8-K

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): June 22, 2023

Smith & Wesson Brands, Inc.

(Exact Name of Registrant as Specified in Charter)

Nevada	001-31552	87-0543688
(State or other jurisdiction<br> <br>of incorporation)	(Commission<br> <br>File Number)	(IRS Employer<br> <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)
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☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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☐	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> <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 §CFR 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 June 22, 2023.

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>    No.
99.1	Press release from Smith & Wesson Brands, Inc., dated June 22, 2023, entitled “Smith & Wesson Brands, Inc. Reports Fourth Quarter and Full Fiscal 2023 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: June 22, 2023	By:	/s/ Deana L. McPherson
		Deana L. McPherson
		Executive Vice President, Chief Financial Officer, Treasurer, and Assistant Secretary

EX-99.1

Exhibit 99.1

Smith & Wesson Brands, Inc. Reports

Fourth Quarter and Full Fiscal 2023 Financial Results

•	Q4 Net Sales of $144.8 Million
•	Q4 Gross Margin of 29.0%; Non-GAAP Gross Margin of 29.4%<br>
---	---
•	Q4 EPS of $0.28/Share; Q4 Adjusted EPS of $0.32/Share
---	---
•	Q4 Adjusted EBITDAS Margin of 20.9%
---	---
•	Board of Directors Authorized 20% Increase in Quarterly Dividend
---	---

SPRINGFIELD, Mass., June 22, 2023 – Smith & Wesson Brands, Inc. (NASDAQ Global Select: SWBI), a U.S.-based leader in firearm manufacturing and design, today announced financial results for the fourth quarter and full fiscal year 2023, ended April 30, 2023.

Fourth Quarter Fiscal 2023 Financial Highlights

•	Net sales were $144.8 million, a decrease of $36.5 million, or 20.1%, from the comparable quarter last<br>year.
•	Gross margin was 29.0% compared with 39.8% in the comparable quarter last year.
---	---
•	GAAP net income was $12.8 million, or $0.28 per diluted share, compared with $36.1 million, or $0.79<br>per diluted share, for the comparable quarter last year.
---	---
•	Non-GAAP net income was $14.6 million, or $0.32 per diluted share,<br>compared with $37.6 million, or $0.82 per diluted share, for the comparable quarter last year. GAAP to non-GAAP adjustments for income exclude costs related to the Relocation, COVID-19 related expenses, and other costs. For a detailed reconciliation, see the schedules that follow in this release.
---	---
•	Non-GAAP Adjusted EBITDAS was $30.3 million, or 20.9% of net sales,<br>compared with $57.7 million, or 31.8% of net sales, for the comparable quarter last year.
---	---

Full Year Fiscal 2023 FinancialHighlights

•	Net sales were $479.2 million compared with $864.1 million for the prior year, a decrease of 44.5%.<br>
•	Gross margin was 32.2% versus 43.3% for the prior year.
---	---
•	GAAP net income was $36.9 million, or $0.80 per diluted share, compared with $194.5 million, or $4.08<br>per diluted share, for the prior year.
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•	Non-GAAP net income was $43.3 million, or $0.94 per diluted share,<br>compared with $202.8 million, or $4.25 per diluted share, for the prior year.
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•	Non-GAAP Adjusted EBITDAS was $95.2 million, or 19.9% of net sales,<br>compared with $299.6 million, or 34.7% of net sales, for the prior year.
---	---

Mark Smith, President and Chief Executive Officer, commented, “Fiscal 2023 ended with a very solid fourth quarter as the headwinds we faced from elevated channel inventory throughout the first half of the fiscal year abated. Focused consumer promotions in the second half were successful in driving retail and distributor inventories down significantly and we are now at or below targeted levels with every major customer. And most importantly, our retail market share data indicates that we’ve maintained our leadership position at the sales counter with the firearm consumer. Combined with lower inventory levels, this points to continued success throughout fiscal 2024.”

Deana McPherson, Executive Vice President and Chief Financial Officer, commented, “We were pleased that inventory in our distribution channel continued to decline from January, resulting in five consecutive quarters of inventory reductions in the channel. For fiscal 2024, we expect consumer demand to resemble demand in fiscal 2023; however, we anticipate an increase in our shipments given the significant decline in inventory in the distribution channel that we experienced during the first half of last fiscal year. With the relocation nearing the final phase, our board of directors has authorized a $0.12 per share quarterly dividend, which will be paid to stockholders of record on July 13, 2023 with payment to be made on July 27, 2023.”

Conference Call and Webcast

The company will host a conference call and webcast on June 22, 2023 to discuss its fourth quarter and full fiscal 2023 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 should click “here” to pre-register for the conference call and obtain your dial-in number and unique PIN number. 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, 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-based compensation, (ix) relocation expense, and (x) the tax effect of non-GAAP adjustments; and (2) the non-GAAP measures that exclude such information. We present these non-GAAP 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 non-GAAP 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^®^, 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.

