Byrna Technologies Inc. (NASDAQ:BYRN) Q4 2023 Earnings Call Transcript
Byrna Technologies Inc. (NASDAQ:BYRN) Q4 2023 Earnings Call Transcript February 14, 2024
Byrna Technologies Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: Good morning. Welcome to Byrna’s Fiscal Fourth Quarter and Full Year 2023 Earnings Conference Call. My name is Shamal 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, David North. Following their remarks, we will open the call to questions. Earlier today, Byrna released results for its fiscal fourth quarter and full year ended November 30, 2023. 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 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, Bryan Ganz. Sir, please proceed.
Bryan Ganz: Thank you, operator, and thank you, everyone, for joining us today. This morning, we issued a press release providing our financial results for the fiscal fourth quarter and full year ended November 30, 2023, along with key business accomplishments for 2023 and an update on Q1 performance 2024 performance. We will also be filing our 10-K with the SEC later today. I’m going to begin this morning by passing the call to David North, our CFO, to discuss our financial results for both the fourth quarter and the full year 2023. Following that, I’ll review what was a very eventful year and offer insights into our operations and go-forward strategy. Lastly, we’ll open the call to questions from our publishing analysts. David?
David North: Thank you, Bryan, and good morning, everyone. Let’s discuss our financial results for the fiscal fourth quarter and full year of 2023 ended November 30, 2023. Net revenue for the fourth quarter in 2023 was $15.6 million compared to $16.0 million in the fiscal fourth quarter of 2022. The slightly lower net revenue is primarily attributed to exceptional international sales in Q4 of 2022, which included a $3.4 million stocking order for the company’s distributor in Argentina. Total international sales in Q4 of 2023 and were $225,000 compared to $4.3 million in the prior year. Without this one-time surge in international sales in the prior year, the fourth quarter displayed strong growth. Domestic revenue in the quarter totaled $15.4 million.
That’s a 32% increase from Q4 of 2022, and it’s a quarterly record. Gross profit for Q4 2023 was $9.0 million, or 58% of net revenue compared to $8.7 million or 54% of net revenue for Q4 of 2022. The increase in gross margin primarily resulted from a much smaller percentage of lower-margin international sales. Operating expenses for Q4 2023 were $9.7 million compared to $8.8 million for Q4 of 2022. The increase in operating expenses was primarily driven by an increase in marketing spend as part of the company’s influencer partnership strategy. Net loss for Q4 2023 was negative $800,000 compared to a negative $100,000 for Q4 of 2022. And the increase in net loss was primarily due to the increase in marketing spend. Adjusted EBITDA, which is a non-GAAP metric for Q4 of 2023, totaled $0.4 million compared to $1.4 million for Q4 of 2022.
Net revenue for the full year totaled $42.6 million compared to $48.0 million for the prior year. This decline was, again, largely due to a $7.6 million decrease in international sales from South Africa, South America and Asia, which are characterized by large but infrequent orders, as experienced in the prior year. This impact was partially offset by a $900,000 increase in sales on Amazon and a $400,000 increase in Fox Labs sales despite temporary headwinds from social media advertising bans. Domestic dealer and distributor sales, which are less dependent on online advertising, grew by $1.6 million. Gross profit for the full year ended 2023 was $23.6 million, or 56% of net revenue compared to $26.3 million, or 55% of net revenue for the prior year period.
Gross margins remained stable as the increase in lower-margin dealer and distributor sales was counterbalanced by the reduction in lower-margin international sales. For the full year, operating expenses were $31.4 million, which is a decrease from $33.7 million in the previous year. This $2.3 million decrease was largely achieved through strategic realignments and cost optimizations in key areas. Notably, sales and marketing expenses were reduced by approximately $920,000 due to the lower advertising spend earlier in the year resulting from the social media advertising ban. Additionally, professional fees, including legal and accounting service, were reduced by $680,000, while insurance costs decreased by $510,000 due to renegotiated premiums.
Payroll expenses decreased by $340,000 contributing to our overall more efficient cost structure. Looking ahead, we are focused on maintaining a balanced approach to managing our operating expenses. We are preparing for a measured uptick in these costs as part of our strategic investment to drive revenue growth. Net loss for the full year was $8.2 million compared to a loss of $7.9 million for the prior year. The slight increase in net loss was primarily due to the decrease in revenue, partly offset by a decrease in operating expenses. For the full year, adjusted EBITDA totaled negative $2.0 million compared to negative $1.0 million in the prior year. The decrease in adjusted EBITDA was primarily due to the increase in net loss previously noted.
