UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d)
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 §CFR 230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 2.02. | Results of Operations and Financial Condition. |
We are furnishing the disclosure in this Item 2.02 in connection with the disclosure of information in the form of the textual information from a press release issued on December 2, 2021.
The information in this Item 2.02 (including Exhibit 99.1) is furnished pursuant to Item 2.02 and shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section.
We do not have, and expressly disclaim, any obligation to release publicly any updates or any changes in our expectations or any change in events, conditions, or circumstances on which any forward-looking statement is based.
The text included with this Current Report on Form 8-K is available on our website at www.smith-wesson.com, although we reserve the right to discontinue that availability at any time.
| Item 9.01. | Financial Statements and Exhibits. |
(d) Exhibits.
| Exhibit Number |
Exhibits | |
| 99.1 | Press release from Smith & Wesson Brands, Inc., dated December 2, 2021, entitled “Smith & Wesson Brands, Inc. Reports Second Quarter Fiscal 2022 Financial Results” | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| SMITH & WESSON BRANDS, INC. | ||||||
| Date: December 2, 2021 | By: | /s/ Deana L. McPherson | ||||
| Deana L. McPherson | ||||||
| Executive Vice President, Chief Financial Officer, Treasurer, and Assistant Secretary | ||||||
Exhibit 99.1
Contact:
investorrelations@smith-wesson.com
(413) 747-3448
Smith & Wesson Brands, Inc. Reports
Second Quarter Fiscal 2022 Financial Results
| - | Two-Year Compounded Sales Growth of over 140% |
| - | Gross Margin of 44.3% |
| - | EPS of $1.05/Share and EBITDAS of 34.9% |
SPRINGFIELD, Mass., December 2, 2021 – Smith & Wesson Brands, Inc. (NASDAQ Global Select: SWBI), a U.S.-based leader in firearm manufacturing and design, today announced financial results for the second quarter of fiscal 2022, ended October 31, 2021. Unless otherwise indicated, any reference to income statement items refers to results from continuing operations.
Second Quarter Fiscal 2022 Financial Highlights
| • | Net sales were $230.5 million, a decrease of $18.3 million, or 7.3%, from the comparable quarter last year. |
| • | Gross margin was 44.3%, compared with 40.6% for the comparable quarter last year. |
| • | Quarterly GAAP net income was $50.9 million, or $1.05 per diluted share, compared with $49.1 million, or $0.87 per diluted share, for the comparable quarter last year. |
| • | Quarterly non-GAAP net income was $55.3 million, or $1.13 per diluted share, compared with $52.8 million, or $0.93 per diluted share, for the comparable quarter last year. GAAP to non-GAAP adjustments for income exclude costs related to the planned relocation of our headquarters and certain manufacturing and distribution operations to Tennessee, the spin-off of the outdoor products and accessories business in fiscal 2021, COVID-19 related expenses, and other costs. For a detailed reconciliation, see the schedules that follow in this release. |
| • | Quarterly non-GAAP Adjusted EBITDAS was $80.4 million, or 34.9% of net sales, compared with $78.9 million, or 31.7% of net sales, for the comparable quarter last year. |
Mark Smith, President and Chief Executive Officer, commented, “Throughout the past 18 months of unprecedented demand levels for our industry, our focus has continued to be on the long term – and our team has been hard at work positioning Smith & Wesson for continued impressive operating results and maintaining our market leadership regardless of market conditions. During our second quarter, as demand levels eased from historical highs experienced during the height of the pandemic, the results of those efforts and our flexible model were evident. Despite a year over year revenue decline, our operations team actually delivered higher gross profit, more than offsetting the decrease in the top line. Our sales, marketing, and new product teams continued our steady cadence of new product introductions, with the most recent being our brand new M&P 10MM introduced last month and we have great confidence going forward to continue being the brand of choice at retail by connecting with both the millions of new firearms owners and our loyal long time enthusiasts in new and innovative ways, continuing to introduce exciting new products, and leveraging our unique ability to adjust rapidly to market dynamics through our flexible manufacturing model.”
