The following excerpt is from the company's SEC filing.
First Quarter Fiscal 2022 Financial Results
Record Gross Margin of 47.3%
Record Q1 Net Sales of $274.6M
Two-Year
Compounded Sales Growth of Nearly 170%
EPS of $1.57/Share and EBITDAS of 39.9%
SPRINGFIELD, Mass., September
1, 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 first quarter of fiscal 2022, ended July 31, 2021. Unless otherwise indicated, any reference to income statement items refers to results from
continuing operations.
First Quarter Fiscal 2022 F
inancial Highlights
Net sales were $274.6 million, an increase of $44.7 million, or 19.5%, over the comparable quarter last
year.
Gross margin was 47.3%, compared with gross margin of 40.2% for the comparable quarter last year.
Quarterly GAAP net income was $76.9 million, or $1.57 per diluted share, compared with $43.3 million,
or $0.77 per diluted share, for the comparable quarter last year.
non-GAAP
net income was $77.1 million, or $1.57 per
diluted share, compared with $46.8 million, or $0.83 per diluted share, for the comparable quarter last year. GAAP to
adjustments for income exclude costs related to the
spin-off
of the outdoor products and accessories business,
COVID-19
related expenses, and other costs. For a detailed reconciliation, see the schedules that follow in this
release.
Adjusted EBITDAS was $109.6 million, or 39.9% of
net sales, compared with $72.5 million, or 31.5% of net sales, for the comparable quarter last year.
Mark Smith, President and
Chief Executive Officer, commented, Our flexible manufacturing model and strong consumer preference for our products at the retail counter combined to deliver the highest first quarter net revenue in the companys history, marking the
fifth consecutive quarter of top line records. Even more remarkable, our team has been able to deliver nearly 170%
two-year
compounded growth, significantly outpacing the competition, while simultaneously
lowering
operating costs over this same timeframe. This is a direct result of significant strides the team has made in executing our strategy to streamline business operations and increase flexibility, and has driven an incredible EBITDAS
margin of nearly 40% in the quarter. But more importantly, we believe we are well positioned for the ever-changing market conditions in our industry, to maintain our leadership position in the industry, and continue delivering impressive
profitability in any environment.
Page 1 of 8
Smith continued, We are also thrilled to introduce our new M&P12 shotgun, which marks our entry
into a
brand-new
category for the iconic Smith & Wesson brand, and presents a significant opportunity to continue capitalizing on the momentum weve built over the past year with the consumer.
Within the first 24 hours of the announcement, we had tallied over 3 million consumer impressions and 300,000 engagements on social media, already making this one of our most widely viewed and most successful launches to date. We are excited to
continue innovating in this category and look forward to its growth potential.
Deana McPherson, Executive Vice President and Chief Financial
Officer, commented, Our first quarter results continue to demonstrate our ability to react to the changing needs of the market, delivering a 19.5% increase over last years results and securing a
compounded growth rate of nearly 170%. This increase in sales, combined with strong expense containment, resulted in a record gross margin of 47.3% for the quarter while also generating
$109.1 million in cash. We believe our ability to grow our top line without adding significant fixed costs, while also leveraging synergies from the
spin-off,
have been key contributors to our
profitability and position us well for the adjusting market. As we begin to replenish inventory in the channel and in our warehouse, we believe the flexibility of our operations and the strength of our balance sheet, combined with the hard work and
ingenuity of our R&D and marketing teams will enable us to continue to invest in our business and capture market share, while returning 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 September 14th with payment to be made on September 28th.
