{"url_path":"/sec/swbi/10-k/2026/item-16","section_key":"item-16","section_title":"Item 16 Form 10-K Summary","topic":"sec","document":{"doc_type":"10-K","doc_date":"2026-06-17","source_url":"https://www.sec.gov/Archives/edgar/data/1092796/0001193125-26-274254-index.html","accession_number":"0001193125-26-274254","cik":"0001092796","ticker":"SWBI","issuer_name":"SMITH & WESSON BRANDS, INC.","edgar_url":"https://www.sec.gov/Archives/edgar/data/1092796/0001193125-26-274254-index.html","primary_entity_key":"0001092796","primary_entity_name":"SMITH & WESSON BRANDS, INC."},"word_count":18852,"has_tables":true,"body_markdown":"Item 16. Form 10-K Summary\n\nNot applicable.\n\n49\n\n \n\nSIGNATURES\n\nPursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.\n\n \n\nSMITH & WESSON BRANDS, INC.\n\n/s/ Mark P. Smith\n\nMark P. Smith\n\nPresident and Chief Executive Officer\n\n \n\nDate: June 17, 2026\n\nPursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated.\n\n \n\nSignature\n\n \n\nCapacity\n\n \n\nDate\n\n \n\n \n\n \n\n \n\n \n\n/s/ Mark P. Smith\n\nPresident, Chief Executive Officer, and Director\n\n(Principal Executive Officer)\n\n \n\nJune 17, 2026\n\nMark P. Smith\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n/s/ Deana L. McPherson\n\n Executive Vice President, Chief Financial Officer, Treasurer, and Assistant Secretary\n\n(Principal Financial and Accounting Officer)\n\nJune 17, 2026\n\nDeana L. McPherson\n\n \n\n \n\n \n\n \n\n \n\n/s/ Robert L. Scott\n\nChairman of the Board\n\nJune 17, 2026\n\nRobert L. Scott\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n/s/ Anita D. Britt\n\nDirector\n\nJune 17, 2026\n\nAnita D. Britt\n\n \n\n \n\n \n\n \n\n \n\n/s/ Fred M. Diaz\n\n \n\nDirector\n\n \n\nJune 17, 2026\n\nFred M. Diaz\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n/s/ Michelle J. Lohmeier\n\n \n\nDirector\n\n \n\nJune 17, 2026\n\nMichelle J. Lohmeier\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n/s/ Barry M. Monheit\n\nDirector\n\nJune 17, 2026\n\nBarry M. Monheit\n\n \n\n \n\n \n\n \n\n \n\n/s/ Denis G. Suggs\n\n \n\nDirector\n\n \n\nJune 17, 2026\n\nDenis G. Suggs\n\n \n\n \n\n \n\n \n\n \n\n50\n\n \n\nINDEX TO CONSOLIDATED FINANCIAL STATEMENTS\n\nSMITH & WESSON BRANDS, INC. AND SUBSIDIARIES\n\n \n\n \n\n \n\nPage\n\n[Reports of Independent Registered Public Accounting Firm (PCAOB ID No. 185)](#report_independent_registered_public_acc)\n\n \n\nF-2\n\n[Report of Independent Registered Public Accounting Firm (PCAOB ID No. 34)](#deloitte_audit_report)\n\n \n\nF-4\n\n[Consolidated Balance Sheets as of April 30, 2026 and 2025](#consolidated_balance_sheets)\n\n \n\nF-5\n\n[Consolidated Statements of Income for the years ended April 30, 2026, 2025, and 2024](#consolidated_statements_of_income)\n\n \n\nF-6\n\n[Consolidated Statements of Changes in Stockholders’ Equity for the years ended April 30, 2026, 2025, and 2024](#statement_stockholders_equity)\n\n \n\nF-7\n\n[Consolidated Statements of Cash Flows for the years ended April 30, 2026, 2025, and 2024](#statements_of_cashflows)\n\n \n\nF-8\n\n[Notes to Consolidated Financial Statements](#notes_to_financial_statements)\n\n \n\nF-10\n\n \n\nF-1\n\n \n\nReport of Independent Registered Public Accounting Firm\n\nTo the Stockholders and the Board of Directors\n\nSmith & Wesson Brands, Inc.:\n\nOpinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting\n\nWe have audited the accompanying consolidated balance sheets of Smith & Wesson Brands, Inc. and subsidiaries (the Company) as of April 30, 2026 and 2025, the related consolidated statements of income, changes in stockholders’ equity, and cash flows for each of the years in the two-year period ended April 30, 2026, and the related notes (collectively, the consolidated financial statements). We also have audited the Company’s internal control over financial reporting as of April 30, 2026, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.\n\nIn our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of April 30, 2026 and 2025, and the results of its operations and its cash flows for each of the years in the two-year period ended April 30, 2026, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of April 30, 2026 based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.\n\nBasis for Opinions\n\nThe Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s consolidated financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.\n\nWe conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.\n\nOur audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.\n\nDefinition and Limitations of Internal Control Over Financial Reporting\n\nA company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with\n\nF-2\n\n \n\ngenerally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.\n\nBecause of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.\n\nCritical Audit Matters\n\nCritical audit matters are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters.\n\n/s/ KPMG LLP\n\nWe have served as the Company's auditor since 2024.\n\nNashville, Tennessee\n\nJune 17, 2026\n\nF-3\n\n \n\nREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM\n\nTo the stockholders and the Board of Directors of Smith & Wesson Brands, Inc.\n\nOpinion on the Financial Statements\n\nWe have audited the accompanying consolidated statements of income, changes in stockholders' equity, and cash flows, for the year ended April 30, 2024, and the related notes (collectively referred to as the \"financial statements\") of Smith & Wesson Brands, Inc. (the “Company”). In our opinion, the financial statements present fairly, in all material respects, the results of the Company’s operations and its cash flows for the year ended April 30, 2024, in conformity with accounting principles generally accepted in the United States of America.\n\nBasis for Opinion\n\nThese financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.\n\nWe conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.\n\n/s/ Deloitte & Touche LLP\n\nNashville, Tennessee\n\nJune 20, 2024 (June 20, 2025, as to the retrospective application of ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, as presented in Note 16)\n\nWe began serving as the Company's auditor in 2014. In 2024 we became the predecessor auditor.\n\nF-4\n\n \n\nSMITH & WESSON BRANDS, INC. AND SUBSIDIARIES\n\nCONSOLIDATED BALANCE SHEETS\n\n \n\n \n\n \n\nAs of:\n\n \n\n \n\n \n\nApril 30, 2026\n\n \n\n \n\nApril 30, 2025\n\n \n\n \n\n \n\n(In thousands, except par value and share data)\n\n \n\nASSETS\n\n \n\nCurrent assets:\n\n \n\n \n\n \n\n \n\n \n\n \n\nCash and cash equivalents\n\n \n\n$\n\n28,190\n\n \n\n \n\n$\n\n25,231\n\n \n\nMarketable securities\n\n \n\n \n\n5,162\n\n \n\n \n\n \n\n—\n\n \n\nAccounts receivable, net of allowances for credit losses of $5 on\n   April 30, 2026 and April 30, 2025\n\n \n\n \n\n40,014\n\n \n\n \n\n \n\n55,868\n\n \n\nInventories\n\n \n\n \n\n156,250\n\n \n\n \n\n \n\n189,840\n\n \n\nPrepaid expenses and other current assets\n\n \n\n \n\n7,170\n\n \n\n \n\n \n\n6,260\n\n \n\nIncome tax receivable\n\n \n\n \n\n4,617\n\n \n\n \n\n \n\n66\n\n \n\nTotal current assets\n\n \n\n \n\n241,403\n\n \n\n \n\n \n\n277,265\n\n \n\nProperty, plant, and equipment, net of accumulated depreciation and\n   amortization of $397,668 on April 30, 2026 and $368,811 on April 30, 2025\n\n \n\n \n\n238,643\n\n \n\n \n\n \n\n242,648\n\n \n\nIntangibles, net\n\n \n\n \n\n1,956\n\n \n\n \n\n \n\n2,409\n\n \n\nGoodwill\n\n \n\n \n\n19,024\n\n \n\n \n\n \n\n19,024\n\n \n\nDeferred income taxes\n\n \n\n \n\n4,347\n\n \n\n \n\n \n\n10,260\n\n \n\nOther