Page 1 of 8
Smith continued, “Late last quarter, we announced our intention to relocate our headquarters and certain of our operations to Maryville, Tennessee in 2023 and work on this project has begun in earnest. With a successful groundbreaking ceremony held on November 5th, we are excited about the opportunity to shape our company for generations to come. The new state-of-the-art facility will serve as our headquarters and will be the new home for our plastic injection molding, assembly, and logistics operations, and will solidify the future of Smith & Wesson – an innovative, nimble organization, whose dedicated employees leverage the latest technology to produce products that set the standard for firearms enthusiasts around the globe. We would like to thank the state of Tennessee and the Blount County community for such a warm welcome, and we look forward to calling Maryville, Tennessee home.”
Deana McPherson, Executive Vice President and Chief Financial Officer, commented, “Our second quarter results continue to demonstrate our ability to react to the changing needs of the market. We delivered a 370 basis point increase in gross margin that more than offset a 7.3% decrease in revenue compared with the prior year second quarter. Although below the prior year, the current quarter’s revenue represents a two-year compounded growth rate of over 140% and is one of the many examples of how our flexible manufacturing model allows our business to return impressive financial performance in both increasing and decreasing demand environments. Inventory in the channel has finally been restored in many of our product categories and we continue to replenish our internal inventories. We believe that our strong balance sheet, impressive product array, and commitment to be the market leader will enable us to continue to invest in our business and capture market share, as we fulfill our commitment to return capital to our stockholders. Our Board of Directors has again authorized our $0.08 per share quarterly dividend, which will be paid to stockholders of record on December 16th with payment to be made on January 4th.”
Conference Call and Webcast
The company will host a conference call and webcast on December 2, 2021, to discuss its second quarter fiscal 2022 financial and operational results. Speakers on the conference call will include Mark Smith, President and Chief Executive Officer, and Deana McPherson, Executive Vice President and Chief Financial Officer. The conference call may include forward-looking statements. The conference call and webcast will begin at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time). Those interested in listening to the conference call via telephone may call directly at (844) 309-6568 and reference conference identification number 9717968. No RSVP is necessary. The conference call audio webcast can also be accessed live on the company’s website at www.smith-wesson.com, under the Investor Relations section.
Reconciliation of U.S. GAAP to Non-GAAP Financial Measures
In this press release, certain non-GAAP financial measures, including “non-GAAP net income,” “Adjusted EBITDAS,” and “free cash flow” are presented. From time-to-time, we consider and use these supplemental measures of operating performance in order to provide the reader with an improved understanding of underlying performance trends. We believe it is useful for us and the reader to review, as applicable, both (1) GAAP measures that include (i) interest expense, (ii) income tax expense, (iii) depreciation and amortization, (iv) stock-based compensation expense, (v) COVID-19 expenses, (vi) transition costs, (vii) amortization of acquired intangible assets, (viii) spin related stock compensation, (ix) Relocation expense, and (x) the tax effect of non-GAAP adjustments; and (2) the non-GAAP measures that exclude such information. We present these non-GAAP measures because we consider them an important supplemental measure of our performance. Our definition of these adjusted financial measures may differ from similarly named measures used by others. We believe these measures facilitate operating performance comparisons from period to period by eliminating potential differences caused by the existence and timing of certain expense items that would not otherwise be apparent on a GAAP basis. These non-GAAP measures have limitations as an analytical tool and should not be considered in isolation or as a substitute for our GAAP measures. The principal limitations of these measures are that they do not reflect our actual expenses and may thus have the effect of inflating its financial measures on a GAAP basis.
About Smith & Wesson Brands, Inc.
Smith & Wesson Brands, Inc. (NASDAQ Global Select: SWBI) is a U.S.-based leader in firearm manufacturing and design, delivering a broad portfolio of quality handgun, long gun, and suppressor products to the global consumer and professional markets under the iconic Smith & Wesson®, M&P®, and Gemtech® brands. The company also provides manufacturing services including forging, machining, and precision plastic injection molding services. For more information call (800) 331-0852 or visit www.smith-wesson.com.
