10-Q
http://fasb.org/us-gaap/2022#OtherLiabilitiesNoncurrenthttp://fasb.org/us-gaap/2022#OtherAssetsNoncurrent00010927960.25Q2--04-30http://www.smith-wesson.com/20221031#AccruedExpensesAndDeferredRevenueCurrenthttp://fasb.org/us-gaap/2022#PropertyPlantAndEquipmentAndFinanceLeaseRightOfUseAssetAfterAccumulatedDepreciationAndAmortizationhttp://www.smith-wesson.com/20221031#AccruedExpensesAndDeferredRevenueCurrenthttp://www.smith-wesson.com/20221031#AccruedExpensesAndDeferredRevenueCurrenthttp://www.smith-wesson.com/20221031#AccruedExpensesAndDeferredRevenueCurrenthttp://www.smith-wesson.com/20221031#AccruedExpensesAndDeferredRevenueCurrentfalsehttp://www.smith-wesson.com/20221031#AccruedExpensesAndDeferredRevenueCurrent2019-12http://fasb.org/us-gaap/2022#FinanceLeaseLiabilityNoncurrent0001092796swbi:IdbMember2022-05-012022-10-310001092796us-gaap:AdditionalPaidInCapitalMember2021-10-310001092796us-gaap:RetainedEarningsMember2021-04-300001092796swbi:SeveranceAndEmployeeRelatedsBenefitsMember2022-04-300001092796swbi:ConsultingServicesMember2021-08-012021-10-310001092796us-gaap:GeneralAndAdministrativeExpenseMember2021-08-012021-10-310001092796us-gaap:CommonStockMember2022-04-300001092796us-gaap:AdditionalPaidInCapitalMember2021-04-3000010927962021-10-310001092796us-gaap:ResearchAndDevelopmentExpenseMember2022-05-012022-10-310001092796us-gaap:FairValueInputsLevel3Member2022-10-310001092796us-gaap:CostOfSalesMember2022-08-012022-10-3100010927962022-12-050001092796us-gaap:CostOfSalesMember2022-05-012022-10-310001092796us-gaap:RetainedEarningsMember2022-04-300001092796swbi:EmployeeRelationsMember2021-05-012021-10-310001092796us-gaap:ResearchAndDevelopmentExpenseMember2022-08-012022-10-310001092796swbi:EmployeeRelationsMember2021-08-012021-10-310001092796srt:MaximumMember2022-05-012022-10-310001092796us-gaap:RetainedEarningsMember2022-05-012022-10-3100010927962021-05-012021-10-310001092796us-gaap:LondonInterbankOfferedRateLIBORMemberus-gaap:RevolvingCreditFacilityMember2022-05-012022-10-310001092796swbi:UnsecuredRevolvingCreditFacilityMember2020-08-242020-08-240001092796swbi:RelocationMember2021-05-012021-10-310001092796us-gaap:TreasuryStockMember2021-04-300001092796swbi:OfficeRentAndEquipmentMember2022-08-012022-10-310001092796us-gaap:RetainedEarningsMember2021-05-012021-10-310001092796us-gaap:SellingAndMarketingExpenseMember2021-05-012021-10-310001092796us-gaap:RestrictedStockUnitsRSUMember2022-05-012022-07-310001092796swbi:RestrictedStockUnitsAndPerformanceStockUnitsMember2022-04-300001092796us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2022-10-3100010927962022-05-012022-10-310001092796us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2022-04-300001092796srt:MinimumMember2022-05-012022-10-310001092796us-gaap:GeneralAndAdministrativeExpenseMember2021-05-012021-10-310001092796swbi:EmployeeRelationsMember2022-08-012022-10-310001092796us-gaap:RestrictedStockUnitsRSUMember2021-08-012021-10-310001092796swbi:RelocationMember2021-08-012021-10-310001092796swbi:RestrictedStockUnitsAndPerformanceStockUnitsMember2022-05-012022-10-310001092796us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-10-310001092796swbi:RelocationMember2022-10-310001092796srt:ExecutiveOfficerMemberus-gaap:RestrictedStockUnitsRSUMember2021-05-012021-10-3100010927962022-07-162022-07-160001092796us-gaap:AdditionalPaidInCapitalMember2022-10-310001092796us-