Byrna Technologies Inc (BYRN) 2022 Q4 法說會逐字稿

Greetings, and welcome to the Byrna Technologies fourth-quarter 2022 earnings conference call and webcast. As a reminder, this conference call is being recorded, and all participants are in a listen-only mode. Before turning the call over to Bryan Ganz, Byrna Technologies' Chief Executive Officer, I will read the Safe Harbor statement.

Some discussions made today may 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 (technical difficulty), 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.

I will now turn the call over to Mr. Bryan Ganz. Sir, please go ahead.

Thank you. Good morning, everyone, and thank you for joining us for Byrna's fiscal 2022 fourth-quarter earnings call. David North, our CFO, and I will be discussing our Q4 and full-year 2022 results. And I will be providing some additional color on both the quarter and the year and discuss recent developments.

We'd like to start by turning the call over to David so that he can discuss the Q4 and full-year results and financial performance. David and I will be taking questions at the conclusion of the presentation. David?

Thanks, Brian. And thanks, all, who have us today. Let's start with a review of the financial results for the fiscal fourth quarter. Revenues for the fourth quarter of 2022 were $16.0 million. That's a 43.5% increase over the $11.0 million (sic - see press release, "$11.2 million") for last year's fourth quarter.

Gross profit increased by 52.0% to $8.7 million from $5.7 million in last year's fourth quarter; while gross margin improved to 54.1% of net revenue from 51.1% in last year's fourth quarter. The improvement in gross margin was driven by a reduced dependence on air freight and an improved product mix with higher margin ammo sales representing a greater percentage of overall sales.

Operating expenses remained relatively flat at $8.7 million in the fourth quarter of 2022 compared to $8.8 million in the fourth quarter of last year. The combination of higher revenue and a higher gross margin percentage, coupled with flat operating expenses resulted in improved profitability.

Net loss for the fourth quarter was near breakeven at $0.1 million, or $0.01 per share compared to a net loss of $3.2 million or $0.14 per share in the fourth quarter of fiscal 2021. Excluding long-term stock-based compensation and one-time severance costs, our non-GAAP adjusted EBITDA was $1.4 million for the quarter, making this a second sequential fiscal quarter with positive non-GAAP adjusted EBITDA.

Taking a look now at the full-year financial results, revenues for the full year increased by 13.8% to $48.0 million compared to $42.2 million in the prior year. In 2022, the company saw increases in international sales, dealer sales, and Amazon sales. Specifically, international sales increased by $5.7 million or 164.6%; dealer sales rose by $1.6 million or 28.4%, and Amazon sales grew by $4.6 million or 522.5%.

This more than offset the decline in Byrna website sales of $6.6 million or 20.9%. 2022 website sales were lower than in 2021 because 2021 benefited from a one-time $9 million spike in sales attributable to an unsolicited endorsement from Sean Hannity in April of that year.

Higher sales drove an increase in gross profit of $3.4 million to $26.3 million in fiscal 2022 as compared to gross profit of $22.9 million in fiscal '21. Gross margin percentage of the full year for fiscal '22 remained relatively consistent at 54.7% compared to 54.3% in fiscal '21 as the increase in the proportion of lower margin, international, and dealer sales was offset by lower freight costs and an improved product mix.

Operating expenses rose by $7.5 million to $33.7 million in 2022 from $26.2 million in fiscal '21 due primarily to increased spending on marketing, which increased by $3.3 million. Non-cash stock compensation expense was up by $2.3 million, and variable selling expenses increased by $1.2 million due to the higher sales volume.

Net loss for this fiscal year was $7.9 million compared to a net loss of $3.3 million in fiscal year 2021. Non-GAAP adjusted EBITDA loss was a loss of $1.0 million versus a profit of $1.3 million in fiscal '21.

Finally, a look at our balance sheet and financial position. We ended the fiscal year of $20.1 million of cash on the balance sheet. Obviously, this was significantly lower than the $56.4 million in the balance sheet at the end of 2021 after having raised $56 million from the sale of 2.8 million shares of common stock in the third quarter of that year at $21 per share. In 2022, we used $17.5 million of cash to buy back 2.2 million of those shares at an average price of $8.8.

The other main use of cash was to increase working capital levels. We increased inventory levels by $8.8 million from $6.6 million at the end of 2021 to $15.5 million at the end of 2022. That's allowed us to cut our reliance and exorbitant air freight for raw materials and to move to slower but far less expensive ocean freight.

