Smith & Wesson Brands, Inc. Reports Fourth Quarter and Full Fiscal 2024 Financial Results

Rhea-AI Summary

Smith & Wesson Brands (NASDAQ: SWBI) reported its Q4 and full fiscal year 2024 financial results. Q4 net sales increased 9.9% to $159.1 million, with a gross margin of 35.5%. GAAP net income was $26.1 million, or $0.57 per diluted share. Non-GAAP net income was $20.9 million, or $0.45 per diluted share. For the full year, net sales rose 11.8% to $535.8 million, though the gross margin decreased to 29.5%. GAAP net income was $39.6 million, and non-GAAP net income was $42.6 million. The company authorized an 8.3% increase in quarterly dividends. Despite a competitive market, Smith & Wesson plans to grow net sales and gross margin in FY 2025.

Positive

• Q4 net sales increased by 9.9% to $159.1 million.
• Q4 gross margin improved to 35.5%, up from 29.0% last year.
• GAAP net income for Q4 more than doubled to $26.1 million.
• Full-year net sales rose by 11.8% to $535.8 million.
• Smith & Wesson authorized an 8.3% increase in quarterly dividends.

Negative

• Full-year gross margin decreased from 32.2% to 29.5%.
• Non-GAAP net income for the full year slightly decreased from $43.3 million to $42.6 million.
• Full-year Non-GAAP Adjusted EBITDAS margin fell from 19.9% to 17.6%.

Financial Analyst

The recent financial results from Smith & Wesson Brands, Inc. present a compelling snapshot of the company's health and strategic direction. The noteworthy 9.9% increase in Q4 net sales to $159.1 million and the significant improvement in gross margin to 35.5% from the previous year's 29.0% underscore the effectiveness of their strategic initiatives. The double-digit growth in net sales, coupled with a solid EPS of $0.57 per share, highlights their operational efficiency and market resilience.

However, the annual gross margin decreased to 29.5% from 32.2% last year. This suggests that while Q4 was robust, the company faced some headwinds throughout the fiscal year, likely from inflationary pressures and competitive market dynamics. Investors should note the company's proactive measures, like the 8.3% increase in dividends, indicating a commitment to shareholder returns, which could be attractive for income-focused investors.

Looking ahead, the company's confident outlook for fiscal 2025, backed by a strong balance sheet and operational improvements, bodes well for future profitability. However, the traditionally slower summer season for firearms might create short-term fluctuations in performance.

Market Research Analyst

Smith & Wesson's fiscal 2024 results are a reflection of its strong brand positioning in a competitive market. The boost in net sales and gross margin in Q4 highlights a successful response to market demand and effective cost management. One key aspect to watch is the 11.8% year-over-year increase in full-year net sales to $535.8 million, an indicator of robust consumer demand and successful market penetration.

Moreover, the company's focus on innovation and new product pipelines suggests a forward-thinking approach to sustaining market leadership. However, the marginal dip in non-GAAP net income indicates that while the top-line growth is strong, maintaining profitability amidst rising costs is a challenge. This nuanced financial landscape calls for careful monitoring of the company's ability to manage its expenses and sustain growth momentum.

Investors should also keep an eye on macroeconomic factors and regulatory changes that could impact the firearms industry. While Smith & Wesson's strategic moves are promising, external factors can play a significant role in shaping future performance.

• Q4 Net Sales of $159.1 Million
• Q4 Gross Margin of 35.5%; Non-GAAP Gross Margin of 35.6%
• Q4 EPS of $0.57/Share; Q4 Adjusted EPS of $0.45/Share
• Q4 Adjusted EBITDAS Margin of 22.6%
• Board of Directors Authorized 8.3% Increase in Quarterly Dividend

Maryville, Tennessee--(Newsfile Corp. - June 20, 2024) - Smith & Wesson Brands, Inc. (NASDAQ: SWBI), a U.S.-based leader in firearm manufacturing and design, today announced financial results for the fourth quarter and full fiscal year 2024, ended April 30, 2024.