Cash and cash equivalents. Here, I wanted to call attention to a complete reversal of the trend of declining cash balances that prevailed through the first three quarters of the year due to declining sales and high inventory balances. The balance of cash and cash equivalents was $13.7 million at the end of the third quarter on August 31, 2023. By year-end, on November 30, 2023, cash and cash equivalents had risen to $20.5 million due to the increase in the sales and also to our ability to sell down high inventory levels. Inventory at November 30, 2023, totaled $13.9 million compared to $16.7 million at August 31, 2023. The company currently has no current long-term debt. And that concludes my prepared remarks. I’ll turn it back over to Bryan.
Bryan Ganz: Thanks, David. 2023 was a pivotal year for Byrna, and it was marked by both formidable challenges and, frankly, remarkable achievements. The year began with Byrna running headlong into 2 extremely challenging problems. The first was a number of unforeseen production problems related to the rollout of the new Byrna LE Launcher. The second was what was, in essence, a total ban on our ability to advertise on social media when we were deemed to be contraband product by Meta, Google and Twitter. First, the Byrna LE. We rolled out our new, much more powerful, Byrna LE launcher to great fanfare at SHOT Show in January 2023, where we gave industry insiders and the press the chance to test-fire the Byrna LE at Industry Day, better known as Range Day.
The Byrna LE was tremendously well-received, and it generated a flood of orders in the wake of SHOT Show. However, as we ramped up production, we ran into a number of production problems and quality control issues that required us to halt production and stop taking orders. Not only was this a black eye for the company, it had a material negative impact on sales, as many customers wanted to wait for the more powerful Byrna LE after it was introduced at SHOT Show. The production problems stemmed from out-of-spec components received from our vendors as they transitioned from prototype production to serial production. This led to an unforeseen stack-up of tolerances that adversely affected the operational launcher. The team went into high gear as we worked closely with our vendors to improve DFM, or Design For Manufacturability.
In fact, I personally spent 3 weeks essentially living at the factory. The incredible effort by the entire Byrna team in combination with our vendors paid off. And in May, we are able to relaunch the Byrna LE. Since then, production and demand for the LE have remained strong; and, for the most part, we’ve been able to keep up with the elevated demand for the LE launcher even though it has proven to be much stronger than originally predicted. Prior to the launch of the LE, we forecasted 10% of the demand would be for the much more expensive Byrna LE. However, LE demand has been running more than a third of our total demand. In the wake of this production problem and product launch, we terminated the VP of New Product Development and Production, and we demoted our Chief Technology Officer, which ultimately led to his resignation.
We have since replaced both these positions with two highly qualified individuals. To replace our VP of New Product Development and Production, we hired John Brasseur as our Head of Product Development and Production. John joins Byrna with more than two decades of on-point experience, including more than 10 years as VP of Product Management at Sig Sauer, a leading manufacturer of firearms. This gun industry experience has given John an extremely good understanding of both the particular engineering issues we face as well as the nature of our market. In addition, we just recently hired Stuart Putz as Director of Design and Manufacturing Engineering. Stuart, who will be starting later this month, brings more than 30 years of design and engineering experience to Byrna.
Most recently, Stuart was Director of Test & Manufacturing Engineering for Walmart Advanced Systems and Robotics, where he successfully led the development of internal and external manufacturing technology resources for the Alphabot warehouse micro-fulfillment system. We are confident that the new policies, procedures and processes that we have put into place, along with the addition of these two very senior and experienced managers that we’ve added to the engineering team, will prevent a repeat of the mistakes made with the LE rollout and will ensure a smooth introduction of the much vaunted and highly-anticipated Byrna compact launcher, which is due out next year. The second and frankly, much more serious challenge that we ran into in the early part of 2023 was the almost total prohibition on advertising our products on the major social media platforms, including Facebook, Instagram, Google and Twitter.
