Equibles

8-K

SMITH & WESSON BRANDS, INC. (SWBI)

8-K 2021-03-04 For: 2021-03-04
View Original
Added on April 04, 2026

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): March 4, 2021

Smith & Wesson Brands, Inc.

(Exact Name of Registrant as Specified in Charter)

Nevada 001-31552 87-0543688
(State or other jurisdiction<br>of incorporation) (Commission<br>File Number) (IRS Employer<br>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)

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):

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
--- ---
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
--- ---
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Securities registered pursuant to Section 12(b) of the Act:

Title of each class Trading<br>Symbol(s) Name of each exchange<br>on which registered
Common Stock, Par Value $0.001 per Share SWBI Nasdaq Global Select Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 §CRF 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 March 4, 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<br>Number Exhibits
--- ---
99.1 Press release from Smith & Wesson Brands, Inc., dated March 4, 2021, entitled “Smith & Wesson Brands, Inc. Reports Third Quarter Fiscal 2021 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: March 4, 2021 By: /s/ Robert J. Cicero
Robert J. Cicero
Senior Vice President, General Counsel,
Chief Compliance Officer, and Secretary

EX-99.1

Exhibit 99.1

LOGO

Contact:

investorrelations@smith-wesson.com

(413) 747-3448

Smith & Wesson Brands, Inc. Reports

Third Quarter Fiscal 2021 Financial Results

• Record Quarterly Net Sales of $257.6 Million
• Record Net Income of $62.3 Million
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• Record GAAP/non-GAAP EPS of $1.12/Share<br>
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• $100M Share Buyback Program and $0.05/Share Quarterly Dividend
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SPRINGFIELD, Mass., March 4, 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 third quarter of fiscal 2021 ended January 31, 2021. On August 24, 2020, the company completed the previously announced spin-off of its outdoor products and accessories business. Therefore, as of the second quarter, all historical financial information for that business is reported as discontinued operations. Unless otherwise indicated, any reference to income statement items refers to results from continuing operations.

Third Quarter Fiscal 2021 Consolidated FinancialHighlights

• Quarterly net sales were $257.6 million compared with $127.4 million for the comparable quarter last<br>year, an increase of 102.2%.
• Gross margin for the quarter was 42.6% compared with 28% for the comparable quarter last year.<br>
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• Quarterly GAAP net income was a record $62.3 million, or $1.12 per diluted share, compared with<br>$4.2 million, or $0.08 per diluted share, for the comparable quarter last year.
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• Quarterly non-GAAP net income was $62.4 million, or $1.12 per<br>diluted share, compared with $7.8 million, or $0.14 per diluted share, for the comparable quarter last year. GAAP to non-GAAP 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<br>release.
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• Quarterly non-GAAP Adjusted EBITDAS was $89.8 million, or 34.9% of<br>net sales, compared with $15.0 million, or 11.8% of net sales, for the comparable quarter last year.
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Mark Smith, President and Chief Executive Officer, commented, “I could not be more proud of our dedicated American workforce as, for the third time in a row, they delivered a record-breaking quarter for our great historic company. Over the past year, millions of our fellow Americans from all walks of life have chosen to empower themselves by exercising their 2nd Amendment rights for the first time, and our loyal employees have risen to the challenge – delivering over 1.8 million units in the first three quarters of our fiscal year alone, ensuring that these new members of the shooting sports community were able to choose the highest quality, innovative firearms that Smith & Wesson has been known for since 1852. All of this was accomplished while implementing and maintaining aggressive safety measures and process changes to keep safe in the midst of the COVID pandemic.”

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Deana McPherson, Executive Vice President and Chief Financial Officer, commented, “Smith & Wesson’s record-breaking financial performance enabled us to generate $60 million of cash from operations during the quarter. This allowed us to complete a $50 million dollar share-repurchase program, pay our second quarter dividend, and continue to invest in capital, all while growing our cash on hand by $4.1 million during the quarter. I am pleased to announce that our Board has authorized a new $100 million dollar share repurchase program and a $0.05 per share dividend to stockholders of record as of March 17, 2021, with payment to be made on March 31, 2021.”

