we can quickly generate professional quality commercials, refresh creative continuously and AV test variations at scale.

This has also allowed us to adapt content to the requirements of cable and streaming networks more efficiently creating broader ad distribution opportunities and lowering customer acquisition costs. With these ads, we've also been able to secure placements on MLB, Major League Baseball streaming services and NFL airport displays among other networks.

These mainstream opportunities on highly visible platforms have elevated brand recognition and acceptance. As these placements demonstrate our credibility and normalization of our product category, we fully expect that they will open the doors to additional mainstream networks with comparable demographics, further amplifying reach and conversion over time.

As expected, the added visibility and higher web troffer from these new ad campaigns initially lowered conversion rates. Traditionally, we have seen a 45-day average purchase cycle from initial exposure to the Byrna brand as most customers engage in multiple -- engaged with us multiple times before making a purchase. Now that we are in our third month of running the new advertising campaign, conversion rates are starting to tick up, and we expect to see continued improvement throughout the quarter as we trend back to our historical 1% mean.

Overall, this expanded media presence is fueling growth in both our e-commerce and retail channels. Speaking of our retail channels, we are excited to now be in more than 1,000 stores nationwide including our big box partners, premier dealers and our own retail stores as we gear up for the holiday season. As our brand awareness has grown, we've also seen steady growth with our retail partners. Particularly those partners to provide a shooting experience. The benefit of our expanding physical presence is clear. When customers have the opportunity to fire the launcher, conversion rates improve dramatically.

What's particularly interesting is the Byrna Compact launcher, first released in May, has gained much greater traction in these experiential settings as customers can see and feel the difference in size and power. This has resulted in our brick-and-mortar partners selling a greater percentage of CL launches than SD launches, while the opposite is true for our online sales.

At the same time, our company-owned stores, most of which opened earlier this year, are also performing in line with our expectations. For the month of September, our 5 retail stores operated an average annualized run rate of $725,000 with our sale of New Hampshire store slightly etching out our Las Vegas location to take the #1 position.

Interestingly, our Fort Wayne, Indiana location, our smallest and most remote store ranked third at an $800,000 annual run rate. These results validate the strong performance we saw at our first Las Vegas location and confirmed that our retail model is resonating across diverse markets. The quick ramp-up in sales across multiple stores reinforces the effectiveness and scalability of our approach as brand awareness continues to grow.

For comparison purposes, it's important to note that last year, our retail store sales were included in our e-commerce figures as transactions are processed through Shopify. This year, we developed and implemented our own proprietary POS system built in-house with the help of allowing retail stores to be recorded separately.

We chose to develop our own POS solution after determining the available off-the-shelf third-party systems could not truly meet our operational requirement. The successful development of this system highlights how AI has dramatically reduced the cost and time needed to develop in-house apps and accounting systems.

While we don't have immediate plans to expand the company-owned retail model broadly, we see additional long-term potential in select flagship markets. These stores also serve as hubs for training community events, product testing and direct customer feedback, and they help foster grassroots engagement and word-of-mouth momentum around the Byrna brands.

To support our demand, we've been carefully monitoring production and inventory levels. As Lauri mentioned, we've seen a shift in our launcher sales mix. With the initial launch of the compact launcher in May, where there was a pent-up demand for the compact launcher, the FD has now become about 50% of our sales, and the CL accounts for around 30% of our sales.

Beyond its lower price point, the SD performs well on Amazon, thanks to its long-standing presence and more than 1,000 reviews. As a result, we've increased our orders for SD parts to be adequately prepared for the holiday season. we expect our inventory levels to reach a more normalized level after the peak season.

We also recently implemented new proprietary shop floor management system at our factory designed to enhance factory efficiency and strengthen first pass yield. With the introduction of the new Byrna Compact launcher and the start-up of our Fort Wayne [indiscernible] manufacturing facility, we experienced the typical short-term inefficiencies that come with ramping new products and operations which temporarily reduces gross margins in both our ammo and larger production facilities.

However, by developing and deploying our own extremely robust shop floor factory management system, which again was built entirely in-house. We were able to virtually eliminate the labor overhead variances in the month of September. As these efficiencies continue to flow through, we expect to significantly reduce the unfavorable labor and overhead variances we experienced in Q3 and as we drive gross margin percentages towards our target of 63% to 65% next year.