SafeHarbor 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, that retail market share data indicating that (i) the combination of us maintaining our leadership position at the sales counter with the firearm consumer and lower inventory levels points to continued success throughout fiscal 2024 and (ii) for fiscal 2024, we expect consumer demand to resemble demand in fiscal 2023; however, we anticipate an increase in our shipments given the significant decline in inventory in the distribution channel that we experienced during the first half of last fiscal year. 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 effectively manage and execute the Relocation; 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, 2023.

Contact:

investorrelations@smith-wesson.com

(413) 747-3448

SMITH & WESSON BRANDS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

			April 30, 2022
ASSETS
Current assets:
Cash and cash equivalents	53,556		$	120,728
Accounts receivable, net of allowances for credit losses of 23 on April 30, 2023 and 36 on<br>April 30, 2022	55,153			62,695
Inventories	177,118			136,660
Prepaid expenses and other current assets	4,917			5,569
Income tax receivable	1,176			1,945
Total current assets	291,920			327,597
Property, plant, and equipment, net	210,330			135,591
Intangibles, net	3,588			3,608
Goodwill	19,024			19,024
Deferred income taxes	8,085			1,221
Other assets	8,347			10,435
Total assets	541,294		$	497,476
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	36,795		$	30,042
Accrued expenses and deferred revenue	20,149			23,482
Accrued payroll and incentives	18,565			17,371
Accrued income taxes	1,831			2,673
Accrued profit sharing	8,203			13,543
Accrued warranty	1,670			1,838
Total current liabilities	87,213			88,949
Notes and loans payable, net of current portion	24,790			—
Finance lease payable, net of current portion	36,961			37,628
Other non-current liabilities	7,707			10,384
Total liabilities	156,671			136,962
Commitments and contingencies
Stockholders’ equity:
Preferred stock, 0.001 par value, 20,000,000 shares authorized, no shares issued or<br>outstanding	—			—
Common stock, 0.001 par value, 100,000,000 shares authorized, 75,029,300 issued and 45,988,930<br>shares outstanding on April 30, 2023 and 74,641,439 shares issued and 45,601,069 shares outstanding on April 30, 2022	75			75
Additional paid-in capital	283,666			278,101
Retained earnings	523,184			504,640
Accumulated other comprehensive income	73			73
Treasury stock, at cost (29,040,370 shares on April 30, 2023 and April 30,<br>2022)	(422,375	)		(422,375	)
Total stockholders’ equity	384,623			360,514
Total liabilities and stockholders’ equity	541,294		$	497,476

All values are in US Dollars.

SMITH & WESSON BRANDS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

	For the Three Months Ended April 30,						For the Years Ended April 30,
	2023			2022			2023			2022
	(In thousands, except per share data)
Net sales	$	144,777		$	181,299		$	479,242		$	864,126
Cost of sales		102,815			109,072			324,705			489,562
Gross profit		41,962			72,227			154,537			374,564
Operating expenses:
Research and development		1,875			1,994			7,550			7,262
Selling, marketing, and distribution		9,522			9,581			36,976			43,156
General and administrative		12,738			14,000			61,604			72,493
Total operating expenses		24,135			25,575			106,130			122,911
Operating income		17,827			46,652			48,407			251,653
Other income/(expense), net:
Other income/(expense), net		(2,154	)		624			150			2,868
Interest expense, net		1,030			(531	)		(331	)		(2,135	)
Total other income/(expense), net		(1,124	)		93			(181	)		733
Income from operations before income taxes		16,703			46,745			48,226			252,386
Income tax expense		3,867			10,610			11,350			57,892
Net income	$	12,836		$	36,135		$	36,876		$	194,494
Net income per share:
Basic - net income	$	0.28		$	0.79		$	0.80		$	4.12
Diluted - net income	$	0.28		$	0.79		$	0.80		$	4.08
Weighted average number of common shares outstanding:
Basic		45,929			45,547			45,844			47,227
Diluted		46,283			45,937			46,170			47,728

SMITH & WESSON BRANDS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

	For the Year Ended
	April 30, 2023			April 30, 2022
	(In thousands)
Cash flows from operating activities:
Income from continuing operations	$	36,876		$	194,494
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		31,436			30,073
(Gain)/loss on sale/disposition of assets		(55	)		625
Provision for (recoveries)/losses on notes and accounts receivable		(27	)		689
Impairment of long-lived tangible assets		—			86
Deferred income taxes		(6,864	)		(2,125	)
Stock-based compensation expense		5,102			4,536
Changes in operating assets and liabilities:
Accounts receivable		7,569			4,058
Inventories		(40,458	)		(58,183	)
Prepaid expenses and other current assets		653			2,839
Income taxes		(74	)		480
Accounts payable		(8,606	)		(26,957	)
Accrued payroll and incentives		1,194			(10	)
Accrued profit sharing		(5,340	)		(902	)
Accrued expenses and deferred revenue		(3,618	)		(9,725	)
Accrued warranty		(168	)		(361	)
Other assets		1,789			2,561
Other non-current liabilities		(2,677	)		(4,364	)
Net cash provided by operating activities		16,732			137,814
Cash flows from investing activities:
Payments to acquire patents and software		(334	)		(283	)
Proceeds from sale of property and equipment		118			139
Payments to acquire property and equipment		(89,565	)		(23,972	)
Net cash used in investing activities		(89,781	)		(24,116	)
Cash flows from financing activities:
Proceeds from loans and notes payable		25,000			—
Payments on finance lease obligation		(1,253	)		(1,087	)
Payments on notes and loans payable		—			—
Payments to acquire treasury stock		—			(90,000	)
Dividend distribution		(18,333	)		(15,035	)
Proceeds from exercise of options to acquire common stock, including employee stock purchase<br>plan		1,528			1,719
Payment of employee withholding tax related to restricted stock units		(1,065	)		(1,584	)
Net cash provided by/(used in) financing activities		5,877			(105,987	)
Net decrease in cash and cash equivalents		(67,172	)		7,711
Cash and cash equivalents, beginning of period		120,728			113,017
Cash and cash equivalents, end of period	$	53,556		$	120,728
Supplemental disclosure of cash flow information
Cash paid for:
Interest	$	2,148		$	2,219
Income taxes	$	18,208		$	59,183