assets\n\n \n\n \n\n7,393\n\n \n\n \n\n \n\n8,006\n\n \n\nTotal assets\n\n \n\n$\n\n512,766\n\n \n\n \n\n$\n\n559,612\n\n \n\nLIABILITIES AND STOCKHOLDERS’ EQUITY\n\n \n\nCurrent liabilities:\n\n \n\n \n\n \n\n \n\n \n\n \n\nAccounts payable\n\n \n\n$\n\n34,570\n\n \n\n \n\n$\n\n26,887\n\n \n\nAccrued expenses and deferred revenue\n\n \n\n \n\n19,146\n\n \n\n \n\n \n\n24,678\n\n \n\nAccrued payroll and incentives\n\n \n\n \n\n15,196\n\n \n\n \n\n \n\n9,060\n\n \n\nAccrued profit sharing\n\n \n\n \n\n5,155\n\n \n\n \n\n \n\n4,636\n\n \n\nAccrued warranty\n\n \n\n \n\n1,300\n\n \n\n \n\n \n\n1,379\n\n \n\nTotal current liabilities\n\n \n\n \n\n75,367\n\n \n\n \n\n \n\n66,640\n\n \n\nNotes and loans payable (Note 4)\n\n \n\n \n\n19,121\n\n \n\n \n\n \n\n79,096\n\n \n\nFinance lease payable, net of current portion\n\n \n\n \n\n32,163\n\n \n\n \n\n \n\n33,703\n\n \n\nOther non-current liabilities\n\n \n\n \n\n9,556\n\n \n\n \n\n \n\n7,719\n\n \n\nTotal liabilities\n\n \n\n \n\n136,207\n\n \n\n \n\n \n\n187,158\n\n \n\nCommitments and contingencies (Note 14)\n\n \n\n \n\n \n\n \n\n \n\n \n\nStockholders’ equity:\n\n \n\n \n\n \n\n \n\n \n\n \n\nPreferred stock, $0.001 par value, 20,000,000 shares authorized, no shares\n   issued or outstanding\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\nCommon stock, $0.001 par value, 100,000,000 shares authorized,\n   44,605,993 shares issued and outstanding on April 30,\n   2026 and 75,789,455 shares issued and 44,111,461 shares\n   outstanding on April 30, 2025\n\n \n\n \n\n45\n\n \n\n \n\n \n\n76\n\n \n\nAdditional paid-in capital\n\n \n\n \n\n2,776\n\n \n\n \n\n \n\n298,075\n\n \n\nRetained earnings\n\n \n\n \n\n373,738\n\n \n\n \n\n \n\n532,615\n\n \n\nTreasury stock, at cost (no shares on April 30, 2026 and 31,677,994 shares\n   on April 30, 2025)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(458,312\n\n)\n\nTotal stockholders’ equity\n\n \n\n \n\n376,559\n\n \n\n \n\n \n\n372,454\n\n \n\nTotal liabilities and stockholders’ equity\n\n \n\n$\n\n512,766\n\n \n\n \n\n$\n\n559,612\n\n \n\n \n\nThe accompanying notes are an integral part of these consolidated financial statements.\n\nF-5\n\n \n\nSMITH & WESSON BRANDS, INC. AND SUBSIDIARIES\n\nCONSOLIDATED STATEMENTS OF INCOME\n\n \n\n \n\nFor the Year Ended April 30,\n\n \n\n \n\n2026\n\n \n\n \n\n2025\n\n \n\n \n\n2024\n\n \n\n \n\n(In thousands, except per share data)\n\n \n\nNet sales\n\n$\n\n523,845\n\n \n\n \n\n$\n\n474,661\n\n \n\n \n\n$\n\n535,833\n\n \n\nCost of sales\n\n \n\n382,742\n\n \n\n \n\n \n\n347,478\n\n \n\n \n\n \n\n377,740\n\n \n\nGross profit\n\n \n\n141,103\n\n \n\n \n\n \n\n127,183\n\n \n\n \n\n \n\n158,093\n\n \n\nOperating expenses:\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nResearch and development\n\n \n\n10,304\n\n \n\n \n\n \n\n9,567\n\n \n\n \n\n \n\n7,258\n\n \n\nSelling, marketing, and distribution\n\n \n\n41,598\n\n \n\n \n\n \n\n41,314\n\n \n\n \n\n \n\n40,611\n\n \n\nGeneral and administrative\n\n \n\n59,999\n\n \n\n \n\n \n\n54,933\n\n \n\n \n\n \n\n63,133\n\n \n\nGain on sale/disposition of assets, net\n\n \n\n(9\n\n)\n\n \n\n \n\n(2,515\n\n)\n\n \n\n \n\n(11\n\n)\n\nTotal operating expenses\n\n \n\n111,892\n\n \n\n \n\n \n\n103,299\n\n \n\n \n\n \n\n110,991\n\n \n\nOperating income\n\n \n\n29,211\n\n \n\n \n\n \n\n23,884\n\n \n\n \n\n \n\n47,102\n\n \n\nOther expense, net:\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nOther income/(expense), net\n\n \n\n669\n\n \n\n \n\n \n\n(17\n\n)\n\n \n\n \n\n6,672\n\n \n\nInterest expense, net\n\n \n\n(4,810\n\n)\n\n \n\n \n\n(4,622\n\n)\n\n \n\n \n\n(2,055\n\n)\n\nTotal other (expense)/income, net\n\n \n\n(4,141\n\n)\n\n \n\n \n\n(4,639\n\n)\n\n \n\n \n\n4,617\n\n \n\nIncome before income taxes\n\n \n\n25,070\n\n \n\n \n\n \n\n19,245\n\n \n\n \n\n \n\n51,719\n\n \n\nIncome tax expense\n\n \n\n6,589\n\n \n\n \n\n \n\n5,820\n\n \n\n \n\n \n\n10,356\n\n \n\nNet income\n\n$\n\n18,481\n\n \n\n \n\n$\n\n13,425\n\n \n\n \n\n$\n\n41,363\n\n \n\nNet income per share:\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nBasic - net income\n\n$\n\n0.42\n\n \n\n \n\n$\n\n0.30\n\n \n\n \n\n$\n\n0.90\n\n \n\nDiluted - net income\n\n$\n\n0.41\n\n \n\n \n\n$\n\n0.30\n\n \n\n \n\n$\n\n0.89\n\n \n\nWeighted average number of common shares outstanding:\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nBasic\n\n \n\n44,420\n\n \n\n \n\n \n\n44,484\n\n \n\n \n\n \n\n45,813\n\n \n\nDiluted\n\n \n\n44,933\n\n \n\n \n\n \n\n44,932\n\n \n\n \n\n \n\n46,248\n\n \n\n \n\nThe accompanying notes are an integral part of these consolidated financial statements.\n\nF-6\n\n \n\nSMITH & WESSON BRANDS, INC. AND SUBSIDIARIES\n\nCONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nAccumulated\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nCommon\n\n \n\nAdditional\n\n \n\n \n\n \n\n \n\nOther\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nTotal\n\n \n\n \n\n \n\nStock\n\n \n\nPaid-In\n\n \n\nRetained\n\n \n\n \n\nComprehensive\n\n \n\n \n\nTreasury Stock\n\n \n\n \n\nStockholders’\n\n \n\n(In thousands, except per share data)\n\n \n\nShares\n\n \n\nAmount\n\n \n\nCapital\n\n \n\nEarnings\n\n \n\nIncome\n\n \n\nShares\n\n \n\nAmount\n\n \n\n \n\nEquity\n\n \n\nBalance at April 30, 2023\n\n \n\n \n\n75,029\n\n \n\n$\n\n75\n\n \n\n$\n\n283,666\n\n \n\n$\n\n523,184\n\n \n\n$\n\n73\n\n \n\n \n\n29,040\n\n \n\n$\n\n(422,375\n\n)\n\n$\n\n384,623\n\n \n\nStock-based compensation\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n5,683\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n5,683\n\n \n\nShares issued under employee stock purchase\n   plan\n\n \n\n \n\n151\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n1,484\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n1,484\n\n \n\nIssuance of common stock under restricted\n   stock unit awards, net of shares surrendered\n\n \n\n \n\n215\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(839\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(839\n\n)\n\nRepurchase of treasury stock, including\n   excise tax\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n794\n\n \n\n \n\n \n\n(10,267\n\n)\n\n \n\n \n\n(10,267\n\n)\n\nDividends issued, including accruals ($0.48\n   per common share)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(22,133\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(22,133\n\n)\n\nNet income\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n—\n\n \n\n \n\n \n\n41,363\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n41,363\n\n \n\nBalance at April 30, 2024\n\n \n\n \n\n75,395\n\n \n\n$\n\n75\n\n \n\n$\n\n289,994\n\n \n\n$\n\n542,414\n\n \n\n$\n\n73\n\n \n\n \n\n29,834\n\n \n\n$\n\n(432,642\n\n)\n\n$\n\n399,914\n\n \n\nStock-based compensation\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n7,609\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n7,609\n\n \n\nShares issued under employee stock purchase\n   plan\n\n \n\n \n\n175\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n1,598\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n1,598\n\n \n\nIssuance of common stock under restricted\n   stock unit awards, net of shares surrendered\n\n \n\n \n\n219\n\n \n\n \n\n \n\n1\n\n \n\n \n\n \n\n(1,126\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(1,125\n\n)\n\nRepurchase of treasury stock, including\n   excise tax\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n1,844\n\n \n\n \n\n \n\n(25,670\n\n)\n\n \n\n \n\n(25,670\n\n)\n\nDividends issued, including accruals ($0.52\n   per common share)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(23,224\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(23,224\n\n)\n\nNet