Smith & Wesson Brands, Inc. Reports Third Quarter Fiscal 2022 Financial Results
03/03/2022 - 04:05 PM
SPRINGFIELD, Mass. , March 3, 2022 /PRNewswire/ -- Smith & Wesson Brands , Inc. (NASDAQ Global Select: SWBI), a U.S.-based leader in firearm manufacturing and design, today announced financial results for the third quarter of fiscal 2022, ended January 31 , 2022. Unless otherwise indicated, any reference to income statement items refers to results from continuing operations.
Third Quarter Fiscal 2022 Financial Highlights
Net sales were $177.7 million $79.9 million 31.0% , from the comparable quarter last year, but $50.3 million 139.5% , higher than the third quarter in fiscal 2020. Gross margin was 39.6% versus 42.6% in the comparable quarter last year and 28.0% in the third quarter in fiscal 2020. Quarterly GAAP net income was $30.5 million $0.65 per diluted share, compared with $62.3 million $1.12 per diluted share, for the comparable quarter last year. Quarterly non-GAAP net income was $32.9 million $0.69 per diluted share, compared with $62.4 million $1.12 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 $51.9 million 29.2% of net sales, compared with $89.8 million 34.9% of net sales, for the comparable quarter last year. During the quarter, we purchased 2,788,152 shares of our common stock for $50.0 million Mark Smith , President and Chief Executive Officer, commented, "I am very proud of our team for demonstrating Smith & Wesson's ability to deliver meaningful profitability no matter the overall market conditions. Although the firearms market remains elevated and healthy with new entrants, it has cooled significantly from the height of the pandemic surge and seems to now be following pre-pandemic historical demand patterns. This macro demand pattern is very familiar to us, and is exactly what our business model is designed to accommodate. Our ability to ramp production aggressively to meet surging demand over the past couple of years fueled significant market share gains for Smith & Wesson and provided a demonstrable proof point for our flexible manufacturing strategy. Our manufacturing team increased throughput by over 82% during the surge, which has enabled us to not only gain impressive market share, but also to set a very solid business foundation for long-term success. Since the demand surge began in March of 2020, we have paid down $160 million $200 million 20% , paid nearly $20 million $40 million $107 million
Deana McPherson , Executive Vice President and Chief Financial Officer, commented "Looking back to where we were during the same quarter in fiscal 2020, you can see how our response to the surge in demand over the last two years has strengthened our foundation, creating an agile business model that optimizes profitability to drive long-term value. Revenue for our third quarter grew from $127.4 million $257.6 million 202.6% increase, and is now at $177.7 million 31% decrease from the historic levels recorded last year, it is truly remarkable that we were able to achieve a $50.3 million 39.6% in the third quarter, which was 300 basis points below the 42.6% realized in the prior year comparable quarter, but 1,160 basis points above the 28% realized in the third quarter of fiscal 2020. Our Board of Directors has again authorized our $0.08 per share quarterly dividend, which will be paid to stockholders of record on March 17, 2022 with payment to be made on March 31, 2022 ."
Conference Call and Webcast March 3, 2022 , to discuss its third 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 2710778. 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
About Smith & Wesson Brands , Inc. 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
Safe Harbor Statement 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 and our Quarterly Report on Form 10-Q for the fiscal quarter ended October 31 , 2021.
Contact: investorrelations@smith-wesson.com
SMITH & WESSON BRANDS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
As of:
January 31, 2022
April 30, 2021
(In thousands, except par value and share data)
ASSETS
Current assets:
Cash and cash equivalents
$ 107,268
$ 113,017
Accounts receivable, net of allowances for credit losses of $25 on January 31, 2022 and $107 on April 30, 2021
49,386
67,442
Inventories
134,268
78,477
Prepaid expenses and other current assets
7,521
8,408
Income tax receivable
2,233
909
Total current assets
300,676
268,253
Property, plant, and equipment, net
134,540
141,612
