Smith & Wesson Brands(SWBI) - 2024 Q2 - Quarterly Report

Part I - Financial Information Item 1. Financial Statements (Unaudited) This section presents Smith & Wesson's unaudited condensed consolidated financial statements, covering balance sheets, income, equity, cash flows, and detailed notes Condensed Consolidated Balance Sheets Total assets and liabilities slightly increased, while stockholders' equity decreased, driven by lower cash and inventories, and a rise in notes payable | Metric | October 31, 2023 (in thousands) | April 30, 2023 (in thousands) | Change (in thousands) | % Change | | :-------------------------------- | :------------------------------ | :---------------------------- | :-------------------- | :------- | | Cash and cash equivalents | $44,192 | $53,556 | $(9,364) | -17.5% | | Accounts receivable, net | $59,773 | $55,153 | $4,620 | 8.4% | | Inventories | $163,291 | $177,118 | $(13,827) | -7.8% | | Total current assets | $281,839 | $291,920 | $(10,081) | -3.5% | | Property, plant, and equipment, net | $253,253 | $210,330 | $42,923 | 20.4% | | Total assets | $572,973 | $541,294 | $31,679 | 5.8% | | Total current liabilities | $90,894 | $87,213 | $3,681 | 4.2% | | Notes and loans payable | $64,836 | $24,790 | $40,046 | 161.6% | | Total liabilities | $199,471 | $156,671 | $42,800 | 27.3% | | Total stockholders' equity | $373,502 | $384,623 | $(11,121) | -2.9% | Condensed Consolidated Statements of Income Net income and gross profit decreased for both three and six-month periods, despite increased net sales, due to higher cost of sales and operating expenses | Metric (in thousands, except per share data) | 3 Months Ended Oct 31, 2023 | 3 Months Ended Oct 31, 2022 | % Change (3 Months) | 6 Months Ended Oct 31, 2023 | 6 Months Ended Oct 31, 2022 | % Change (6 Months) | | :------------------------------------------- | :-------------------------- | :-------------------------- | :------------------ | :-------------------------- | :-------------------------- | :------------------ | | Net sales | $124,958 | $121,035 | 3.2% | $239,201 | $205,429 | 16.4% | | Cost of sales | $93,192 | $81,773 | 14.0% | $177,034 | $134,696 | 31.4% | | Gross profit | $31,766 | $39,262 | -19.1% | $62,167 | $70,733 | -12.1% | | Operating income | $3,768 | $12,527 | -69.9% | $8,116 | $16,445 | -50.6% | | Net income | $2,498 | $9,648 | -74.1% | $5,616 | $12,960 | -56.7% | | Basic - net income per share | $0.05 | $0.21 | -76.2% | $0.12 | $0.28 | -57.1% | | Diluted - net income per share | $0.05 | $0.21 | -76.2% | $0.12 | $0.28 | -57.1% | Condensed Consolidated Statements of Changes in Stockholders' Equity Stockholders' equity decreased due to treasury stock repurchases and dividend distributions, partially offset by net income and stock-based compensation | Metric (in thousands) | Balance at April 30, 2023 | Balance at October 31, 2023 | Change | | :-------------------- | :------------------------ | :-------------------------- | :----- | | Common Stock | $75 | $75 | $0 | | Additional Paid-In Capital | $283,666 | $286,341 | $2,675 | | Retained Earnings | $523,184 | $517,682 | $(5,502) | | Treasury Stock | $(422,375) | $(430,669) | $(8,294) | | Total Stockholders' Equity | $384,623 | $373,502 | $(11,121) | - During the six months ended October 31, 2023, the company repurchased $8.2 million in treasury stock and distributed $11.08 million in dividends[16] Condensed Consolidated Statements of Cash Flows Operating cash flow improved significantly, but increased investing activities for relocation and financing activities led to a net decrease in cash | Cash Flow Activity (in thousands) | 6 Months Ended Oct 31, 2023 | 6 Months Ended Oct 31, 2022 | Change | | :-------------------------------- | :-------------------------- | :-------------------------- | :----- | | Net cash provided by/(used in) operating activities | $37,756 | $(28,165) | $65,921 | | Net cash used in investing activities | $(67,063) | $(39,590) | $(27,473) | | Net cash provided by/(used in) financing activities | $19,943 | $(9,998) | $29,941 | | Net decrease in cash and cash equivalents | $(9,364) | $(77,753) | $68,389 | | Cash and cash equivalents, end of period | $44,192 | $42,975 | $1,217 | - Operating cash flow was favorably impacted by a $13.8 million decrease in inventory in 2023, contrasting with a $59.8 million increase in inventory in the prior comparable period[102] - Investing activities saw a $27.6 million increase in capital expenditures, primarily due to payments related to the Maryville, Tennessee Relocation[103] Notes to Condensed Consolidated Financial Statements These notes provide detailed context for financial statements, covering operations, accounting principles, leases, debt, fair value, inventories, liabilities, equity, litigation, relocation, and restructuring (1) Organization Smith & Wesson Brands, Inc. manufactures firearms under Smith & Wesson and Gemtech brands, and recently began operations at its new Maryville, Tennessee facility - Smith & Wesson manufactures handguns, long guns, handcuffs, firearm suppressors, and other firearm-related products under the Smith & Wesson and Gemtech brands[21] - The company serves firearm enthusiasts, collectors, hunters, sportsmen, competitive shooters, individuals seeking home/personal protection, law enforcement, security agencies, and military agencies[21] - Manufacturing facilities are located in Springfield, Massachusetts; Houlton, Maine; Deep River, Connecticut; and the new Maryville, Tennessee facility, which began manufacturing and distribution activities during the quarter ended October 31, 2023[21] (2) Basis of Presentation Interim financial statements are unaudited, prepared under GAAP, and should be read with the Fiscal 2023 Form 10-K, as interim results may not predict full fiscal year performance - Interim financial statements are unaudited and include only normal recurring adjustments necessary for fair presentation[22] - Certain GAAP information and footnote disclosures have been condensed or omitted, requiring these statements to be read with the Fiscal 2023 Form 10-K[23] - Results for the three and six months ended October 31, 2023, may not be indicative of the full fiscal year ending April 30, 2024[23] (3) Leases The company leases real estate and equipment under operating and finance leases, plans to terminate the Missouri Sublease, and anticipates no right-of-use asset impairment | Lease Type | Balance Sheet Caption | October 31, 2023 (in thousands) | | :----------- | :-------------------- | :------------------------------ | | Operating Leases | Right-of-use assets, net | $1,207 | | | Total operating lease liabilities | $1,405 | | Finance Leases | Right-of-use assets, net | $31,051 | | | Total finance lease liabilities | $37,707 | | Fiscal Year | Future Sublease Receipts (in thousands) | Future Lease Payments (in thousands) | | :---------- | :------------------------------------ | :----------------------------------- | | 2024 | $1,399 | $2,325 | | 2025 | $3,180 | $3,702 | | 2026 | $3,235 | $3,734 | | 2027 | $3,292 | $3,762 | | 2028 | $3,350 | $3,549 | | Thereafter | $38,906 | $38,906 | | Total | $53,362 | $55,978 | - The company intends to terminate the Missouri Sublease around January 1, 2024, and may extend the Connecticut facility lease through the end of calendar 2024[28] (4) Notes, Loans Payable, and Financing Arrangements The company has a $100.0 million revolving line of credit, with $65.0 million outstanding at 7.17% interest, amended to SOFR, and remains compliant with covenants - The company has a $100.0 million revolving line of credit, with $65.0 million outstanding as of October 31, 2023, at an average interest rate of 7.17%[31][32] - The credit agreement was amended on April 28, 2023, to replace LIBOR with SOFR as the interest rate benchmark and to exclude unfinanced capital expenditures related to the Relocation from the 'Consolidated Fixed Charge Coverage Ratio'[31] - As of October 31, 2023, the company was compliant with all required financial covenants, including minimum consolidated fixed charge coverage ratio and maximum consolidated leverage ratio[33] (5) Fair Value Measurement The company measures financial assets and liabilities at fair value, with $44.2 million in Level 1 cash and cash equivalents, and no Level 2 or Level 3 financial assets or liabilities | Asset/Liability | October 31, 2023 (in thousands) | April 30, 2023 (in thousands) | Fair Value Hierarchy Level | | :---------------- | :------------------------------ | :---------------------------- | :------------------------- | | Cash and cash equivalents | $44,192 | $53,556 | Level 1 | - The company had no Level 2 or Level 3 financial assets or liabilities as of October 31, 2023[39] (6) Inventories Total inventories decreased by 7.8%, driven by a reduction in finished parts, partially offset by increases in finished goods and raw materials | Inventory Category (in thousands) | October 31, 2023 | April 30, 2023 | Change | | :-------------------------------- | :--------------- | :------------- | :----- | | Finished goods | $95,646 | $93,705 | $1,941 | | Finished parts | $47,980 | $65,460 | $(17,480) | | Work in process | $7,026 | $6,821 | $205 | | Raw material | $12,639 | $11,132 | $1,507 | | Total inventories | $163,291 | $177,118 | $(13,827) | (7) Accrued Expenses and Deferred Revenue Total accrued expenses and deferred revenue increased by 15.1%, primarily due to a new accrued settlement, higher accrued taxes, and distributor incentives | Accrued Expense Category (in thousands) | October 31, 2023 | April 30, 2023 | Change | | :-------------------------------------- | :--------------- | :------------- | :----- | | Accrued taxes other than income | $5,250 | $3,703 | $1,547 | | Accrued employee benefits | $3,339 | $3,256 | $83 | | Accrued settlement | $3,200 | $0 | $3,200 | | Accrued distributor incentives | $2,931 | $1,640 | $1,291 | | Accrued other | $2,494 | $4,597 | $(2,103) | | Total accrued expenses and deferred revenue | $23,197 | $20,149 | $3,048 | (8) Stockholders' Equity The Board authorized a $50.0 million stock repurchase program, with $8.2 million utilized, while diluted EPS significantly decreased, and stock-based compensation increased - On September 19, 2023, the Board authorized a $50.0 million common stock repurchase program. Through October 31, 2023, 645,770 shares were repurchased for $8.2 million[42][109] | EPS Metric | 3 Months Ended Oct 31, 2023 | 3 Months Ended Oct 31, 2022 | % Change | 6 Months Ended Oct 31, 2023 | 6 Months Ended Oct 31, 2022 | % Change | | :--------- | :-------------------------- | :-------------------------- | :------- | :-------------------------- | :-------------------------- | :------- | | Basic EPS | $0.05 | $0.21 | -76.2% | $0.12 | $0.28 | -57.1% | | Diluted EPS | $0.05 | $0.21 | -76.2% | $0.12 | $0.28 | -57.1% | - Total stock-based compensation expense was $2.8 million for the six months ended October 31, 2023, up from $2.6 million in the prior year. The company granted 357,357 RSUs and 176,583 PSUs during this period[47][50] (9) Commitments and Contingencies The company faces various legal proceedings and is committed to the Maryville, Tennessee Relocation, involving substantial capital expenditures, job creation, and asset impairments Litigation Smith & Wesson actively defends against multiple lawsuits, including product liability, class actions, and a new stockholder derivative lawsuit, unable to estimate potential adverse judgment losses - The company settled indemnity and counterclaims with Gemini Technologies, Incorporated, but continues to defend remaining claims in the lawsuit[55] - Smith & Wesson is a defendant in five product liability cases and is aware of five other claims, primarily alleging defective product design, manufacturing, or inadequate warnings[56] - The company is defending against multiple class action lawsuits and government actions, including cases in Canada, California (Poway synagogue shooting), by the Mexican Government, in Illinois (Highland Park shooting), and by the cities of Buffalo and Rochester, New York, all related to firearm misuse or alleged negligence[57][58][59][60][61] - A proposed class action for non-payment of wages at the Springfield facility was settled on September 21, 2023. A new stockholder derivative lawsuit was filed on December 5, 