Matthew Koranda

Matthew Koranda asked how the new modular launcher would integrate with Byrna's existing product assortment, specifically if it could manufacture the SD, LE, and CL models, and whether it would replace the current lineup or serve as an entirely new platform.

Answer

CEO Bryan Ganz explained that the modular launcher is both an augmentation and a potential future replacement. He stated that existing .68 caliber launchers (SD, LE) would not be discontinued due to customer preference for higher payload. The new .61 caliber modular platform will offer variants priced similarly to the SD and LE, incrementally expanding the product line. The Byrna CL, being a popular and recently released .61 caliber launcher, is expected to have a multi-year run before any potential replacement by a new modular platform variant.

Matthew Koranda asked about the contribution of growth in the retail channel from both existing and new partners, the rollout timing and organic versus acquisition strategy for the Byrna Cam and connected products, how these new products could open incremental advertising channels, and how the new modular launcher will integrate with or potentially replace the existing product assortment.

Answer

CFO Lori Kearns indicated that growth in the retail channel for 2026 is expected from both expanding into more chain stores and deepening relationships with existing partners through new products and optimized inventory. CEO Bryan Ganz stated the Byrna Cam is being commissioned with a third-party vendor, expected late Q2 or Q3 2026, and will not require an acquisition. He confirmed that both the camera and connected devices, as accessories, can be advertised in channels where launchers cannot, expanding reach. Mr. Ganz explained the modular launcher will primarily augment the existing line, offering .61 caliber options at various price points, but the .68 caliber launchers will not be discontinued. The new platform might eventually replace the CL launcher, but not for a couple of years.

Matthew Koranda asked Byrna Technologies Inc. to reconcile the Q4 2025 sales guidance with the substantial 70% lift in web traffic, questioned potential promotional strategies for the holiday season to boost conversion, and sought an update on wholesale expansion, including current door count and future goals. He also inquired about the commercial availability timeline for the new SOS alert technology and connected safety platform.

Answer

CEO Bryan Ganz explained that the Q4 guidance reflects a conservative view on conversion rates, as it takes time for new web traffic to convert, and daily web sessions continue to grow. He outlined the planned "Black and Orange" and "Black Friday Cyber Monday" sales, noting potential Q1 2026 spillover due to fulfillment timing. CFO Laurilee Kearnes stated that Byrna is well-positioned with its current 1,000-store retail footprint and will focus on expanding existing relationships rather than broad new store additions, though corporate stores in select markets are possible. Bryan Ganz confirmed the SOS alert technology would see phased releases starting in 2026, leveraging existing technology for quicker development.

Matthew Koranda inquired about June sales trends following recent civil unrest, the sustainability of the 25-40% growth forecast, and the specific indicators of market softness. He also sought clarification on the Sportsman's Warehouse rollout, including the number of shop-in-shops versus POS displays and their relative performance.

Answer

CEO Bryan Ganz confirmed a temporary sales spike during the June events but stated sales have since normalized. He affirmed the 25-40% annual growth forecast remains achievable due to expanding distribution channels, despite observing market softness through metrics like higher abandoned cart rates. Ganz detailed the Sportsman's Warehouse strategy, explaining the different store formats (shooting pods, store-in-stores, POS displays) and noting that while it's early, the company is focused on training and incentives to maximize performance across all 140 planned locations.

Matthew Butler Koranda asked about the progression of the quarter, specifically if Lovesac's comparable sales performance picked up commensurately with the reported improvement in the overall category from July into August. He also inquired about the customer response to Lovesac's recent pricing actions on Sactionals, asking if it affected conversion from the quotation pipeline or led to customers trading down to Snug, and sought clarification on the gross margin progression, specifically the Q3 headwinds and the implied Q4 gross margin improvement.