Page 2 of 8
Safe Harbor Statement
Certain statements contained in this press release may be deemed to be forward-looking statements under federal securities laws, and we intend that such forward-looking statements be subject to the safe-harbor created thereby. Such forward-looking statements include, among others, that (i) we have great confidence going forward to continue being the brand of choice at retail by connecting with both the millions of new firearms owners and our loyal long time enthusiasts in new and innovative ways, continuing to introduce exciting new products, and leveraging our unique ability to adjust rapidly to market dynamics through our flexible manufacturing model; (ii) we intend to relocate our headquarters and certain of our operations to Maryville, Tennessee in 2023; (iii) the new state-of-the-art facility will serve as our headquarters and will be the new home for our plastic injection molding, assembly, and logistics operations, and will solidify the future of Smith & Wesson – an innovative, nimble organization, whose dedicated employees leverage the latest technology to produce products that set the standard for firearms enthusiasts around the globe; and (iv) we believe that our strong balance sheet, impressive product array, and commitment to be the market leader will enable us to continue to invest in our business and capture market share, as we fulfill our commitment to return capital to our stockholders. We caution that these statements are qualified by important risks, uncertainties, and other factors that could cause actual results to differ materially from those reflected by such forward-looking statements. Such factors include, among others, economic, social, political, legislative, and regulatory factors; the potential for increased regulation of firearms and firearm-related products; actions of social activists that could have an adverse effect on our business; the impact of lawsuits; the demand for our products; the state of the U.S. economy in general and the firearm industry in particular; general economic conditions and consumer spending patterns; our competitive environment; the supply, availability, and costs of raw materials and components; our anticipated growth and growth opportunities; our strategies; our ability to maintain and enhance brand recognition and reputation; our ability to effectively manage and execute the planned relocation of our headquarters and certain of our operations to Tennessee; our ability to introduce new products; the success of new products; the potential for cancellation of orders from our backlog; and other risks detailed from time to time in our reports filed with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the fiscal year ended April 30, 2021.
Page 3 of 8
SMITH & WESSON BRANDS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
| As of: | ||||||||
| October 31, 2021 | April 30, 2021 | |||||||
| (In thousands, except par value and share data) | ||||||||
| ASSETS |
| |||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 159,391 | $ | 113,017 | ||||
| Accounts receivable, net of allowances for credit losses of $38 on October 31, 2021 and $107 on April 30, 2021 |
44,226 | 67,442 | ||||||
| Inventories |
120,277 | 78,477 | ||||||
| Prepaid expenses and other current assets |
8,321 | 8,408 | ||||||
| Income tax receivable |
1,717 | 909 | ||||||
|
|
|
|
|
|||||
| Total current assets |
333,932 | 268,253 | ||||||
|
|
|
|
|
|||||
| Property, plant, and equipment, net |
136,932 | 141,612 | ||||||
| Intangibles, net |
4,322 | 4,417 | ||||||
| Goodwill |
19,024 | 19,024 | ||||||
| Other assets |
10,966 | 13,082 | ||||||
|
|
|
|
|
|||||
| 505,176 | 446,388 | |||||||
|
|
|
|
|
|||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
