Smith & Wesson Brands reported earnings declined 51.9 percent in the third quarter ended January 31 as sales declined 27.4 percent. The firearms maker said the sales improved sequentially and remain above the comparable pre-pandemic quarter in fiscal 2020.
Third Quarter Fiscal 2023 Financial Highlights
- Net sales were $129.0 million, a decrease of $48.7 million, or 27.4 percent, fom the comparable quarter last year, but $1.6 million, or 1.3 percent, higher than the comparable quarter in fiscal 2020, which was the last pre-pandemic comparable third quarter.
- Gross margin was 32.4 percent compared with 39.6 percent in the comparable quarter last year and 28.0 percent in the comparable quarter in fiscal 2020.
- GAAP net income was $11.1 million, or $0.24 per diluted share, compared with $30.5 million, or $0.65 per diluted share, for the comparable quarter last year, and $4.2 million, or $0.08 per diluted share, for the comparable quarter in fiscal 2020.
- Non-GAAP net income was $11.6 million, or $0.25 per diluted share, compared with $32.9 million, or $0.70 per diluted share, for the comparable quarter last year, and with $2.2 million, or $0.04 per diluted share, for the comparable quarter in fiscal 2020. For a detailed reconciliation, see the schedules that follow in this release.
- Non-GAAP Adjusted EBITDA was $23.7 million, or 18.4 percent of net sales, compared with $51.9 million, or 29.2 percent of net sales, for the comparable quarter last year, and $15.0 million, or 11.8 percent of net sales, for the comparable quarter in fiscal 2020.
Mark Smith, president and chief executive officer, commented, “We are extremely pleased with our third quarter performance, with our top-line increasing sequentially, and above the comparable pre-pandemic quarter in fiscal 2020, and our bottom-line results continuing to show dramatic improvement over pre-pandemic levels. Our results reflect the work our team has done to capitalize on the opportunity afforded by our flexible manufacturing model during the surge to fundamentally transform our business model as it relates to product mix and pricing. Further, the firearm market remains healthy, with strong participation growth in recent years on top of a large and loyal base of core consumers, all of which leads to a compelling view of the future for a leading brand like Smith & Wesson.”
Deana McPherson, executive vice president and chief financial officer, commented, “In spite of inflationary pressures, we are pleased that our average selling prices and profitability for the third quarter were well above pre-pandemic levels. Our investment in the relocation to Tennessee resulted in us borrowing against our line of credit during the third quarter, but we expect that we will be able to repay this balance by the time the relocation is complete, if not sooner. We will continue to focus on managing the business for long-term profitability, market share performance, and capital returned to our stockholders. Consistent with our capital allocation strategy, our board of directors has authorized a $0.10 per share quarterly dividend, which will be paid to stockholders of record on March 16, 2023 with payment to be made on March 30, 2023.”
Photo courtesy Smith & Wesson