Answer

President Mary Fox stated that Lovesac feels good about its underlying performance quarter-to-date, demonstrating continued market share gains despite the category still being down. She noted that a surgical price increase in Q2 Fiscal 2026 did not result in trade-downs to opening price point fabrics or shifts in unit selection, indicating strong value perception, and that a more recent price increase is still in early days with no resistance observed to date. CFO Keith Siegner clarified that Q3 faces headwinds from a lower promotional intensity lap compared to last year and a significantly higher impact from China tariffs as a percentage of sales. He explained that Q4's improvement is primarily due to easier year-over-year comparisons as promotional offers were significantly ramped up in Q4 of last year, and the tariff burden eases off considerably.

Matthew Koranda inquired about the quarter's sales progression relative to category trends, the customer response to recent pricing actions on Sactionals and potential trade-downs to Snug, and sought clarification on the gross margin progression, specifically the Q3 headwinds and the Q4 improvement drivers.

Answer

President Mary Fox stated that Lovesac's underlying performance quarter-to-date feels strong, demonstrating continued market share gains despite a promotional environment and challenging macros. She noted no trade-down observed from surgical price increases in Q2, with Sacs and Recliner innovations performing well. CFO Keith Siegner clarified that Q3 gross margin headwinds stem from not yet lapping last year's heavier Q4 promotions and a significantly higher impact from China tariffs (several hundred basis points more than Q2). The Q4 improvement is primarily due to easier year-over-year promotional laps and a reduction in tariff burden as China-sourced goods exposure lessens, resulting in a flattish year-over-year gross margin in Q4, not an expansion.

Matthew Koranda of Roth Capital Partners, LLC sought clarity on Q2 gross margin headwinds, given recent price increases, and asked about Memorial Day sales performance as a demand indicator.

Answer

EVP & CFO Keith Siegner described Q2 as a 'perfect storm' for gross margins, with higher costs from tariff-impacted inventory and less benefit from vendor concessions and pricing actions, which will ramp up later in the year. President & COO Mary Fox reported that the company was 'happy with' Memorial Day performance, which is factored into the Q2 guidance for growth and market share gains. She added that recent surgical price increases have been well-received due to the brand's strong value proposition.

Matthew Koranda asked when the current choppiness in retailer order patterns is expected to normalize, given ongoing supply chain and tariff uncertainties. He also inquired about which brands are exhibiting the strongest point-of-sale (POS) performance and where trends might be struggling, and sought an update on the company's M&A funnel, including the pipeline of acquisition opportunities and the consideration of launching new brands.

Answer

CEO Brian Murphy stated that retailers are ordering cautiously, but strong POS indicates consumer demand, expecting normalization as inventory aligns with POS, which should improve visibility. He highlighted Caldwell (especially with the Clay Copter), BUBBA (Smart Fish Scale Light and subscription revenue), BOG, Grilla, and MEAT! Your Maker as strong POS performers, noting other brands are outperforming peers despite overall category weakness. Regarding M&A, he noted fewer targets, more distressed assets, and a focus on IP, indicating patience and a consideration for launching new brands organically in certain categories at low cost.

Matthew Koranda of Roth Capital Partners, LLC asked for clarification on the reason for withdrawing guidance, the status of retail order flow in late Q4 and early Q1, what retailers need to see to resume ordering, a directional outlook for Q1 sales, and the company's sourcing exposure to China.

Answer

President & CEO Brian Murphy stated that the guidance was suspended due to reduced near-term visibility caused by retailer lumpiness in ordering as they manage their own balance sheets amid tariff uncertainty. He confirmed a slower start to Q1 orders due to the pull-forward but noted strong underlying POS data should drive replenishment. EVP, CFO, and Treasurer Andy Fulmer directionally confirmed that a way to view Q1 is to take the prior growth expectation and subtract the $8-10 million pull-forward. Murphy added that while AOUT has a playbook to shift sourcing, the primary financial impact of new tariffs is not expected until the second half of fiscal 2026.

The analyst inquired about the specific reasons for withdrawing guidance, asking about a potential pause in retail orders after the Q4 pull-forward. He also asked what would trigger retailers to resume ordering, sought clarification on the expected Q1 impact, and questioned the company's exposure to China and plans for sourcing diversification in response to tariffs.

