Smith & Wesson falls in the fourth fiscal quarter

Smith & Wesson Brands, Inc. reported sales fell 43.9% in the fourth quarter and 18.4% in its fiscal year ended April 30. Profits also fell sharply, reflecting weakening demand for firearms and inflationary cost pressures.

Fourth Quarter Fiscal 2022 Financial Highlights

  • Net sales were $181.3 million, a decrease of $141.6 million, or 43.9%, from the same quarter last year, and $11.7 million , or 6.1%, lower than the comparable quarter of fiscal 2020.
  • Gross margin was 39.8% compared to 45.1% in the comparable quarter of fiscal 2020 and 32.2% in the comparable quarter of fiscal 2020.
  • GAAP net income was $36.1 million, or $0.79 per diluted share, compared to $89.2 million, or $1.70 per diluted share, for the comparable quarter last year.
  • Non-GAAP net income was $37.6 million, or $0.82 per diluted share, compared to $89.6 million, or $1.71 per diluted share, for the comparable quarter of the year last. GAAP and non-GAAP adjustments for revenue exclude costs related to the planned move of our corporate headquarters and certain manufacturing and distribution operations to Tennessee, the spin-off of the outdoor products and accessories business during the fiscal year 2021, COVID-19 related expenses and other costs.
  • Non-GAAP Adjusted EBITDA was $57.7 million, or 31.8% of net sales, compared to $125.6 million, or 38.9% of net sales, for the comparable quarter of last year.

Fiscal 2022 Financial Highlights

  • Net sales were $864.1 million, compared to $1.1 billion the previous year, a decrease of 18.4%.
  • The gross margin was 43.3% compared to 42.4% the previous year.
  • GAAP net income was $194.5 million, or $4.08 per diluted share, compared to $243.6 million, or $4.40 per diluted share, for the prior year.
  • Non-GAAP net income was $202.8 million, or $4.25 per diluted share, compared to $251.5 million, or $4.54 per diluted share, a year earlier. GAAP/non-GAAP adjustments for revenue exclude costs related to the spin-off of the outdoor products and accessories business, COVID-19 related expenses and other costs.
  • Non-GAAP adjusted EBITDA was $299.6 million, or 34.7% of net sales, compared to $366.6 million, or 34.6% of net sales, the prior year.

Mark Smith, President and CEO, said, “Our fourth quarter and full year results are a testament to the quality and dedication of our people, the strength of our iconic brand and the resilience of our business model. of flexible manufacturing. We delivered strong financial results, including gross profit and Adjusted EBITDAS margins for fiscal year 2022 that exceeded prior year levels despite the continued moderation in firearms demand that resulted in a decline in net sales. While we expect inflationary pressures to persist and firearms market conditions to return to more normalized levels in fiscal 2023, we are confident in our flexible manufacturing model. We expect to benefit from the price and product portfolio adjustments we made during the push. In summary, we believe we remain well positioned for long-term growth with an agile business model designed to quickly adapt to market changes, deliver strong and consistent levels of profitability and generate long-term value for shareholders.

Deana McPherson, Executive Vice President and Chief Financial Officer, said, “Our financial performance reflects more difficult year-over-year comparisons due to the return to more normalized demand levels following the surge. However, despite the decline in demand, we are now realizing the benefits of the proactive steps we took during the surge to improve our profitability profile. Fourth quarter gross margin was down year over year, as expected, but 760 basis points above the comparable quarter of fiscal 2020 despite a 6.1% decline in net sales. Our balance sheet remains strong with $120.7 million in cash and no debt, and we expect to continue to generate strong cash flow for the foreseeable future. Accordingly, our Board of Directors has authorized a 25% increase in our quarterly dividend to $0.10 per share, which will be paid to shareholders of record on July 7, 2022, with payment due July 21, 2022.”

Smith & Wesson brands include Smith & Wesson, M&P and Gemtech.

Photo courtesy Smith & Wesson

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