income\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n—\n\n \n\n \n\n \n\n13,425\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n13,425\n\n \n\nOther\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(73\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(73\n\n)\n\nBalance at April 30, 2025\n\n \n\n \n\n75,789\n\n \n\n$\n\n76\n\n \n\n$\n\n298,075\n\n \n\n$\n\n532,615\n\n \n\n$\n\n—\n\n \n\n \n\n31,678\n\n \n\n$\n\n(458,312\n\n)\n\n$\n\n372,454\n\n \n\nStock-based compensation\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n8,350\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n8,350\n\n \n\nShares issued under employee stock purchase\n   plan\n\n \n\n \n\n199\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n1,577\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n1,577\n\n \n\nIssuance of common stock under restricted\n   stock unit awards, net of shares surrendered\n\n \n\n \n\n296\n\n \n\n \n\n \n\n1\n\n \n\n \n\n \n\n(930\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(929\n\n)\n\nRetirement of common stock held in treasury\n\n \n\n \n\n(31,678\n\n)\n\n \n\n \n\n(32\n\n)\n\n \n\n \n\n(304,296\n\n)\n\n \n\n \n\n(153,984\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(31,678\n\n)\n\n \n\n \n\n458,312\n\n \n\n \n\n \n\n—\n\n \n\nDividends issued, including accruals ($0.52\n   per common share)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(23,374\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(23,374\n\n)\n\nNet income\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n—\n\n \n\n \n\n \n\n18,481\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n18,481\n\n \n\nBalance at April 30, 2026\n\n \n\n \n\n44,606\n\n \n\n$\n\n45\n\n \n\n$\n\n2,776\n\n \n\n$\n\n373,738\n\n \n\n$\n\n—\n\n \n\n \n\n—\n\n \n\n$\n\n—\n\n \n\n$\n\n376,559\n\n \n\n \n\nThe accompanying notes are an integral part of these consolidated financial statements.\n\nF-7\n\n \n\nSMITH & WESSON BRANDS, INC. AND SUBSIDIARIES\n\nCONSOLIDATED STATEMENTS OF CASH FLOWS\n\n \n\n \n\n \n\nFor the Year Ended April 30,\n\n \n\n \n\n \n\n2026\n\n \n\n \n\n2025\n\n \n\n \n\n2024\n\n \n\n \n\n \n\n(In thousands)\n\n \n\nCash flows from operating activities:\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nNet income\n\n \n\n$\n\n18,481\n\n \n\n \n\n$\n\n13,425\n\n \n\n \n\n$\n\n41,363\n\n \n\nAdjustments to reconcile net income to net cash provided by/(used in)\n   operating activities:\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nDepreciation and amortization\n\n \n\n \n\n31,311\n\n \n\n \n\n \n\n31,845\n\n \n\n \n\n \n\n32,558\n\n \n\nGain on sale/disposition of assets\n\n \n\n \n\n(9\n\n)\n\n \n\n \n\n(2,515\n\n)\n\n \n\n \n\n(5,595\n\n)\n\nRecoveries on notes and accounts receivable\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(23\n\n)\n\nDeferred income taxes\n\n \n\n \n\n5,913\n\n \n\n \n\n \n\n(3,032\n\n)\n\n \n\n \n\n857\n\n \n\nStock-based compensation expense\n\n \n\n \n\n8,350\n\n \n\n \n\n \n\n7,609\n\n \n\n \n\n \n\n5,683\n\n \n\nNon-cash sublease income\n\n \n\n \n\n(1,797\n\n)\n\n \n\n \n\n(1,724\n\n)\n\n \n\n \n\n—\n\n \n\nOther, net\n\n \n\n \n\n(528\n\n)\n\n \n\n \n\n(73\n\n)\n\n \n\n \n\n—\n\n \n\nChanges in operating assets and liabilities:\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nAccounts receivable\n\n \n\n \n\n15,854\n\n \n\n \n\n \n\n3,203\n\n \n\n \n\n \n\n(3,896\n\n)\n\nInventories\n\n \n\n \n\n33,590\n\n \n\n \n\n \n\n(29,340\n\n)\n\n \n\n \n\n16,618\n\n \n\nPrepaid expenses and other current assets\n\n \n\n \n\n(910\n\n)\n\n \n\n \n\n(1,287\n\n)\n\n \n\n \n\n(57\n\n)\n\nIncome taxes\n\n \n\n \n\n(4,551\n\n)\n\n \n\n \n\n1,882\n\n \n\n \n\n \n\n(2,602\n\n)\n\nAccounts payable\n\n \n\n \n\n5,367\n\n \n\n \n\n \n\n(14,771\n\n)\n\n \n\n \n\n18,341\n\n \n\nAccrued payroll and incentives\n\n \n\n \n\n6,136\n\n \n\n \n\n \n\n(8,087\n\n)\n\n \n\n \n\n(1,418\n\n)\n\nAccrued profit sharing\n\n \n\n \n\n519\n\n \n\n \n\n \n\n(4,462\n\n)\n\n \n\n \n\n895\n\n \n\nAccrued expenses and deferred revenue\n\n \n\n \n\n(3,008\n\n)\n\n \n\n \n\n(268\n\n)\n\n \n\n \n\n3,995\n\n \n\nAccrued warranty\n\n \n\n \n\n(79\n\n)\n\n \n\n \n\n(434\n\n)\n\n \n\n \n\n142\n\n \n\nOther assets\n\n \n\n \n\n(136\n\n)\n\n \n\n \n\n938\n\n \n\n \n\n \n\n(267\n\n)\n\nOther non-current liabilities\n\n \n\n \n\n(308\n\n)\n\n \n\n \n\n(132\n\n)\n\n \n\n \n\n145\n\n \n\nNet cash provided by/(used in) operating activities\n\n \n\n \n\n114,195\n\n \n\n \n\n \n\n(7,223\n\n)\n\n \n\n \n\n106,739\n\n \n\nCash flows from investing activities:\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nPurchases of marketable securities\n\n \n\n \n\n(4,634\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\nPayments to acquire patents and software\n\n \n\n \n\n(93\n\n)\n\n \n\n \n\n(187\n\n)\n\n \n\n \n\n(186\n\n)\n\nProceeds from sale of intangible assets\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n6,500\n\n \n\nProceeds from sale of property and equipment\n\n \n\n \n\n235\n\n \n\n \n\n \n\n2,619\n\n \n\n \n\n \n\n2,955\n\n \n\nPayments to acquire property and equipment\n\n \n\n \n\n(23,748\n\n)\n\n \n\n \n\n(21,605\n\n)\n\n \n\n \n\n(90,759\n\n)\n\nNet cash used in investing activities\n\n \n\n \n\n(28,240\n\n)\n\n \n\n \n\n(19,173\n\n)\n\n \n\n \n\n(81,490\n\n)\n\nCash flows from financing activities:\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nProceeds from loans and notes payable\n\n \n\n \n\n25,000\n\n \n\n \n\n \n\n75,000\n\n \n\n \n\n \n\n50,000\n\n \n\nPayments on loans and notes payable\n\n \n\n \n\n(85,000\n\n)\n\n \n\n \n\n(35,000\n\n)\n\n \n\n \n\n(35,000\n\n)\n\nCash paid for debt issuance costs\n\n \n\n \n\n(219\n\n)\n\n \n\n \n\n(941\n\n)\n\n \n\n \n\n—\n\n \n\nPayments on finance lease obligation\n\n \n\n \n\n(195\n\n)\n\n \n\n \n\n(179\n\n)\n\n \n\n \n\n(1,378\n\n)\n\nPayments to acquire treasury stock\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(25,468\n\n)\n\n \n\n \n\n(10,213\n\n)\n\nDividend distribution\n\n \n\n \n\n(23,229\n\n)\n\n \n\n \n\n(23,096\n\n)\n\n \n\n \n\n(22,020\n\n)\n\nProceeds to acquire common stock from employee stock purchase plan\n\n \n\n \n\n1,577\n\n \n\n \n\n \n\n1,598\n\n \n\n \n\n \n\n1,484\n\n \n\nPayment of employee withholding tax related to restricted stock units\n\n \n\n \n\n(930\n\n)\n\n \n\n \n\n(1,126\n\n)\n\n \n\n \n\n(839\n\n)\n\nNet cash used in financing activities\n\n \n\n \n\n(82,996\n\n)\n\n \n\n \n\n(9,212\n\n)\n\n \n\n \n\n(17,966\n\n)\n\nNet increase/(decrease) in cash and cash equivalents\n\n \n\n \n\n2,959\n\n \n\n \n\n \n\n(35,608\n\n)\n\n \n\n \n\n7,283\n\n \n\nCash and cash equivalents, beginning of period\n\n \n\n \n\n25,231\n\n \n\n \n\n60,839\n\n \n\n \n\n \n\n53,556\n\n \n\nCash and cash equivalents, end of period\n\n \n\n$\n\n28,190\n\n \n\n \n\n$\n\n25,231\n\n \n\n \n\n$\n\n60,839\n\n \n\nSupplemental disclosure of cash flow information\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nCash paid for:\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nInterest, net of amounts capitalized\n\n \n\n$\n\n5,375\n\n \n\n \n\n$\n\n5,193\n\n \n\n \n\n$\n\n4,745\n\n \n\n \n\nThe accompanying notes are an integral part of these consolidated financial statements.