Answer

The company confirmed a slower start to Q1 as the Q4 orders were accelerated from the first few months of the new fiscal year. However, they emphasized that underlying point-of-sale (POS) trends remain very strong. They believe retailers will resume ordering as they sell through the current inventory and see continued consumer demand, though they are generally maintaining lower inventory levels. The company confirmed the analyst's directional thinking on Q1 sales was correct. Regarding tariffs, they stated they have a good inventory position to buffer near-term impacts, have a playbook to move production out of China quickly if needed, and expect the increased tariff costs to start hitting the P&L in the back half of the fiscal year. They will mitigate this through price increases and agile sourcing.

Matthew Koranda asked for color on the implied back-half comp guide, noting potential deceleration against tougher comparisons, and inquired about demand trends through August and the setup for comps in the back half. He also requested a breakdown of the AOV trend, specifically regarding the strategy to build larger baskets around firearms despite lower AURs, and whether there's more room for AOV improvement.

Answer

Paul Stone, President, CEO & Director, reported positive August trends with accelerating NICs performance, indicating good momentum for Q3. He stated that the company is 'just really getting started' on attachment strategies, with working capital reinvested into attached categories. He confirmed that UPT and AOV are at all-time highs, exceeding COVID marks, with further opportunity for growth through sharper inventory.

Matthew Koranda asked about the expected impact of tariffs factored into the full-year guidance, the company's mitigation strategies, the timing of when tariff costs might affect the P&L, and whether the outperformance of NICS data was based on units or dollars.

Answer

CEO Paul Stone stated that the company is dynamically managing pricing at the SKU level to handle tariff impacts while maintaining its EDLP strategy on key traffic drivers. CFO Jeff White added that the inventory pull-forward would likely delay any significant P&L impact from tariffs until late Q3 or Q4. White also clarified that the outperformance relative to NICS data was on a unit basis and that this trend continued into May.

Matthew Koranda from Roth Capital Partners asked about the specific drivers behind the Q2 revenue beat relative to guidance and sought clarification on the 2.5% gross margin headwind expected in Q3, including potential mitigation strategies.

Answer

CFO Erica Wei attributed the Q2 outperformance primarily to the Noble House portfolio, which performed better than their conservative estimates during its first peak outdoor season. Wei confirmed the 2.5% margin headwind for Q3 is an unmitigated figure and that the company plans to use targeted price increases to offset it, though she cautioned that the supply chain will need time to adjust.

Matthew Koranda from ROTH Capital Partners, LLC asked what drove the revenue upside in Q2 relative to the company's guidance. He also sought clarification on the forecasted 2.5% gross margin headwind for Q3, questioning if it was an unmitigated figure and what specific mitigation strategies were planned.

Answer

CFO Erica Wei attributed the Q2 revenue beat primarily to the Noble House portfolio, which performed significantly better than their conservative internal models had projected during its SKU rationalization. Wei confirmed the 2.5% Q3 gross margin headwind is an unmitigated estimate and that the company plans to use targeted price increases to offset it, though she cautioned that the adjustment may take time to be fully absorbed.

Matthew Koranda inquired about the Q4 outlook, specifically the revenue breakdown between service and product, and the reasons for the apparent organic deceleration. He also asked about the source of new buyer growth, where these buyers resell products, the progress of integrating Noble House products into the 1P platform, and the mechanics of how potential tariffs would impact 3P sellers.

Answer

Erica Wei, CFO, addressed the questions, stating the Q4 service and product revenue mix would likely remain similar to Q3. She clarified that Noble House contributes 15-20% of product revenue and was already included in Q4 2023 results for two months, contextualizing the year-over-year comparison. Wei attributed the surge in new buyers to increased market recognition, direct outreach, and word-of-mouth referrals, noting they are primarily sellers on major e-commerce platforms. Regarding tariffs, she explained that while 3P sellers from China are more common, the tariff is applied to the product cost, which is only one component of the total landed cost, thus mitigating the overall percentage impact on the final price.