Well Byrna has always been at the vanguard of innovation when it comes to CO2 powered less lethal launch market. The company is breaking new ground with the development products that will take Byrna beyond simply being a less lethal weapons company. In fact, we have modified our mission statement to reflect this broader focus.

Our mission statement now reads to provide civilians and security professionals with safe, reliable and effective less lethal alternatives to traditional firearms that will allow Burns customers to protect and defend themselves, their families and their communities without the need to resort to lethal force.

And to provide them with the technology-based systems and solutions that will help protect them in their homes, their vehicles and went out in public. We strongly believe that by combining recent advances in the area of SOS alert capabilities, along with the attended development of compact communication and recording devices and the advances in AI.

With the incredible stopping power of Byrna's launchers and sprays, we can provide additional protection and functionality to our users. Today, there are many devices that have SOS alert capabilities. yet in those critical situations where someone needs to protect themselves against an immediate threat, an SOS alert system by itself is not enough as even in the best of circumstances, help as many minutes away.

In these instances, you must be your own first responder, which highlights the need for tools to both contact the authorities and provide the proven ability to protect one sells and one family when the situation calls for it. Accordingly, we see tremendous opportunity to combine existing SOS alert technology with Byrna's proven safe, reliable and effective launches in sprays giving customers the ability to both neutralize a threat and contact help.

We believe that integrating SOS alert connectivity into Byrna's suite of self-defense devices through products that either fit on the picketing rail or are built into our spray or alarm devices. These connected devices will dramatically enhance the value proposition for Byrna's customers by giving them the ability to some and help if they are under threat.

This should not only serve to deter any wood be attacker and provide valuable third-party corroboration of the threat, but also defend themselves and their family should the situation demand it. This evolution of our safety devices to include the ability of alerting authorities and capturing the events will strengthen the Byrna ecosystem, increase customer engagement and create the foundation for new technology-driven recurring revenue streams.

At the same time, this initiative has the potential to broaden our already large addressable market by reaching into the population of tens of millions of firearms owners, many of whom may be interested in connected less lethal safety solutions that they can easily affix to the [indiscernible] rail of their firearm when they feel that they may need that extra layer of protection.

Even modest adoption within this group could meaningfully expand awareness and usage of Byrna's technology. Together, these efforts could create a compelling entry point and an expanded opportunity for the adoption of Byrna Technology. We have been working on this project for almost a year, and we are steadily advancing the development of our connected safety platform is an effort that continues to build momentum as we move closer to bringing this vision to market due to recent AI-driven advances in coding.

Our success in developing several proprietary programs, including our own POS application and our [ Shop Store ] factory management system reinforced our confidence in our ability to develop the apps needed to be able to have our devices communicate with established SOS alert systems that have become so popular in recent years.

In addition to this connected platform opportunity, Byrna is also developing the next generation of products that extend beyond our current lineup and address new segments of the less lease on personal safety markets. This generation includes new value-oriented launches and self-defense products designed to make Byrna solutions accessible to a broader audience, including a younger demographic and more cost conscious consumers.

As part of this strategy, we plan to introduce a value-focused 61 caliber launcher in 2026 targeted at budget-minded consumers and first-time buyers exploring less lethal protection. We also expect to launch a simplified, highly portable protection device in 2026 that marries the form factor Byrna iconic lodges with stopping power burners line of BGR self-defense sprays.

These 2 products are designed to expand or reach to customers that may not be able to afford Byrna's existing range of launches while maintaining our core focus on safety, reliability and effective legal protection. On the consumables side, we plan to expand upon this theme of making our products available to more cost-conscious consumers to our ammunition offering by introducing more affordable inert and kinetic practice rounds to both compete against cheap foreign imports and encourage frequent training and repeat purchases.

We will, of course, continue to offer our premium ammunition lines for professional and enthusiast users. And we believe that this balance between accessibility and performance ensures that we are meeting the needs of every customer from those just discovering less legal options, to experience users demanding top-tier accuracy and dependability Byrna has proven that we are the leader in providing safe and effective very reliable, less lethal protection for consumers.

We are still in the very early innings of penetrating this market. As we continue to make inroads, it is essential that we offer a variety of less lethal products at a range of price points that meet the needs of a diverse customer base and provide Bernard with the opportunity to generate recurring revenue over time. Looking ahead, we are confident that our new advertising programs and our expanded retail footprint position Byrna for a strong finish to the year.