\n\nF-8\n\n \n\nSMITH & WESSON BRANDS, INC. AND SUBSIDIARIES\n\nCONSOLIDATED STATEMENTS OF CASH FLOWS - (Continued)\n\nSupplemental Disclosure of Non-cash Investing and Financing Activities:\n\n \n\n \n\n \n\nFor the Year Ended April 30,\n\n \n\n \n\n \n\n2026\n\n \n\n \n\n2025\n\n \n\n \n\n2024\n\n \n\n \n\n \n\n(In thousands)\n\n \n\nPurchases of property and equipment included in accounts payable\n\n \n\n$\n\n4,605\n\n \n\n \n\n$\n\n2,289\n\n \n\n \n\n$\n\n2,462\n\n \n\nCapital lease included in accrued expenses and finance lease\n   payable\n\n \n\n \n\n580\n\n \n\n \n\n \n\n442\n\n \n\n \n\n \n\n612\n\n \n\n \n\nThe accompanying notes are an integral part of these consolidated financial statements.\n\nF-9\n\n \n\nSMITH & WESSON BRANDS, INC. AND SUBSIDIARIES\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS\n\n1. Organization\n\nWe are one of the world’s leading manufacturers and designers of firearms. We manufacture a wide array of handguns (including revolvers and pistols), long guns (including modern sporting rifles, pistol caliber carbines, and lever-action rifles), handcuffs, firearm suppressors, and other firearm-related products for sale to a wide variety of customers, including firearm enthusiasts, collectors, hunters, sportsmen, competitive shooters, individuals desiring home and personal protection, law enforcement and security agencies and officers, and military agencies in the United States and throughout the world. We sell our products under the Smith & Wesson and Gemtech brands. We manufacture our products at our facilities in Maryville, Tennessee; Springfield, Massachusetts; and Houlton, Maine. We also sell our manufacturing services under our Smith & Wesson and Smith & Wesson Precision Components brands to other businesses to attempt to level-load our factories. During the fiscal year ended April 30, 2025, or fiscal 2025, we discontinued operations at our Deep River, Connecticut facility and vacated the premises. See Note 14 — Commitments and Contingencies for more information.\n\n2. Significant Accounting Policies\n\nUse of Estimates — The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the financial statement dates and the reported amounts of revenue and expenses during the reporting periods. Our significant estimates include the accrual for warranty, reserves for excess and obsolete inventory, rebates and other promotions, valuation of intangible assets, and costs associated with the Relocation. Actual results could differ from those estimates.\n\nPrinciples of Consolidation — The accompanying consolidated financial statements include the accounts of Smith & Wesson Brands, Inc. and its wholly owned subsidiaries, including Smith & Wesson Inc., Smith & Wesson Sales Company, and Smith & Wesson Online, LLC. In our opinion, all adjustments, which include only normal recurring adjustments necessary to fairly present the financial position, results of operations, changes in stockholders’ equity, and cash flows at April 30, 2026 and 2025 and for the periods presented, have been included. All intercompany accounts and transactions have been eliminated in consolidation.\n\nReclassifications — We have reclassified certain amounts relating to prior period results to conform to current period presentation. These reclassifications have not changed the results of operations of prior periods.\n\nFair Value of Financial Instruments — Unless otherwise indicated, the fair values of all reported assets and liabilities, which represent financial instruments not held for trading purposes, approximate the carrying values of such amounts because of their short-term nature or market rates of interest.\n\nCash and Cash Equivalents — We consider all highly liquid investments purchased with original maturities of three months or less at the date of acquisition to be cash equivalents. We maintain our cash in bank deposit accounts that, at times, may exceed federally insured limits. We have not experienced any losses in such accounts. As of April 30, 2026, all of our accounts exceeded federally insured limits.\n\nTrade Receivables — We extend credit to our domestic customers and some foreign distributors based on their financial condition. We sometimes offer discounts for early payment on invoices. When we believe the extension of credit is not advisable, we rely on either a prepayment or a letter of credit. We write off balances deemed uncollectible by us against our allowance for credit losses. We estimate our allowance for credit losses through current past due balances, knowledge of our customers’ financial situations, and past payment history.\n\nF-10\n\nSMITH & WESSON BRANDS, INC. AND SUBSIDIARIES\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)\n\n \n\nConcentrations of Credit Risk — Financial instruments that potentially subject us to concentration of credit risk consist principally of cash, cash equivalents, and trade receivables. We place our cash and cash equivalents in overnight U.S. government securities or money market mutual funds. Concentrations of credit risk with respect to trade receivables are limited by the large number of customers comprising our customer base and their geographic and business dispersion. We perform ongoing credit evaluations of our customers’ financial condition and generally do not require collateral.\n\nFor fiscal 2026, sales to two of our customers represented 24.7% of our total net sales, and, as of April 30, 2026, two customers accounted for 30.2% of our total accounts receivable. No other customer represented more than 10% of our fiscal 2026 net sales or accounted for more than 10% of our accounts receivable as of April 30, 2026. For fiscal 2025, sales to one of our customers represented 14.6% of our total net sales, and, as of April 30, 2025, this customer accounted for 36.1% of our total accounts receivable. No other customer represented more than 10% of our fiscal 2025 net sales or accounted for more than 10% of our accounts receivable as of April 30, 2025.\n\nInventories — We value inventories at the lower of cost, using the first-in, first-out, or FIFO, method or net realizable value. An allowance for potential non-saleable inventory due to excess stock or obsolescence is based upon a detailed review of inventory, past history, and expected future usage.\n\nProperty, Plant, and Equipment — We record property, plant, and equipment, consisting of land, building, improvements, machinery, equipment, software, hardware, furniture, and fixtures, at cost and depreciate them using the straight-line method over their estimated useful lives. We charge expenditures for maintenance and repairs to earnings as incurred, and we capitalize additions, renewals, and betterments. Upon the retirement or other disposition of property and equipment, we remove the related cost and accumulated depreciation from the respective accounts and include any gain or loss in operations. We lease certain of our real estate, machinery, and photocopiers under non-cancelable operating and finance lease agreements, and we recognize expenses under our operating lease assets and liabilities at the commencement date based on the present value of lease payments over the lease term. The depreciable life of assets and leasehold improvements are based on the expected life of the lease. A summary of the estimated useful lives is as follows:\n\n \n\nDescription\n\n \n\nUseful Life\n\n \n\nBuilding and improvements\n\n \n\n \n\n10 to 40 years\n\n \n\nSoftware and hardware\n\n \n\n \n\n2 to 7 years\n\n \n\nMachinery and equipment\n\n \n\n \n\n2 to 10 years\n\n \n\nOffice equipment and furniture\n\n \n\n \n\n5 years\n\n \n\n \n\nWe include tooling, dies, and fixtures as part of machinery and equipment and depreciate them over a period generally not exceeding ten years.