Fourth Quarter Fiscal 2024 Financial Highlights

• Net sales were $159.1 million, an increase of $14.4 million, or 9.9%, over the comparable quarter last year.

• Gross margin was 35.5% compared with 29.0% in the comparable quarter last year.

• GAAP net income was $26.1 million, or $0.57 per diluted share, compared with $12.8 million, or $0.28 per diluted share, for the comparable quarter last year.

• Non-GAAP net income was $20.9 million, or $0.45 per diluted share, compared with $14.6 million, or $0.32 per diluted share, for the comparable quarter last year. GAAP to non-GAAP adjustments for income include a gain related to the sale of certain intangible assets and other costs. For a detailed reconciliation, see the schedules that follow in this release.

• Non-GAAP Adjusted EBITDAS was $36.0 million, or 22.6% of net sales, compared with $30.3 million, or 20.9% of net sales, for the comparable quarter last year.

Full Year Fiscal 2024 Financial Highlights

• Net sales were $535.8 million, an increase of $56.6 million, or 11.8%, over the prior fiscal year.

• Gross margin was 29.5% compared with 32.2% in the prior fiscal year.

• GAAP net income was $39.6 million, or $0.86 per diluted share, compared with $36.9 million, or $0.80 per diluted share, for the prior fiscal year.

• Non-GAAP net income was $42.6 million, or $0.92 per diluted share, compared with $43.3 million, or $0.94 per diluted share, for the prior fiscal year. GAAP to non-GAAP adjustments for income include a gain related to the sale of certain intangible assets, costs related to the move of our headquarters and significant elements of our operations to a new facility in Maryville, Tennessee, or the Relocation, an accrued legal settlement, and other costs. For a detailed reconciliation, see the schedules that follow in this release.

• Non-GAAP Adjusted EBITDAS was $94.3 million, or 17.6% of net sales, compared with $95.2 million, or 19.9% of net sales, for the prior fiscal year.

Mark Smith, President and Chief Executive Officer, commented, "We delivered yet another strong quarter to close out fiscal 2024. I am very proud of the team's continuing discipline and execution against our strategic initiatives of strong brand messaging and marketing, best-in-class innovation, operational excellence, and business process efficiencies. Our results in fiscal 2024 again demonstrate that our relentless focus on these long-term strategies consistently reinforces our position as a market leader and delivers solid stockholder returns. While the summer months will be highly competitive as we navigate the traditionally slower season for firearms, we continue to expect healthy demand overall for firearms in fiscal 2025, and Smith & Wesson is well positioned to deliver another solid year of growth. With our deep pipeline of new products, leading brand, new state of the art facility now fully operational, strong balance sheet, and, most importantly, world-class dedicated employees, we are excited to continue delivering value for our stockholders."

Deana McPherson, Executive Vice President and Chief Financial Officer, commented, "Our fourth quarter net sales increased by nearly 10% compared to the comparable quarter last year, while our fiscal 2024 sales increased by nearly 12% year-over-year. Fourth quarter gross margin of 35.5% was 6.5% above the prior year comparable quarter, with the full year ending at 29.5%. We generated operating cash of $43.6 million during the fourth quarter and $106.7 million for the full year. Despite a competitive marketplace and inflationary impacts, we expect to grow both net sales and gross margin in fiscal 2025. During fiscal 2024, we repurchased 793,551 shares, utilizing $10.2 million of our $50 million authorization and paid $22.0 million of dividends. Consistent with our capital allocation strategy, our board of directors has authorized a $0.13 per share quarterly dividend, which will be paid to stockholders of record on July 11, 2024 with payment to be made on July 25, 2024."

