Smith & Wesson Brands, Inc. posted net sales of $125.0 million in the fiscal second quarter ended October 31, an increase of $3.9 million, or 3.2 percent, versus the comparable quarter last year.
Gross margin was 25.4 percent of sales in fiscal Q2, compared with 32.4 percent in the comparable quarter last year.
GAAP net income was $2.5 million, or 5 cents per diluted share, compared with $9.6 million, or 21 cents per diluted share, for the comparable quarter last year.
Non-GAAP net income was $6.5 million, or 14 cents per diluted share, compared with $12.0 million, or 26 cents per diluted share, for the comparable quarter last year. GAAP to non-GAAP adjustments for income exclude costs related to an accrued legal settlement, relocation and other costs.
Non-GAAP Adjusted EBITDA was $19.3 million, or 15.5 percent of net sales, in the second quarter, compared with $25.6 million, or 21.1 percent of net sales, for the comparable quarter last year.
“We were very pleased with our second quarter results, which continued to reflect our innovative new product introductions and our consumers’ enduring loyalty to the Smith & Wesson brand,” said Mark Smith, president and CEO. “Top line revenue and unit shipments were both up versus last year, while channel inventories actually decreased slightly in the period. This robust sell-through, combined with our shipments outperforming NICS in the quarter by over 7 percent, underscores our belief that our strong performance was due to share gains at the retail counter. With demand levels expected to remain elevated through our traditionally busy season, a strong balance sheet, and a significant reduction in capex on the horizon as we wind down the major investment in our new facility in Tennessee, we expect to be in a very strong position to drive returns for our stockholders throughout the second half of fiscal 2024 and in fiscal 2025.”
Deana McPherson, EVP and CFO, commented, “Although our gross margin continues to be temporarily pressured by fixed-cost absorption, inflationary factors, and inventory reserve adjustments, we strengthened our working capital position by reducing production to drive internal inventory levels down, and we anticipate that the temporary margin headwinds will abate in the fourth quarter.
“We repurchased nearly 646,000 shares during the third quarter, utilizing $8.2 million of our $50 million authorization, and paid $5.5 million in dividends. Consistent with our capital allocation strategy, our board of directors has authorized a $0.12 per share quarterly dividend, which will be paid to stockholders of record on December 21, 2023, with payment to be made on January 4, 2024,” McPherson concluded.