gaap:TreasuryStockMember2022-10-3100010927962022-03-092022-03-090001092796us-gaap:CostOfSalesMember2021-05-012021-10-310001092796us-gaap:AdditionalPaidInCapitalMember2021-05-012021-10-310001092796us-gaap:RetainedEarningsMember2021-08-012021-10-310001092796us-gaap:RetainedEarningsMember2022-07-310001092796swbi:SmithAndWessonCorporationMemberswbi:GeminiTechnologiesIncorporatedMember2018-01-012018-01-310001092796swbi:ShareRepurchaseTransactionsTwoMemberus-gaap:CommonStockMember2021-03-020001092796us-gaap:AdditionalPaidInCapitalMember2021-07-310001092796us-gaap:RetainedEarningsMember2022-10-310001092796us-gaap:TreasuryStockMember2022-04-300001092796us-gaap:AdditionalPaidInCapitalMember2022-04-300001092796us-gaap:RetainedEarningsMember2022-08-012022-10-310001092796swbi:ConsultingServicesMember2022-05-012022-10-310001092796srt:ExecutiveOfficerMemberus-gaap:PerformanceSharesMember2021-05-012021-10-310001092796swbi:MarketConditionPsusMember2022-05-012022-10-310001092796us-gaap:GeneralAndAdministrativeExpenseMember2022-08-012022-10-310001092796swbi:OfficeRentAndEquipmentMember2021-08-012021-10-310001092796swbi:SeveranceAndEmployeeRelatedBenefitsMember2021-08-012021-10-310001092796us-gaap:RevolvingCreditFacilityMemberswbi:SelfInsuranceMember2022-10-310001092796us-gaap:CommonStockMemberswbi:ShareRepurchaseTransactionsOneMember2021-05-012021-10-310001092796us-gaap:CostOfSalesMember2021-08-012021-10-310001092796swbi:ShareRepurchaseTransactionsTwoMemberus-gaap:CommonStockMember2021-05-012021-10-310001092796us-gaap:ResearchAndDevelopmentExpenseMember2021-08-012021-10-310001092796swbi:ServiceBasedPerformanceSharesMember2021-05-012021-10-310001092796us-gaap:CommonStockMember2021-08-012021-10-310001092796us-gaap:SellingAndMarketingExpenseMember2021-08-012021-10-310001092796swbi:ConsultingServicesMember2021-05-012021-10-310001092796us-gaap:CommonStockMember2021-05-012021-10-310001092796us-gaap:RestrictedStockUnitsRSUMembersrt:DirectorMember2022-05-012022-10-3100010927962021-07-310001092796us-gaap:CommonStockMember2021-04-300001092796us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-04-300001092796swbi:SeveranceAndEmployeeRelatedsBenefitsMember2022-05-012022-10-310001092796swbi:MarketConditionPsusMember2021-05-012021-10-310001092796swbi:IncentiveStockPlanMemberswbi:MarketConditionPsusMember2021-10-310001092796swbi:SeveranceAndEmployeeRelatedsBenefitsMember2022-10-310001092796swbi:UnsecuredRevolvingCreditFacilityMember2020-08-240001092796us-gaap:CommonStockMemberswbi:ShareRepurchaseTransactionsOneMember2022-10-310001092796swbi:UnsecuredRevolvingCreditFacilityMember2022-05-012022-10-310001092796us-gaap:RestrictedStockUnitsRSUMembersrt:DirectorMember2021-05-012021-10-310001092796us-gaap:RevolvingCreditFacilityMember2022-10-310001092796swbi:RestrictedStockUnitsAndPerformanceStockUnitsMember2021-10-3100010927962022-05-012022-07-310001092796swbi:IncentiveStockPlanMemberswbi:MarketConditionPsusMember2022-05-012022-10-310001092796swbi:RestrictedStockUnitsAndPerformanceStockUnitsMember2021-05-012021-10-310001092796swbi:OfficeRentAndEquipmentMember2022-05-012022-10-310001092796us-gaap:RetainedEarningsMember2021-07-310001092796swbi:OfficeRentAndEquipmentMember2021-05-012021-10-310001092796swbi:IncentiveStockPlanMemberswbi:MarketConditionPsusMember2022-10-310001092796swbi:RelocationMember2022-08-012022-10-310001092796swbi:NationalLogisticsFacilityMember