Smith & Wesson Brands Inc. reported net sales in the first quarter ended July 31 were $278.0 million compared with $123.7 million for the first quarter last year, an increase of 124.8 percent.
Firearms segment gross sales were $229.9 million, which included $1.0 million of intersegment revenue, an increase of $134.4 million, or 140.9 percent, over the comparable quarter last year. Outdoor Products & Accessories segment gross sales were $50.6 million, which included $1.5 million of intersegment revenue, an increase of $17.4 million, or 52.3 percent, over the comparable quarter last year.
Gross margin for the quarter was 42.0 percent compared with 38.7 percent for the comparable quarter last year.
Quarterly GAAP net income was $48.4 million, or 86 cents per diluted share, compared with a GAAP net loss of $2.1 million, or 4 cents per diluted share, for the comparable quarter last year.
Quarterly non-GAAP net income was $54.9 million, or 97 cents per diluted share, compared with $1.7 million, or $0.03 per diluted share, for the comparable quarter last year. GAAP to non-GAAP adjustments for net income exclude costs related to the spin-off of the Outdoor Products & Accessories segment, COVID-19-related expenses, and other costs. For a detailed reconciliation, see the schedules that follow in this release.
Quarterly non-GAAP Adjusted EBITDAS was $84.2 million, or 30.3 percent of net sales, compared with $17.5 million, or 14.1 percent of net sales, for the comparable quarter last year.
On August 24, 2020, the company announced that it had completed the previously announced spin-off of its Outdoor Products & Accessories segment. Therefore, first-quarter fiscal 2021 represents the final period in which the Smith & Wesson Brands, Inc. financial results will include the financial results of the Outdoor Products & Accessories segment.
Mark Smith, president and chief executive officer, commented, “Today, I am pleased to report record-breaking first-quarter financial results for Smith & Wesson Brands, Inc. These results could not have been possible without our dedicated employees, who not only worked diligently to manufacture and fulfill the strong flow of customer orders with a broad assortment of our highly sought-after firearms but did so with a heightened commitment to the health and safety protocols that our operations management team put in place at the start of the pandemic. Our record revenue and unit sales during the quarter demonstrate our ability to rapidly respond to increased demand through our flexible manufacturing model and our state-of-the-art distribution facility, delivering outstanding products that resonate with the firearms consumer.”
Smith continued, “With the successful spin-off of our Outdoor Products & Accessories segment last week, we have now returned to our heritage as a pure-play firearms company, with a focus on organic growth and returning excess capital to our stockholders. As such, our Board of Directors has authorized the company to declare a regular, quarterly cash dividend of $0.05 per share. Our first quarterly dividend will be payable on October 1, 2020 to shareholders of record as of the market close on September 17, 2020.”
Deana McPherson, executive vice president and chief financial officer, commented, “Our strong financial performance enabled us to generate operating cash flow of $83.5 million during the quarter, which, combined with our cash on hand, allowed us to pay down $135.0 million on our revolving line of credit and end the quarter with zero net debt. After the end of the first quarter, as part of the spin-off process, we restructured our credit facility for a new, five-year term that enables us to maintain an unsecured $100 million line of credit for the foreseeable future.”
Photo courtesy Zora/Kennedi Carter