\n\nIntangible Assets — We record intangible assets at cost or based on the fair value of the assets acquired. Intangible assets consist of developed technology, customer relationships, trademarks, trade names, and patents. We amortize intangible assets over their estimated useful lives or in proportion to expected yearly revenue generated from the intangibles that were acquired.\n\nRevenue Recognition — We recognize revenue in accordance with the provisions of Accounting Standards Codification, or ASC, 606, Revenue from Contracts with Customers. Generally, all performance obligations are satisfied and revenue is recognized when the risks and rewards of ownership have transferred to the customer, which is generally upon shipment but could be delayed until the receipt of customer acceptance.\n\nIn some instances, sales include multiple performance obligations. The most common of these instances relates to sales promotion programs under which customers are entitled to receive free goods based upon their purchase of our products, which we have identified as a material right. The fulfillment of these free goods is our responsibility. In such instances, we allocate the revenue of the promotional sales based on the estimated level of participation in the sales promotional program and the timing of the shipment of all of the products included in the promotional program, including the free goods. We recognize revenue related to the material right proportionally as each performance obligation is satisfied. The net change in contract liabilities for a given period is reported as an increase or decrease to sales.\n\nF-11\n\nSMITH & WESSON BRANDS, INC. AND SUBSIDIARIES\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)\n\n \n\nWe generally sell our products free on board, or FOB, shipping point and provide payment terms to most commercial customers ranging from 20 to 60 days of product shipment with a discount available to some customers for early payment. Generally, framework contracts define the general terms of sales, including payment terms, freight terms, insurance requirements, and cancelation provisions. Purchase orders define the terms for specific sales, including description, quantity, and price of each product purchased. We estimate variable consideration relative to the amount of cash discounts to which customers are likely to be entitled. As a result of utilizing practical expedients in accordance with ASC 606, we do not consider these extended terms to be a significant financing component of the contract because the payment terms are less than one year. In all cases, we consider our costs related to shipping and handling to be a cost of fulfilling the contract with the customer.\n\nResearch and Development — We engage in both internal and external research and development, or R&D, in order to remain competitive and to exploit possible untapped market opportunities. We approve prospective R&D projects after analysis of the cost and benefits associated with the potential product. Costs in R&D expense include, among other items, salaries, materials, utilities, and administrative costs.\n\nEarnings per Share — We calculate basic and diluted earnings per common share in accordance with the provisions of ASC 260-10, Earnings Per Share. Basic earnings per common share equals net income divided by the weighted average number of common shares outstanding during the period. Diluted earnings per common share equals net income divided by the weighted average number of common shares outstanding during the period, including the effect of outstanding stock-based instruments if their effect is dilutive.\n\nThe following table provides a reconciliation of the net income amounts and weighted average number of common and common equivalent shares used to determine basic and diluted earnings per common share (in thousands, except per share data):\n\n \n\n \n\n \n\nFor the Year Ended April 30,\n\n \n\n \n\n \n\n2026\n\n \n\n \n\n2025\n\n \n\n \n\n2024\n\n \n\nNet income\n\n \n\n$\n\n18,481\n\n \n\n \n\n$\n\n13,425\n\n \n\n \n\n$\n\n41,363\n\n \n\nWeighted average shares outstanding — Basic\n\n \n\n \n\n44,420\n\n \n\n \n\n \n\n44,484\n\n \n\n \n\n \n\n45,813\n\n \n\nEffect of dilutive stock awards\n\n \n\n \n\n513\n\n \n\n \n\n \n\n448\n\n \n\n \n\n \n\n436\n\n \n\nWeighted average shares outstanding — Diluted\n\n \n\n \n\n44,933\n\n \n\n \n\n \n\n44,932\n\n \n\n \n\n \n\n46,248\n\n \n\nEarnings per share — Basic\n\n \n\n$\n\n0.42\n\n \n\n \n\n$\n\n0.30\n\n \n\n \n\n$\n\n0.90\n\n \n\nEarnings per share — Diluted\n\n \n\n$\n\n0.41\n\n \n\n \n\n$\n\n0.30\n\n \n\n \n\n$\n\n0.89\n\n \n\n \n\nFor fiscal 2026, 2025, and 2024, the number of shares excluded from the computation of diluted earnings per share was 24,041, 29,935, and 18,009, respectively, because the effect would be antidilutive.\n\nValuation of Long-lived Tangible and Intangible Assets — We evaluate the recoverability of long-lived assets, or asset groups, whenever events or changes in circumstances indicate that carrying amounts may not be recoverable. When such evaluations indicate that the related future undiscounted cash flows are not sufficient to recover the carrying values of the assets, such carrying values are reduced to fair value and this adjusted carrying value becomes the asset’s new cost basis. We determine fair value primarily using future anticipated cash flows that are directly associated with and are expected to arise as a direct result of the use and eventual disposition of the asset, or asset group, discounted using an interest rate commensurate with the risk involved.\n\nWe have significant long-lived tangible and intangible assets, which are susceptible to valuation adjustments as a result of changes in various factors or conditions. The most significant long-lived tangible and intangible assets, other than goodwill, are property, plant, and equipment, right of use assets, developed technology, customer relationships, patents, trademarks, and trade names. We amortize all finite-lived intangible assets either on a straight-line basis or based upon patterns in which we expect to utilize the economic benefits of such assets. We initially determine the values of intangible assets by a risk-adjusted, discounted cash flow approach. We assess the potential impairment of identifiable intangible assets and fixed assets whenever events or changes in circumstances indicate\n\nF-12\n\nSMITH & WESSON BRANDS, INC. AND SUBSIDIARIES\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)\n\n \n\nthat the carrying values may not be recoverable and at least annually. Factors we consider important, which could trigger an impairment of such assets, include the following:\n\n•\nsignificant underperformance relative to historical or projected future operating results;\n\n•\nsignificant changes in the manner or use of the assets or the strategy for our overall business;\n\n•\nsignificant negative industry or economic trends;\n\n•\na significant decline in our stock price for a sustained period; and\n\n•\na decline in our market capitalization below net book value.\n\nFuture adverse changes in these or other unforeseeable factors could result in an impairment charge that could materially impact future results of operations and financial position in the reporting period identified.