2022-05-012022-10-310001092796swbi:SeveranceAndEmployeeRelatedBenefitsMember2022-08-012022-10-310001092796us-gaap:RestrictedStockUnitsRSUMember2022-05-012022-10-310001092796swbi:PutativeClassMemberswbi:GeneralDamagesMember2022-05-012022-10-310001092796swbi:RelocationMember2022-04-300001092796us-gaap:CommonStockMember2021-10-3100010927962022-10-310001092796us-gaap:RestrictedStockUnitsRSUMemberswbi:NonExecutiveEmployeesMember2022-05-012022-10-310001092796swbi:PutativeClassMemberswbi:CompensatoryDamagesMember2022-05-012022-10-310001092796swbi:SeveranceAndEmployeeRelatedBenefitsMember2022-05-012022-10-3100010927962021-08-012021-10-310001092796srt:ExecutiveOfficerMemberus-gaap:PerformanceSharesMember2022-05-012022-10-310001092796us-gaap:BridgeLoanMember2022-05-012022-10-310001092796us-gaap:RestrictedStockUnitsRSUMember2022-08-012022-10-310001092796swbi:PutativeClassMember2022-05-012022-10-310001092796us-gaap:CommonStockMember2022-08-012022-10-310001092796swbi:RelocationMember2022-05-012022-10-310001092796us-gaap:AdditionalPaidInCapitalMember2022-08-012022-10-310001092796us-gaap:CommonStockMember2022-05-012022-10-310001092796us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-07-310001092796us-gaap:CommonStockMember2022-10-310001092796us-gaap:RetainedEarningsMember2021-10-310001092796us-gaap:TreasuryStockMember2022-07-310001092796us-gaap:FairValueInputsLevel2Member2022-10-310001092796swbi:RestrictedStockUnitsAndPerformanceStockUnitsMember2021-04-300001092796us-gaap:TreasuryStockMember2021-07-310001092796us-gaap:AdditionalPaidInCapitalMember2022-07-310001092796us-gaap:CommonStockMember2021-07-310001092796us-gaap:SellingAndMarketingExpenseMember2022-08-012022-10-3100010927962022-04-300001092796us-gaap:SellingAndMarketingExpenseMember2022-05-012022-10-310001092796us-gaap:AdditionalPaidInCapitalMember2022-05-012022-10-3100010927962021-04-300001092796swbi:ShareRepurchaseTransactionsTwoMemberus-gaap:CommonStockMember2021-06-150001092796swbi:RestrictedStockUnitsAndPerformanceStockUnitsMember2022-10-310001092796us-gaap:TreasuryStockMember2021-10-310001092796swbi:EmployeeRelationsMember2022-05-012022-10-310001092796us-gaap:GeneralAndAdministrativeExpenseMember2022-05-012022-10-310001092796swbi:IncentiveStockPlanMemberswbi:MarketConditionPsusMember2021-05-012021-10-310001092796us-gaap:RestrictedStockUnitsRSUMemberswbi:NonExecutiveEmployeesMember2021-05-012021-10-310001092796srt:MaximumMember2020-08-2400010927962022-08-012022-10-310001092796us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-07-3100010927962022-07-310001092796us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-10-310001092796us-gaap:ResearchAndDevelopmentExpenseMember2021-05-012021-10-310001092796srt:ExecutiveOfficerMemberus-gaap:RestrictedStockUnitsRSUMember2022-05-012022-10-310001092796us-gaap:RestrictedStockUnitsRSUMember2021-05-012021-10-3100010927962022-09-120001092796us-gaap:TreasuryStockMember2021-05-012021-10-310001092796us-gaap:AdditionalPaidInCapitalMember2021-08-012021-10-310001092796swbi:SeveranceAndEmployeeRelatedBenefitsMember2021-05-012021-10-310001092796us-gaap:BridgeLoanMember2020-08-240001092796us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-04-300001092796us-gaap:CommonStockMember2022-07-310001092796swbi:ConsultingServicesMember2022-08-012022-10-31swbi:Casexbrli:pureswbi:Plaintiffxbrli:sharesiso4217:CADiso4217:USDiso4217:USDxbrli:shares

