Smith & Wesson Brands, Inc. reported sales fell 43.9 percent in the fourth quarter and 18.4 percent in its fiscal year ended April 30. Earnings were also sharply down, reflecting weakening demand for firearms and inflationary pressures on costs.

Fourth Quarter Fiscal 2022 Financial Highlights

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

Full Year Fiscal 2022 Financial Highlights

  • Net sales were $864.1 million compared with $1.1 billion for the prior year, a decrease of 18.4 percent.
  • Gross margin was 43.3 percent versus 42.4 percent for the prior year.
  • GAAP net income was $194.5 million, or $4.08 per diluted share, compared with $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 with $251.5 million, or $4.54 per diluted share, for the prior 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. 
  • Non-GAAP Adjusted EBITDAS was $299.6 million, or 34.7 percent of net sales, compared with $366.6 million, or 34.6 percent of net sales, for the prior year.

Mark Smith, president and chief executive officer, commented, “Our fourth quarter and full-year results speak to the quality and dedication of our employees, the strength of our iconic brand and the resiliency of our flexible manufacturing model. We delivered strong financial results, including gross profit and Adjusted EBITDAS margins for fiscal 2022 that exceeded prior-year levels despite continued moderation in demand for firearms that led to lower net sales. Although we expect inflationary pressures to persist and firearm 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 pricing and product portfolio adjustments we made during the surge. In summary, we believe that we remain well-positioned for long-term growth with an agile business model designed to quickly adapt to changes in the marketplace, deliver strong, consistent levels of profitability and drive long-term stockholder value.”

Deana McPherson, executive vice president and chief financial officer, commented, “Our financial performance reflects tougher year-over-year comparisons due to the return to more normalized levels of demand following the surge. However, despite the lower demand, we now realize the benefits of the proactive steps we took during the surge to enhance our profitability profile. Fourth-quarter gross margin was down on a year-over-year basis, as expected, but 760 basis points above the comparable quarter in fiscal 2020 despite a 6.1 percent decline in net sales. Our balance sheet remains strong with $120.7 million of cash and no debt, and we expect to continue generating strong cash flow for the foreseeable future. Accordingly, our Board of Directors has authorized a 25 percent increase in our quarterly dividend to $0.10 per share, which will be paid to stockholders of record on July 7, 2022, with payment to be made on July 21, 2022.”

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

Photo courtesy Smith & Wesson