\n\nIn accordance with ASC 350, Intangibles-Goodwill and Other, we evaluate goodwill for potential impairment on an annual basis, as of February 1, and whenever events or changes in circumstances indicate that the fair value of a reporting unit may be below its carrying value. Under the guidance, we may assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If this assessment indicates it is more likely than not that the fair value of a reporting unit is less than its carrying amount, a quantitative test for goodwill impairment would be performed. If the fair value of our single reporting unit exceeds the carrying value of our net assets, including goodwill, goodwill is not impaired. If the carrying value of our net assets, including goodwill, exceeds the fair value of the reporting unit, then we would determine the implied fair value of the reporting unit’s goodwill. If the carrying value of our goodwill exceeds its implied fair value, then we would record an impairment loss equal to the difference. We did not record any goodwill impairments during the fiscal years ended April 30, 2026 or 2025.\n\nThe re-measurement of goodwill is classified as a Level 3 fair value assessment as described in Note 9 - Fair Value Measurement, due to the significance of unobservable inputs developed using company-specific information.\n\nIncome Taxes – We use the asset and liability approach for financial accounting and reporting income taxes. The provision for income taxes is based upon income reported in the accompanying consolidated financial statements as required by ASC 740, Income Taxes. We determine our deferred tax assets and liabilities based on temporary differences between financial reporting and tax bases in assets and liabilities, which are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. We recognize the effect on deferred taxes of a change in tax rates in the period that includes the enactment date. In assessing the realization of our deferred tax assets, we consider whether it is more likely than not that the deferred tax assets will be realized. The ultimate realization of our deferred tax assets depends upon generating future taxable income during the periods in which our temporary differences become deductible and before our net operating loss carryforwards expire. We evaluate the recoverability of our deferred tax assets by assessing the need for a valuation allowance on a quarterly basis. If we determine that it is more likely than not that our deferred tax assets will not be recovered, we establish a valuation allowance against some or all of our deferred tax assets. Recording or reversing a valuation allowance could have a significant effect on our future results of operations and financial position.\n\nWarranty — We generally provide a limited one-year warranty and a lifetime service policy to the original purchaser of our new firearm products. We will also repair or replace certain products or parts found to be defective under normal use and service with an item of equivalent value, at our option, without charge during the warranty period. In addition, we sometimes experience certain manufacturing and design issues with respect to our firearms and initiate product recalls and safety alerts.\n\nWe quantify and record an estimate for warranty-related costs based on our actual historical claims experience and current repair costs. We adjust accruals as warranty claims data and historical experience warrant. Should we experience actual claims and repair costs that are higher than the estimated claims and repair costs used to calculate the provision, our operating results for the period or periods in which such claims or additional costs materialize would be adversely impacted. Warranty expense for the fiscal years ended April 30, 2026, 2025, and 2024 amounted to $2.1 million, $2.4 million, and $2.6 million, respectively.\n\nF-13\n\nSMITH & WESSON BRANDS, INC. AND SUBSIDIARIES\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)\n\n \n\nThe following table sets forth the change in accrued warranties, a portion of which is recorded as a non-current liability, in the fiscal years ended April 30, 2026 and 2025 (in thousands):\n\n \n\nBalance as of April 30, 2024\n\n \n\n$\n\n3,884\n\n \n\nWarranties issued and adjustments to provisions\n\n \n\n \n\n2,390\n\n \n\nWarranty claims\n\n \n\n \n\n(2,998\n\n)\n\nBalance as of April 30, 2025\n\n \n\n \n\n3,276\n\n \n\nWarranties issued and adjustments to provisions\n\n \n\n \n\n2,122\n\n \n\nWarranty claims\n\n \n\n \n\n(2,607\n\n)\n\nBalance as of April 30, 2026\n\n \n\n$\n\n2,791\n\n \n\n \n\nAdvertising Costs — We expense advertising costs, primarily consisting of magazine advertisements, printed materials, television advertisements, digital advertisements, radio advertisements, and billboards, either as incurred or upon the first occurrence of the advertising. Advertising expense, included in selling, marketing, and distribution expenses, for the fiscal years ended April 30, 2026, 2025, and 2024, amounted to $13.7 million, $15.2 million, and $14.7 million, respectively.\n\nShipping and Handling — In the accompanying consolidated financial statements, we included amounts billed to customers for shipping and handling in net sales. Inbound freight charges and internal transfer costs are included in cost of goods sold; however, costs incurred to distribute products to customers are included in selling, marketing, and distribution expenses.\n\nInsurance Reserves — In January 2020, we formed a wholly owned captive insurance company, which provides product liability insurance to us and our subsidiaries. We are self-insured through retentions or deductibles for the majority of our workers’ compensation, automobile, general liability, product liability, and group health insurance programs. Self-insurance amounts vary up to $10.0 million per occurrence; however, we believe the likelihood of reaching the maximum per occurrence limit is remote. We record our liability for estimated premiums and incurred losses in the accompanying consolidated financial statements on an undiscounted basis.\n\nRecently Issued Accounting Standards — In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures, which requires entities to disclose in their rate reconciliation table additional categories of information about federal, state, and foreign income taxes and provide more details about the reconciling items in some categories if items meet a quantitative threshold. Entities will have to provide qualitative disclosures about the new categories. The guidance will require all entities to disclose income taxes paid, net of refunds, disaggregated by federal (national), state, and foreign taxes for annual periods, and to disaggregate the information by jurisdiction based on a quantitative threshold. The guidance makes several other changes to the disclosure requirements. Entities are required to apply the guidance prospectively, with the option to apply it retrospectively. The guidance is effective for annual periods beginning after December 15, 2024, or the fiscal year ending April 30, 2026 for us. We adopted ASU 2023-09 in the fourth quarter of fiscal 2026. The adoption of this guidance resulted in additional financial statement disclosures and had no impact to our consolidated financial condition, results of operations, or cash flows. See Note 13 - Income Taxes, which includes the disclosures resulting from our adoption of this guidance.\n\nIn November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses, which requires entities to disclose, in the notes to financial statements, specified information about certain costs and expenses included in each relevant expense caption presented on the face of the income statement. Entities will also be required to disclose qualitative descriptions of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively. Entities will need to disclose the total amount of selling expenses and, in annual reporting periods, an entity’s definition of selling expenses. Entities are generally required to apply the guidance prospectively. The guidance is effective for annual periods beginning after December 15, 2026, or the fiscal year ending April 30, 2028 for us. We are currently evaluating the impact that the adoption of this standard will have on financial disclosures.