| |||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ | 49,070 | $ | 57,337 | ||||
| Accrued expenses and deferred revenue |
31,958 | 33,136 | ||||||
| Accrued payroll and incentives |
11,068 | 17,381 | ||||||
| Accrued income taxes |
1,722 | 1,157 | ||||||
| Accrued profit sharing |
7,777 | 14,445 | ||||||
| Accrued warranty |
2,142 | 2,199 | ||||||
|
|
|
|
|
|||||
| Total current liabilities |
103,737 | 125,655 | ||||||
| Deferred income taxes |
904 | 904 | ||||||
| Finance lease payable, net of current portion |
38,228 | 38,786 | ||||||
| Other non-current liabilities |
13,999 | 14,659 | ||||||
|
|
|
|
|
|||||
| Total liabilities |
156,868 | 180,004 | ||||||
|
|
|
|
|
|||||
| Commitments and contingencies |
||||||||
| Stockholders’ equity: |
||||||||
| Preferred stock, $.001 par value, 20,000,000 shares authorized, no shares issued or outstanding |
— | — | ||||||
| Common stock, $.001 par value, 100,000,000 shares authorized, 74,546,592 issued and 48,294,374 shares outstanding on October 31, 2021 and 74,222,127 shares issued and 49,937,329 shares outstanding on April 30, 2021 |
75 | 74 | ||||||
| Additional paid-in capital |
275,229 | 273,431 | ||||||
| Retained earnings |
445,306 | 325,181 | ||||||
| Accumulated other comprehensive income |
73 | 73 | ||||||
| Treasury stock, at cost (26,252,218 shares on October 31, 2021 and 24,284,798 on April 30, 2021) |
(372,375 | ) | (332,375 | ) | ||||
|
|
|
|
|
|||||
| Total stockholders’ equity |
348,308 | 266,384 | ||||||
|
|
|
|
|
|||||
| $ | 505,176 | $ | 446,388 | |||||
|
|
|
|
|
|||||
Page 4 of 8
SMITH & WESSON BRANDS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
| For the Three Months Ended October 31, | For the Six Months Ended October 31, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| (In thousands, except per share data) | ||||||||||||||||
| Net sales |
$ | 230,479 | $ | 248,729 | $ | 505,088 | $ | 478,614 | ||||||||
| Cost of sales |
128,484 | 147,656 | 273,151 | 285,117 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Gross profit |
101,995 | 101,073 | 231,937 | 193,497 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Operating expenses: |
||||||||||||||||
| Research and development |
1,744 | 1,855 | 3,552 | 3,761 | ||||||||||||
| Selling, marketing, and distribution |
11,423 | 11,614 | 22,057 | 21,609 | ||||||||||||
| General and administrative |
23,436 | 23,224 | 41,049 | 45,007 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total operating expenses |
36,603 | 36,693 | 66,658 | 70,377 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Operating income from continuing operations |
65,392 | 64,380 | 165,279 | 123,120 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Other income/(expense), net: |
||||||||||||||||
| Other income/(expense), net |
833 | 693 | 1,493 | 760 | ||||||||||||
| Interest expense, net |
(466 | ) | (1,490 | ) | (1,011 | ) | (2,806 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total other income/(expense), net |
367 | (797 | ) | 482 | (2,046 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Income from operations before income taxes |
65,759 | 63,583 | 165,761 | 121,074 | ||||||||||||
| Income tax expense |
14,824 | 14,465 | 37,944 | 28,657 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Income from continuing operations |
$ | 50,935 | $ | 49,118 | $ | 127,817 | $ | 92,417 | ||||||||
| Discontinued operations: |
||||||||||||||||
| Income from discontinued operations, net of tax |
— | 3,123 | — | 8,209 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net income |
$ | 50,935 | $ | 52,241 | $ | 127,817 | $ | 100,626 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net income per share: |
||||||||||||||||
| Basic—continuing operations |