Intangibles, net
4,257
4,417
Goodwill
19,024
19,024
Other assets
10,808
13,082
Total assets
469,305
446,388
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable
$ 36,060
$ 57,337
Accrued expenses and deferred revenue
26,857
33,136
Accrued payroll and incentives
16,223
17,381
Accrued income taxes
362
1,157
Accrued profit sharing
11,502
14,445
Accrued warranty
2,040
2,199
Total current liabilities
93,044
125,655
Deferred income taxes
904
904
Finance lease payable, net of current portion
37,930
38,786
Other non-current liabilities
11,118
14,659
Total liabilities
142,996
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, 74,550,885 issued and 45,510,515 shares outstanding on January 31, 2022 and 4,222,127 shares
75
74
Additional paid-in capital
276,389
273,431
Retained earnings
472,147
325,181
Accumulated other comprehensive income
73
73
Treasury stock, at cost (29,040,370 shares on January 31, 2022 and 24,284,798 on April 30, 2021)
(422,375)
(332,375)
Total stockholders' equity
326,309
266,384
Total liabilities and stockholders' equity
$ 469,305
$ 446,388
SMITH & WESSON BRANDS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
For the Three Months Ended January 31,
For the Nine Months Ended January 31,
2022
2021
2022
2021
(In thousands, except per share data)
Net sales
$ 177,738
$ 257,634
$ 682,826
$ 736,247
Cost of sales
107,339
147,955
380,490
433,073
Gross profit
70,399
109,679
302,336
303,174
Operating expenses:
Research and development
1,716
1,757
5,269
5,518
Selling, marketing, and distribution
11,518
10,487
33,575
32,095
General and administrative
17,443
17,054
58,491
62,061
Total operating expenses
30,677
29,298
97,335
99,674
Operating income from continuing operations
39,722
80,381
205,001
203,500
Other income/(expense), net:
Other income/(expense), net
751
952
2,244
1,711
Interest expense, net
(594)
(550)
(1,605)
(3,356)
Total other income/(expense), net
157
402
639
(1,645)
Income from operations before income taxes
39,879
80,783
205,640
201,855
Income tax expense
9,337
18,520
47,281
47,176
Income from continuing operations
$ 30,542
$ 62,263
$ 158,359
$ 154,679
Discontinued operations:
Income from discontinued operations, net of tax
—
127
—
8,334
Net income
$ 30,542
$ 62,390
$ 158,359
$ 163,013
Net income per share:
Basic - continuing operations
$ 0.65
$ 1.13
$ 3.32
$ 2.79
Basic - net income
$ 0.65
$ 1.13
$ 3.32
$ 2.94
Diluted - continuing operations
$ 0.65
$ 1.12
$ 3.28
$ 2.75
Diluted - net income
$ 0.65
$ 1.12
$ 3.28
$ 2.90
Weighted average number of common shares outstanding:
Basic
46,763
55,137
47,769
55,515
Diluted
47,175
55,702
48,307
56,258
SMITH & WESSON BRANDS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the Nine Months Ended
January 31, 2022
January 31, 2021
(In thousands)
Cash flows from operating activities:
Income from continuing operations
$ 158,359
$ 154,679
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
22,413
24,133
Loss on sale/disposition of assets
31
148
Provision for losses/(recoveries) on notes and accounts receivable
678
(693)
Impairment of long-lived tangible assets
86
—
Deferred income taxes
—
316
Stock-based compensation expense
3,565
3,392
Changes in operating assets and liabilities:
Accounts receivable
17,378
8
Inventories
(55,791)
19,295
Prepaid expenses and other current assets
887
(1,018)
Income taxes
(2,119)
(12,831)
Accounts payable
(21,209)
17,299
Accrued payroll and incentives
(1,158)
2,040
Accrued profit sharing
(2,943)
8,663
Accrued expenses and deferred revenue
(6,322)
(19,950)
Accrued warranty
(159)
421
Other assets
2,188
1,226
Other non-current liabilities
(3,609)
1,309
Cash provided by operating activities - continuing operations
112,275
198,437
Cash used in operating activities - discontinued operations
—
(2,129)
Net cash provided by operating activities
112,275
196,308
Cash flows from investing activities:
Refunds on machinery and equipment
—
310
Payments to acquire patents and software
(218)
(502)
Proceeds from sale of property and equipment
97
—
Payments to acquire property and equipment
(15,090)
(18,378)
Cash used in investing activities - continuing operations
(15,211)
(18,570)
Cash used in investing activities - discontinued operations
—
(1,143)
Net cash used in investing activities
(15,211)
(19,713)
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
(813)
(736)
Payments on notes and loans payable
—
(185,000)
Distribution to AOUT
—
(25,000)
Payments to acquire treasury stock
(90,000)
(50,000)
Dividend distribution
(11,393)