We have never been able to advertise on mainstream media, including both broadcast and cable TV, due to the nature of our products. However, we had spent millions of dollars on social media advertising over the prior 2 years. In truth, up until just recently, social media advertising had been our primary means for both educating the public about less-lethal self-defense and driving demand for Byrna products. When, without warning, we were denied access to this advertising venue, the effect, frankly, was devastating. We saw an immediate 60% drop in Web traffic from Q1 to Q2. Initially, sales were somewhat resilient due to the tail effect of our prior advertising. However, by Q3, we saw a significant negative impact on sales, posting our worst quarter in years at just $7.1 million in revenues as we averaged only $44,000 a day on byrna.com and $11,000 a day on amazon.com.
This sharp decline in sales resulting from the social media advertising ban has the potential to be an existential threat to the company if we could not find a way to manage around it. We simply could not cut expenses enough while maintaining our robust R&D efforts and new product development pipeline to be profitable at $7 million a quarter. While other industries, such as firearms and tobacco, have also had to deal with wide-ranging advertising bans, these were mature industries with well-known products and large, well-established markets and customer bases. By contrast, few Americans know what less-lethal is, and even fewer have ever heard of Byrna. We needed to find a way to both educate the general public as to the benefits of less-lethal self-defense and drive demand for our products, and we needed to find it quick.
The management team worked around the clock exploring every conceivable option to build brand awareness before settling on the celebrity endorsement model pioneered by Phil Knight at Nike. In September 2023, Byrna signed its first celebrity endorser, Sean Hannity, and committed to a multimillion-dollar advertising campaign on Sean’s afternoon drive-time radio show aired nationally on iHeart Radio. This shift in strategy not only helped us circumnavigate around the mainstream and social media advertising bans, but it propelled us to a record-breaking fourth quarter as our daily sales spiked to $120,000 a day on byrna.com and $35,000 a day on amazon.com, posting $15.4 million in domestic sales. This represented a 182% increase from the third quarter.
Our new marketing approach has significantly enhanced brand visibility and has driven a dramatic increase in website visits and sales. In the fourth quarter, daily Web sessions jumped to 32,500, an increase of 174% from the third quarter and a 22% increase from the same period in 2022 before the social media advertising ban. This surge in Web traffic led to a 41.2% year-over-year increase in fourth quarter direct-to-consumer sales. Based on the initial success of our partnership with Sean Hannity, our network of celebrity partners has expanded over the past several months with the addition of Judge Jeanine Pirro, Glenn Beck and Bill O’Reilly. These partners, whose influence spans radio, TV and social media, have been instrumental in our success, offering a substantial return on advertising spend, or ROAS.
Our ROAS for the holiday fourth quarter reached 7.5x. We are seeing a continuation of this momentum with a 5.9x in the first 2 months of fiscal 2024. That’s December and January. These campaigns have been particularly effective in attracting new customers, with first-time customer rates soaring to 66.5% of daily orders in Q4, an 11% increase from the prior year when our first-time customer rate was 55.5%. Higher first-time customer rates means higher average order values, AOV, as first-time customers purchase a launcher kit at the very minimum. For Q4, we saw a 15.2% increase in average order value. Higher first-time customer rates also give us the opportunity to go back to the well as we engage these customers with follow-on offers of ammunition and accessories as we look to garner the lifetime value of these new customers.
I am extremely proud of what the team at Byrna accomplished in dealing with these twin challenges. It’s no secret that we are under tremendous pressure. Our stock price had fallen as low as $2.24 at the end of September, giving the company a market cap of less than 1x sales as investors headed to the exits. Analysts reduced both sales projections and price targets, and some even downgraded the stock despite the already-precipitous decline. Some investors even questioned whether Byrna had enough cash to survive. This led to some mid-level management employees giving notice. In the face of these mounting pressures, the senior leadership team at Byrna remain laser-focused on finding a way around these problems. And as my dad always used to say, when the going gets tough, the tough get going.
I am proud to say that I’m surrounded by a group of tough SOBs here at Byrna that do not know the word surrender. And it was through their grit, tenacity and determination that we were able to lick these twin challenges and, frankly, come out the other side even stronger. I’d now like to discuss our 2023 performance across the various sales channels. First, let me start with international sales. As David mentioned, the primary reason for the dip in our full-year revenue for 2023 was the $7.6 million decline in year-over-year international sales. While the timing of large international orders is often sporadic and hard to predict, the real reason for the decline in international sales is that, starting in 2023, our sales to South America no longer showed up in Byrna Technologies’ numbers.