Conference Call and
Webcast
The company will host a conference call and webcast on September 1, 2021, to discuss its first 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 2176794. No RSVP is necessary. The conference call audio webcast can also be accessed live on the companys 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
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, and (ix) the tax effect of
adjustments; and (2) the
measures that exclude such information. We present these
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
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
, 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
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, our belief that consumers have a strong preference for our products at the retail counter; our belief that we are well
positioned for the ever-changing market conditions in our industry, to maintain our leadership position in the industry, and continue delivering impressive profitability in any environment; our significant opportunity to continue capitalizing on the
momentum weve built over the past year with the consumer; our excitement to continue innovating in a new category and its growth potential; our belief that our ability to grow our top line without adding significant fixed costs, while also
leveraging synergies from the
positions us well for the adjusting market; and our belief that as we begin to replenish inventory in the channel and in our warehouse, the flexibility of our operations
and the strength of our balance sheet, combined with the hard work and ingenuity of our R&D and marketing teams will enable us to continue to invest in our business and capture market share, while returning 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 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
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:
July 31, 2021
April 30, 2021
(In thousands, except par value and share data)
ASSETS
Current assets:
Cash and cash equivalents
171,413
113,017
Accounts receivable, net of allowances for credit losses of $52 on July 31, 2021 and $107 on April
30, 2021
41,198
67,442
Inventories
97,140
78,477
Prepaid expenses and other current assets
Income tax receivable
Total current assets
318,255
268,253
Property, plant, and equipment, net
139,626
141,612
Intangibles, net
Goodwill
19,024
Other assets
11,405
13,082
492,670
446,388
LIABILITIES AND STOCKHOLDERS EQUITY
Current liabilities:
Accounts payable
54,583
57,337
Accrued expenses and deferred revenue
33,554
33,136
Accrued payroll and incentives
17,381
Accrued income taxes
22,236
Accrued profit sharing
18,279
14,445
Accrued warranty
Total current liabilities
138,821
125,655
Deferred income taxes
Finance lease payable, net of current portion
38,509
38,786
non-current
14,377
14,659
Total liabilities
192,611
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, 74,298,308 issued and 48,046,090
shares outstanding on July 31, 2021 and 74,222,127 shares issued and 49,937,329 shares outstanding on April 30, 2021
Additional
paid-in
274,068
273,431
Retained earnings
398,219
325,181
Accumulated other comprehensive income
Treasury stock, at cost (26,252,218 shares on July 31, 2021 and 24,284,798 on April 30,
2021)
(372,375
(332,375
Total stockholders equity
300,059
266,384
492,670
446,388
Page 4 of 8
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
For the Three Months Ended July 31,
(In thousands, except per share data)
274,609
229,885
Cost of sales
144,667
137,461
Gross profit
129,942
92,424
Operating expenses:
Research and development
Selling, marketing, and distribution
10,634
General and administrative
17,614
21,780
Total operating expenses
30,056
33,681
Operating income from continuing operations
99,886
58,743
Other income/(expense), net:
Interest expense, net
(1,316
Total other income/(expense), net
(1,249
Income from operations before income taxes
100,002
57,494
Income tax expense
23,120
14,193
Income from continuing operations
76,882
43,301
Discontinued operations:
Income from discontinued operations, net of tax
Net income
48,385
Net income per share:
Basic
Diluted
Weighted average number of common shares outstanding:
48,394
55,494
49,050
56,277
Page 5 of 8
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
July 31, 2020
(In thousands)
Cash flows from operating activities:
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
Loss on sale/disposition of assets
Provision for losses on notes and accounts receivable
Stock-based
Changes in operating assets and liabilities:
26,300
(18,663
23,767
Income taxes
21,988
14,340
(2,443
(9,114
(1,664
(18,638
(1,225
Cash provided by operating activities
continuing
operations
109,087
81,723
discontinued
operations
Net cash provided by operating activities
84,230
Cash flows from investing activities:
Payments to acquire patents and software
Proceeds from sale of property and equipment
Payments to acquire property and equipment
(5,769
(6,465
Cash used by investing activities
(5,768
(6,652
Net cash used in investing activities
(7,647
Cash flows from financing activities:
Payments on finance lease obligation
Payments on notes and loans payable
(135,000
Payments to acquire treasury stock
(40,000
Dividend distribution
(3,844
Proceeds from exercise of options to acquire common stock
Payment of employee withholding tax related to restricted stock units
Cash used in by financial activities
(44,923
(135,967
Net cash used inprovided by financing activities
Net increase/(decrease) in cash and cash equivalents
58,396
(59,384
Cash and cash equivalents, beginning of period
125,011
Cash and cash equivalents, end of period
65,627
Supplemental disclosure of cash flow information
Cash paid for:
1,556
1,131
1,689
Page 6 of 8
RECONCILIATION OF GAAP FINANCIAL MEASURES TO
NON-GAAP
(Dollars in thousands, except per share data)
For the Three Months Ended
July 31, 2020
% of Sales
GAAP gross profit
129,970
93,333
GAAP operating expenses
Amortization of acquired intangible assets
Transition costs
(3,595
Spin related
29,864
29,960
GAAP operating income
100,106
63,373
GAAP income from continuing operations
Tax effect of
(1,144
77,051
46,787
GAAP income from continuing operations per share
Page 7 of 8
RECONCILIATION OF OPERATING CASH FLOW FROM CONTINUING OPERATIONS TO FREE CASH FLOW
(In thousands)
Net cash provided in operating activities
Free cash flow
103,319
75,071
RECONCILIATION OF GAAP INCOME FROM CONTINUING OPERATIONS TO
ADJUSTED EBITDAS
(in thousands)
109,557
72,526
Page 8 of 8
The above information was disclosed in a filing to the SEC. To see the filing, click here.
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