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended October 31, 2022

Commission File No. 001-31552

 

 

https://cdn.kscope.io/5cbcf180866ed37f8c367df413ad418a-img124971165_0.jpg 

 

Smith & Wesson Brands, Inc.

(Exact name of registrant as specified in its charter)

 

 

Nevada

 

87-0543688

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

2100 Roosevelt Avenue

Springfield, Massachusetts

 

01104

(Address of principal executive offices)

 

(Zip Code)

(800) 331-0852

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each Class

Trading Symbol

Name of exchange on which registered

Common Stock, par value $0.001 per share

SWBI

Nasdaq Global Select Market

 

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

 

Accelerated filer

 

 

 

 

 

Non-accelerated filer

 

 

Smaller reporting company

 

 

 

 

 

 

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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No

The registrant had 45,897,315 shares of common stock, par value $0.001, outstanding as of December 5, 2022.

 


 

SMITH & WESSON BRANDS, INC.

Quarterly Report on Form 10-Q

For the Three and Six Months Ended October 31, 2022 and 2021

 

TABLE OF CONTENTS

 

PART I - FINANCIAL INFORMATION

 

 

 

Item 1. Financial Statements (Unaudited)

 

4

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

19

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

25

 

Item 4. Controls and Procedures

 

25

 

 

 

 

PART II - OTHER INFORMATION

 

 

 

Item 1. Legal Proceedings

 

26

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

26

 

Item 6. Exhibits

 

26

Signatures

 

28

EX-31.1

 

 

EX-31.2

 

 

EX-32.1

 

 

EX-32.2

 

 

 

Smith & Wesson®, S&W®, M&P®, M&P Shield®, Performance Center®, Airlite®, Airweight®, American Guardians®, America’s Master Gunmaker®, Armornite®, Arrow®, Aurora®, Aurora-II®, Blast Jacket®, Bodyguard®, Carry Comp®, Chiefs Special®, Club 1852®, Compass®, Competitor®, Contender®, CSX®, Dagger®, Dimension®, Encore®, E-Series®, EZ®, Flextech®, G-Core®, Gemtech®, Gemtech Suppressors®, Gemtech World-Class Silencers®, GM®, GMT-Halo®, Governor®, Integra®, Lady Smith®, Lever Lock®, LOC®, Lunar®, M2.0®, Mag Express®, Magnum®, Maxi-Hunter®, Mist-22®, Mountain Gun®, Number 13®, PC®, Power Rod®, Protected by Smith & Wesson®, Put A Legend On Your Line®, QLA®, Quick Load Accurizer®, Quickmount®, Shield®, Smith & Wesson Collectors Association®, Smith & Wesson Performance Center®, Smith & Wesson Precision Components®, Speed Breech®, Speed Breach XT®, SW22 Victory®, Swing Hammer®, T/C®, T/CR22®, T17®, The Professional’s Choice for Decades®, The S&W Bench®, The Sigma Series®, Thompson/Center®, Trek®, Triumph®, U-View®, Viper®, and Weather Shield® are some of the registered U.S. trademarks of our company or one of our subsidiaries. Abyss™, Neutron™, GVAC™, TEMPO™, ETM™, Silence Is Golden™, Smith & Wesson Response™, M&P FPC™, C.O.R.E.™, SW Equalizer™, GM-S1™, Redux™, Oath™, Nerve™, Empowering Americans™, GunSmarts™, S&W500™, SD™, SDVE™, SW1911™, Volunteer™, Cheap Shot™, Impact!™, Impact!SB™, Katahdin™, Maxi-Ball™, Natural Lube 1000 Plus™, Pro Hunter™, Pro-Hunter FX™, Pro Hunter XT™, Quickshot™, Speed Shots™, Strike™, Super Glide™, Venture™, Alpine™, One™, Patrolman™, and Tracker™ are some of the unregistered trademarks of our company or one of our subsidiaries. This report also may contain trademarks and trade names of other companies.

