Byrna Technologies Inc (BYRN) 2024 Q4 法說會逐字稿

Good morning.

Welcome to Byrna's fiscal fourth-quarter and full-year 2024 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 to questions.

Earlier today, Byrna released results for its fiscal fourth-quarter and full-year ended November 30, 2024.

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 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 obligations 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 Investor Relations 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'd like to turn the call over to Byrna's CEO, Bryan Ganz.

Sir, please proceed.

Thank you, Kevin, and thank you everyone, for joining us today.

We will be filing our 10-K with the SEC today.

We're not sure if it's going to get out before the open or after the close, but it is -- it is in for filing.

And as Kevin mentioned, we've issued a press release providing our financial results and business highlights for the fiscal fourth quarter and for the full year ended November 30, 2024.

I'm going to start 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 record $20 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 analyst Lauri.

Thank you, Bryan, and good morning, everyone.

Let's review our financial results for the fiscal fourth quarter and the full year ended November 30, 2024.

Net revenue for the fourth quarter was $28 million, a 79% increase from the $15.6 million reported in the fiscal fourth quarter of 2023.

This $12.4 million dollar increase is primarily due to the transformational shift in our advertising strategy, which we began in September 2023, and the resulting normalization of Byrna and the less-lethal space generally.

In Q4, direct-to-consumer revenues increased by $8.9 million through Byrna.com and Amazon.com compared to the prior year period.

For the full year 2024, net revenue totaled $45.-- $85.8 million, up 101% from $42.6 million in 2023.

Gross profit for Q4 2024 was $17.6 million, or 62.8% of net revenue, compared to $9 million or 57.8% of net revenue for Q4 2023.

For the full year 2024, gross profit was $52.8 million, or 61.5% of net revenue, compared to $23.6 million or 55.5% of net revenue for the same period in 2023.

The improvement in gross profit margin is largely attributable to additional sales through our higher-margin DTC channels, and intensive cost component reduction effort spearheaded by Byrna's engineering team and the economies of scale resulting from increased production volumes.

Operating expenses for Q4 2024 were $13.5 million compared to $9.7 million for Q4 2023.

For the full year 2024, operating expenses were $46.1 million, compared to $31.4 million for the same period in 2023, reflecting a 47% increase year-over-year.

The increase in operating expenses was driven by an increase in our variable selling costs, such as freight, third-party processing fees, credit card fees, increased marketing spend, and higher payroll expenses in marketing and engineering, as the company has scaled to handle increased sales and production volumes.

Netcom for Q4 2024 was $9.7 million compared to a net loss of $0.8 million for Q4 2023, a $10.5 million improvement.

This increase was driven by higher revenue and a $5.6 million dollar income tax benefit.

The tax benefit arose from the release of tax evaluation allowances related to net operating loss carry-forwards and other tax assets.

For the full year 2024, net income was $12.8 million, a $21 million improvement from a net loss of $8.2 million in the prior year.

The increase in net income was driven by higher revenue and included a $5.7 million income tax benefit due to the full release of U.S. tax valuation allowances.

Adjusted EBITDA, a non-GAAP metric for Q4 2024 totaled $5.2 million, compared to $400,000 for Q4 2023.

This brings adjusted EBITDA for the full year to $11. -- for the full year 2024 to $11.5 million, compared to a negative $2 million in the prior year.

Cash and cash equivalents at November 30, 2024, totaled $16.8 million, compared to $20.5 million at November 30, 2023.

The change in cash and cash equivalence is primarily due to an $8.9 million investment in marketable securities.

Cash and short-term marketable securities totaled $25.7 million, which is an increase of $5.2 million compared to November 30, 2023.

Inventory at November 30, 2024, totaled $20 million compared to $13.9 million at November 30, 2023.

The company has no current or long-term debt.

I'll now turn it back to Bryan.

Thank you, Lauri.

And just to remark on her last comment there, although the cash levels were down, cash and marketable securities were up significantly from the year before, as we took some of our excess cash and put it into short-term paper.

Okay.

As our results demonstrate, 2024 was a standout year for Byrna.