Rather, they are reported in Byrna LATAM’s numbers. And because we do not consolidate Byrna LATAM’s results for financial statement reporting purposes, their sales are not included in Byrna’s top line revenue number. For this reason, we expect that our reported international sales number in 2024 will remain depressed and will come in well below our 2022 record of $9 million. That said, we expect to see continued strong sales in South America, particularly in Argentina and, with some luck, Brazil. If you remember, in October, we announced two large sales in Argentina through Byrna’s Argentinian distributor and our Latin American partner, Bersa. Notably, one of these was the landmark $6 million order from Cordoba Provincial Police, the largest single order for Byrna launchers in the company’s history.
Since the launchers sold to the Cordoba Police by Bersa were part of the initial stocking order Bersa placed last year in Q4, this sale wasn’t reflected in our 2023 numbers, but rather was part of the $4.3 million in international sales we reported in Q4 of 2022. This year, we project that Byrna LatAm will do $8 million in sales. And while these revenues will not show up as part of Byrna Technologies’ reported sales numbers, we will benefit as a 51% owner of Byrna LatAm. More importantly, the breakthrough in Argentina with the Cordoba Police, as well as agencies in Buenos Aires, Santa Fe, Lanus, highlights the product’s appeal to police departments around the world. As the demand for less-lethal use of force grows ever stronger, orders like the one from the Cordoba Police can only serve to further validate Byrna’s suite of less-lethal products and confirm Byrna’s position as one of the leading less-lethal companies globally.
With sales in South America going through our Byrna LatAm joint venture subsidiary, our focus in 2024 as it pertains to international sales will be heavily reliant on Mexico and Canada. In 2023, sales into Canada were slightly more than $1 million, with most of this coming through our online DTC efforts. We expect to see significant growth in this market in 2024 with the opening of our first premier dealer in Canada, Byrna Toronto. Starting with only a $25,000 initial stocking order in January, Byrna Toronto sold out in just 2 days. The owner and operator of Byrna Toronto, Emiliano Mons, reported that the second order for 100,000 placed 2 days after selling out the initial stocking order was also sold out before the product even arrived. He has since placed a third order, all in the span of less than 2 months.
The overwhelming success of Byrna Toronto underscores the opportunity that exists in Canada as restrictive gun laws serve to drive the demand among Canadians looking for a means to be able to protect themselves and their families. Based on the success of byrna.ca and of Byrna Toronto, the company has made the decision to hire a person dedicated to the Canadian market with a particular emphasis on growing our online presence in Canada. With both an online and dealer presence in this important market to our North, we expect to see our Canadian sales eclipse $1.5 million in 2024. In 2023, our sales into Mexico were de minimis. In fact, they were so insignificant, we did not even bother to report ourselves into Mexico as a separate line item as they amounted to less than $200,000.
Rather, we simply lumped them in with dealer sales. Recently, however, Byrna has seen significant interest from Mexico, and orders during the first 2 months of the year from Mexican dealers have already exceeded our full-year 2023 Mexico sales. We believe that Mexico offers an amazing opportunity for growth as we expand our presence into both law enforcement and military markets, as well as the consumer market, through dealers and a soon-to-be created online presence. We project 2024 sales into Mexico will be more than $1 million. Turning to our domestic dealer channel, dealer sales were one of the bright spots for 2023 with sales growth of $1.6 million, or 21%. This was on the heels of $2.9 million in growth, or 52% the prior year. We expect to see strong continued growth in the dealer segment.
While dealer sales are less impacted by Byrna’s advertising efforts, we have seen a recent spike in dealer sales which can be attributed to increased brand recognition resulting from our celebrity endorsement program. In addition to the growth, we expect to see from our traditional brick-and-mortar dealers, we expect significant growth in our premier dealer program. As we have previously explained, premier dealers are essentially Byrna franchisees. While we do not require a franchise fee to become a premier dealer, premier dealers must derive more than 50% of their revenue from Byrna products and can only sell non-lethal self-defense products. The minimum annual purchase commitment for a premier dealer is $250,000, and the store must adhere to strict brand standards, including a firing range on-premises so that potential customers can test-fire the Byrna launches.