 


 

Statement Regarding Forward-Looking Information

The statements contained in this Quarterly Report on Form 10-Q that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical facts contained or incorporated herein by reference in this Quarterly Report on Form 10-Q, including statements regarding our future operating results, future financial position, business strategy, objectives, goals, plans, prospects, markets, and plans and objectives for future operations, are forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “anticipates,” “believes,” “estimates,” “expects,” “intends,” “targets,” “contemplates,” “projects,” “predicts,” “may,” “might,” “plan,” “will,” “would,” “should,” “could,” “may,” “can,” “potential,” “continue,” “objective,” or the negative of those terms, or similar expressions intended to identify forward-looking statements. However, not all forward-looking statements contain these identifying words. Specific forward-looking statements in this Quarterly Report on Form 10-Q include statements that we plan to move our headquarters and certain of our manufacturing operations to a new facility being constructed in Maryville, Tennessee; lease payments for future periods; estimated amortization expense of intangible assets for future periods; the outcome of the lawsuits to which we are subject and their effect on us; our belief that the claims asserted by Gemini (as defined herein) and plaintiffs in a putative class action against us have no merit and that we intend to aggressively defend these actions; our belief with respect to certain matters described in the Commitments and Contingencies – Litigation section, that the allegations are unfounded and that any incident and any results from them or any injuries were due to negligence or misuse of the firearm by the claimant or a third party; our belief that our accruals for product liability cases and claims are a reasonable quantitative measure of the cost to us of product liability cases and claims; our belief that we have provided adequate accruals for defense costs; our intention in connection with the Project Agreement (as defined herein) to incur, or cause to be incurred, no less than $120.0 million in aggregate capital expenditures on or before December 31, 2025, create no less than 620 new jobs, and sustain an average hourly wage of at least $25.97 at the facility; our intention, as part of the Relocation (as defined herein), to vacate and sublease our Missouri distribution facility; our belief that we will not incur an impairment associated with the lease associated with our Missouri distribution facility; our intention, with respect to assets associated with our assembly operations in Massachusetts and distribution operations in Missouri, to either move those assets to Tennessee at the appropriate time or sell or sublease those assets that will not be moved; that subsequent to the Relocation, our Massachusetts facility will continue to remain an important part of our manufacturing activities with significant portions of the operations being unaffected by the Relocation; our intention, at or near the conclusion of our Connecticut building lease in May 2024, to relocate a portion of the plastic injection molding operations to Tennessee and evaluate selling the remaining molding operations utilized in our Connecticut operations to a third party; our expectation to incur capital expenditures in connection with the construction and equipping of the new facility in Maryville, Tennessee in an aggregate amount of no less than $120.0 million on or before December 31, 2025; our belief that overall firearm demand remains healthy, as indicated by recent adjusted NICS data; our belief that the impact of inflation on consumer purchase power has resulted in a temporary shift toward lower priced offerings; our inventory levels, both internally and in the distribution channel, in excess of demand may negatively impact future operating results; our expectation that our inventory levels will decline by the end of the fiscal year due to normal seasonality, but will remain elevated as we begin our transition to our new facility in Tennessee; our expectation for capital expenditures in fiscal 2023, including spending related to the Relocation; factors affecting our future capital requirements; availability of equity or debt financing on acceptable terms, if at all; the record date and payment date for our dividend; and our belief that our existing capital resources and credit facilities will be adequate to fund our operations, including our finance leases and other commitments, for the next 12 months. All forward-looking statements included herein are based on information available to us as of the date hereof and speak only as of such date. Except as required by law, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements. The forward-looking statements contained in or incorporated by reference into this Quarterly Report on Form 10-Q reflect our views as of the date hereof about future events and are subject to risks, uncertainties, assumptions, and changes in circumstances that may cause our actual results, performance, or achievements to differ significantly from those expressed or implied in any forward-looking statement. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future events, results, performance, or achievements. A number of factors could cause actual results to differ materially from those indicated by the forward-looking statements. Such factors include, among other, 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, including the impact of inflationary pressures; our competitive environment; the supply, availability, and costs of raw materials and components; speculation surrounding fears of terrorism and crime; our anticipated growth and growth opportunities; our ability to effectively manage and execute the Relocation; our ability to increase demand for our products in various markets, including consumer, law enforcement, and military channels, domestically and internationally; our penetration rates in new and existing markets; our strategies; our ability to maintain and enhance brand recognition and reputation; our ability to introduce new products; the success of new products; our ability to expand our markets; our ability to integrate acquired businesses in a successful manner; the potential for cancellation of orders from our backlog; and other factors detailed from time to time in our reports filed with the Securities and Exchange Commission, or the SEC, including our Annual Report on Form 10-K for the fiscal year ended April 30, 2022, or the Fiscal 2022 Form 10-K.