For the last five quarters, we have grown revenue quarter over quarter.

Culminating in a $28 million quarter in Q4 last year totaling $85.8 million for the year, more than double our 2023 revenue.

This growth reflects our team's ability to market our products effectively and to scale our production to meet demand.

A key milestone, which we announced earlier this year was hitting the 500,000 launchers sold mark, which we eclipsed in November.

This reinforces our progress in normalizing less-lethal alternatives and establishing them as a widely accepted category in personal self-defense.

With 500,000 launchers sold, this is no longer, just a flash in the pan.

This is a real market.

Since selling our first launcher in 2019, we've experienced remarkable growth, and we are just getting started.

Okay.

Our marketing strategy continues to be anchored by our celebrity endorsement program.

Since launching this initiative in September 2023.

We've seen a remarkable increase in both orders and brand awareness.

By carefully managing these partnerships, this year, we achieved more than a five times ROAS or return on advertising spend across all advertising platforms.

This highly accretive threshold has helped us achieve this record profitability and become a stable, cash-flowing enterprise.

We continue to refine our approach, testing new influencers and new platforms in different markets, starting with an initial trial period before making a long-term commitment.

Unfortunately, we recently terminated a few relationships with several celebrity endorsers, that were unable to achieve our minimum ROAS requirements.

However, today, we have not had to terminate any of our celebrity endorsers that were initially successful.

Rather, the celebrity endorsers that we've had to terminate were never able to achieve our minimum ROAS requirements during the initial trial period.

Unfortunately, we did lose one very successful celebrity endorser, Governor Mike Huckabee, due to his appointment as Ambassador to Israel.

We are excited to be onboarding new prominent voices in media and politics, including Megyn Kelly, Charlie Kirk, and Lara Trump, as new partners in Q1 of this year.

With their strong, engaged audiences and influential platforms, we expect them to -- meaningful brand awareness and deliver strong results for the upcoming period.

We are also expanding the platforms we are -- where we are running our advertisements, as more and more cable and internet platforms are green lighting our advertising campaigns.

In the fourth quarter, most of the $21.3 million in web sales, our highest-margin sales channel, were directly attributable to our current roster of influencers.

These influencers spread the word about our mission to provide less-lethal personal security solutions, and they have helped us successfully build a very strong brand awareness.

This has also allowed us to build a more robust multi-channel marketing strategy that now includes traditional media, such as cable and broadcast networks.

Prior to our advertising pivot, we were not allowed to broadcast on traditional broadcast TV channels.

Fast forward to now, and we are able to advertise regularly on new networks, and we are also frequently featured in news stories, as less-lethal solutions become a larger part of the conversation.

Yesterday I just returned from Nashville, where we had a retail store grand opening, and three of the four local affiliates covered the opening.

Two of them came to the event.

They took video of the shooting in the range, and that story played more than 20 times in the local market.

This change from a year ago demonstrates that more and more people are becoming familiar with our products, and they are beginning to see us as the solution to the epidemic of gun violence.

We also believe that the changes that have occurred in both public sentiment and the position of some of the social media platforms since the new administration was elected bode well for burnout.

We have traditionally been banned from advertising on social media and on most of the mainstream media platforms, but with both social media and mainstream media relaxing their restrictions in the wake of the election, we're hopeful that a number of these channels will open up to us.

We are already seeing some movement with a number of the cable TV networks, and we have started to take advantage of these channels.

We believe that Byrna's proven track record in saving lives, coupled with the normalization of the product category and the shift in public sentiment, will allow us to continue to expand our advertising efforts and, in turn, the size of the audience that we are able to reach.

Additionally, we are building out our physical store presence to reach our customers in new ways.

We have strong data from Las Vegas, our first store, which in 2024 did in excess of $1 million in sales at a gross margin of more than 65%.

To support our thesis that when potential customers have the chance to fire the launcher and experience the less-lethal difference, we have decided to open additional four stores.

As I mentioned, we just opened our Nashville store, and I was there for the grand opening.

We will be opening stores in the Scottsdale, Arizona, and Salem, New Hampshire locations in the next few weeks.