Our accounts receivable balance of $5.9 million was $4.3 million higher than the prior-year end balance, mainly due to large international sales in the fourth quarter. We also used $1.9 million of cash to enter the self-defense spray market with the acquisition of Fox Labs in May of 2022. At year end, there was no current or long-term debt. And with that, I'll turn it back over to Brian.

Thank you, David. As David said, the fourth quarter was a record quarter for the company, the second in a row and the third consecutive quarter of sequential topline growth. Q4 was also the second consecutive quarter of profitability on an adjusted EBITDA basis.

The improving profitability is due to improving operating leverage. Sales last quarter grew by 43% in comparison to the fourth quarter of 2022, while operating expenses were actually down, slightly down, 1% compared to the same quarter last year.

While our sales growth for the full year of 2022 was a disappointing 14%, over the last two quarters of the year, Byrna experienced year-over-year revenue growth of 43%. Full-year sales growth was dragged down by the 14% decline in the first-half sales of 2022. And as David mentioned, this decline in the first-half sales of 2022 was due to the $9 million spike in sales in the first half of 2021, resulting from an unexpected and frankly, unsolicited endorsement from Sean Hannity on live television in April of 2021.

If we back out the $9 million of Hannity effect sales that occurred in the second quarter of 2021, sales in the first half of 2022 would have been up 47% year over year, and full-year 2022 sales would have been up 45% year over year, more in keeping with Byrna's long-term growth trajectory. In fact, over the last four years, Byrna has experienced compound annual growth rate of 272%.

This significant topline growth for Byrna has been driven by both growing brand awareness and an overall increase in the demand for less-lethal alternatives to traditional firearms. Byrna, specifically, and the less-lethal industry, generally, is benefiting from two societal trends that while on their face may seem to be countervailing, when taken together, they create a tailwind for the less-lethal industry.

First, as we all know, there is an overall sense of unease driven by a spike in violent crime and growing civil unrest. This is a global phenomenon as people around the world are becoming increasingly concerned for their safety and the safety of their families. At the same time, there is growing outrage over the level of gun violence. Again, this is a global phenomenon and is resulting in tougher gun laws.

Just a few months ago, Canada essentially banned the sale of handguns. This had an immediate effect on Byrna as we saw sales in Canada more than tripled after the ban went into effect. Even in the US, an increasing number of states such as Oregon are adopting more stringent gun laws. We believe that this is the beginning of a longer-term trend that will greatly benefit Byrna.

These tailwinds can be seen in the increased interest in Byrna's line of less-lethal personal self-defense product. In 2022, web sessions on byrna.com grew by 32% year over year. If we include Amazon DTC sessions, total visitors grew by 75% year over year to more than 11 million visitors, with more than half of the traffic being new to Byrna.

The same time, we are seeing an increase in repeat customers. In fiscal year '22, 47% of Byrna's sales on byrna.com were to repeat customers compared to 40% in 2021 and 24% in 2022 (sic - see press release, "2020"). This supports our thesis that Byrna benefits from a razor-razorblade model.

As our installed user base grows, we are seeing an increase in sales of higher-margin ammo, accessories, and other products such as pepper spray, body armor, and less lethal rifles to our existing customer base. In fact, as of the end of the year, our top 250 customers on byrna.com have each purchased more than $4,200 of Byrna products.

Two months ago, we said that we would be introducing several new products at SHOT Show. SHOT Show is the premier tradeshow for the shooting sports, hunting, law enforcement, and firearms industries. SHOT Show, which takes place in Las Vegas every January, was back in full swing this year as worries over the pandemic subsided.

I am pleased to report that the show this year was an amazing success for Byrna. We debuted our new good-better-best pistol strategy with the introduction of the price point Byrna EP and the all-new, much more powerful Byrna LE or law enforcement edition. Consumers, representatives of the media, and industry insiders had the chance to test fire these weapons at both the Industry Range Day, which takes place the day before SHOT Show, and at the grand opening of Byrna's Las Vegas retail center.

We also introduced Byrna's new 12-gauge round at SHOT Show, and the response was overwhelming. With a 100-foot effective range, no recoil, and tremendous stopping power, Byrna's new less-lethal 12-gauge Kinetic round was a smashing success. It was named one of the four best new products at SHOT Show by Police1 magazine and made the list of best personal defense top -- best Personal Defense World's top picks for 2023.