September sales were strong and that momentum, combined with the upcoming holiday shopping season supports our expectation for full year fiscal 2025 revenue growth to be between 35% and 40%. The timing of this year's Black Friday and Cyber Monday sales, which fall over the final weekend of our fiscal year with Cyber Monday landing at the start of fiscal year 2026 is expected to drive exceptionally high order volume.

These sales days consistently generate strong demand, with Byrna shipping thousands of packages a day during this period. With the fiscal year-end ending on Sunday after Thanksgiving, the precise timing of order fulfillment will determine whether certain sales are reported in Q4 or Q1 but either way, we expect this activity to contribute to a strong finish to 2025 and also set the stage for a fast start to fiscal year 2026.

The strong results so far this year demonstrate both our effective execution and the scale of the opportunity in front of us. The continued expansion of our larger customer base is a critical foundation for our larger vision of building a personal safety platform that extends our model with services and connected capabilities to complement our best-in-class less lethal to launchers, sprays and alarms with recurring service-based revenue as we look to integrate burn more deeply into consumer safety routines.

We believe that we are only at the beginning of penetrating a large and expanding market. We are laying the groundwork for sustained multiyear growth, and we look forward to updating you on our progress against this road map in the quarters to come. That concludes my prepared remarks. Operator?

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

And great to hear the continued business momentum. Bryan, maybe you could just touch on thoughts on adding new influencers. I know that's something that has been discussed, maybe touch on areas of focus there.

Okay. So in the end of 2023, we kicked off our celebrity influencer campaign with [ Sean Hannity. ] And since that time, it's expanded to approximately a dozen conservative radio talk show host. We believe that at this point, we have a sufficient number of conservative radio talk show host, and we are looking to expand beyond that universe.

Towards that end, you may have noticed that we recently brought on board a new director by the name of Adam Roth. Adam was Head of Sales and Marketing for NIKE North America before he retired. And he brings with him a wealth of knowledge regarding celebrity influencers or what Nike called brand ambassadors.

In fact, I was just on the phone with Adam yesterday, as we are putting together a plan and pitch deck for going after a whole new host of brand ambassadors or celebrity endorsers for Byrna, that will help us expand beyond our existing customer demographic. At this point, I cannot share with you the names of anybody that we're talking to but we are well into this process.

Okay. That's great to hear. And then maybe if you can just touch on the latest -- I think there's another CL launcher that's planned -- and then also just give us an update, if you could, on the lower price point unit that you plan to roll out?

Yes. Jeff, I'm not sure what you mean by another CL launcher that's planned. The next new launcher that's going to be coming out will be the caliber price point launcher, which will come out sometime next year. And it will be largely based on the CL design. It will be similar in size to the existing CL.

But there are no different variations of the CL that are going to be coming out -- in terms of the basic box, the price point launcher that we brought out. Interestingly, it has not been as popular as we would have expected. We still sell both the basic box configuration, which is just the launcher by itself with no accessories as well as what we call the Universal already kit which comes with CO2 and ammunition and an extra magazine, so that you can buy simply the ready kit and you already use it.

That is still probably 90% of our sales. So initially, we were concerned that maybe the price point was too high. The market has clearly voted with their pocket book and said, no, your 540.99 price point is perfect.

Okay. That's an interesting development. So one other thing, if I could squeeze it in. Just wondering how Byrna Care adoption is running in the early days.

Byrna Care adoption is running in line with expectations. We have not yet been able to adopt our website ask for people to buy Byrna Care at the end of every purchase. This requires a little bit of a digital coding, and we think that will have even greater impact. But it's in line with expectations.

The next question is coming from Jeremy Hamblin of Craig-Hallum.

And I'll add my congratulations. I want to come back to the success that you're seeing with the advertising campaign, the momentum you have in -- with web traffic, in particular, and just a commentary around expectations on conversion rates with the, what, 70%, 75% increase in web traffic that you're seeing sequentially.

Can you just discuss a little bit more in terms of conversions that you were seeing and whether or not this campaign is reaching maybe a customer set that is outside of your traditional customer set, given kind of the viral nature of the campaign.

Jeremy, thank you for the question. And honestly, that's the question we're asking ourselves every day as well. As we expand our -- the demographic that we're speaking to, will we see the same conversion rates. And the answer simply is that we don't know -- what we do know is that the conversion rates will climb significantly from where they are.