(5,594)
Proceeds from exercise of options to acquire common stock, including employee stock purchase plan
846
2,217
Payment of employee withholding tax related to restricted stock units
(1,453)
(2,201)
Cash used in by financial activities - continuing operations
(102,813)
(241,764)
Cash used in financial activities - discontinued operations
—
(166)
Net cash used inprovided by financing activities
(102,813)
(241,930)
Net decrease in cash and cash equivalents
(5,749)
(65,335)
Cash and cash equivalents, beginning of period
113,017
125,011
Cash and cash equivalents, end of period
$ 107,268
$ 59,676
Supplemental disclosure of cash flow information
Cash paid for:
Interest
$ 1,670
$ 2,745
Income taxes
$ 49,402
$ 63,525
SMITH & WESSON BRANDS, INC. AND SUBSIDIARIES
For the Three Months Ended
For the Nine Months Ended
January 31, 2022
January 31, 2021
January 31, 2022
January 31, 2021
$
% of Sales
$
% of Sales
$
% of Sales
$
% of Sales
GAAP gross profit
$ 70,399
39.6%
$ 109,679
42.6%
$ 302,336
44.3%
$ 303,174
41.2%
Relocation expenses
1,243
0.7%
—
—
2,330
0.3%
—
—
COVID-19
1
0.0%
22
0.0%
32
0.0%
517
0.1%
Non-GAAP gross profit
$ 71,643
40.3%
$ 109,701
42.6%
$ 304,698
44.6%
$ 303,691
41.2%
GAAP operating expenses
$ 30,677
17.3%
$ 29,298
11.4%
$ 97,335
14.3%
$ 99,674
13.5%
Amortization of acquired intangible assets
(72)
0.0%
(83)
0.0%
(214)
0.0%
(248)
0.0%
Transition costs
—
—
(20)
0.0%
80
0.0%
(7,953)
-1.1%
COVID-19
(37)
0.0%
(58)
0.0%
(137)
0.0%
(617)
-0.1%
Spin related stock-based compensation
(43)
0.0%
—
—
(104)
0.0%
(442)
-0.1%
Relocation expenses
(1,737)
-1.0%
—
—
(6,198)
-0.9%
—
—
Non-GAAP operating expenses
$ 28,788
16.2%
$ 29,137
11.3%
$ 90,762
13.3%
$ 90,414
12.3%
GAAP operating income
$ 39,722
22.3%
$ 80,381
31.2%
$ 205,001
30.0%
$ 203,500
27.6%
Amortization of acquired intangible assets
72
0.0%
83
0.0%
214
0.0%
248
0.0%
Transition costs
—
—
20
0.0%
(80)
0.0%
7,953
1.1%
COVID-19
38
0.0%
80
0.0%
169
0.0%
1,134
0.2%
Spin related stock-based compensation
43
0.0%
—
—
104
0.0%
442
0.1%
Relocation expenses
2,980
1.7%
—
—
8,528
1.2%
—
—
Non-GAAP operating income
$ 42,855
24.1%
$ 80,564
31.3%
$ 213,936
31.3%
$ 213,277
29.0%
GAAP income from continuing operations
$ 30,542
17.2%
$ 62,263
24.2%
$ 158,359
23.2%
$ 154,679
21.0%
Amortization of acquired intangible assets
72
0.0%
83
0.0%
214
0.0%
248
0.0%
Transition costs
—
0.0%
20
0.0%
(80)
0.0%
7,953
1.1%
COVID-19
38
0.0%
80
0.0%
169
0.0%
1,134
0.2%
Spin related stock-based compensation
43
0.0%
—
—
104
0.0%
442
0.1%
Relocation expenses
2,980
1.7%
—
—
8,528
1.2%
—
—
Tax effect of non-GAAP adjustments
(733)
-0.4%
(46)
0.0%
(2,054)
-0.3%
(2,444)
-0.3%
Non-GAAP income from continuing operations
$ 32,942
18.5%
$ 62,400
24.2%
$ 165,240
24.2%
$ 162,012
22.0%
GAAP income from continuing operations per share - diluted
$ 0.65
$ 1.12
$ 3.28
$ 2.75
Amortization of acquired intangible assets
—
—
—
—
Transition costs
—
—
—
0.14
COVID-19
—
—
—
0.02
Spin related stock-based compensation
—
—
—
0.01
Relocation expenses
0.06
—
0.18
—
Tax effect of non-GAAP adjustments
(0.02)
—
(0.04)
(0.04)
Non-GAAP income from continuing operations per share - diluted
$ 0.69
$ 1.12
$ 3.42
$ 2.88
(a) Non-GAAP net income per share does not foot due to rounding.
Net Sales
177,738
257,634
682,826
736,247
-
-
Weighted average number of common shares outstanding - diluted
47,175
55,702
48,307
56,258
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 Nine Months Ended
January 31, 2022
January 31, 2021
January 31, 2022
January 31, 2021
GAAP income from continuing operations
$ 30,542
$ 62,263
$ 158,359
$ 154,679
Interest expense
639
592
1,740
3,471
Income tax expense
9,337
18,520
47,281
47,176
Depreciation and amortization
7,179
7,017
22,346
23,264
Stock-based compensation expense
1,199
1,317
3,565
3,392
COVID-19
38
80
169
1,134
Transition costs
—
20
(80)
7,953
Relocation expense
2,980
—
8,528
—
Non-GAAP Adjusted EBITDAS
$ 51,914
$ 89,809
$ 241,908
$ 241,069
29.2%
34.9%
SMITH & WESSON BRANDS, INC. AND SUBSIDIARIES
RECONCILIATION OF OPERATING CASH FLOW FROM CONTINUING OPERATIONS TO FREE CASH FLOW
For the Three Months Ended
For the Nine Months Ended
January 31, 2022
January 31, 2021
January 31, 2022
January 31, 2021
Net cash (used in)/provided by operating activities
$ 6,911
$ 60,349
$ 112,275
$ 198,437
Net cash used in investing activities
(5,012)
(3,256)
(15,211)
(18,570)
Free cash flow
$ 1,899
$ 57,093
$ 97,064
$ 179,867
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SOURCE Smith & Wesson Brands , Inc.