In return, we assist with the design of the store, provide point-of-sale display materials and allow these dealers to use the Byrna name in nomenclature, for example, Byrna Toronto, the UnGun bar in Breckenridge, Colorado, and of course, our original premier dealer, Live Safe Hawaii in Oahu. The premier dealer concept was developed in May of last year. And in just 6 short months, we opened 15 premier dealers in addition to the original premier dealer, Live Safe Hawaii. We look for potential premier dealer partners from the ranks of the entrepreneurs who are committed to our mission of saving lives. This year, we will be attending several franchise shows in the hopes of finding enough new premier dealer partners to double the size of our premier dealer program in 2024.
The big story of 2023, as I previously explained, was, of course, the turnaround of our online DTC program on both byrna.com and amazon.com. If we look at full-year online sales through byrna.com and amazon.com, sales were relatively flat, ending the year at $29.2 million, down less than 2% from 2022. That, of course, is very misleading as strong Q4 sales, up 33% for the prior year, made up for a significant shortfall in Q3 before we had settled on a means to replace the sales driven by social media advertising. While dealing with the social media advertising ban was extraordinarily stressful, it was a blessing in disguise. While our social media advertising program was effective, its effectiveness had been waning as consumers were becoming numb to the barrage of social media ads.
Compounding the problem was the reduced effectiveness of ads on Facebook, Instagram, Google and Twitter due to the fact that the big tech companies were bowing to public pressure when it came to capturing and selling personal data, making it more difficult for us and other businesses to micro-target consumers. The net result is that our online growth had waned in terms of both sessions and sales. In 2022, prior to the advertising ban, sessions growth had gone from 95% in Q1 to 56% in Q2 to 35% in Q3 to 22% by Q4. This negative trend accelerated in 2023 once the advertising ban took effect. For the first 10 months of 2022, the year-over-year sessions growth was 56.3%. By contrast, for the first 10 months of 2023, year-over-year sessions growth was a negative 11%.
In the last 2 months of the year, however, once we had fully implemented the celebrity endorsement program, sessions grew to 37,550 a day, up 41% from the 27,000 daily sessions for the last 2 months of 2022, demonstrating the effectiveness of the new celebrity endorsement program compared with the social media advertising program employed the prior year. What do we see when we look forward to 2024 and beyond? How confident are we that we can maintain the current sales momentum? And what is the risk of further production problems or supply chain disruptions? First, let’s talk about sales. When we initiated the celebrity endorsement program, we had three questions: one, was it replicable; two, was it scalable; and three, was it sustainable.
After almost 6 months, we can answer the first two questions. First, it is replicable. After kicking off the program with Sean Hannity, we have been able to successfully add three additional celebrities to the mix; Judge Jeanine, Glenn Beck, and Bill O’Reilly. In each instance, we have seen very similar ROAS numbers. Second, we found out that it’s not scalable. Adding more money to these individual campaigns results in diminishing returns. Once we’re advertising 3 to 4 days a week, increasing the frequency does not yield a commensurate increase in revenue. Third, with regards to sustainability, the simple answer is that we do not yet know how sustainable this program is. Will we see a drop in ROAS over time once we have saturated each celebrity endorsers market?
To date, we’ve not seen any material decline in effectiveness over time. However, it’s still early, and we will be closely monitoring ROAS numbers for any changes in the trend. So what does that mean for growth? As we look ahead to the rest of the year, based on what we have seen to date, we are quite optimistic about the sustained impact of our celebrity endorsement model. For the month of December, the only month in 2024 where we’ve closed the books, byrna.com’s preliminary revenue numbers were up 89% over last year, and amazon.com’s preliminary revenue numbers were up 98% over last year. Well, this torrid pace has slowed somewhat in the post-holiday selling season. The trend in January and February to date remains very strong. There is, of course, no assurance that these trends will continue.
And given the fact that we are still in the early innings of our new celebrity endorsement program, we will not be giving guidance. However, it is safe to say that, based on the first 11 weeks of Q1, we expect to see strong growth in our online business in Q1 and, hopefully, well beyond. Of course, strong sales requires significant ad expenditures, and we expect to see a significant increase in marketing expenses related to our celebrity endorsement program. However, with a 5x ROAS and a 60% plus gross profit margin for our online sales, the return on marketing spend is very accretive. At the same time that we expect to see strong sustainable growth in DTC sales, we also expect to see a marked increase in dealer sales, driven largely by our premier dealer program as we look to double the number of participating dealers.