Because it does take some period of time for people to make a purchase, they come back to the website on average, 5x to 7x before making a purchase. So we know that the first time we see incremental traffic, it's not going to result in incremental sales. We have started to see a climb a climbing conversion rate. But interestingly, we're also continuing to see a climb in web sessions, Yesterday, our web sessions were 70,000 sessions, I think, for the third day in a row. So as we're starting to see higher web sessions, we are, again, getting more and more new consumers on.

So it is having a dampening effect on the conversion rate, while at the same time, those new consumers that came a month ago, 2 months ago are having a positive effect on conversion rate. Last year, during the months of October, November, our conversion rates approached 1.5%. They're always higher during the holiday season.

We don't need anything close to 1.5% this year when we're generating 70,000 sessions a day to hit our numbers. So to answer your question, is it going to get back to exactly where it was? We don't know but we do know that it will be significantly higher than where it is currently, and we are already seeing that trend.

Great. That's helpful. And then just in terms of what you expect on channel mix here, in Q4. You've obviously had significant expansion in the number of wholesale doors you're selling into. But given this lift that you're seeing in traffic both at byrna.com and on Amazon, how should we be thinking about the mix of business here in Q4?

Jeremy, it's Lauri. Yes, I mean, we will still continue to see strong dealer and chain store sales. We see additional orders coming in as they're ramping for the holidays as well. We still expect to see that strength there. That being said, we expect our DTC channels to be a higher percentage of overall sales than they were in Q3.

Got it. Helpful. And then just last one for me. In terms of thinking about kind of the expense leverage that you're getting in the model, you saw OpEx really well contained here in the third quarter. As we look ahead, you saw what, $7.3 million year-over-year growth in sales, but OpEx was only up $2 million year-over-year in Q3.

Should we expect that kind of expense leverage ratio to maintain here both in Q4, but then as we think about kind of projecting out in FY '26 and beyond?

Yes. I mean, I think in Q4, it will be closed, we do ramp up some additional marketing from Q3. So we will continue to see that leverage maybe not quite to the extent. I mean, Q3 was a great quarter for us on leverage. Going into next year, will be some additional incremental labor for new positions and things we're hiring.

But for the most part, we'll continue to see that leverage as we move forward. And really, this quarter, it was really just -- it was marketing expense and variable selling expense was really the increase. Everything else held pretty steady.

Great. I'll hop out and congrats and look forward to seeing the development.

The next question is coming from Matt Koranda of Roth Capital Partners.

I guess you sort of tangentially addressed it earlier, Bryan, but I just wanted to put a finer point on sort of how the guidance fits with the lift that you've seen in web traffic. So I guess if I just look at the mid-20-year guide, and it would suggest about 25% growth in the fourth quarter, but the web traffic numbers are pretty substantially above that.

So maybe just hit those 2 things together. I assume the answer is generally conversion and being conservative there, but maybe just a little bit more color on that would be great.

Yes. As we said before, it will take us some time for our conversion rates to get back to mean of 1%. And we have seen this happen time and time and time again, where we see a significant spike in web sessions, and it takes some period of time for the conversion rate to catch up.

But in every case, it ultimately does catch up. So we don't believe that we're going to get back to our normal conversion rate in Q4. And in fact, web sessions are growing daily. But we do expect that it will occur over time. And I think we have to be cognizant of that it's going to take some time for that to happen.

Okay. And then maybe just a tool at your disposal will be promotions. So just any thoughts that you have heading into the holiday on sort of the promotional posture that we're considering any shift in strategy that we might consider to drive improved conversion that would sort of help with the web traffic you're seeing?

Every year at this time of year, we have 2 separate sales. We have kind of an early Black Friday sale, which is our Byrna black and orange sale that happens at the end of October. And there's always a big conversion during that period of time.

And then we have the traditional Black Friday, Cyber Monday sale that happens starting the Wednesday before Thanksgiving. This year is a little bit of an issue because this period of time, these 6 days represent 40% of our sales in November. So it's an enormous amount of sales that are happening in the last 6 days of the month. One of which is Thanksgiving, and we're closed.

And then when we come back for 3 days, we're going to have to get something like 6,000 or 7,000 packages out the door. So my only concern is how many of those packages can we get out the door and what ends up falling into Q1.