In fact, Scottsdale will have its grand opening on February 19, and Salem, New Hampshire will have its grand opening on March 5.

Our Fort Wayne, Indiana store is expected to come online in the March-April time frame.

While we had initially planned to open a store in Pasadena, California, we had to pause those plans while we evaluate the impacts of the recent wildfires.

In response to these wildfires, Byrna donated 10% of the sales from a designated week in January to support those affected.

As our Chief Marketing Officer, Luan Pham, a Los Angeles native, said, Byrna's mission has always been about protecting people, and that includes supporting them when they are in need of help.

As previously mentioned, each of the stores we are opening will have a firing range, four to five Byrna employees, a simple slat wall design showcasing our less-lethal products.

With these brick-and-mortar investments, we do expect our capital expenditures to be elevated in the first quarter, but we expect them to provide immense value in the long term.

Similarly to the store in Las Vegas, we expect contribution margins to be in the 20% to 25% range from each store once they are fully ramped up, which we expect to take four months to six months after opening.

If any of our investors are near a store location, I would urge you to go to the store and experience this firsthand.

On our last call, I mentioned that we upgraded -- that we were upgraded by our national accounts at Bass Pro and Cabela's to all of their locations.

Today, I am pleased to share that we recently signed a letter of intent to form a new partnership with Sportsman's Warehouse.

Starting in the second quarter, we expect to be launching a Byrna store-within-a-store model at 11 Sportsman's Warehouse locations across the United States.

If this initial pilot program succeeds, as we expect it will -- We plan to expand into 50 additional locations by the end of 2025 and 100 locations total by the end of 2026.

This concept, modeled after the success of Ralph Lauren's store within a store program is designed to roll out our brick-and-mortar experience more quickly than we would be able to do with our own retail presence.

As part of this agreement, each sportsman's warehouse will convert its existing archery range into a burner firing range, where customers can experience our launchers.

We believe that this is a critical component to the program's success as the conversion rate in our brick-and-mortar stores is around 80%, well, our conversion rate online is a little over 1%.

Byrna has agreed to fund 50% of the buildout of the store within a store location in each of sportsmen's stores where they carry the store within a store model.

Our confidence in this initiative is supported by our Las Vegas store data, and also by a case study by a traditional gun store last year, where we opened up a store within a store.

Zack's Sporting Goods in Round Lake, New York approached us in May of 2024 wanting to be a premier, a Byrna premier dealer.

Because Zack was primarily a gun store, they did not meet our premier dealer requirement.

We then settled on trying a store within a store model, and it quickly became a success.

In just seven months, the store had sales of $400,000 of a product.

Now Zack is projecting more than $1 million of sales of Byrna products in 2025.

This is the type of success we hope to replicate at Sportsman's Warehouse with our initial 11 stores.

We've also committed to providing training for the employees and support them with demo rounds and CO2 so that they can really get a lot of the traffic that goes into the Sportsman's Warehouse stores into the Byrna range.

We are also leveraging strategic partnerships beyond retail.

Recently at the shot show in Las Vegas, we announced our partnership with the USCCA, the United States Concealed Carry Association, to promote our less-lethal solutions.

The USCCA has nearly $1 million members, and they will now have access to Byrna.

We believe that many of their members will be interested in our less-lethal products, because these are the most responsible gun owners that want to take training, gun owners that want to have insurance in case something goes wrong.

These are the people that are interested in the non-lethal Byrna solution.

Likewise, our customers will now have the opportunity to learn from the CC -- USCCA, from training and education to self-defense liability insurance.

Altogether our momentum in retail expansion, influencer marketing, strategic partnerships, positions us to attract new customers, and convert them into long-term supporters of Byrna and the less-lethal movement.

To support our growth initiatives, we successfully increased monthly launcher production this year to 24,000 units, a 33% increase from our previous capacity of 18,000 units.

To do this, we implemented a second shift at our Fort Wayne, Indiana facility, where we have been able to attract and retain top talent by increasing wages 10% in the second half of last year, which made us one of the higher paying manufacturers in the Fort Wayne region.