The amount and timing of any repurchases will depend on a number of factors, including price, trading volume, general market conditions, legal requirements, and other factors. The repurchases may be made on the open market, in block trades, or in privately negotiated transactions. Any shares of common stock repurchased under the program will be considered issued but not outstanding shares of the company’s common stock.

Conference Call and Webcast

The company will host a conference call and webcast on March 4, 2021, to discuss its third quarter fiscal 2021 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 1056738. 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, the company considers and uses these supplemental measures of operating performance in order to provide the reader with an improved understanding of underlying performance trends. The company believes it is useful for itself and the reader to review, as applicable, both (1) GAAP measures that include (i) amortization of acquired intangible assets, (ii) transition costs, (iii) change in contingent consideration, (iv) CEO separation, (v) the tax effect of non-GAAP adjustments, (vi) COVID-19 expenses, (vii) net cash used in investing activities, (viii) interest expense, (ix) income tax expense, (x) depreciation and amortization, and (xi) stock-based compensation expenses; and (2) the non-GAAP measures that exclude such information. The company presents these non-GAAP measures because it considers them an important supplemental measure of its performance. The company’s definition of these adjusted financial measures may differ from similarly named measures used by others. The company believes 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 the company’s GAAP measures. The principal limitations of these measures are that they do not reflect the company’s 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^®^, Thompson/Center Arms^™^, and Gemtech^®^ brands. The company also provides manufacturing services including forging, machining, and precision plastic injection molding services. For more information call (844) 363-5386 or visit www.smith-wesson.com.

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SMITH & WESSON BRANDS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)
April 30, 2020
ASSETS ****
Current assets:
Cash and cash equivalents 59,676 $ 125,011
Accounts receivable, net of allowances for credit losses of 151 on January 31, 2021 and<br>1,038 on April 30, 2020 61,564 60,879
Inventories 84,446 103,741
Prepaid expenses and other current assets 8,574 7,556
Current assets of discontinued operations — 94,673
Income tax receivable 9,277 1,595
Total current assets 223,537 393,455
Property, plant, and equipment, net 145,398 147,739
Intangibles, net 4,436 4,375
Goodwill 19,024 19,024
Other assets of discontinued operations — 148,485
Other assets 13,456 16,437
405,851 729,515
LIABILITIES AND STOCKHOLDERS’ EQUITY ****
Current liabilities:
Accounts payable 49,166 $ 31,476
Accrued expenses and deferred revenue 37,805 57,678
Accrued payroll and incentives 14,488 12,448
Accrued income taxes 337 5,503
Accrued profit sharing 10,860 2,197
Accrued warranty 3,718 3,297
Current liabilties of discontinued operations — 17,372
Total current liabilities 116,374 129,971
Deferred income taxes 773 457
Notes and loans payable, net of current portion — 159,171
Finance lease payable, net of current portion 39,060 39,873
Other non-current liabilities of discontinued<br>operations — 2,299
Other non-current liabilities 11,935 10,626
Total liabilities 168,142 342,397
Commitments and contingencies
Stockholders’ equity:
Preferred stock, .001 par value, 20,000,000 shares authorized, no shares issued or<br>outstanding — —
Common stock, .001 par value, 100,000,000 shares authorized, 74,153,528 issued and<br>53,249,177 shares outstanding on January 31, 2021 and 73,526,790 shares issued and 55,359,928 shares outstanding on April 30, 2020 74 74
Additional paid-in capital 271,222 267,630
Retained earnings 238,715 341,716
Accumulated other comprehensive income 73 73
Treasury stock, at cost (20,904,351 shares on January 31, 2021 and April 30,<br>2020) (272,375 ) (222,375 )
Total stockholders’ equity 237,709 387,118
405,851 $ 729,515

All values are in US Dollars.