$ | 1.06 | $ | 0.88 | $ | 2.65 | $ | 1.66 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Basic—net income |
$ | 1.06 | $ | 0.93 | $ | 2.65 | $ | 1.81 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Diluted—continuing operations |
$ | 1.05 | $ | 0.87 | $ | 2.63 | $ | 1.64 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Diluted—net income |
$ | 1.05 | $ | 0.92 | $ | 2.63 | $ | 1.78 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Weighted average number of common shares outstanding: |
||||||||||||||||
| Basic |
48,147 | 55,914 | 48,270 | 55,691 | ||||||||||||
| Diluted |
48,692 | 56,531 | 48,524 | 56,475 | ||||||||||||
Page 5 of 8
SMITH & WESSON BRANDS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| For the Six Months Ended | ||||||||
| October 31, 2021 | October 31, 2020 | |||||||
| (In thousands) | ||||||||
| Cash flows from operating activities: |
||||||||
| Income from continuing operations |
$ | 127,817 | $ | 92,417 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
| Depreciation and amortization |
15,210 | 17,129 | ||||||
| Loss on sale/disposition of assets |
57 | 3 | ||||||
| Provision for losses on notes and accounts receivable |
781 | 29 | ||||||
| Impairment of long-lived tangible assets |
86 | — | ||||||
| Stock-based compensation expense |
2,366 | 2,075 | ||||||
| Changes in operating assets and liabilities: |
||||||||
| Accounts receivable |
22,435 | (7,787 | ) | |||||
| Inventories |
(41,800 | ) | 24,852 | |||||
| Prepaid expenses and other current assets |
87 | (43 | ) | |||||
| Income taxes |
(242 | ) | (8,267 | ) | ||||
| Accounts payable |
(8,514 | ) | 28,331 | |||||
| Accrued payroll and incentives |
(6,313 | ) | (1,043 | ) | ||||
| Accrued profit sharing |
(6,668 | ) | 4,613 | |||||
| Accrued expenses and deferred revenue |
(1,206 | ) | (16,212 | ) | ||||
| Accrued warranty |
(57 | ) | 1,055 | |||||
| Other assets |
2,030 | 2,561 | ||||||
| Other non-current liabilities |
(705 | ) | (1,625 | ) | ||||
|
|
|
|
|
|||||
| Cash provided by operating activities—continuing operations |
105,364 | 138,088 | ||||||
| Cash used in operating activities—discontinued operations |
— | (2,225 | ) | |||||
|
|
|
|
|
|||||
| Net cash provided by operating activities |
105,364 | 135,863 | ||||||
|
|
|
|
|
|||||
| Cash flows from investing activities: |
||||||||
| Payments to acquire patents and software |
(156 | ) | (350 | ) | ||||
| Proceeds from sale of property and equipment |
70 | — | ||||||
| Payments to acquire property and equipment |
(10,113 | ) | (14,964 | ) | ||||
|
|
|
|
|
|||||
| Cash used in investing activities—continuing operations |
(10,199 | ) | (15,314 | ) | ||||
| Cash used in investing activities—discontinued operations |
— | (1,143 | ) | |||||
|
|
|
|
|
|||||
| Net cash used in investing activities |
(10,199 | ) | (16,457 | ) | ||||
|
|
|
|
|
|||||
| Cash flows from financing activities: |
||||||||
| Proceeds from loans and notes payable |
— | 25,000 | ||||||
| Cash paid for debt issuance costs |
— | (450 | ) | |||||
| Payments on finance lease obligation |
(531 | ) | (479 | ) | ||||
| Payments on notes and loans payable |
— | (185,000 | ) | |||||
| Distribution to AOUT |
— | (25,000 | ) | |||||
| Payments to acquire treasury stock |
(40,000 | ) | — | |||||
| Dividend distribution |
(7,692 | ) | (2,795 | ) | ||||
| Proceeds from exercise of options to acquire common stock, including employee stock purchase plan |
831 | 2,195 | ||||||
| Payment of employee withholding tax related to restricted stock units |
(1,399 | ) | (2,173 | ) | ||||
|
|
|
|
|
|||||
| Cash used in by financial activities—continuing operations |
(48,791 | ) | (188,702 | ) | ||||
| Cash used in financial activities—discontinued operations |
— | (166 | ) | |||||
|
|