In addition to expanding launcher production, we also opened our domestic ammunition facility just four miles down the road from our launcher facility in Fort Wayne.

The onshoring of our ammo production is part of Byrna's overall Made in America strategy.

This brings me to the recent discussions around the tariffs on goods coming in from China, Canada, and Mexico, which have raised questions about the potential impact on Byrna.

To clarify this, these tariffs do not affect our current production costs in any meaningful way.

Byrna sources no components or launchers for its launchers or ammunition from Mexico or from Canada, with the only exception being the five count ammo tubes, which are produced in Canada and cost only $0.09. The three tubes per kit total $0.27, so a hypothetical 25% tariff would only add 7 to $0.08 a kit.

And Byrna, as I said, doesn't manufacture any products in Mexico currently.

With regards to China, Byrna's exposure is very limited.

While we currently source certain magazine components from China, we have implemented a dual sourcing strategy securing production for the magazines in both India and South Africa as well.

This ensures that Byrna is not dependent on China for any critical components, mitigating the risk of increased tariffs.

Accordingly, we would actually welcome higher tariffs on Chinese goods, as many of our competitors produce their products in China.

As a result, the announced duties on China, Canada, and Mexico, will have no impact on our production cost.

From a sales standpoint, while potential retaliatory tariffs from Canada and Mexico could impact our projected growth in these markets, we don't anticipate significant disruptions at this time.

In 2024, Byrns's sales in Mexico grew to $890,000 from $300,000 the prior year.

We expect this figure to at least double in 2025.

In Canada, sales grew from $1.36 million in 2023 to $2.47 million in 2024, and we expect these sales to grow to approximately $4 million in 2025.

That said, we are currently working with a partner to bring in and distribute our DTC launchers from inside Canada, which would significantly reduce the impact of any new tariffs or duties.

We are keeping a close eye on evolving trade policies, but our diversified supply chain and strategic sourcing approach position us well to navigate through any potential shifts with minimal or no disruption.

On a related note, even though China is not the sole supplier for anything we use in our launchers or ammo, we remain committed to exiting China by midyear and being in the position to source virtually 100% of the components needed for production of the Byrna SD, LE, and CL models from US suppliers by the end of 2025.

This transition will fully insulate us from any potential tariffs, as well as create well-paying jobs for American workers, reduce lead times, eliminate risks associated with unreliable foreign suppliers and supply chains, and finally, it will allow us to advertise the era as a Made in America product.

This new state of the art ammo facility will house a total of eight manufacturing machines that are capable of producing both .68 caliber rounds and .61 caliber rounds, which we'll need for our new compact launcher, as well as .61 caliber fin-tail payload rounds used in our payload 12-gauge less lethal ammunition.

We believe that the introduction of the Byrna Pepper and Max 12-gauge rounds coupled with Sportsman's store.

This store partnership will help spur the sale of our less-lethal 12-gauge rounds.

In total, these eight machines will be able to produce $10 million payload rounds, including $1.5 million fin-tail rounds for the 12-gauge once they're fully operational later this year.

We will -- this will help us keep up with the demand that we see both here and internationally.

Speaking of which, we have seen significant success in Argentina on the ammunition side.

The Cordoba Province police committed to purchasing $1.7 million rounds of payload ammunition.

Last month, this order, which will be shipped in 200,000 round increments to the balance of 2025, underscores the fact that the 13,500 Byrna launchers sold to the Cordoba Police Department have been deployed and are being used extensively to apprehend dangerous criminals and maintain the peace in Argentina.

As a reminder, in 2024, we sold our stake in the joint venture, Byrna LATAM, which allows us to book the sales we make to Byrna LATAM, and to collect royalties on every launcher that they produce.

We believe that there is still significant untapped potential in these markets, and our partners at Byrna LATAM will help us reach new customers and expand with our current customers.

As previously reported, we have left the door open to reacquire the whole of Byrna LATAM.

Should they reach critical scale and implement the accounting and internal controls appropriate for a US company.

Looking ahead, we expect future growth to continue in both the United States and the international markets.