\n\nF-14\n\nSMITH & WESSON BRANDS, INC. AND SUBSIDIARIES\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)\n\n \n\n3. Leases\n\nWe lease certain of our real estate, machinery, equipment, and photocopiers under non-cancelable operating and finance lease agreements.\n\nWe recognize expenses for our operating lease assets and liabilities at the commencement date based on the present value of lease payments over the lease term. Our leases do not provide an implicit interest rate. We use our incremental borrowing rate based on the information available at the lease commencement date in determining the present value of lease payments. Our lease agreements do not require material variable lease payments or residual value guarantees, nor do they include restrictive covenants. For operating leases, we recognize expense on a straight-line basis over the lease term. Tenant improvement allowances are recorded as an offsetting adjustment included in our calculation of the respective right-of-use asset.\n\nMany of our leases include renewal options that enable us to extend the lease term. The execution of those renewal options is at our sole discretion and renewals are reflected in the lease term when they are reasonably certain to be exercised. The depreciable life of assets and leasehold improvements are limited by the expected lease term.\n\nThe amounts of assets and liabilities related to our operating and financing leases as of April 30, 2026 and 2025 were as follows (in thousands):\n\n \n\n \n\nBalance Sheet Caption\n\n \n\nApril 30, 2026\n\n \n\n \n\nApril 30, 2025\n\n \n\nOperating Leases\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nRight-of-use assets\n\n \n\n \n\n$\n\n—\n\n \n\n \n\n$\n\n1,623\n\n \n\nAccumulated amortization\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(1,211\n\n)\n\nRight-of-use assets, net\n\nOther assets\n\n \n\n$\n\n—\n\n \n\n \n\n$\n\n412\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nCurrent liabilities\n\nAccrued expenses and deferred revenue\n\n \n\n$\n\n—\n\n \n\n \n\n$\n\n233\n\n \n\nNon-current liabilities\n\nOther non-current liabilities\n\n \n\n \n\n—\n\n \n\n \n\n \n\n318\n\n \n\nTotal operating lease liabilities\n\n \n\n \n\n$\n\n—\n\n \n\n \n\n$\n\n551\n\n \n\nFinance Leases\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nRight-of-use assets\n\n \n\n \n\n$\n\n41,437\n\n \n\n \n\n$\n\n41,631\n\n \n\nAccumulated depreciation\n\n \n\n \n\n \n\n(14,726\n\n)\n\n \n\n \n\n(12,973\n\n)\n\nRight-of-use assets, net\n\nProperty, plant, and equipment, net\n\n \n\n$\n\n26,711\n\n \n\n \n\n$\n\n28,658\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nCurrent liabilities\n\nAccrued expenses and deferred revenue\n\n \n\n$\n\n1,858\n\n \n\n \n\n$\n\n1,701\n\n \n\nNon-current liabilities\n\nFinance lease payable, net of current portion\n\n \n\n \n\n32,163\n\n \n\n \n\n \n\n33,703\n\n \n\nTotal finance lease liabilities\n\n \n\n \n\n$\n\n34,021\n\n \n\n \n\n$\n\n35,404\n\n \n\n \n\nDuring fiscal 2026, we recorded $143,000 of operating lease costs. We recorded $2.3 million of finance lease amortization and $1.7 million of finance lease interest expense during fiscal 2026. As of April 30, 2026, our weighted average lease term and weighted average discount rate for our financing leases was 12.3 years and 5.0%, respectively, and consisted primarily of our former Missouri distribution center. The building is pledged to secure the amounts outstanding. The depreciable lives of right-of-use assets are limited by the lease term and are amortized on a straight-line basis over the life of the lease.\n\nOn October 26, 2017, we entered into a lease agreement with Ryan Boone County, LLC, or the Original Missouri Landlord, concerning certain real property located in Boone County, Missouri on which we had been operating our distribution center, or the Missouri Lease, as well as a related payment and performance guaranty, dated October 26, 2017, in favor of the Original Missouri Landlord. As part of the Relocation, on January 31, 2023, we entered into (i) an assignment and assumption agreement with American Outdoor Brands, Inc., our former wholly owned subsidiary, or AOUT (which became effective on January 1, 2024), pursuant to which AOUT assumed all of our rights, entitlement, and obligations in, to, and under the Missouri Lease, or the Assignment and Assumption\n\nF-15\n\nSMITH & WESSON BRANDS, INC. AND SUBSIDIARIES\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)\n\n \n\nAgreement, and (ii) an amended and restated guaranty in favor of RCS-S&W Facility, LLC, as successor in interest to the Original Missouri Landlord, pursuant to which Smith & Wesson Sales Company was added as a guarantor, or the Amended and Restated Guaranty. Because of the Amended and Restated Guaranty, we continue to account for this lease as we have since prior to the Relocation. During fiscal 2026, AOUT made payments pursuant to this lease directly to the landlord and we neither received nor paid any cash payments related to this arrangement. For the fiscal year ended April 30, 2026, noncash sublease income was $1.8 million and was recorded in general and administrative expense in our consolidated statements of income. During the fiscal year ended April 30, 2026 we recognized $2.1 million of depreciation expense associated with the related right-of-use asset.\n\nThe following table represents future expected undiscounted cash flows, based on the Assignment and Assumption Agreement with AOUT, to be received by the landlord directly from AOUT on an annual basis for the next five years and thereafter, as of April 30, 2026 (in thousands):\n\n \n\nFiscal\n\n \n\nAmount\n\n \n\n2027\n\n \n\n$\n\n3,292\n\n \n\n2028\n\n \n\n \n\n3,350\n\n \n\n2029\n\n \n\n \n\n3,408\n\n \n\n2030\n\n \n\n \n\n3,468\n\n \n\n2031\n\n \n\n \n\n3,529\n\n \n\nThereafter\n\n \n\n \n\n28,501\n\n \n\nTotal future receipts\n\n \n\n \n\n45,548\n\n \n\nLess amounts representing interest\n\n \n\n \n\n(12,107\n\n)\n\nPresent value of receipts\n\n \n\n$\n\n33,441\n\n \n\n \n\nFuture lease payments for all our finance leases for succeeding fiscal years are as follows (in thousands):\n\n \n\n \n\n \n\nFinancing\n\n \n\n2027\n\n \n\n \n\n$\n\n3,519\n\n \n\n2028\n\n \n\n \n\n \n\n3,596\n\n \n\n2029\n\n \n\n \n\n \n\n3,560\n\n \n\n2030\n\n \n\n \n\n \n\n3,468\n\n \n\n2031\n\n \n\n \n\n \n\n3,529\n\n \n\nThereafter\n\n \n\n \n\n \n\n28,501\n\n \n\nTotal future lease payments\n\n \n\n \n\n \n\n46,173\n\n \n\nLess amounts representing interest\n\n \n\n \n\n \n\n(12,152\n\n)\n\nPresent value of lease payments\n\n \n\n \n\n \n\n34,021\n\n \n\nLess current maturities of lease liabilities\n\n \n\n \n\n \n\n(1,858\n\n)\n\nLong-term maturities of lease liabilities\n\n \n\n \n\n$\n\n32,163\n\n \n\n \n\nDuring fiscal 2026, the cash paid for amounts included in the measurement of liabilities and operating cash flows was $581,000.