Most importantly, our first production run of 250,000 rounds, 25,000 boxes, is completely spoken for based on the demand at SHOT Show. Based on the strong demand that we have already seen, we have commissioned additional 12-gauge molds that will allow us to double our production of the Kinetic 12-gauge round by June of this coming year.

Until then, we will allocate all production to our Byrna authorized stocking dealers. The first shipments to dealers will begin later this month. We will roll this product out to our online customers once we have taken care of our dealers. We expect that to be sometime in April.

We plan to release the payload rounds later this year. These rounds will carry the same chemical irritant formulations as the 68-caliber projectiles used by our range of less-lethal launchers. Accordingly, we will be introducing the Byrna pepper 12-gauge round, the Byrna max 12-gauge round, and the Byrna pro-training 12-gauge round.

We are also developing a dedicated launcher, our Pump Action launcher, that will be able to shoot the .61-caliber fin projectiles that are currently fired from our 12-gauge rounds without the need for a 12-gauge shotgun and the need for a casing, wad, and protective clamshell.

For 2023, while we remain bullish on the long-term prospects for the less-lethal industry and while we expect to maintain our leadership position in the consumer segments of the less-lethal industry, we do not expect to see sales continue to grow by 40% this year. Rather, we are forecasting revenue growth for fiscal year '23 of approximately 20%, and accordingly, we are providing revenue guidance of $55 million to $60 million for the full year of '23.

The reason that we have damped our growth expectations somewhat for this coming year is because we believe that 2023 will be a more difficult economic environment than 2022 for consumer products companies. Whether or not the US is technically in a recession and whether or not the Fed has engineered a soft landing, rising prices and higher interest rates have reduced demand for high-priced discretionary consumer goods.

In coming up with this guidance, we also took into account the uncertainty associated with rolling out three brand-new products with no sales history and opening at all new production facility in South America. For this reason, we did not think it would be prudent to provide precise earnings guidance at this time. However, we do expect to be solidly profitable for the full-year 2023 on an adjusted EBITDA basis, and we expect to be cash flow positive this year.

The improvement in profitability is a result of the operating leverage that comes from growing sales, improving profit margins, and stable operating expenses. For 2023, we expect to be able to hold the line on operating expenses other than variable expenses to track with sales and expenses at our South American Byrna LatAm joint venture. We also believe that we will see a minimum 5% improvement in gross profit margins for the full-year 2023 due to a continued transition from air freight to ocean freight and an improving product mix.

In addition, for 2023, we are significantly reducing our reliance on discounts and special pricing to move our products on byrna.com. During much of 2022, Byrna relied heavily on discounts and special pricing to drive DTC sales. This had the negative effect of conditioning our customers to expect discounts and to wait for discounts. It also undermined our dealer sales effort, and the constant discounting depressed margins.

For 2023, Byrna is committed to maintaining price integrity. Prices will only be discounted on special preplanned MAP holidays, and these MAP holidays will be shared with our dealers well in advance. The first such MAP holiday for 2023 will be the four-day period over President's Day weekend.

Understandably, reinstating pricing integrity may negatively impact sales for a period of time as our customers adjust to our new pricing policy. We believe, however, that this short-term pain is well worth the long-term gain. Already, during the first six weeks of Q1, gross profit margins company-wide have come in at 62%, a full 8 percentage points higher than the 54% we reported for Q4 of 2022.

2023 should be a very exciting year for Byrna as we roll out these new products and we begin production at our new Argentinian production facility. While there are always hiccups with any new product launch or the opening of any new subsidiary or facility, we expect that the combination of new products and a production facility dedicated to the South American market will open significant new markets and new opportunities for Byrna. Once the Argentinian facility is in full swing and once we have better visibility on the sell-through of the new products, we should be able to better refine our guidance, both top line and bottom line.

In conclusion, we've made excellent progress this year in terms of both growing the top line and controlling expenses. As I said in our last earnings call, we have reached the point in terms of operating leverage that will allow us to consistently generate positive cash flow and strong year-over-year revenue growth.

Now, I'd like to turn it back to the operator, and we'll be happy to take questions from our analysts.

(Operator Instructions) Jeff Van Sinderen, B. Riley.

Hi. Good morning, everyone. First, let me say congratulations on the shotgun brand launch. Great to see that among other new product launches. Some multi-part question here, so appreciate, you guys, bearing with me on these.

Wondering if you could speak a little bit more about what you saw in projectiles sales in Q4. Maybe any sense you can give us of concentration of overall revenues in a, call it, ammo.