2023, alleging breach of fiduciary duties related to AR-15 style rifle sales[63][66] Commitments The company is relocating to Maryville, Tennessee, committing to at least $120.0 million in capital expenditures and 620 new jobs, with total expected spending of $160.0-$170.0 million and $1.9 million in asset impairment - The company plans to move its headquarters and significant operations to Maryville, Tennessee, by 2023, committing to at least $120.0 million in capital expenditures and creating no less than 620 new jobs by December 31, 2025[70][72] - The construction contract for the new facility has a guaranteed maximum price of $114.5 million, with total expected spending between $160.0 million and $170.0 million through the end of fiscal 2024, including machinery and equipment[73] - An impairment of $1.9 million was recorded as of October 31, 2023, for distribution equipment not expected to be utilized in the Tennessee facility or recovered through sale[74] (10) Restructuring Relocation-related restructuring charges totaled $2.1 million for three months and $6.0 million for six months, primarily for public relations, employee relations, and office expenses | Restructuring Charges (in thousands) | 3 Months Ended Oct 31, 2023 | 3 Months Ended Oct 31, 2022 | 6 Months Ended Oct 31, 2023 | 6 Months Ended Oct 31, 2022 | | :----------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Cost of sales | $409 | $1,735 | $1,312 | $2,978 | | Selling, marketing, and distribution | $774 | $270 | $2,969 | $707 | | General and administrative | $878 | $1,106 | $1,692 | $1,620 | | Total restructuring charges | $2,061 | $3,110 | $5,973 | $5,308 | | Component of Restructuring Charges (in thousands) | 3 Months Ended Oct 31, 2023 | 3 Months Ended Oct 31, 2022 | 6 Months Ended Oct 31, 2023 | 6 Months Ended Oct 31, 2022 | | :------------------------------------------------ | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Severance and employee-related benefits | $(49) | $2,505 | $881 | $3,658 | | Relocation | $210 | $179 | $447 | $1,062 | | Public relations | $922 | $0 | $922 | $0 | | Office rent and equipment | $64 | $86 | $2,142 | $92 | - The accrual for severance and employee-related benefits and relocation totaled $10.8 million as of October 31, 2023, with $1.3 million in charges and $2.3 million in cash payments/settlements during the six months[78] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section analyzes the company's financial performance and condition, covering key results, sales, gross profit, operating expenses, income, liquidity, capital, and relocation efforts Overview This overview refers readers to the Fiscal 2023 Annual Report for a comprehensive discussion of financial condition, operations, objectives, performance indicators, and industry data - The section refers to the Management's Discussion and Analysis in the Fiscal 2023 Annual Report for key objectives, performance indicators, and industry data[80] Second Quarter Fiscal 2024 Highlights Net sales increased for both three and six-month periods, but gross margin declined, leading to significant decreases in net income to $2.5 million (three months) and $5.6 million (six months), with $8.2 million in stock repurchases | Metric | 3 Months Ended Oct 31, 2023 | 3 Months Ended Oct 31, 2022 | % Change | 6 Months Ended Oct 31, 2023 | 6 Months Ended Oct 31, 2022 | % Change | | :----- | :-------------------------- | :-------------------------- | :------- | :-------------------------- | :-------------------------- | :------- | | Net sales | $125.0 million | $121.0 million | 3.2% | $239.2 million | $205.4 million | 16.4% | | Gross margin | 25.4% | 32.4% | -7.0 pp | 26.0% | 34.4% | -8.4 pp | | Net income | $2.5 million | $9.6 million | -74.1% | $5.6 million | $13.0 million | -56.7% | | Diluted EPS | $0.05 | $0.21 | -76.2% | $0.12 | $0.28 | -57.1% | - During the six months ended October 31, 2023, the company purchased 645,770 shares of common stock for $8.2 million[81] Results of Operations Net sales increased, but gross profit and net income significantly declined due to higher cost of sales, unfavorable