 


 

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

SMITH & WESSON BRANDS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

 

 

As of:

 

 

 

October 31, 2022

 

 

April 30, 2022

 

 

 

(In thousands, except par value and share data)

 

ASSETS

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

42,975

 

 

$

120,728

 

Accounts receivable, net of allowances for credit losses of $24 on
   October 31, 2022 and $
36 on April 30, 2022

 

 

44,384

 

 

 

62,695

 

Inventories

 

 

196,474

 

 

 

136,660

 

Prepaid expenses and other current assets

 

 

8,062

 

 

 

5,569

 

Income tax receivable

 

 

10,988

 

 

 

1,945

 

Total current assets

 

 

302,883

 

 

 

327,597

 

Property, plant, and equipment, net

 

 

169,265

 

 

 

135,591

 

Intangibles, net

 

 

3,688

 

 

 

3,608

 

Goodwill

 

 

19,024

 

 

 

19,024

 

Deferred income taxes

 

 

1,221

 

 

 

1,221

 

Other assets

 

 

9,914

 

 

 

10,435

 

Total assets

 

$

505,995

 

 

$

497,476

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

45,178

 

 

$

30,042

 

Accrued expenses and deferred revenue

 

 

23,845

 

 

 

23,482

 

Accrued payroll and incentives

 

 

17,042

 

 

 

17,371

 

Accrued income taxes

 

 

161

 

 

 

2,673

 

Accrued profit sharing

 

 

5,628

 

 

 

13,543

 

Accrued warranty

 

 

1,708

 

 

 

1,838

 

Total current liabilities

 

 

93,562

 

 

 

88,949

 

Finance lease payable, net of current portion

 

 

37,013

 

 

 

37,628

 

Other non-current liabilities

 

 

8,780

 

 

 

10,385

 

Total liabilities

 

 

139,355

 

 

 

136,962

 

Commitments and contingencies (Note 9)

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Preferred stock, $0.001 par value, 20,000,000 shares authorized, no shares
   issued or outstanding

 

 

 

 

 

 

Common stock, $0.001 par value, 100,000,000 shares authorized, 74,934,815
   issued and
45,894,445 shares outstanding on October 31, 2022 and 74,641,439
   shares issued and
45,601,069 shares outstanding on April 30, 2022

 

 

75

 