And then with the launch of the shotgun rounds, just wondering what you're seeing out there in early days, realize it is very early. And then maybe remind us of the margin on the shotgun projectiles, and that will that change when you have your own launcher and the projectiles change?

And then also, maybe you could just touch on the payload shotgun projectiles, I guess what needs to happen to get those completed and ready to launch in any timeframe there? Sorry, I know there's a lot in that.

All right. Well, at least, Jeff, they're all sort of ammo-based questions.

So let's focus on the 12 gauge first because I think that that is the more important product. All of the initial production was spoken for by our Byrna Authorized Stocking Dealers. So the large chain stores, they carry Byrna. And frankly, most of our dealers were interested in carrying the 12 gauge.

We made a commitment to the dealers at SHOT show that we would not start selling to the consumer so long as there were open orders, and that we would give their refill orders priority. And the reason for this is pretty simple. We want to make sure that if they're giving us a shelf space that we don't let it sit empty.

So we've told them that we will not offer it online until we feel that we have adequate stock to fulfill their restocking orders and also to sell online. So initially, we expect the margins on 12 gauge to be lower because 100% of the sales will be through retailers. And our margins through retailers are right around 50%.

Our margins when we go to sell this online are going to, of course, be much higher, again, closer to 70% gross profit margins. Again, we don't know whether we're at the right price points on this product. We're selling a 10-count box a round for $50. We didn't seem to get any pushback at all on this.

If we have difficulty maintaining production to keep up with demand, we could consider raising the price. But I think a $50 price for a box of 10 rounds is a fair price and gives us adequate margin. And again, the most important thing here is that we get them out into the market. We allow consumers to use these rounds.

When we were trying to understand the [TAM] for 12 gauge, our research told us that there's above 100 million shotguns in the US and, probably, somewhere between 30 million and 50 million shotgun owners in the US. If we can get 10% of that market over the next five years, that's 5 million people, if all they do is buy one box a round, that's $250 million in revenues. So we think getting this into the market, developing this market with shotgun owners, getting the word of mouth out there is extremely important.

In terms of the payload rounds. The payload rounds are significantly more complicated to produce because not only do they require us to create the 61-caliber round ball payload projectile, but we then have to fill the tail fin and well that into the tail fin. So it's requiring some very, very expensive equipment to be able to do that. We expect that equipment to be in the factory in South Africa sometime in June.

Right now, we're going through basic testing of this process. But I'm not sure how important the payload rounds will be because the Kinetic rounds have tremendous stopping power. So with the Byrna HD, we didn't really advertise the Kinetic rounds as being a self-defense round. We advertised the Kinetic rounds really as being a training rounds, a round to be used for target practice, because out of the HD, the joule energy of these rounds is about 10 joules.

With the introduction of the Byrna LE, which is a much more powerful launcher, the joule energy is up to 16 joules. These rounds become a legitimate self-defense rounded 16 joules. And as we go to the 12 gauge, that climbs to 20 joules of energy.

We did a lot of human effects testing, and wish you were having to pay people, of course, to take the rounds. And we were paying people $100 a round. And we had a lot of tough guys say, you know, I'll take five rounds. Nobody took more than two before they said no more. (laughing)

So we know that the Kinetic round has a lot of stopping power. So again, I -- we're committed to the payload rounds, but we're not sure at twice the price, whether they're going to be a significant portion of our overall sales or not.

David, I'm going to turn it over to you to talk about the product mix of the ammo.

Yeah, ammo in the fourth quarter was -- the mix of ammo and accessories has traditionally been around 25%. In the fourth quarter, it was closer to 30%, and that's up from -- it was lower than that in the fourth quarter of last year. So we're seeing a gradual increase in that as a total percentage.

And keep in mind, what we're seeing is a couple of things with the increase in returning customers. So this year, as our returning customers went from 40% to 47% of sales, we obviously saw an increase in ammo sales, a slightly lower average order value. We went from $345 average order value in 2021 to a $320 average order value in 2022, but we saw improving margins.

So we think that over time, ammo and accessory sales will get closer to 45% of overall sales. And again, I don't know if that's in five years or 10 years, but that's the line that we will probably end up trending to. And we base that on what we've seen with other less-lethal companies, including Mission Less Lethal, which we purchased and one of our direct competitors, as we have several employees that were former employees at a competitor. And it seems that that 45% range for ammo is where you end up with when you stop growing it, you know, double-digit rates of return.

Okay. I think you've covered all of the -- all those questions pretty well.