fixed-cost absorption, legal settlements, and inflation, with mixed operating expense changes Net Sales and Gross Profit – For the Three Months Ended October 31, 2023 Net sales increased by 3.2% to $125.0 million, driven by long gun sales, while gross profit fell by 19.1% to $31.8 million, with gross margin at 25.4%, due to fixed-cost absorption, a $3.2 million legal settlement, and inflation | Product Category (in thousands) | 2023 Net Sales | 2022 Net Sales | $ Change | % Change | | :------------------------------ | :------------- | :------------- | :------- | :------- | | Handguns | $88,347 | $93,037 | $(4,690) | -5.0% | | Long Guns | $28,120 | $16,999 | $11,121 | 65.4% | | Other Products & Services | $8,491 | $10,999 | $(2,508) | -22.8% | | Total net sales | $124,958 | $121,035 | $3,923 | 3.2% | | Gross profit | $31,766 | $39,262 | $(7,496) | -19.1% | | Gross margin | 25.4% | 32.4% | -7.0 pp | | | Unit Shipments (in thousands) | 2023 | 2022 | Change | % Change | | :---------------------------- | :--- | :--- | :------- | :------- | | Handguns (Total) | 191 | 209 | (18) | -8.6% | | Long Guns (Total) | 56 | 31 | 25 | 80.6% | | Handguns (Sporting Goods) | 177 | 191 | (14) | -7.3% | | Long Guns (Sporting Goods) | 53 | 27 | 26 | 96.3% | - New products represented 29.0% of sales for the quarter, including two new pistols and one new long gun. Inventory levels are expected to decline by fiscal year-end due to the operational transition to the new Tennessee facility and alignment of production capacity with demand[85][87] Net Sales and Gross Profit – For the Six Months Ended October 31, 2023 Net sales increased by 16.4% to $239.2 million, driven by handgun and long gun sales, while gross profit declined by 12.1% to $62.2 million, with gross margin at 26.0%, due to similar factors as the three-month period | Product Category (in thousands) | 2023 Net Sales | 2022 Net Sales | $ Change | % Change | | :------------------------------ | :------------- | :------------- | :------- | :------- | | Handguns | $174,452 | $152,403 | $22,049 | 14.5% | | Long Guns | $46,903 | $31,105 | $15,798 | 50.8% | | Other Products & Services | $17,846 | $21,921 | $(4,075) | -18.6% | | Total net sales | $239,201 | $205,429 | $33,772 | 16.4% | | Gross profit | $62,167 | $70,733 | $(8,566) | -12.1% | | Gross margin | 26.0% | 34.4% | -8.4 pp | | | Unit Shipments (in thousands) | 2023 | 2022 | Change | % Change | | :---------------------------- | :--- | :--- | :------- | :------- | | Handguns (Total) | 365 | 337 | 28 | 8.3% | | Long Guns (Total) | 95 | 58 | 37 | 63.8% | | Handguns (Sporting Goods) | 339 | 307 | 32 | 10.4% | | Long Guns (Sporting Goods) | 86 | 51 | 35 | 68.6% | - New products accounted for 30.8% of sales for the six months, including five new pistols and two new long guns[91] Operating Expenses Total operating expenses increased by 4.7% for three months and decreased by 0.4% for six months, with selling, marketing, and distribution rising due to relocation costs, and general and administrative decreasing from lower profit sharing and legal expenses | Operating Expense (in thousands) | 3 Months Ended Oct 31, 2023 | 3 Months Ended Oct 31, 2022 | % Change | 6 Months Ended Oct 31, 2023 | 6 Months Ended Oct 31, 2022 | % Change | | :------------------------------- | :-------------------------- | :-------------------------- | :------- | :-------------------------- | :-------------------------- | :------- | | Research and development | $1,724 | $1,869 | -7.8% | $3,522 | $3,542 | -0.6% | | Selling, marketing, and distribution | $10,952 | $9,431 | 16.1% | $20,993 | $17,458 | 20.2% | | General and administrative | $15,322 | $15,435 | -0.7% | $29,536 | $33,288 | -11.3% | | Total operating expenses | $27,998 | $26,735 | 4.7% | $54,051 | $54,288 | -0.4% | - Selling, marketing, and distribution expenses increased due to one-time grand opening costs for the new Maryville, Tennessee facility, increased compensation, and targeted customer promotions[93][94] - General and administrative expenses decreased primarily due to a $3.8 million decrease in profit sharing expense and a $1.0 