Our compact launcher remains on schedule, and we believe that this new launch will provide us with a significant sales booth and higher margins later in this year, as well as unlocking an audience, that is looking for a smaller launcher that is better concealed for better suited for concealed carry.

In conclusion, we are optimistic about the trajectory of the business, the ongoing success of our marketing efforts that's resulted in less-lethal becoming a much more widely accepted personal self-defense category.

In fact, we believe that the market for less-lethal weapons among gun owners in the US is in the tens of millions of consumers.

This growing market coupled with the growth of our online presence, the expansion of our retail presence, and our growing international opportunities all reinforce our confidence in the long-term demand for less-lethal weapons generally and for burner products in particular.

Well, the first quarter historically experiences a seasonal slowdown in consumer spending.

We do expect to achieve very strong year-over-year growth as we continue executing on our strategic initiatives.

We believe that Byrna is well positioned to generate additional cash and expand our profitability in 2025 and beyond.

That includes my prepared remarks, Kevin.

Thank you.

The company will now be taking questions from cell side analysts.

(Operator Instructions) Our first question is coming from Matt Koranda from Roth Capital Partners.

Your line is now live.

Hey, good morning team.

Just curious if you could speak to any demand and sales trends in the first quarter to date.

Curious specifically in January, I guess since you probably have the full month of data there and then any notable changes since the new administration, took office, any contacts that you can provide around the loss of Huckabee as well would be helpful.

Yeah, thank you very much, Matt.

We have been -- we have had five consecutive growth quarters, and I do not expect there to be a sixth consecutive growth quarter, as Q1 is traditionally a slower quarter for us.

That said, Q1 will be a record quarter, but for Q4.

So it is a very strong quarter.

It will be well above the previous high-water marks that we had last year, other than the fourth quarter.

There has been nothing really remarkable since the change in administration, other than the willingness of more and more platforms to accept our advertising.

So, we think that that that shift is a very positive shift for us.

Obviously by signing up Lara Trump and Charlie Kirk, we're trying to go after more of that audience that voted for President Trump, but we don't see any significant change in demand as a result one way or the other as a result of the election.

With regard to Governor Huckabee, well, we're sorry to see Mike go.

Mike was at TBN, which is a relatively small network, and although his ROAS was excellent.

He was a relatively small endorser for us, didn't-- was certainly not on the scale of a Sean Hannity or a Glenn Beck.

So, well, we'll miss him on a personal level.

I don't see that there's going to have any significant impact on our numbers.

Okay, very helpful.

And then the flow-through on your EBITDA, I was pretty impressive for the quarter.

Obviously, we can see a lot of that coming from the -- good gross margin pull-through that you guys have mentioned, and sort of the production improvements.

Curious also on the operating expense side, where you guys are getting the most leverage because you mentioned leaning into marketing, so I'd assume there's not really leverage on that front.

Maybe just discuss how we can kind of think about incremental margins, going forward as we head into fiscal '25.

Sure, Matt, good to talk to you.

You're right, we will continue to see our marketing increase throughout the year as we're leaning into the marketing, so I would expect to see that our variable selling expenses are remaining at 10% of sales, so that has been pretty consistent, and we'll continue.

The rest of the expenses, we will have some leverage.

The one call out I would say is as we open these retail stores, we do have operating expenses related to those.

So, the people, the labor costs associated with it, the least cost associated with it, and we do expect sometimes before, they really ramp up to full revenues.

So, if you think about on a quarterly basis, that's probably a $400,000 to $500,000 incremental expense that we have on the retail stores, and it's probably a six-month time frame before those gets ramped up to full speed.

Okay, alright, that's helpful.

The rest of the expenses, I mean, you'll see a little bit, some incremental.

I mean we've done raises, so you know you'll just see a few percentage points of increase but nothing drastic.

Yeah, if I could just add, I think the biggest issue is the store openings.

So, as I mentioned, I was just down in Nashville.

We just had the grand opening on Wednesday.

We've had staff there for going on two months now.

So, we've had people that have been setting up the store, that have been training, that have been traveling to Las Vegas to train, and then sales just started this week.

