Byrna Technologies Inc. (NASDAQ:BYRN) is a rapidly growing personal defense technology company that has carved out a unique niche in the less-lethal personal security solutions market. With a focus on innovation, quality, and customer-centric solutions, Byrna has emerged as a disruptive force, challenging the status quo and redefining how individuals can safely and effectively protect themselves.
Business Overview and History Byrna Technologies Inc. was incorporated under the laws of the state of Delaware on March 1, 2005, originally named Security Devices International Inc. The company changed its name to Byrna Technologies Inc. on March 4, 2020. Initially, Byrna focused on developing and selling non-lethal 40mm ammunition and launchers.
A significant turning point came in April 2018 when Byrna acquired certain assets and intellectual property related to less-lethal technology from Andre Buys of South Africa. This acquisition paved the way for the development of the company's first flagship product, the Byrna SD launcher, which was introduced to the market in June 2019.
The Byrna SD, a compact, ergonomically designed, handheld personal security device, quickly gained traction, with the company reaching the milestone of 100,000 launchers sold within the first 2.5 years. Building on this success, Byrna introduced the more powerful Byrna LE launcher in early 2023, featuring an increased effective range.
To further expand its product portfolio, Byrna made strategic acquisitions. In May 2021, the company acquired certain assets of Mission Less Lethal, allowing it to introduce the Byrna TCR and Byrna M-4 tactical rifle models. The following year, in May 2022, Byrna acquired Fox Labs International, a producer of defensive pepper sprays, enabling the company to offer Byrna Bad Guy Repellent to consumers.
Despite facing challenges such as navigating complex regulatory environments for its less-lethal products and managing supply chain disruptions, Byrna has continued to grow its business. The company's success is evident in its milestone of surpassing 500,000 launchers sold as of November 2024, just 5.5 years after its first sale.
Financial Performance and Ratios Byrna's financial performance has been impressive, with the company reporting record revenue of $85.8 million for the fiscal year ended November 30, 2024, a 101% increase from the previous year's $42.6 million. This remarkable growth can be attributed to the company's successful marketing strategies, expansion of its distribution channels, and the growing demand for its less-lethal solutions.
The company's gross profit margin has also seen a significant improvement, increasing from 55.5% in fiscal year 2023 to 61.5% in fiscal year 2024. This increase in profitability is largely due to Byrna's focus on cost optimization, economies of scale, and a greater proportion of higher-margin direct-to-consumer sales.
For fiscal year 2024, Byrna reported net income of $12.8 million, a significant turnaround from the $8.2 million net loss in the prior year. This improvement was driven by higher revenues, improved gross margins, and a $5.7 million income tax benefit compared to a $0.2 million provision in the prior year.
The company's e-commerce sales saw a substantial increase of 112.8%, accounting for 76.8% of total revenue in fiscal year 2024. This growth was primarily driven by a transformational shift in the company's advertising strategy that began in September 2023, leading to increased brand awareness and demand for Byrna's products.
In the most recent quarter (Q4 2024), Byrna reported revenue of $28 million, representing a 79% year-over-year increase compared to $15.6 million in Q4 2023. Net income for the quarter was $9.7 million.
Liquidity Byrna's liquidity position remains strong, with cash and cash equivalents totaling $16.8 million as of November 30, 2024. The company's current ratio, a measure of its ability to meet short-term obligations, stands at a healthy 3.30, indicating a solid financial footing. Additionally, Byrna's debt-to-equity ratio of 0.05 demonstrates a low level of leverage, further bolstering its financial stability.
The company's quick ratio, which measures its ability to meet short-term obligations with its most liquid assets, was 2.01 as of November 30, 2024. Byrna had previously secured a $5 million revolving line of credit and a $1.5 million equipment financing line of credit, but both were terminated in January 2024 and not renewed.
For fiscal year 2024, Byrna reported annual operating cash flow of $11.7 million and annual free cash flow of $9.4 million. The company used $11.2 million for investing activities, including $8.9 million for the acquisition of marketable securities and $2.3 million for property and equipment purchases. Additionally, $4.6 million was used in financing activities, primarily for $3.8 million in stock repurchases.
Operational Highlights and Expansion Initiatives Byrna's operational performance has been equally noteworthy. In fiscal year 2024, the company increased its monthly launcher production capacity by 33%, from 18,000 units to 24,000 units, to meet the growing demand for its products. This expansion was achieved through the implementation of a second shift at the company's Fort Wayne, Indiana, manufacturing facility.
Alongside the production ramp-up, Byrna has been actively expanding its physical retail presence. In 2024, the company opened its second company-owned store in Nashville, Tennessee, following the success of its Las Vegas location. Byrna plans to open an additional four stores in the coming months, including locations in Scottsdale, Arizona, and Salem, New Hampshire.