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SMITH & WESSON BRANDS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME/(LOSS)

(Unaudited)

For the Three Months Ended January 31, For the Nine Months Ended January 31,
2021 2020 2021 2020
(In thousands, except per share data)
Net sales $ 257,634 $ 127,416 $ 736,247 $ 336,575
Cost of sales 147,955 91,729 433,073 232,989
Gross profit 109,679 35,687 303,174 103,586
Operating expenses:
Research and development 1,757 1,809 5,518 5,501
Selling, marketing, and distribution 10,487 10,465 32,095 30,839
General and administrative 17,054 14,603 62,061 47,915
Total operating expenses 29,298 26,877 99,674 84,255
Operating income from continuing operations 80,381 8,810 203,500 19,331
Other income/(expense), net:
Other income/(expense), net 952 (10 ) 1,711 80
Interest expense, net (550 ) (2,885 ) (3,356 ) (8,572 )
Total other income/(expense), net 402 (2,895 ) (1,645 ) (8,492 )
Income from operations before income taxes 80,783 5,915 201,855 10,839
Income tax expense 18,520 1,688 47,176 4,084
Income from continuing operations $ 62,263 $ 4,227 $ 154,679 $ 6,755
Discontinued operations:
Income/(loss) from discontinued operations 127 1,504 8,334 (1,839 )
Net income $ 62,390 $ 5,731 $ 163,013 $ 4,916
Net income per share:
Basic - continuing operations $ 1.13 $ 0.08 $ 2.79 $ 0.12
Basic - net income $ 1.13 $ 0.10 $ 2.94 $ 0.09
Diluted - continuing operations $ 1.12 $ 0.08 $ 2.75 $ 0.12
Diluted - net income $ 1.12 $ 0.10 $ 2.90 $ 0.09
Weighted average number of common shares outstanding:
Basic 55,137 55,064 55,515 54,919
Diluted 55,702 55,744 56,258 55,641

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SMITH & WESSON BRANDS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

For the Nine Months Ended
January 31, 2021 January 31, 2020
(In thousands)
Cash flows from operating activities:
Income from continuing operations $ 154,679 $ 6,755
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 24,133 24,320
Loss on sale/disposition of assets 148 310
Provision for losses on notes and accounts receivable (693 ) (98 )
Deferred income taxes 316 (18 )
Change in fair value of contingent consideration — 100
Stock-based compensation expense 3,392 941
Changes in operating assets and liabilities:
Accounts receivable 8 (8,503 )
Inventories 19,295 (31,687 )
Prepaid expenses and other current assets (1,018 ) (3,797 )
Income taxes (12,831 ) (2,196 )
Accounts payable 17,299 (2,398 )
Accrued payroll and incentives 2,040 (6,754 )
Accrued profit sharing 8,663 (1,006 )
Accrued expenses and deferred revenue (19,950 ) (1,584 )
Accrued warranty 421 (526 )
Other assets 1,226 1,281
Other non-current liabilities 1,309 (1,777 )
Cash provided by/(used in) operating activities - continuing operations 198,437 (26,637 )
Cash (used in)/provided by operating activities - discontinued operations (2,129 ) 1,804
Net cash provided by/(used in) operating activities 196,308 (24,833 )
Cash flows from investing activities:
Refunds on machinery and equipment 310 —
Payments to acquire patents and software (502 ) (303 )
Payments to acquire property and equipment (18,378 ) (10,504 )
Cash used by investing activities - continuing operations (18,570 ) (10,807 )
Cash used by investing activities - discontinued operations (1,143 ) (1,495 )
Net cash used in investing activities (19,713 ) (12,302 )
Cash flows from financing activities:
Proceeds from loans and notes payable 25,000 228,225
Cash paid for debt issuance costs (450 ) (875 )
Payments on finance lease obligation (736 ) (663 )
Payments on notes and loans payable (185,000 ) (184,600 )
Distribution to AOUT (25,000 ) —
Payments to acquire treasury stock (50,000 ) —
Dividend distribution (5,594 ) —
Proceeds from exercise of options to acquire common stock 2,217 936
Payment of employee withholding tax related to restricted stock units (2,201 ) (594 )
Cash (used in)/provided by financial activities - continuing operations (241,764 ) 42,429
Cash used in financial activities - discontinued operations (166 ) —
Net cash (used in)/provided by financing activities (241,930 ) 42,429
Net (decrease)/increase in cash and cash equivalents (65,335 ) 5,294
Cash and cash equivalents, beginning of period 125,011 40,853
Cash and cash equivalents, end of period $ 59,676 $ 46,147
Supplemental disclosure of cash flow information
Cash paid for:
Interest $ 2,745 $ 8,422
Income taxes $ 63,525 $ 5,755