Okay. Understood. Maybe just curious for an update on how to think about the wholesale expansion into the end of this year and next. I know you mentioned 1,000 doors. I think you're in as of the end of the third quarter. Where do you think things will shake out by the end of this fiscal year? And do we have any kind of stretch goals for next year in terms of doors that we'd enter.

Lauri, do you want to take that?

Yes, Matt. So where we are right now, we think we're pretty well positioned. We want to make sure we don't become too saturated. So we're probably mostly holding where we are on our current retail print. We'll continue to work with all of our partners to make sure we help them with better conversion, better tools. And I think we'll hold at that point.

Perhaps there will be more later as Bryan said, we may look for special markets where we put additional corporate stores in some of those markets. But right now, we feel pretty good as far as where we are on the retail store.

Yes. If I can just add, Matt, I think -- our team has done an amazing job working with our partners. And I think at this point, we have a very, very good footprint of stores. There are in large certain areas where we're not as -- we're not represented as well as we should be. And we will likely open up retail stores in those areas.

But I think the bigger issue for us and our focus for 2026 is going to be expanding our existing relationships. We have seen Bass Pro, for example, increased the number of that they're offering. They're offering additional colors, they're offering additional models. And this is having a significant impact on their weekly sales.

This is what we need to do with all of our partners to make sure that they're doing as well as they can in each store. And I think there's huge opportunities for growth within the existing footprint. And not that we will not take on more partners, we will, but we need to be very selective about it because putting 2 stores right next to each other is not helpful.

Okay. Makes a ton of sense. Maybe if I could just sneak one more in. You mentioned the SOS and connected platform, which sounds really exciting. And I'm curious, when do you think loosely that could become sort of commercially available to consumers? Would that be a next year event? Or is that something like a 27% [indiscernible]

No, it will be a next year event. But keep in mind that it is going to be phased. So that -- and let me just say, all of this technology exists. These -- so will alert systems, rapid SOS, New light, there's a lot of these services out there already. the hardware technology already exists.

What we are doing is packaging in a format to work with Byrna products. So there are some things that we are very far along on that will certainly be released in 2026, there are other sort of more aspirational products that we have that may not come out until 2027.

But unlike the development of a brand-new launcher, where there's a lot of technology that has to be developed from scratch, this is really taking existing technology and adapting it for use with Byrna's suite of products. So this will happen much more quickly than traditional development projects.

Our next question is coming from Jon Hickman of Ladenburg Thalmann.

Jon?

I just wanted to follow up from one of the last questions. But how are you -- could you elaborate on whole sportsman's warehouse are you complete with them, are you adding more stores. Are you adding more chain lanes.Can you talk about that a little bit?

Hi, Jon, it's Lauri. I think we're on track on where we expect to be with Sportsman. They have mix of different presence and different stores, they're working through some of their stores and their markets to determine what works best. What we found is the stores where we put the shooting pod seems to help drive additional demos, additional conversion in those stores. So that's really something that's driving well.

Now that doesn't fit in all of their stores due to their footprint and what works in different markets. So we're continuing to support them. We feel great about the partnership with them. And like I said, we've got a various mix, but we're on track and well positioned.

How many SKUs are they carrying?

They carry most of our SKUs. There are obviously a few accessories and things that they don't. But they carry all of the various [indiscernible] they carry CO2 and a number of accessories and sprays as well. I don't know the exact number, but it's pretty much our full product line.

And Jon, I think the big takeaway from -- that Lauri said is that this shooting pod has proven to be very, very effective. Now we have an agreement with Sportsman's where this is exclusive to them. So unfortunately, we don't have the shooting experience in some of the other partners that we work with.

But the shooting parts have been very effective, and the stores that have the pods have done extremely well.

I don't know. Maybe you can't answer this. Are you in Cabela's or are you trying to be get in the Cabela's?

Yes. Yes, cone Yes. Cabela's is part of Beth Pro. So last October, we actually went on a national basis with Beth Pro Cabela's. So we are in all of their stores.

Okay. All my other questions were basically answered.

Thank you. This concludes our question-and-answer session. I'd now like to turn the call back over to Mr. Ganz for his closing remarks.

Donna, thank you very much, and I just want to thank everybody on the call for taking the time. And we will, of course, keep everybody apprised on these very exciting new projects that we're working on. Thank you very much.

Thank you. Thank you for joining us for today's Byrna Fiscal Third Quarter 2025 Conference Call. You may now disconnect.