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 Year Ended
	April 30, 2023					April 30, 2022					April 30, 2023					April 30, 2022
			% of Sales					% of Sales					% of Sales					% of Sales
GAAP gross profit				29.0	%				39.8	%				32.2	%				43.3	%
Relocation expenses				0.4	%				0.6	%				0.8	%				0.4	%
COVID-19				—					0.0	%				—					0.0	%
Non-GAAP gross profit				29.4	%				40.4	%				33.1	%				43.7	%
GAAP operating expenses				16.7	%				14.1	%				22.1	%				14.2	%
Amortization of acquired intangible assets				—			)		0.0	%				—			)		0.0	%
Transition costs				—					—					—					0.0	%
COVID-19				—			)		0.0	%				—			)		0.0	%
Spin related stock-based compensation		)		0.0	%		)		0.0	%		)		0.0	%		)		0.0	%
Relocation expenses		)		-1.2	%		)		-0.4	%		)		-0.9	%		)		-0.8	%
Non-GAAP operating expenses				15.5	%				13.6	%				21.2	%				13.4	%
GAAP operating income				12.3	%				25.7	%				10.1	%				29.1	%
Amortization of acquired intangible assets				—					0.0	%				—					0.0	%
Transition costs				—					—					—			)		0.0	%
COVID-19				—					0.0	%				—					0.0	%
Spin related stock-based compensation				0.0	%				0.0	%				0.0	%				0.0	%
Relocation expenses				1.6	%				0.9	%				1.7	%				1.2	%
Non-GAAP operating income				13.9	%				26.8	%				11.8	%				30.4	%
GAAP net income				8.9	%				19.9	%				7.7	%				22.5	%
Amortization of acquired intangible assets				—					0	%				—					0.0	%
Transition costs				—					—					—			)		0.0	%
COVID-19				—					0.0	%				—					0.0	%
Spin related stock-based compensation				0.0	%				0.0	%				0.0	%				0.0	%
Relocation expenses				1.6	%				0.9	%				1.7	%				1.2	%
Tax effect of non-GAAP adjustments		)		-0.4	%		)		-0.2	%		)		-0.4	%		)		-0.3	%
Non-GAAP net income				10.1	%				20.7	%				9.0	%				23.5	%
GAAP net income per share - diluted
Amortization of acquired intangible assets
COVID-19
Relocation expenses
Tax effect of non-GAAP adjustments		)					)					)					)
Non-GAAP net income per share - diluted																	(a)

All values are in US Dollars.

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

SMITH & WESSON BRANDS, INC. AND SUBSIDIARIES

RECONCILIATION OF GAAP INCOME FROM OPERATIONS TO NON-GAAP ADJUSTED EBITDAS

(in thousands)

(Unaudited)

	For the Three Months Ended				For the Year Ended
	April 30, 2023		April 30, 2022		April 30, 2023		April 30, 2022
GAAP net income	$	12,836	$	36,135	$	36,876	$	194,494
Interest expense		446		570		2,253		2,310
Income tax expense		3,867		10,610		11,350		57,892
Depreciation and amortization		9,552		7,636		31,347		29,982
Stock-based compensation expense		1,244		972		5,103		4,536
COVID-19		—		72		—		240
Transition costs		—		—		—		(80	)
Relocation expense		2,327		1,716		8,261		10,245
Non-GAAP Adjusted EBITDAS	$	30,272	$	57,711	$	95,190	$	299,619

SMITH & WESSON BRANDS, INC. AND SUBSIDIARIES

RECONCILIATION OF OPERATING CASH FLOW FROM OPERATIONS TO FREE CASH FLOW

(In thousands)

(Unaudited)

	For the Three Months Ended						For the Year Ended
	April 30, 2023			April 30, 2022			April 30, 2023			April 30, 2022
Net cash provided by operating activities	$	37,980		$	25,539		$	16,732		$	137,814
Net cash used in investing activities		(25,029	)		(8,905	)		(89,781	)		(24,116	)
Free cash flow	$	12,951		$	16,634		$	(73,049	)	$	113,698