Conference Call and Webcast
The company will host a conference call and webcast on June 20, 2024 to discuss its fourth quarter and full fiscal 2024 financial and operational results. Speakers on the conference call will include Mark Smith, President and Chief Executive Officer, and Deana McPherson, Executive Vice President and Chief Financial Officer. The conference call may include forward-looking statements. The conference call and webcast will begin at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time). Interested parties in North America are invited to participate by dialing 1-877-704-4453. Interested parties from outside North America are invited to participate by dialing 1-201-389-0920. Participants should dial in at least 10 minutes prior to the start of the call. The conference call audio webcast can also be accessed live on the company's website at www.smith-wesson.com, under the Investor Relations section.

Reconciliation of U.S. GAAP to Non-GAAP Financial Measures
In this press release, certain non-GAAP financial measures, including "non-GAAP net income," "Adjusted EBITDAS," and "free cash flow" are presented. From time-to-time, we consider and use these supplemental measures of operating performance in order to provide the reader with an improved understanding of underlying performance trends. We believe it is useful for us and the reader to review, as applicable, both (1) GAAP measures that include (i) interest expense, (ii) income tax expense, (iii) depreciation and amortization, (iv) stock-based compensation expense, (v) a gain from the sale of certain intangible assets, (vi) spin related stock-based compensation, (vii) an accrued legal settlement, (viii) Relocation expense, and (ix) the tax effect of non-GAAP adjustments; and (2) the non-GAAP measures that exclude such information. We present these non-GAAP measures because we consider them an important supplemental measure of our performance. Our definition of these adjusted financial measures may differ from similarly named measures used by others. We believe these measures facilitate operating performance comparisons from period to period by eliminating potential differences caused by the existence and timing of certain expense items that would not otherwise be apparent on a GAAP basis. These non-GAAP measures have limitations as an analytical tool and should not be considered in isolation or as a substitute for our GAAP measures. The principal limitations of these measures are that they do not reflect our actual expenses and may thus have the effect of inflating its financial measures on a GAAP basis.

About Smith & Wesson Brands, Inc.
Smith & Wesson Brands, Inc. (NASDAQ: SWBI) is a U.S.-based leader in firearm manufacturing and design, delivering a broad portfolio of quality handgun, long gun, and suppressor products to the global consumer and professional markets under the iconic Smith & Wesson® and Gemtech® brands. The company also provides manufacturing services including forging, machining, and precision plastic injection molding services. For more information call (800) 331-0852 or visit www.smith-wesson.com.

Safe Harbor Statement
Certain statements contained in this press release may be deemed to be forward-looking statements under federal securities laws, and we intend that such forward-looking statements be subject to the safe-harbor created thereby. Such forward-looking statements include, among others, that (i) while the summer months will be highly competitive as we navigate the traditionally slower season for firearms, we continue to expect healthy demand overall for firearms in fiscal 2025 and Smith & Wesson is well positioned to deliver another solid year of growth and (ii) despite a competitive marketplace and inflationary impacts, we expect to grow both net sales and gross margin in fiscal 2025. We caution that these statements are qualified by important risks, uncertainties, and other factors that could cause actual results to differ materially from those reflected by such forward-looking statements. Such factors include, among others, economic, social, political, legislative, and regulatory factors; the potential for increased regulation of firearms and firearm-related products; actions of social activists that could have an adverse effect on our business; the impact of lawsuits; the demand for our products; the state of the U.S. economy in general and the firearm industry in particular; general economic conditions and consumer spending patterns; our competitive environment; the supply, availability and costs of raw materials and components; our anticipated growth and growth opportunities; our strategies; our ability to maintain and enhance brand recognition and reputation; our ability to effectively manage and execute the Relocation; our ability to introduce new products; the success of new products; the potential for cancellation of orders from our backlog; and other risks detailed from time to time in our reports filed with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the fiscal year ended April 30, 2024.