million decrease in legal-related expenses for the six-month period[94] Operating Income Operating income significantly decreased by 69.9% to $3.8 million (three months) and 50.6% to $8.1 million (six months), driven by unfavorable fixed-cost absorption, inventory adjustments, a legal settlement, and relocation costs | Operating Income (in thousands) | 3 Months Ended Oct 31, 2023 | 3 Months Ended Oct 31, 2022 | % Change | 6 Months Ended Oct 31, 2023 | 6 Months Ended Oct 31, 2022 | % Change | | :------------------------------ | :-------------------------- | :-------------------------- | :------- | :-------------------------- | :-------------------------- | :------- | | Operating income | $3,768 | $12,527 | -69.9% | $8,116 | $16,445 | -50.6% | | Operating margin | 3.0% | 10.3% | -7.3 pp | 3.4% | 8.0% | -4.6 pp | - The decrease in operating income was primarily due to unfavorable fixed-cost absorption, inventory reserve adjustments, an accrued legal settlement, increased compensation, and costs related to the grand opening of the new Maryville, Tennessee facility[95] Income Taxes Income tax expense decreased by 76.5% to $0.8 million (three months) and 46.4% to $2.2 million (six months) due to lower operating income, while the effective tax rate increased to 28.1% | Income Tax Metric (in thousands) | 3 Months Ended Oct 31, 2023 | 3 Months Ended Oct 31, 2022 | % Change | 6 Months Ended Oct 31, 2023 | 6 Months Ended Oct 31, 2022 | % Change | | :------------------------------- | :-------------------------- | :-------------------------- | :------- | :-------------------------- | :-------------------------- | :------- | | Income tax expense | $765 | $3,249 | -76.5% | $2,196 | $4,094 | -46.4% | | Effective tax rate | 23.4% | 25.2% | -1.8 pp | 28.1% | 24.0% | 4.1 pp | - The decrease in income tax expense was a direct result of lower operating income[98] Net Income Net income decreased by 74.1% to $2.5 million (three months) and 56.7% to $5.6 million (six months), primarily due to factors affecting gross profit and operating expenses | Net Income Metric (in thousands, except per share data) | 3 Months Ended Oct 31, 2023 | 3 Months Ended Oct 31, 2022 | % Change | 6 Months Ended Oct 31, 2023 | 6 Months Ended Oct 31, 2022 | % Change | | :------------------------------------------------------ | :-------------------------- | :-------------------------- | :------- | :-------------------------- | :-------------------------- | :------- | | Net income | $2,498 | $9,648 | -74.1% | $5,616 | $12,960 | -56.7% | | Basic EPS | $0.05 | $0.21 | -76.2% | $0.12 | $0.28 | -57.1% | | Diluted EPS | $0.05 | $0.21 | -76.2% | $0.12 | $0.28 | -57.1% | Liquidity and Capital Resources Cash requirements include operations, relocation capital expenditures, and stockholder returns. Operating cash flow improved to $37.8 million, while investing activities increased cash usage, and financing provided $19.9 million from borrowings, with adequate resources for the next 12 months - Principal cash requirements include financing operations growth (working capital, capital expenditures), funding the Maryville, Tennessee Relocation, and returning capital to stockholders[101] | Cash Flow Activity (in thousands) | 6 Months Ended Oct 31, 2023 | 6 Months Ended Oct 31, 2022 | $ Change | % Change | | :-------------------------------- | :-------------------------- | :-------------------------- | :------- | :------- | | Operating activities | $37,756 | $(28,165) | $65,921 | -234.1% | | Investing activities | $(67,063) | $(39,590) | $(27,473) | -69.4% | | Financing activities | $19,943 | $(9,998) | $29,941 | 299.5% | | Total cash flow | $(9,364) | $(77,753) | $68,389 | -88.0% | - Cash provided by operating activities was $37.8 million, favorably impacted by a $13.8 million decrease in inventory. Cash used in investing activities increased by $27.5 million, primarily due to $67.0 million in capital expenditures, with $50.0 million to $55.0 million expected for facility construction in fiscal 2024[102][103][104] - Financing activities provided $19.9 million, mainly from $40 million in net borrowings under the