We also expect to see strong double-digit growth from both Canada and Mexico this year. All told, we have every reason to expect strong yet manageable year-over-year growth in 2024. In 2025, we may look to add additional names to our roster of celebrity endorsers. However, that decision will depend largely upon the success of our new compact launcher, which we hope to debut early in 2025. This launcher will be the size of a micro-compact pistol, similar to the SIG Sauer P365, the most popular handgun in the world. We believe that the compact launcher will be a game changer for Byrna, as the number one complaint we currently get about the Byrna SD is its size. For this reason, we believe that this new, much smaller launcher will appeal to many of Byrna’s current customers and, at the same time, expand our market to women and those consumers interested in easily concealable non-lethal launcher.
If SIG Sauer’s success with the introduction of their micro-compact pistol is any indication, we should see a dramatic increase in overall sales when we introduce this micro-compact launcher. For 2024, we also expect to see improved operational efficiencies, reduced product costs and improved margins as a result of a number of initiatives that we are undertaking. One recent change we made is to simplify our product offering, recognizing the need for simplicity and ease in the purchasing process. Last month, we introduced the Byrna Universal Kit, a one-size-fits-all solution that is legal in all 50 states and Canada. This replaces the Byrna Pepper and Byrna Kinetic kits. Having two different configurations created a lot of confusion for first-time customers.
Now we have only one configuration. Customers are asked to choose between the Byrna SD, our most popular pistol, and the Byrna LE, our most powerful pistol. They are then asked to choose their color, black, orange, or tan. Every other color will be a special offering, for example pink on Valentine’s Day, which we’re actually rolling out today. Finally, customers will be asked if they want the launcher with or without a thumb safety. The configuration of each kit, however, will be the same - one launcher, one extra 5-round magazine, one 5-count tube of Kinetic, one 5-count tube of Eco-Kinetic and one 5-count tube of Pro Training. Chemical irritant rounds will be sold separately. This streamlines the checkout process and offers additional opportunities to upsell ammunition, making this a win-win for customers and Byrna.
We anticipate that this change will lead to a slight increase in average order value over time as the Universal Kit is selling for the same price as the Pepper kit was previously selling for despite the fact that it does not come with chemical irritant rounds. This change has also allowed us to reduce the number of product variants offered by more than 25 SKUs. This should allow us to both reduce inventory levels and improve factory efficiency, which in turn should bring down costs, over time. This simplified offering, coupled with our new expedited shipping option, should help improve both revenues and margins. To be able to keep up with the anticipated growth this year, we’ve recently initiated a plan to scale up our manufacturing capabilities.
This initiative includes increasing our production facility personnel by 25% and opening a second assembly line. These steps are designed to increase launcher production capacity from 10,000 units per month to 12,500 units per month. Since we are still operating on only one shift a day, we have significant excess capacity for expansion as needed. In addition to the expansion of our launcher production capacity, we are also focusing on increasing ammunition production by opening a second ammunition production facility, which will be located here in the U.S. This move is aimed at both strengthening our supply chain and reducing the risk of supply chain disruption, thereby ensuring that we can meet the forecasted demand for our high-margin ammunition products even if international shipments become more difficult for any reason.
We expect these projects to be completed in the second half of 2024, setting a strong foundation for Byrna’s continued growth and operational efficiency. Fortunately, Byrna’s strong financial footing provides the foundation to be able to undertake these projects and handle the expected growth in sales. At the end of December, cash had actually climbed to $23 million. And as David mentioned, there is no debt on our books, so we are well-positioned for growth. In conclusion, we believe that 2023 demonstrated that this management team can react to whatever challenges are thrown our way, safely navigating Byrna through troubled waters on the way to our charted destination. Now let’s open the call for your questions. Operator, please provide the appropriate instructions.
Operator: Thank you. [Operator Instructions] Our first question comes from Jeff Van Sinderen with B. Riley Securities. Please proceed with your questions.
Jeff Van Sinderen: Hi, good morning, everyone. And thanks for taking our questions. I guess the first question I had is really just around marketing, realize that you’ve added a bunch of new folks to your influencer group. I’m just wondering what we should anticipate for the advertising budget in 2024.
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