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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 Nine Months Ended
January 31, 2021 January 31, 2020 January 31, 2021 January 31, 2020
% of Sales % of Sales % of Sales % of Sales
GAAP gross profit 42.6 % 28.0 % 41.2 % 30.8 %
COVID-19 0.0 % — 0.1 % —
Non-GAAP gross profit 42.6 % 28.0 % 41.2 % 30.8 %
GAAP operating expenses 11.4 % 21.1 % 13.5 % 25.0 %
Amortization of acquired intangible assets ) 0.0 % ) 0.0 % ) 0.0 % ) -0.1 %
Transition costs ) 0.0 % ) -0.8 % ) -1.1 % ) -0.4 %
COVID-19 ) 0.0 % — ) -0.1 % —
Spin related stock-based compensation — — ) -0.1 % —
CEO separation — ) -3.0 % — ) -1.1 %
Non-GAAP operating expenses 11.3 % 17.2 % 12.3 % 23.5 %
GAAP operating income 31.2 % 6.9 % 27.6 % 5.7 %
Amortization of acquired intangible assets 0.0 % 0.0 % 0.0 % 0.1 %
Transition costs 0.0 % 0.8 % 1.1 % 0.4 %
COVID-19 0.0 % — 0.2 % —
Spin related stock-based compensation — — 0.1 % —
CEO separation — 3.0 % — 1.1 %
Non-GAAP operating income 31.3 % 10.8 % 29.0 % 7.3 %
GAAP income from continuing operations 24.2 % 3.3 % 21.0 % 2.0 %
Amortization of acquired intangible assets 0.0 % 0.0 % 0.0 % 0.1 %
Transition costs 0.0 % 0.8 % 1.1 % 0.4 %
COVID-19 0.0 % — 0.2 % —
Change in contingent consideration — — — ) 0.0 %
Spin related stock-based compensation — — 0.0 % —
CEO separation — 3.0 % — 1.1 %
Tax effect of non-GAAP adjustments ) 0.0 % ) -1.0 % ) -0.3 % ) -0.4 %
Non-GAAP income from continuing operations 24.2 % 6.1 % 22.0 % 3.1 %
GAAP income from continuing operations per share - diluted
Amortization of acquired intangible assets
Transition costs
COVID-19
Change in contingent consideration
Spin related stock-based compensation
CEO separation
Tax effect of non-GAAP adjustments ) ) )
Non-GAAP income from continuing operations per share -<br>diluted (a) (a)

All values are in US Dollars.

(a) Non-GAAP net income per share does not foot due to rounding.<br>

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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 Nine Months Ended
January 31, 2021 January 31, 2020 January 31, 2021 January 31, 2020
Net cash (provided by)/used in operating activities $ 60,349 $ 2,047 $ 198,437 $ (26,637 )
Net cash used in investing activities (3,256 ) (2,279 ) (18,570 ) (10,807 )
Free cash flow $ 57,093 $ (232 ) $ 179,867 $ (37,444 )

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, 2021 January 31, 2020 January 31, 2021 January 31, 2020
GAAP income from continuing operations $ 62,263 $ 4,227 $ 154,679 $ 6,755
Interest expense 592 2,869 3,471 8,919
Income tax expense 18,520 1,688 47,176 4,084
Depreciation and amortization 7,017 7,509 23,264 23,776
Stock-based compensation expense 1,317 1,554 3,392 4,375
Change in contingent consideration — — — (100 )
COVID-19 80 — 1,134 —
Transition costs 20 1,025 7,953 1,189
CEO separation — (3,844 ) — (3,844 )
Non-GAAP Adjusted EBITDAS $ 89,809 $ 15,028 $ 241,069 $ 45,154

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