Furthermore, Byrna has entered into a strategic partnership with Sportsman's Warehouse, a leading outdoor retailer, to establish a store-within-a-store concept. The company plans to open 11 Byrna store-within-a-store locations in Sportsman's Warehouse during the second quarter of 2025, with plans to expand to 50 locations by the end of 2025 and 100 locations by the end of 2026. This initiative will allow Byrna to leverage Sportsman's Warehouse's existing customer base and infrastructure, accelerating the rollout of its brick-and-mortar presence across the United States.
Byrna's international expansion efforts have also gained momentum. In 2024, the company sold 1.7 million rounds of ammunition to the Cordoba province police department in Argentina, showcasing the growing global demand for its less-lethal solutions. While Byrna primarily sells in the United States, with domestic revenue of $78.9 million in 2024, the company is focused on expanding its international presence. International revenue from regions like South Africa, Europe, South America, Asia, and Canada totaled $6.9 million in 2024.
In January 2023, Byrna created a new joint venture, Byrna LATAM, with Fusady S.A. in Uruguay to expand its operations and presence in South American markets. However, in August 2024, Byrna sold its 51% ownership stake in Byrna LATAM and entered into an exclusive distribution, manufacturing, and licensing agreement with the venture, further solidifying its position in the Latin American market.
Product Portfolio Byrna's product portfolio includes a range of less-lethal self-defense solutions. The company's flagship product, the Byrna SD, is a compact, handheld personal security device that utilizes patented technology and over 60 custom-designed parts. It is effective at a stand-off distance of up to 60 feet, making it a safer alternative to pepper spray or conductive energy devices.
In fiscal year 2024, Byrna introduced the Byrna LE, which features a more powerful valve design with a higher average muzzle velocity of 330 feet per second and an effective range of 60 feet. The company also offers the Byrna TCR, an easy-to-use tactical compact rifle, and the Byrna M-4, a full-sized tactical rifle, both well-suited for security professionals.
Byrna's product line includes a range of .68 caliber projectiles for different applications, such as chemical irritant projectiles like Byrna Max and Byrna Pepper, as well as kinetic and inert rounds. The company also sells various accessories that allow users to customize, carry, load, power, and maintain their Byrna launchers.
Human Capital As of November 30, 2024, Byrna had 167 employees, which the company believes meet the needs of its business. The company has not experienced any work stoppages, and none of its employees are represented by a collective bargaining agreement.
Regulatory Environment The manufacture, sale, and purchase of Byrna's products are subject to extensive federal, state, local, and foreign laws and regulations, including those related to firearms, ammunitions, explosives, and chemical irritants. Compliance with these regulations has not had a material adverse effect on the company's operations, but changes in laws and regulations could impact Byrna's ability to manufacture or sell its products and projectiles.
Risks and Challenges While Byrna's growth trajectory has been impressive, the company is not without its risks and challenges. The highly regulated nature of the personal security industry, with evolving laws and restrictions governing the sale and use of less-lethal weapons, poses a potential risk to Byrna's operations. The company's ability to navigate these regulatory landscapes and adapt its products and distribution channels accordingly will be crucial to its continued success.
Additionally, Byrna faces competition from both traditional firearms manufacturers and other less-lethal weapon providers, each vying for a share of the growing market. The company's ability to maintain its technological edge, brand recognition, and customer loyalty will be critical in fending off these competitive threats.
Finally, as Byrna expands its physical retail presence, the company must effectively manage the operational and financial challenges associated with opening and maintaining a network of brick-and-mortar stores. Balancing the costs of this expansion with the expected returns will be a key focus for the management team.
Outlook and Future Guidance Despite the challenges, Byrna's outlook remains highly favorable. The company expects to continue double-digit revenue growth in fiscal year 2025, although it will not be at the same 100% growth rate as 2024. Margins are anticipated to improve further with the launch of the new compact launcher, which is expected to have higher margins, and from ongoing cost reduction efforts.
Byrna has provided guidance on expected EBITDA margins as the business scales, projecting mid-teens EBITDA margins at $100 million in revenue, high-teens at $125 million, and low-20s at $150 million. The company's retail expansion plans, including the partnership with Sportsman's Warehouse, are expected to contribute significantly to future growth.
The less-lethal market is recognized as one of the faster-growing segments of the security market, with Byrna estimating that the market for less-lethal weapons among gun owners in the US is in the tens of millions of consumers. This presents a substantial opportunity for continued expansion and market penetration.
As Byrna continues to disrupt the personal security market, it is well-positioned to deliver sustainable growth and long-term value for its shareholders. The company's commitment to innovation, customer satisfaction, and responsible firearms alternatives makes it an intriguing investment opportunity for those seeking exposure to the dynamic less-lethal personal security market.