|
|
|
|||||
| Net cash used inprovided by financing activities |
(48,791 | ) | (188,868 | ) | ||||
|
|
|
|
|
|||||
| Net increase/(decrease) in cash and cash equivalents |
46,374 | (69,462 | ) | |||||
| Cash and cash equivalents, beginning of period |
113,017 | 125,011 | ||||||
|
|
|
|
|
|||||
| Cash and cash equivalents, end of period |
$ | 159,391 | $ | 55,549 | ||||
|
|
|
|
|
|||||
| Supplemental disclosure of cash flow information |
||||||||
| Cash paid for: |
||||||||
| Interest |
$ | 1,116 | $ | 2,188 | ||||
| Income taxes |
$ | 38,186 | $ | 40,888 | ||||
Page 6 of 8
SMITH & WESSON BRANDS, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES
(Dollars in thousands, except per share data)
(Unaudited)
| For the Three Months Ended | For the Six Months Ended | |||||||||||||||||||||||||||||||
| October 31, 2021 | October 31, 2020 | October 31, 2021 | October 31, 2020 | |||||||||||||||||||||||||||||
| $ | % of Sales | $ | % of Sales | $ | % of Sales | $ | % of Sales | |||||||||||||||||||||||||
| GAAP gross profit |
$ | 101,995 | 44.3 | % | $ | 101,073 | 40.6 | % | $ | 231,937 | 45.9 | % | $ | 193,497 | 40.4 | % | ||||||||||||||||
| Relocation expenses |
1,087 | 0.5 | % | — | — | 1,087 | 0.2 | % | — | — | ||||||||||||||||||||||
| COVID-19 |
3 | 0.0 | % | 10 | 0.0 | % | 31 | 0.0 | % | 896 | 0.2 | % | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Non-GAAP gross profit |
$ | 103,085 | 44.7 | % | $ | 101,083 | 40.6 | % | $ | 233,055 | 46.1 | % | $ | 194,393 | 40.6 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| GAAP operating expenses |
$ | 36,603 | 15.9 | % | $ | 36,693 | 14.8 | % | $ | 66,658 | 13.2 | % | $ | 70,377 | 14.7 | % | ||||||||||||||||
| Amortization of acquired intangible assets |
(70 | ) | 0.0 | % | (83 | ) | 0.0 | % | (142 | ) | 0.0 | % | (166 | ) | 0.0 | % | ||||||||||||||||
| Transition costs |
80 | 0.0 | % | (4,338 | ) | -1.7 | % | 80 | 0.0 | % | (7,933 | ) | -1.7 | % | ||||||||||||||||||
| COVID-19 |
(52 | ) | 0.0 | % | (92 | ) | 0.0 | % | (100 | ) | 0.0 | % | (159 | ) | 0.0 | % | ||||||||||||||||
| Spin related stock-based compensation |
10 | 0.0 | % | (442 | ) | -0.2 | % | (62 | ) | 0.0 | % | (442 | ) | -0.1 | % | |||||||||||||||||
| Relocation expenses |
(4,461 | ) | -1.9 | % | — | — | (4,461 | ) | -0.9 | % | — | — | ||||||||||||||||||||
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| Non-GAAP operating expenses |
$ | 32,110 | 13.9 | % | $ | 31,738 | 12.8 | % | $ | 61,973 | 12.3 | % | $ | 61,677 | 12.9 | % | ||||||||||||||||
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| GAAP operating income |
$ | 65,392 | 28.4 | % | $ | 64,380 | 25.9 | % | $ | 165,279 | 32.7 | % | $ | 123,120 | 25.7 | % | ||||||||||||||||
| Amortization of acquired intangible assets |
70 | 0.0 | % | 83 | 0.0 | % | 142 | 0.0 | % | 166 | 0.0 | % | ||||||||||||||||||||
| Transition costs |
(80 | ) | 0.0 | % | 4,338 | 1.7 | % | (80 | ) | 0.0 | % | 7,933 | 1.7 | % | ||||||||||||||||||
| COVID-19 |
55 | 0.0 | % | 102 | 0.0 | % | 131 | 0.0 | % | 1,055 | 0.2 | % | ||||||||||||||||||||
| Spin related stock-based compensation |
(10 | ) | 0.0 | % | 442 | 0.2 | % | 62 | 0.0 | % | 442 | 0.1 | % | |||||||||||||||||||
| Relocation expenses |
5,548 | 2.4 | % | — | — | 5,548 | 1.1 | % | — | — | ||||||||||||||||||||||
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| Non-GAAP operating income |
$ | 70,975 | 30.8 | % | $ | 69,345 | 27.9 | % | $ | 171,082 | 33.9 | % | $ | 132,716 | 27.7 | % | ||||||||||||||||
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| GAAP income from continuing operations |
$ | 50,935 | 22.1 | % | $ | 49,118 | 19.7 | % | $ | 127,817 | 25.3 | % | $ | 92,417 | 19.3 | % | ||||||||||||||||
| Amortization of acquired intangible assets |