Those a lot of questions.

Just one -- well, it was a lot of question. Fewer questions and my next question, but I guess if we can just touch a little bit more on -- it sounds like you're putting the dealers first with the 12-gauge allocation at least.

Maybe you could just speak a little more about production plans. When will the Pump Action Launcher be introduced? And then also with the new Latin American facility, the factory in Argentina, how much of your production do you expect to move there? And also, does that include the shotgun rounds in Argentina?

That was a lot of questions.

Yeah, it was.

Yeah. But the shotgun round -- the plastic pieces that make up the shotgun round are going to be made at one factory. But each factory, the US, South America, the Argentinean factory, and South Africa will each put in the propulsion. So it doesn't become ammo or pyro tactic ammo until we put the propulsion into it. So that will all happen in the local markets, and it's just easier for us to ship.

It has to do with regulation and taxation.

Yes. It's easier for us to ship when it's just plastic pieces and not ammos.

I wanted to weigh in on this question because the question implies kind of a misunderstanding about what we're doing in our Latin American joint venture. You've asked, how much the production will be moved there.

The reason for the Latin American joint venture is not to move production there. It is not to take advantage of a lower cost production location. It is to take advantage of the two giant South American markets in Argentina and Brazil. That's much take advantage by getting access to them.

And to get access to them with a local content manufacturing within the tariff boundaries of Mercosur, which has a 20% tariff surrounding those countries. So we're able now to sell our product into those markets at a profit and pay that 20% tariff. But by moving in there and putting production, we're able to get all of that profit margin for the investors and have direct access to those markets. So it's really moving inside the castle walls is what we're doing.

I think that's a very good point. In fact, what drove this home was the last shipment that we sent to Argentina, we ended up having to pay $37 a launcher in freight and another $38 a launcher in duty. So we had $75 in freight and duty. The bill of materials for that launcher is $82.

So basically, by moving inside the mode, inside Mercosur, the bill of materials is essentially free because we're getting rid of the very expensive freight and duty getting into the Mercosur region.

And the other thing that happens is that that becomes a barrier to entry to competition. So in my career, I have worked in several multi-national manufacturers, and the way you get access to those markets and take the market share is you put your production there.

Okay, good. That's really helpful to understand. I'll let somebody else jump in because I've asked you too many questions already.

Thank you, Jeff.

Ryan Rackley, Raymond James.

Hey, guys, thanks for taking my question. Actually, I've started to do this, but I have a couple more on the 12-gauge round. It's really interesting to us.

I just -- I wanted to clarify, so you're seeing demand across all of your dealers, or is that concentrated just within a few? How's that spread across your customer base?

It's been pretty universal. Obviously, we've got some very large dealers that are taking thousands of boxes, tens of thousands of rounds. But we've got a lot of dealers that are taking 10 boxes, 100 rounds. So it's pretty universal.

I think that the dealers, like us, are very anxious to see what the sell-through is. We will know a lot more three months from now. So we need to get it on the shelf, and we need to see how quickly it moves off the shelf.

So the one good thing is this is a relatively easy market to reach, shotgun owners. There are very specific magazines for us to advertise in. This product is being written up by a lot of various magazines, loaded by places like police one and the personal defense world. So we should see what the consumer demand is.

But frankly, we need to get it on the shelves first. And we felt the dealers were important to this because we don't actually know what percentage of our current Byrna customers that own a shotgun. My guess is it's well under 50%. I mean, it may be only 10% that actually own a shotgun, and that's the reason they're buying at Byrna.

By going after these customers through the brick-and-mortar dealer base that we have, we're doing two things. One, as I said, I mean, we see this as potentially being a several hundred million dollars market in and of itself. But just as importantly, we are going to get people to get out and come to our website.

So a guy that has a shotgun and may buy a box of non-lethal or less-lethal ammo for it will then see, look, they've got a Byrna shield for my elementary school age child, and maybe my wife would like this Byrna SD or Byrna LE. So we're hoping that this is a very inexpensive way to get them into the Byrna ecosystem. So right now, the most important thing is just to get these into the market and as widely disseminated as possible, and that was the reason we chose the brick-and-mortar route.

And I think that this also -- it also may give us access to more dealers that we might not already have because we've got a gun dealer who's selling 12 gauge shotgun ammunition, he might not have been interested at the beginning in a CO2 launcher, but now he is interested in this product. So it expands our relationships as well with the brick and mortar.

