SWBI 8-K

SMITH & WESSON BRANDS, INC.

Date: December 3, 2020

/s/ Robert J. Cicero

Robert J. Cicero

Senior Vice President, General Counsel,

Chief Compliance Officer, and Secretary

Smith & Wesson Brands, Inc. (SWBI)

8-K 2020-12-03 For: 2020-12-03

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Added on April 04, 2026

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Exhibit Number		Exhibits

99.1		Press release from Smith & Wesson Brands, Inc., dated December 3, 2020, entitled “Smith & Wesson Brands, Inc. Reports Second Quarter Fiscal 2021 Financial Results”

104		Cover Page Interactive Data File (embedded within the Inline XBRL document)


	As of:
	October 31, 2020			April 30, 2020
	(In thousands, except par value and share data)
ASSETS
Current assets:
Cash and cash equivalents	$	55,549		$	125,011
Accounts receivable, net of allowances for credit losses of $1,067 on October 31, 2020 and $1,038 on April 30, 2020		68,637			60,879
Inventories		78,889			103,741
Prepaid expenses and other current assets		7,599			7,556
Current assets of discontinued operations		—			94,673
Income tax receivable		4,713			1,595

Total current assets		215,387			393,455

Property, plant, and equipment, net		147,907			147,739
Intangibles, net		4,458			4,375
Goodwill		19,024			19,024
Other assets of discontinued operations		—			148,485
Other assets		14,309			16,437

		401,085			729,515

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	60,985		$	31,476
Accrued expenses and deferred revenue		41,254			57,678
Accrued payroll and incentives		11,405			12,448
Accrued income taxes		337			5,503
Accrued profit sharing		6,810			2,197
Accrued warranty		4,352			3,297
Current liabilties of discontinued operations		—			17,372

Total current liabilities		125,143			129,971
Deferred income taxes		457			457
Notes and loans payable, net of current portion		—			159,171
Finance lease payable, net of current portion		39,343			39,610
Other non-current liabilities of discontinued operations		—			2,299
Other non-current liabilities		9,264			10,889

Total liabilities		174,207			342,397

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, 74,122,674 issued and 55,955,812 shares outstanding on October 31, 2020 and 73,526,790 shares issued and 55,359,928 shares outstanding on April 30, 2020		74			74
Additional paid-in capital		269,911			267,630
Retained earnings		179,195			341,716
Accumulated other comprehensive income		73			73
Treasury stock, at cost (18,166,862 shares on October 31, 2020 and April 30, 2020)		(222,375	)		(222,375	)

Total stockholders’ equity		226,878			387,118

	$	401,085		$	729,515


	For the Three Months Ended October 31,						For the Six Months Ended October 31,
	2020			2019			2020			2019
	(In thousands, except per share data)
Net sales	$	248,729		$	113,717		$	478,614		$	209,153
Cost of sales		147,656			81,405			285,117			141,254

Gross profit		101,073			32,312			193,497			67,899

Operating expenses:
Research and development		1,855			1,795			3,761			3,692
Selling, marketing, and distribution		11,614			10,841			21,609			20,374
General and administrative		23,224			16,103			45,007			33,312

Total operating expenses		36,693			28,739			70,377			57,378

Operating income from continuing operations		64,380			3,573			123,120			10,521

Other income/(expense), net:
Other income/(expense), net		693			83			760			90
Interest expense, net		(1,490	)		(3,046	)		(2,806	)		(5,687	)

Total other (expense)/income, net		(797	)		(2,963	)		(2,046	)		(5,597	)

Income from operations before income taxes		63,583			610			121,074			4,924
Income tax expense		14,465			267			28,657			2,396

Income from continuing operations	$	49,118		$	343		$	92,417		$	2,528
Discontinued operations:
Income/(loss) from discontinued operations		3,123			950			8,209			(3,343	)

Net income/(loss)	$	52,241		$	1,293		$	100,626		$	(815	)

Net income/(loss) per share:
Basic - continuing operations	$	0.88		$	0.01		$	1.66		$	0.05

Basic - net income/(loss)	$	0.93		$	0.02		$	1.81		$	(0.01	)

Diluted - continuing operations	$	0.87		$	0.01		$	1.64		$	0.05

Diluted - net income/(loss)	$	0.92		$	0.02		$	1.78		$	(0.01	)

Weighted average number of common shares outstanding:
Basic		55,914			54,912			55,691			54,847
Diluted		56,531			55,424			56,475			54,847


	For the Six Months Ended
	October 31, 2020			October 31, 2019
	(In thousands)
Cash flows from operating activities:
Income from continuing operations	$	92,417		$	2,528
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		17,129			16,483
Loss on sale/disposition of assets		3			15
Provision for losses on notes and accounts receivable		29			(219	)
Change in fair value of contingent consideration		—			100
Stock-based compensation expense		2,075			2,826
Changes in operating assets and liabilities:
Accounts receivable		(7,787	)		(5,585	)
Inventories		24,852			(29,260	)
Prepaid expenses and other current assets		(43	)		(2,979	)
Income taxes		(8,267	)		(2,932	)
Accounts payable		28,331			3,486
Accrued payroll and incentives		(1,043	)		(9,510	)
Accrued profit sharing		4,613			(1,462	)
Accrued expenses and deferred revenue		(16,212	)		(1,134	)
Accrued warranty		1,055			(436	)
Other assets		2,561			753
Other non-current liabilities		(1,625	)		(1,358	)