revolving line of credit, partially offset by $11.1 million in dividend distributions and $8.2 million in share repurchases[105] - As of October 31, 2023, the company had $44.2 million in cash and cash equivalents and believes existing capital resources and credit facilities are adequate to fund operations and commitments for the next 12 months[112] Other Matters No material changes to critical accounting policies have occurred, and information on recent accounting pronouncements is referenced from Note 2 - No material changes to critical accounting policies have occurred since the Fiscal 2023 Annual Report[113] - Information on recent accounting pronouncements is incorporated by reference from Note 2 of the condensed consolidated financial statements[114] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company had no forward option or outstanding forward contracts during the period, indicating no significant market risk exposure from such instruments - The company did not enter into or transact any forward option contracts, nor did it have any forward contracts outstanding during the period ended October 31, 2023[115] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of October 31, 2023, with no material changes to internal control over financial reporting during the period - As of October 31, 2023, the company's disclosure controls and procedures were deemed effective by the Chief Executive Officer and Chief Financial Officer[116] - There was no material change in the company's internal control over financial reporting during the period covered by this Quarterly Report on Form 10-Q[117] Part II - Other Information Item 1. Legal Proceedings This section refers to Note 9—Commitments and Contingencies for a detailed discussion of legal proceedings against the company - Details regarding the nature of legal proceedings against the company are discussed in Note 9—Commitments and Contingencies of the condensed consolidated financial statements[119] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company repurchased 645,770 common shares for $8.2 million under a $50.0 million authorization, with $41.788 million remaining for future repurchases | Period | Total of Shares Purchased | Average Price Paid Per Share | Total of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in thousands) | | :-------------------------- | :-------------------------- | :--------------------------- | :------------------------------------------------------------------------ | :------------------------------------------------------------------------------------------------- | | September 1 to September 30, 2023 | 554,702 | $12.65 | 554,702 | $42,973 | | October 1 to October 31, 2023 | 91,068 | $13.00 | 91,068 | $41,788 | | Total | 645,770 | $12.70 | 645,770 | $41,788 | - The repurchases were made under a $50.0 million authorization approved by the Board of Directors on September 19, 2023[124] Item 5. Other Information No directors or officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the three months ended October 31, 2023 - None of the company's directors or officers adopted or terminated a 'Rule 10b5-1 trading arrangement' or a 'non-Rule 10b5-1 trading arrangement' during the three months ended October 31, 2023[121] Item 6. Exhibits This section lists all exhibits included or incorporated by reference into the Quarterly Report on Form 10-Q, including certifications, dividend agreements, and XBRL documents - The exhibits include certifications (Rule 13a-14(a)/15d-14(a) and Section 1350) from the Principal Executive Officer and Principal Financial Officer, a Form of Dividend Equivalent Award Agreement, and various Inline XBRL documents[127] SIGNATURES The report is signed by Mark P. Smith, President and CEO, and Deana L. McPherson, EVP, CFO, Treasurer, and Assistant Secretary, on behalf of Smith & Wesson Brands, Inc - The report is signed by Mark P. Smith, President and Chief Executive Officer, and Deana L. McPherson, Executive Vice President, Chief Financial Officer, Treasurer, and Assistant Secretary[129] - The signing date for the report is December 7, 2023[129]