They started to have 1 to 2 launchers a day.

Las Vegas is up over 10 launchers a day.

So, we expect Nashville to be there over the next 4 to 6 months, but in the beginning, as with any new business, we expect these to be loss leaders, and that's going to have some negative impact on our operating expense percentage.

Okay, fair enough.

I wonder if you could maybe just speak a little bit more to the Sportsman's partnership just in terms of the impact, you expect, on the P&L timing of the rollout.

It sounds like 2Q is kind of when we start seeing the 11 initial stores.

How quickly could we see the additional 50 that you mentioned, Bryan in the prepared remarks?

What do you need to see out of the partnership from the initial 11 to hit that next stage of the 50, and then maybe just lastly if you could touch on how this may impact your own store rollout, going forward and how we should be thinking about that in light of the partnership?

Okay, the Sportsman store rollout is very important to us, because these are existing stores.

So, the thing that slows us down with rolling out the Byrna store is, the amount of time it takes to secure a lease to get approval from the police department, the fire department to do the tenant improvements to hire the personnel.

So from the time we select the city to the time that we can open up a store, probably is six months for Sportsman's Warehouse where there is already an existing location already customer flow.

There's already space there.

There's an archery range, and all that needs to be done is the conversion of this space from an archery range into a burner store.

We're looking at three or four weeks to take a location and turn it into an active store.

So that's one of the things that's very attractive about the deal with Sportsman's Warehouse is that for us to roll out 100 stores could take us multiple years, whereas Sportsman's could frankly roll them out as quickly as 12 months if the numbers are there.

So that brings us down to the question of, what is it going to take to roll out additional stores?

We think that these stores like Zack's could do, $0.5 million to $1 million a year in each store.

I think Sportsman's is looking at much lower numbers than that, honestly, I think that they would be happy rolling these stores out if they were, in the -- $100,000 to $300,000 range per store within a store.

And I think, in speaking with management there and speaking with the CEO of Sportsman's, they're using these 11 stores for them to get comfortable with the concept, but they are fully committed to rolling these out into the full 100 stores as quickly as possible, provided that the concept is economically viable.

Okay, makes a lot of sense.

I'll leave it there.

Great quarter guys.

Thank you.

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

Your line is now live.

Good morning, everyone, and just to follow up on the Sportsman's Warehouse.

Have you thought about sort of a time frame when you can declare success hitting the targets there?

Is it six months out from now, nine months out?

Any sense you can give us there?

We know from our own stores that we're looking at four to six months to really get comfortable that these stores are hitting their stride.

Sportsman's Warehouse may happen more quickly than that because we have to drive traffic to our stores.

I just set up a billboard campaign in the greater Nashville area to make people aware of the store and to get them in.

We're starting with co splitting with Sean Hannity, Glenn Beck, to make people aware that there's a store in Nashville.

With Sportsmen's, you already have significant traffic.

You already have customers in the store, so we would guess that it will happen more quickly.

That said, it's not going to happen overnight.

I mean, there's going to take some number of months.

So I would be -- I'm hopeful that in the next three to four months these stores will start to produce profits that would encourage Sportsman's Warehouse to roll them out to other locations.

Okay, great to hear.

And then if we could turn to production plans, and targets that you have there for a moment, also wondering if there are any shortages and components in your supply chain and then may be if you could touch on inventory levels you expect to maintain as you continue to grow.

Okay, sure.

So as far as production levels, we mentioned that we're up to 24,000 a month, and we'll, we plan to continue that.

We don't have any shortage of parts, so we're keeping on top of that and getting parts in timely.

We do expect to grow inventory through the first quarter, maybe in the second quarter until we get to the launch of our CL, as we are starting production of our CL.

As we've mentioned previously, we want to have 30,000 of those produced and ready to go before that product launch, which we expect to be in the summer of this year, so midyear this year.

So that will increase our inventory in the neighborhood of about $5 million we expect.

Okay, helpful to know.

And that $5 million is just for the compact launcher?

Just for the compact launcher.

Okay, fair enough.