Cash provided by/(used in) operating activities - continuing operations		138,088			(28,684	)
Cash used in operating activities - discontinued operations		(2,225	)		(6,187	)

Net cash provided by/(used in) operating activities		135,863			(34,871	)

Cash flows from investing activities:
Payments to acquire patents and software		(350	)		(279	)
Payments to acquire property and equipment		(14,964	)		(8,249	)

Cash used by investing activities - continuing operations		(15,314	)		(8,528	)
Cash used by investing activities - discontinued operations		(1,143	)		(840	)

Net cash used in investing activities		(16,457	)		(9,368	)

Cash flows from financing activities:
Proceeds from loans and notes payable		25,000			75,000
Cash paid for debt issuance costs		(450	)		—
Payments on finance lease obligation		(479	)		(431	)
Payments on notes and loans payable		(185,000	)		(28,150	)
Distribution to AOUT		(25,000	)		—
Dividend distribution		(2,795	)		—
Proceeds from exercise of options to acquire common stock		2,195			936
Payment of employee withholding tax related to restricted stock units		(2,173	)		(550	)

Cash used in/(provided by) financial activities - continuing operations		(188,702	)		46,805
Cash used in financial activities - discontinued operations		(166	)		—

Net cash (used in)/provided by financing activities		(188,868	)		46,805

Net decrease in cash and cash equivalents		(69,462	)		2,566
Cash and cash equivalents, beginning of period		125,011			40,853

Cash and cash equivalents, end of period	$	55,549		$	43,419

Supplemental disclosure of cash flow information
Cash paid for:
Interest	$	2,188		$	5,767
Income taxes	$	40,888		$	4,184


	For the Three Months Ended												For the Six Months Ended
	October 31, 2020						October 31, 2019						October 31, 2020						October 31, 2019
	$			% of Sales			$			% of Sales			$			% of Sales			$			% of Sales
GAAP gross profit	$	101,073			40.6	%	$	32,312			28.4	%	$	193,497			40.4	%	$	67,899			32.5	%
COVID-19		10			0.0	%		—			—			896			0.2	%		—			—

Non-GAAP gross profit	$	101,083			40.6	%	$	32,312			28.4	%	$	194,393			40.6	%	$	67,899			32.5	%

GAAP operating expenses	$	36,693			14.8	%	$	28,739			25.3	%	$	70,377			14.7	%	$	57,378			27.4	%
Amortization of acquired intangible assets		(83	)		0.0	%		(113	)		-0.1	%		(166	)		0.0	%		(222	)		-0.1	%
Transition costs		(4,338	)		-1.7	%		(164	)		-0.1	%		(7,933	)		-1.7	%		(164	)		-0.1	%
COVID-19		(92	)		0.0	%		—			—			(159	)		0.0	%		—			—
Spin related stock-based compensation		(442	)		-0.2	%		—			—			(442	)		-0.1	%		—			—

Non-GAAP operating expenses	$	31,738			12.8	%	$	28,462			25.0	%	$	61,677			12.9	%	$	56,992			27.2	%

GAAP operating income	$	64,380			25.9	%	$	3,573			3.1	%	$	123,120			25.7	%	$	10,521			5.0	%
Amortization of acquired intangible assets		83			0.0	%		113			0.1	%		166			0.0	%		222			0.1	%
Transition costs		4,338			1.7	%		164			0.1	%		7,933			1.7	%		164			0.1	%
COVID-19		102			0.0	%		—			—			1,055			0.2	%		—			—
Spin related stock-based compensation		442			0.2	%		—			—			442			0.1	%		—			—

Non-GAAP operating income	$	69,345			27.9	%	$	3,850			3.4	%	$	132,716			27.7	%	$	10,907			5.2	%

GAAP income from continuing operations	$	49,118			19.7	%	$	343			0.3	%	$	92,417			19.3	%	$	2,528			1.2	%
Amortization of acquired intangible assets		83			0.0	%		113			0.1	%		166			0.0	%		222			0.1	%
Transition costs		4,338			1.7	%		164			0.1	%		7,933			1.7	%		164			0.1	%
COVID-19		102			0.0	%		—			—			1,055			0.2	%		—			—
Change in contingent consideration		—			—			(100	)		-0.1	%		—			—			(100	)		0.0	%
Spin related stock-based compensation		442			0.0	%		—			—			442			0.0	%		—			—
Tax effect of non-GAAP adjustments		(1,241	)		-0.5	%		(48	)		0.0	%		(2,399	)		-0.5	%		(77	)		0.0	%

Non-GAAP income from continuing operations	$	52,842			21.2	%	$	472			0.4	%	$	99,614			20.8	%	$	2,737			1.3	%

GAAP income from continuing operations per share - diluted	$	0.87					$	0.01					$	1.64					$	0.05
Amortization of acquired intangible assets		—						—						—						—
Transition costs		0.08						—						0.14						—
COVID-19		—						—						0.02						—
Change in contingent consideration		—						—						—						—
Spin related stock-based compensation		0.01						—						0.01						—
Tax effect of non-GAAP adjustments		(0.02	)					—						(0.04	)					—

Non-GAAP income from continuing operations per share - diluted	$	0.93			(a)		$	0.01					$	1.76			(a)		$	0.05