Matthew Koranda of Roth Capital Partners inquired about the sales progression during Q2 that led to the revenue beat and asked for specifics on the promotional pullback planned for the second half of the year.

Answer

CFO Sarah Oughtred attributed the Q2 outperformance to strong sales on baseline (non-promotional) days. She explained the second-half promotional pullback involves fewer generic site-wide sales in favor of event-specific promos and sample sales, making them more strategic. CEO Trina Spear added that the strength of full-price selling days enables this more disciplined promotional strategy.

Matthew Koranda from Roth Capital Partners, LLC asked for an update on the Cars acquisition integration, specifically regarding any identified commercial synergies and their potential timing. He also questioned if the revised EBITDA guidance implies lower margins due to the nature of the delayed projects.

Answer

President Brad Williams explained it's still early in the Cars integration process, but leadership teams have identified five potential commercial synergy areas to explore, leveraging cross-brand relationships and product positions. CFO Blaine Browers confirmed that the lower implied margin in the revised EBITDA guidance is due to some of the delayed large opportunities having a better-than-average margin mix.

Matthew Koranda of ROTH Capital Partners questioned what near-term levers Cadre has to improve the margins of the newly acquired Carr's Engineering division and whether the evolving tariff landscape would cause a reconsideration of the company's production footprint.

Answer

President Brad Williams outlined a phased integration plan, starting with foundational areas like finance and IT before implementing the Cadre operating model to drive margin improvement. CFO Blaine Browers added that margin gains would be focused at the gross margin line, not through SG&A cuts. Regarding the production footprint, Williams stated the company is satisfied with its current strategic locations, having already undertaken risk mitigation in Mexico and noting the strategic value of its nuclear facilities in the U.K. and Germany.

Sought a deeper dive on the pricing and assortment strategy, questioning if the frame mix goal was already met, and asked about the potential for lens pricing optimization and overall store productivity improvements.

Answer

The company responded that the assortment evolution is still in its early stages with more room to grow, and that they are just 'scratching the surface' on significant opportunities in lens pricing. Store productivity has runway for improvement through continued fleet optimization, the impact of price changes, and increased leverage of remote exam technology.

Matthew Koranda sought clarification on whether Q3 gross margin guidance fully captures tariff and pricing impacts, and asked about the drivers of OpEx deleverage in the second half of the year.

Answer

CFO Jesse Timmermans confirmed the guidance is a comprehensive best estimate. He explained that Selling & Distribution costs face tough comps from prior-year return rate improvements, while Marketing expenses will increase to support new owned brand launches and the opening of the Los Angeles store.

Matthew Koranda questioned if the McStarlight acquisition was accretive to Engineering Technologies' margins and if synergies were in the forecast. He also asked about the impact of recent tariffs and for a detailed bridge to the company's fiscal 2028 long-term sales target.

Answer

CFO Ademir Sarcevic clarified that McStarlight has margins similar to the core ETG business. CEO David Dunbar added that exciting long-term synergies are emerging. Regarding tariffs, Sarcevic noted that only 4% of COGS comes from India and the impact is manageable. Dunbar then provided a bridge to the FY28 target, starting from the FY25 base and layering on expected growth from new products, fast-growth markets, and the core business, with further upside potential from specific market opportunities.

Inquired about the drivers of Outdoor segment revenue, the outlook for the second half, the financial impact of the PEEPS brand divestiture, the timeline for lapping headwinds in the Adventure segment's Australian market, and the company's cash flow outlook and capital allocation priorities.

Answer

Outdoor's wholesale business (80% of the segment) is healthy with a strong order book for H2, while D2C is intentionally soft due to a strategic shift to full-price. The PEEPS sale is accretive as the brand was losing money. The major headwind from the OEM customer in Australia has been anniversaried, with another major retail headwind to be lapped in H2. The priority for cash is organic reinvestment, not buybacks, with cash expected to grow in H2 driven by inventory reduction.