And then I know you guys generally don't provide guidance but wondering if there's -- if you want to say anything about what level of revenue growth or gross margin seems attainable in 2025, and then maybe given some of your expenses to ramp retail perhaps the level of even down margin that seems feasible to aim for.

Yeah, we don't want to give any numerical guidance to the top line, but we can say that it's not going to be the same 100% growth we had in '24, but it will be a very strong double digit growth year.

We're already seeing that in Q1, and we expect as we get into Q3 and Q4 with the implementation of the compact launcher that we'll see very strong growth.

In terms of margins, as you could see, we've been seeing increasing margins all the way through last year, and we expect that to continue.

We expect it to continue, for a couple of reasons, as Lauri pointed out, we've been doing a lot of work to reduce costs.

We've been benefiting from economies of scale as we grow the business, and frankly, as we bring out.

The compact launcher, we're going to be bringing out a higher margin product.

So, as we get into, the third and fourth quarter, we expect margins to exceed where we ended up at the end of 2024.

We had talked about just sort of EBITDA margins, historically that, as we hit $100 million, we should be in the mid-teens as we hit $125 million.

We should be in the high 10s as we get up to $150 million, we should be in the low 20s and probably a terminal gross margin of somewhere close to 30% that we will hit, when we're at the $175 million to $200 million mark.

Okay, that's helpful.

Thanks for taking my questions.

I'll take the rest offline.

Thank you.

Next question is coming from John Hickman from Ladenburg Thalmann.

Your line is now live.

Hi, nice results, congratulations.

Just one question about the Sportsman partnership.

Are any of the employees in those stores in a store going to be burning employees or are they all going to be Sportsman?

What kind of control you have over there performance?

That's a very good question, John.

They are not going to be Sportsmen's.

They're not going to be burnt employees.

They are going to be Sportsman's employees, and that's one of the benefits for us.

Now we have committed to significant training, and it is in our best interest to train, so we are.

Involved in the design of the store, the look of the store, the feel of the store, we will train all the personnel, and we will train them using what we call a T3 or train the trainer program, so that each of these employees that we train will then be able to train other employees in the store.

Sportsman's Warehouse has committed to having many of their employees in the store be trained to operate the range and to sell Byrna.

So, we're going to be very involved.

We have also agreed to having Byrna personnel on site at least twice a year in each of the locations and to provide, demo days using our trailer and other ways to support Sportsman.

But the real benefit here is that we're able to use the Sportsman's footprints and we're able to use the sportsman's balance sheet to grow our business.

Okay, so, back to the build out there.

It's I think you said that each of your like the Nashville store et cetera.

That's a $400,000 or $500,000 expense.

What do you anticipate for the expense for the Sportsman's store within a store?

Hi John, it's Lauri.

So just one correction, our build out of our stores are in the $200,000 to $250,000 range for most of our retail stores.

For Sportsman's though, because they already have the store, all they're doing is reconfiguring the space and, changing some of the fixtures and furniture and fixtures, and they're estimating the cost to be about $15,000 of which we're going to pay half, so it's $75,000 per store, this is not a large expense for us.

Okay, and then are they going to carry all your products, your rifles, all the ammo, that kind of thing?

The agreement is, as with the premier dealers to carry a full representative range of products that may not mean every single product we carry in every single location, but very close.

So, the intention is to carry everything that sells.

And this is part for Sportsman.

They're creating a whole personal safety, personal self-defense division.

So they've been focused almost exclusively on hunting.

Hunting is a five month a year season.

Personal safety is 12 months a year, 365 days a year, and Byrna will sort of be the anchor for this personal safety segment of their marketing campaign.

So, they do want to carry everything personal safety related.

Okay.

And -- I guess that's it for me.

Thank you.

We reached the end of our question-and-answer session.

I'd like to turn the floor back over for any further closing comments.

Okay, Kevin, thank you.

I appreciate your continued interest in Byrna, and I want to thank all of our investors and customers for your continued support.

Thank you very much.

Thank you.

That does conclude today's teleconference and webcasting me disconnect your line at this time and have a wonderful day.

We thank you for your participation today.