 

 

75

 

Additional paid-in capital

 

 

280,420

 

 

 

278,101

 

Retained earnings

 

 

508,447

 

 

 

504,640

 

Accumulated other comprehensive income

 

 

73

 

 

 

73

 

Treasury stock, at cost (29,040,370 shares on October 31, 2022 and
   April 30, 2022)

 

 

(422,375

)

 

 

(422,375

)

Total stockholders’ equity

 

 

366,640

 

 

 

360,514

 

Total liabilities and stockholders' equity

 

$

505,995

 

 

$

497,476

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

4


 

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,

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

 

(In thousands, except per share data)

 

Net sales

$

121,035

 

 

$

230,479

 

 

$

205,429

 

 

$

505,088

 

Cost of sales

 

81,773

 

 

 

128,484

 

 

 

134,696

 

 

 

273,151

 

Gross profit

 

39,262

 

 

 

101,995

 

 

 

70,733

 

 

 

231,937

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

1,869

 

 

 

1,744

 

 

 

3,542

 

 

 

3,552

 

Selling, marketing, and distribution

 

9,431

 

 

 

11,423

 

 

 

17,458

 

 

 

22,057

 

General and administrative

 

15,435

 

 

 

23,436

 

 

 

33,288

 

 

 

41,049

 

Total operating expenses

 

26,735

 

 

 

36,603

 

 

 

54,288

 

 

 

66,658

 

Operating income

 

12,527

 

 

 

65,392

 

 

 

16,445

 

 

 

165,279

 

Other income/(expense), net:

 

 

 

 

 

 

 

 

 

 

 

Other income/(expense), net

 

790

 

 

 

833

 

 

 

1,463

 

 

 

1,493

 

Interest expense, net

 

(420

)

 

 

(466

)

 

 

(854

)

 

 

(1,011

)

Total other income/(expense), net

 

370

 

 

 

367

 

 

 

609

 

 

 

482

 

Income from operations before income taxes

 

12,897

 

 

 

65,759

 

 

 

17,054

 

 

 

165,761

 

Income tax expense

 

3,249

 

 

 

14,824

 

 

 

4,094

 

 

 

37,944

 

Net income

$

9,648

 

 

$

50,935

 

 

$

12,960

 

 

$

127,817

 

Net income per share:

 

 

 

 

 

 

 

 

 

 

 

Basic - net income

$

0.21

 

 

$

1.06

 

 

$

0.28

 

 

$

2.65

 

Diluted - net income

$

0.21

 

 

$

1.05

 

 

$

0.28

 

 

$

2.63

 

Weighted average number of common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

Basic

 

45,815

 

 

 

48,147

 

 

 

45,777

 

 

 

48,270

 

Diluted

 

46,106

 

 

 

48,692

 

 

 

46,104

 

 

 

48,524

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

5


 

SMITH & WESSON BRANDS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

Common

 

 

Additional

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

Total

 

 

 

Stock

 

 

Paid-In

 

 

Retained

 

 

Comprehensive

 

 

Treasury Stock

 

 

Stockholders’

 

(In thousands)

 

Shares

 

 

Amount

 

 

Capital

 

 

Earnings

 

 

Income

 

 

Shares

 

 

Amount

 

 

Equity

 

Balance at July 31, 2021

 

 

74,298

 

 

$

74

 

 

$

274,068

 

 

$

398,219

 

 

$

73

 

 

 

26,252

 

 

$

(372,375

)

 

$

300,059

 

Stock-based compensation

 

 

 

 

 

 

 

 

914

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

914

 

Shares issued under employee
  stock purchase plan

 

 

61

 

 

 

 

 

 

831

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

831

 

Issuance of common stock under restricted
  stock unit awards, net of shares
  surrendered

 

 

188

 

 

 

1

 

 

 

(584

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(583

)

Dividends issued

 

 

 

 

 

 

 

 

(3,848

)

 

 

 

 

 

 

 

 

(3,848

)

Net income

 

 