70 | 0.0 | % | 83 | 0.0 | % | 142 | 0.0 | % | 166 | 0.0 | % | ||||||||||||||||||||
| Transition costs |
(80 | ) | 0.0 | % | 4,338 | 1.7 | % | (80 | ) | 0.0 | % | 7,933 | 1.7 | % | ||||||||||||||||||
| COVID-19 |
55 | 0.0 | % | 102 | 0.0 | % | 131 | 0.0 | % | 1,055 | 0.2 | % | ||||||||||||||||||||
| Spin related stock-based compensation |
(10 | ) | 0.0 | % | 442 | 0.2 | % | 62 | 0.0 | % | 442 | 0.1 | % | |||||||||||||||||||
| Relocation expenses |
5,548 | 2.4 | % | — | — | 5,548 | 1.1 | % | — | — | ||||||||||||||||||||||
| Tax effect of non-GAAP adjustments |
(1,258 | ) | -0.5 | % | (1,241 | ) | -0.5 | % | (1,328 | ) | -0.3 | % | (2,399 | ) | -0.5 | % | ||||||||||||||||
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| Non-GAAP income from continuing operations |
$ | 55,260 | 24.0 | % | $ | 52,842 | 21.2 | % | $ | 132,292 | 26.2 | % | $ | 99,614 | 20.8 | % | ||||||||||||||||
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| GAAP income from continuing operations per share—diluted |
$ | 1.05 | $ | 0.87 | $ | 2.63 | $ | 1.64 | ||||||||||||||||||||||||
| Amortization of acquired intangible assets |
— | — | — | — | ||||||||||||||||||||||||||||
| Transition costs |
— | 0.08 | — | 0.14 | ||||||||||||||||||||||||||||
| COVID-19 |
— | — | — | 0.02 | ||||||||||||||||||||||||||||
| Spin related stock-based compensation |
— | 0.01 | — | 0.01 | ||||||||||||||||||||||||||||
| Relocation expenses |
0.11 | — | 0.11 | — | ||||||||||||||||||||||||||||
| Tax effect of non-GAAP adjustments |
(0.03 | ) | (0.02 | ) | (0.03 | ) | (0.04 | ) | ||||||||||||||||||||||||
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| Non-GAAP income from continuing operations per share—diluted |
$ | 1.13 | $ | 0.93 | (a) | $ | 2.73 | (a) | $ | 1.76 | (a) | |||||||||||||||||||||
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| (a) | Non-GAAP net income per share does not foot due to rounding. |
Page 7 of 8
SMITH & WESSON BRANDS, INC. AND SUBSIDIARIES
RECONCILIATION OF OPERATING CASH FLOW FROM CONTINUING OPERATIONS TO FREE CASH FLOW
(In thousands)
(Unaudited)
| For the Three Months Ended | For the Six Months Ended | |||||||||||||||
| October 31, 2021 | October 31, 2020 | October 31, 2021 | October 31, 2020 | |||||||||||||
| Net cash (used in)/provided by operating activities |
$ | (3,723 | ) | $ | 55,265 | $ | 105,364 | $ | 138,088 | |||||||
| Net cash used in investing activities |
(4,431 | ) | (8,674 | ) | (10,199 | ) | (15,314 | ) | ||||||||
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| Free cash flow |
$ | (8,154 | ) | $ | 46,591 | $ | 95,165 | $ | 122,774 | |||||||
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SMITH & WESSON BRANDS, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP INCOME FROM CONTINUING OPERATIONS TO NON-GAAP ADJUSTED EBITDAS
(in thousands)
(Unaudited)
| For the Three Months Ended | For the Six Months Ended | |||||||||||||||
| October 31, 2021 | October 31, 2020 | October 31, 2021 | October 31, 2020 | |||||||||||||
| GAAP income from continuing operations |
$ | 50,935 | $ | 49,118 | $ | 127,817 | $ | 92,417 | ||||||||
| Interest expense |
516 | 1,517 | 1,101 | 2,879 | ||||||||||||
| Income tax expense |
14,824 | 14,465 | 37,944 | 28,657 | ||||||||||||
| Depreciation and amortization |
7,724 | 8,145 | 15,166 | 16,282 | ||||||||||||
| Stock-based compensation expense |
914 | 1,191 | 2,366 | 2,075 | ||||||||||||
| COVID-19 |
55 | 102 | 131 | 1,055 | ||||||||||||
| Transition costs |
(80 | ) | 4,338 | (80 | ) | 7,933 | ||||||||||
| Relocation expense |
5,548 | — | 5,548 | — | ||||||||||||
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| Non-GAAP Adjusted EBITDAS |
$ | 80,436 | $ | 78,876 | $ | 189,993 | $ | 151,298 | ||||||||
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Page 8 of 8