Contact:
investorrelations@smith-wesson.com
(413) 747-3448

SMITH & WESSON BRANDS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

		As of:
		April 30, 2024				April 30, 2023
		(In thousands, except par value and share data)
ASSETS
Current assets:
Cash and cash equivalents	$	60,839		$		53,556
Accounts receivable, net of allowances for credit losses of $0 on April 30, 2024 and      $23 on April 30, 2023		59,071				55,153
Inventories		160,500				177,118
Prepaid expenses and other current assets		4,973				4,917
Income tax receivable		2,495				1,176
Total current assets		287,878				291,920
Property, plant, and equipment, net		252,633				210,330
Intangibles, net		2,598				3,588
Goodwill		19,024				19,024
Deferred income taxes		7,249				8,085
Other assets		8,614				8,347
Total assets	$	577,996		$		541,294
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	41,831		$		36,795
Accrued expenses and deferred revenue		26,811				20,149
Accrued payroll and incentives		17,147				18,565
Accrued income taxes		—				1,831
Accrued profit sharing		9,098				8,203
Accrued warranty		1,813				1,670
Total current liabilities		96,700				87,213
Notes and loans payable, net of current portion		39,880				24,790
Finance lease payable, net of current portion		35,404				36,961
Other non-current liabilities		7,852				7,707
Total liabilities		179,836				156,671
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.001 par value, 20,000,000 shares authorized, no shares issued or outstanding		—				—
Common stock, $0.001 par value, 100,000,000 shares authorized, 75,395,490 issued and 45,561,569 shares outstanding on April 30, 2024 and 75,029,300 shares issued and 45,988,930 shares outstanding on April 30, 2023		75				75
Additional paid-in capital		289,994				283,666
Retained earnings		540,660				523,184
Accumulated other comprehensive income		73				73
Treasury stock, at cost (29,833,921 shares on April 30, 2024 and 29,040,370 shares on April 30, 2023)		(432,642)				(422,375)
Total stockholders' equity		398,160				384,623
Total liabilities and stockholders' equity	$	577,996		$		541,294

 

SMITH & WESSON BRANDS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME

			For the Three Months Ended April 30,									For the Years Ended April 30,
			2024				2023					2024					2023
			(In thousands, except per share data)
Net sales		$	159,148		$		144,777			$		535,833		$			479,242
Cost of sales			102,646				102,815					377,740					324,705
Gross profit			56,502				41,962					158,093					154,537
Operating expenses:
Research and development			1,774				1,875					7,266					7,550
Selling, marketing, and distribution			9,463				9,522					40,564					36,976
General and administrative			19,886				12,738					65,484					61,604
Total operating expenses			31,123				24,135					113,314					106,130
Operating income			25,379				17,827					44,779					48,407
Other income/(expense), net:
Other income/(expense), net			6,496				(2,154)					6,672					150
Interest expense, net			(607)				1,030					(2,055)					(331)
Total other income/(expense), net			5,889				(1,124)					4,617					(181)
Income from operations before income taxes			31,268				16,703					49,396					48,226
Income tax expense			5,158				3,867					9,787					11,350
Net income		$	26,110		$		12,836		$			39,609		$			36,876
Net income per share:
Basic - net income		$	0.57	

FAQ

What were Smith & Wesson's Q4 2024 net sales?

Smith & Wesson reported Q4 2024 net sales of $159.1 million, an increase of 9.9% from the previous year.

What was Smith & Wesson's Q4 2024 GAAP net income?

Smith & Wesson's Q4 2024 GAAP net income was $26.1 million, or $0.57 per diluted share.

How did Smith & Wesson's full-year net sales perform in fiscal 2024?

Smith & Wesson's full-year net sales in fiscal 2024 increased by 11.8% to $535.8 million.

What is the new quarterly dividend authorized by Smith & Wesson?

Smith & Wesson's Board authorized an 8.3% increase in the quarterly dividend to $0.13 per share.

How did Smith & Wesson's gross margin perform in fiscal 2024?

Smith & Wesson's gross margin for fiscal 2024 was 29.5%, down from 32.2% the previous year.