Matthew Koranda from Roth Capital Partners, LLC asked for a breakdown of the Outdoor segment's revenue trends, the outlook for the second half, and the impact of the PEEPS divestiture. He also questioned the timeline for lapping headwinds in the Adventure segment and inquired about the company's cash flow outlook and capital allocation priorities.

Answer

President of Black Diamond Equipment, Neil Fiske, detailed that wholesale remains strong with a healthy order book, while D2C is intentionally softer due to a strategic shift to full-price. CFO Michael J. Yates clarified that the PEEPS sale is accretive, the major Adventure segment OEM headwind was anniversaried in Q2, and the focus for cash is on organic reinvestment, with cash expected to grow in the second half.

Matthew Koranda of Roth Capital Partners, LLC sought clarification on the drivers behind the quarter-to-date mid-single-digit growth in Q3, the expected seasonality of EBITDA in the second half, and the timing of a potential new large retail partner's impact.

Answer

CEO Robert DeMartini confirmed the Q3 growth reflects broad demand momentum in both DTC and wholesale, not just the Mattress Firm load-in. He also noted a new retail partner would have a modest impact in late 2025 and a more significant one in 2026. CFO Todd Vogensen projected a gradual, Q4-weighted improvement in EBITDA, driven by the full impact of the Rejuvenate 2.0 launch and Mattress Firm expansion.

Sought clarification on the mid-single-digit growth trend in Q3 and its drivers, the potential timing for achieving positive EBITDA within the second half, and whether a new large retail partner would impact 2025 results.

Answer

The Q3 year-to-date growth is driven by both wholesale (Mattress Firm) and DTC channels (catching up on Rejuvenate demand). Positive EBITDA is expected to improve gradually, with Q4 being stronger due to the full impact of new initiatives. The new retail partner will have a modest impact in late 2025 but will be a more significant contributor in 2026.

Matthew Koranda of Roth Capital Partners, LLC questioned the timing of the expected second-half EBITDA margin expansion, asking if it would occur in Q3 or Q4 and what the drivers were. He also asked about the timeline to close the performance gap in Asia and the typical launch cycle for new adjacent market products.

Answer

CFO Jonathan Douyard stated that Q3 results would be similar to Q2, with most margin expansion expected in Q4, driven by operational and manufacturing efficiencies. President & CEO Bill Presley projected that the China revenue mix would shift to 60% global/40% domestic OEMs by next year and align with the market in 18-24 months. He also confirmed that adjacent market product launches are much faster than automotive, often under a year.

Matthew Koranda inquired about the sales cadence during the first quarter, the breakdown of the comparable sales decline between transactions and ticket size, the rationale behind the second-quarter guidance, and the potential impact of tariffs on future margins.

Answer

EVP & CFO Michael Henry detailed the monthly sales trends for Q1 (Feb: -5.7%, Mar: -13.8%, Apr: +1.5%) and noted that traffic and average sale were down low-single digits. For Q2, he explained that the back-to-school season in late July represents the bulk of the quarter's volume, giving them cautious optimism. Regarding tariffs, Mr. Henry stated that no material impact is expected for the remainder of the year based on current information. Co-Founder, Executive Chairman, President & CEO Hezy Shaked added that the merchandise assortment is improving, which is helping close the negative sales gap.

Asked for a breakdown of the debt refinancing math, whether the new facility would provide sufficient working capital, the assumed return on ad spend for the rest of the year, and the rationale behind shifting away from traditional marketing channels.

Answer

The company explained they have about $18M in cash and AR against $25.7M in debt and plan to refinance the difference, targeting a new debt facility of $12M-$15M. This is expected to provide sufficient working capital. The return on ad spend profile for H2 will be similar to Q2, prioritizing partnerships and high-ROI channels, with a hold on aggressive growth spending until the refinancing is complete. The shift from traditional channels like Google and Facebook is a long-term strategy to build more durable, scalable partnerships that offer better returns, a move also influenced by the anticipated challenging marketing landscape of an election year.