But in all of this, we're early in the game. And this is why Bryan said that it is one of the variables that we don't have any history on the product. We know that there's a great big-installed base of 12-gauge shotguns out there in the country, but we don't know what the overall demand will be, we don't know what the dealer sell-through will be. We're at very early stages.

Great. And are you seeing any interest from dealers that don't sell traditionally.

Yes.

Okay.

And frankly, we're also seeing interest in -- from dealers that are not selling our Byrna. So there's been a number of dealers that we've spoken to that we've been unable to get our foot in the door that we've made several presentations, who have now reached out to us and said that we'd like to start with the 12 gauge and then we'll see how it goes from there.

Okay. All right. That's great. So yeah, just last one on the 12 gauge. The pump launcher for the fin-tail projectile, I just wanted to clarify that, that won't be considered -- I know your fin-tail projectile can be shot out of the fire arm, but your pump launcher will not be a fire arm?

Correct. So -- no. Interestingly, the fin-tail projectile was originally developed to be fired out of this Pump Action Launcher. So they were sort of developed in tandem.

And we came up with the idea of putting that little projectile in a 12-gauge casing. And the reason for that is the Pump Action Launcher is going to be $1,000 launcher. So while there is a market for us, it's not a market in the millions.

There aren't millions of people that are going to buy a $1,000 launcher to shoot these projectiles. But there are tens of millions of people that have a 12 gauge, and for them, the entry is not $1,000, it's $50. So we sort of pivoted.

We didn't stop the development of the Pump Action Launcher, and frankly, it is very, very far down the road. We have working prototypes of that currently. It's an amazing technological tour de force. But we don't think it will have that anywhere near the commercial impact that putting that same project out in a 12-gauge casing will.

And we started off, initially, just thinking that we would drop it in an existing 12-gauge casing, that we would buy a casing from [POP] or from [Hornet Day] or from one of the big armor companies. Because of the shortage of ammunition, we were unable to get adequate casings for any of these ammo manufacturers, which turned out to be a blessing in disguise because it forced us to go develop a plastic casing ourselves.

And by having a plastic casing, we're able to do a couple of things. One, we have a round that does not look at all like a normal shotgun round, and this was a big concern. Particularly, for law enforcement, they didn't want rounds that could be confused, or somebody thought they had a less-lethal round in their shotgun, but in fact, had a lethal round. So with the plastic casing, we don't look anything like a normal 12 gauge that has a brass casings.

Secondly, we're now in control of our own destiny. We're not limited to buying these from POP, so the next time there's a shortage of 12-gauge casings, we can't sell our 12 gauge. We manufacture every single piece of this other than the primer. So we really have complete control over the situation with the 12 gauge.

Great. Okay. That's helpful, thanks.

So I guess -- so jumping to the '23 guide, and there's a lot of moving parts of the new products, your Amazon relationship is maturing. How are you thinking about the seasonality of '23 relative to '22? Should we expect a similar pattern, or is there anything different that might stray from what we saw in '22?

No. We think 22 is pretty indicative of what we should see. Q1 is always soft because it comes on the heels of our big Christmas shopping season in Q4. The summer months, we're a little slower. But what we saw in 2022 with the constant build, I think, is probably what we should see in '23/

2020 and 2021, both had an endorsement from Sean Hannity, which made the sales very lumpy and made the quarter-over-quarter, year-over-year comparisons very difficult. This is the first time in 2023 that we will be comparing ourselves to a year that did not have an exogenous event.

Yeah, I think the overall seasonality, we all agree we should stay there. The main thing in forecasting, and I think is difficult for this year, is just figuring out what were the effects of the macroeconomic factors that we've seen due to the pandemic in that sort of thing, particularly on the fourth quarter. So it's hard to say, past two, fourth quarters, what were the effects of what was going on in the macroeconomic environment and how will that affect '23.

Okay, great. Well, that's it for me. I really appreciate the time.

Thank you, Ryan.

Thanks, again.

(Operator Instructions)

Any other questions?

It looks like we have reached the end of the question-and-answer session. I'll turn the call back over to Bryan Ganz for closing remarks.

Great. Thank you very much.

Once again, I just want to thank everyone for joining us today and for your interest in Byrna. If anyone would like to set up a one-on-one call with either me or David, please reach out to Erol Girgin at Stonegate. His e-mail is erol@stonegateinc.com, and he will make an arrangement for a one-on-one conversation. Once again, thank you very much and we'll be signing off.

And this concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.