 

 

 

 

 

 

 

 

50,935

 

 

 

 

 

 

 

 

 

 

 

 

50,935

 

Balance at October 31, 2021

 

 

74,547

 

 

 

75

 

 

 

275,229

 

 

 

445,306

 

 

 

73

 

 

 

26,252

 

 

 

(372,375

)

 

 

348,308

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at April 30, 2021

 

 

74,222

 

 

 

74

 

 

 

273,431

 

 

 

325,181

 

 

 

73

 

 

 

24,285

 

 

 

(332,375

)

 

 

266,384

 

Stock-based compensation

 

 

 

 

 

 

 

 

2,366

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,366

 

Shares issued under employee
  stock purchase plan

 

 

61

 

 

 

 

 

 

831

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

831

 

Issuance of common stock under restricted
  stock unit awards, net of shares
  surrendered

 

 

264

 

 

 

1

 

 

 

(1,399

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,398

)

Repurchase of treasury stock

 

 

 

 

 

 

 

 

 

 

 

 

1,967

 

 

 

(40,000

)

 

 

(40,000

)

Dividends issued

 

 

 

 

 

 

 

 

(7,692

)

 

 

 

 

 

 

 

 

(7,692

)

Net income

 

 

 

 

 

 

 

 

 

 

127,817

 

 

 

 

 

 

 

 

 

 

 

 

127,817

 

Balance at October 31, 2021

 

 

74,547

 

 

 

75

 

 

 

275,229

 

 

 

445,306

 

 

 

73

 

 

 

26,252

 

 

 

(372,375

)

 

 

348,308

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at July 31, 2022

 

 

74,811

 

 

 

75

 

 

 

278,297

 

 

 

503,376

 

 

 

73

 

 

 

29,040

 

 

 

(422,375

)

 

 

359,446

 

Stock-based compensation

 

 

 

 

 

 

 

 

1,428

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,428

 

Shares issued under employee
  stock purchase plan

 

 

85

 

 

 

 

 

 

753

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

753

 

Issuance of common stock under restricted
  stock unit awards, net of shares
  surrendered

 

 

39

 

 

 

 

 

 

(58

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(58

)

Dividends issued

 

 

 

 

 

 

 

 

(4,577

)

 

 

 

 

 

 

 

 

(4,577

)

Net income

 

 

 

 

 

 

 

 

 

 

9,648

 

 

 

 

 

 

 

 

 

 

 

 

9,648

 

Balance at October 31, 2022

 

 

74,935

 

 

 

75

 

 

 

280,420

 

 

 

508,447

 

 

 

73

 

 

 

29,040

 

 

 

(422,375

)

 

 

366,640

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at April 30, 2022

 

 

74,641

 

 

 

75

 

 

 

278,101

 

 

 

504,640

 

 

 

73

 

 

 

29,040

 

 

 

(422,375

)

 

 

360,514

 

Stock-based compensation

 

 

 

 

 

 

 

 

2,605

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,605

 

Shares issued under employee
  stock purchase plan

 

 

85

 

 

 

 

 

 

753

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

753

 

Issuance of common stock under restricted
   stock unit awards, net of shares
   surrendered

 

 

209

 

 

 

 

 

 

(1,039

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,039

)

Dividends issued

 

 

 

 

 

 

 

 

(9,153

)

 

 

 

 

 

 

 

 

(9,153

)

Net income

 

 

 

 

 

 

 

 

 

 

12,960

 

 

 

 

 

 

 

 

 

 

 

 

12,960

 

Balance at October 31, 2022

 

 

74,935

 

 

$

75

 

 

$

280,420

 

 

$

508,447

 

 

$

73

 

 

 

29,040

 

 

$

(422,375

)

 

$

366,640

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

6


 

SMITH & WESSON BRANDS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

 

For the Six Months Ended October 31,

 

 

 

2022

 

 

2021

 

 

 

(In thousands)

 

Cash flows from operating activities:

 

 

 

 

 

 

Net income