\n\n4. Notes and Loans Payable\n\nCredit Facilities — On August 24, 2020, we and certain of our subsidiaries entered into an amended and restated credit agreement, or the Amended and Restated Credit Agreement, with certain lenders, including TD Bank, N.A., as administrative agent; TD Securities (USA) LLC and Regions Bank, as joint lead arrangers and joint bookrunners; and Regions Bank, as syndication agent. The Amended and Restated Credit Agreement provided for a revolving line of credit of $100.0 million at any one time. On April 28, 2023, we entered into an amendment to the Amended and Restated Credit Agreement to, among other things, replace LIBOR with SOFR as the interest rate benchmark and amend the definition of “Consolidated Fixed Charge Coverage Ratio” to exclude unfinanced capital expenditures in connection with our plan to move our headquarters and significant elements of our operations to Maryville, Tennessee in 2023, or the Relocation. The revolving line bore interest at either the Base Rate (as defined in the Amended and\n\nF-16\n\nSMITH & WESSON BRANDS, INC. AND SUBSIDIARIES\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)\n\n \n\nRestated Credit Agreement) or the Adjusted Term SOFR rate, plus an applicable margin based on our consolidated leverage ratio.\n\nOn October 3, 2024, we entered into an amended and restated credit agreement, or the Second Amended and Restated Credit Agreement. The Second Amended and Restated Credit Agreement is currently unsecured; however, should any Springing Lien Trigger Event (as defined in the Second Amended and Restated Credit Agreement) occur, we and certain of our subsidiaries would be required to execute certain documents in favor of TD Bank, N.A., as administrative agent, and the lenders party to such documents would have a legal, valid, and enforceable ‎first priority lien on the collateral described therein.\n\nThe Second Amended and Restated Credit Agreement provides for a revolving line of credit of $175.0 million at any one time, or the Revolving Line. The Revolving Line bears interest at either the Base Rate (as defined in the Second Amended and Restated Credit Agreement) or the Adjusted Term SOFR rate, plus an applicable margin based on our consolidated leverage ratio. The Second Amended and Restated Credit Agreement also provides a swingline facility in the maximum amount of $5.0 million at any one time (subject to availability under the Revolving Line). Each Swingline Loan (as defined in the Second Amended and Restated Credit Agreement) bears interest at the Base Rate, plus an applicable margin based on our Adjusted Consolidated Leverage Ratio (as defined in the Second Amended and Restated Credit Agreement). Subject to the satisfaction of certain terms and conditions described in the Second Amended and Restated Credit Agreement, we have an option to increase the Revolving Line by an aggregate amount not exceeding $50.0 million. The Revolving Line matures on the earlier of October 3, 2029 or the date that is six months in advance of the earliest maturity of any Permitted Notes (as defined in the Second Amended and Restated Credit Agreement) under the Second Amended and Restated Credit Agreement.\n\nOn August 15, 2025, we entered into a first amendment to the Second Amended and Restated Credit Agreement, or the First Amendment. The First Amendment provides for (a) in connection with the calculation of Consolidated Funded Indebtedness (as defined in the Second Amended and Restated Credit Agreement), the exclusion of any Indebtedness (as defined in the Second Amended and Restated Credit Agreement) of the guarantors relating to a particular guaranty; (b) in connection with the calculation of Consolidated Fixed Charge Coverage Ratio (as defined in the Second Amended and Restated Credit Agreement), a one-time exclusion of cash taxes paid by the loan parties during fiscal 2026 in connection with the filing of amended tax returns in fiscal 2026 covering particular periods; and (c) an amendment to the minimum Consolidated Fixed Charge Coverage Ratio for particular measurement periods.\n\nAs of April 30, 2026, we had $20.0 million of borrowings outstanding on the Revolving Line, bearing interest at a weighted average rate of 5.72%, which is equal to the Adjusted Term SOFR rate plus an applicable margin.\n\nThe Second Amended and Restated Credit Agreement contains customary limitations, including limitations on indebtedness, liens, fundamental changes to business or organizational structure, investments, loans, advances, guarantees, and acquisitions, asset sales, dividends, stock repurchases, stock redemptions, and the redemption or prepayment of other debt, and transactions with affiliates. We are also subject to financial covenants, including a minimum consolidated fixed charge coverage ratio and a maximum consolidated leverage ratio. As of April 30, 2026, we were compliant with all required financial covenants.\n\nLetters of Credit – At April 30, 2026, we had outstanding letters of credit aggregating $1.5 million.\n\nDebt Issuance Costs — During fiscal 2026, we incurred $219,000 of debt issuance costs. During fiscal 2025, we incurred $941,000 of debt issuance costs. We did not incur any debt issuance costs during fiscal 2024. Debt issuance costs are amortized to expense over the life of the credit facility. In total, we amortized $244,000, $157,000, and $89,805 to interest expense for all debt issuance costs in fiscal 2026, 2025, and 2024, respectively.\n\nF-17\n\nSMITH & WESSON BRANDS, INC. AND SUBSIDIARIES\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)\n\n \n\n5. Net Sales\n\nThe following table sets forth the breakdown of net sales for the fiscal years ended April 30, 2026, 2025, and 2024 (in thousands):\n\n \n\n \n\n \n\nFor the Year Ended April 30,\n\n \n\n \n\n \n\n2026\n\n \n\n \n\n2025\n\n \n\n \n\n2024\n\n \n\nHandguns\n\n \n\n$\n\n \n\n394,404\n\n \n\n \n\n$\n\n \n\n331,936\n\n \n\n \n\n$\n\n \n\n381,898\n\n \n\nLong Guns\n\n \n\n \n\n \n\n90,481\n\n \n\n \n\n \n\n \n\n103,956\n\n \n\n \n\n \n\n \n\n116,491\n\n \n\nOther Products & Services\n\n \n\n \n\n \n\n38,960\n\n \n\n \n\n \n\n \n\n38,769\n\n \n\n \n\n \n\n \n\n37,444\n\n \n\nTotal Net Sales\n\n \n\n$\n\n \n\n523,845\n\n \n\n \n\n$\n\n \n\n474,661\n\n \n\n \n\n$\n\n \n\n535,833\n\n \n\n \n\nWe sell our products and services under our Smith & Wesson and Gemtech brands. Depending upon the product or service, our customers primarily include distributors; federal, state, and municipal law enforcement agencies and officers; government and military agencies; businesses; retailers; and retail consumers for non-serialized firearms-related products.\n\nWe sell our products worldwide. The following table sets forth the breakdown of export net sales included in the above table. Our export net sales shown below accounted for approximately 4%, 5%, and 5% of total net sales for the fiscal years ended April 30, 2026, 2025, and 2024, respectively (in thousands):\n\n \n\n \n\nFor the Year Ended April 30,\n\n \n\nRegion\n\n \n\n2026\n\n \n\n2025\n\n \n\n2024\n\n \n\nAsia\n\n \n\n$\n\n \n\n4,922\n\n \n\n$\n\n \n\n8,174\n\n \n\n$\n\n \n\n9,346\n\n \n\nEurope\n\n \n\n \n\n \n\n9,551\n\n \n\n \n\n \n\n6,995\n\n \n\n \n\n \n\n4,786\n\n \n\nLatin America\n\n \n\n \n\n1,925\n\n \n\n \n\n1,498\n\n \n\n \n\n5,314\n\n \n\nAll other international\n\n \n\n \n\n4,510\n\n \n\n \n\n6,428\n\n \n\n \n\n5,143\n\n \n\nTotal international net sales\n\n \n\n$\n\n \n\n20,908\n\n \n\n$\n\n \n\n23,095\n\n \n\n$\n\n \n\n24,589\n\n \n\n \n\n6. Property, Plant, and Equipment\n\nThe following table summarizes property, plant, and equipment as of April 30, 2026 and 2025 (in thousands):\n\n \n\n \n\nApril 30, 2026\n\n \n\n \n\nApril 30, 2025\n\n \n\nMachinery and equipment\n\n \n\n$\n\n361,141\n\n \n\n \n\n$\n\n344,706\n\n \n\nBuilding and improvements\n\n \n\n \n\n159,502\n\n \n\n \n\n \n\n154,398\n\n \n\nSoftware and hardware\n\n \n\n \n\n56,965\n\n \n\n \n\n \n\n54,775\n\n \n\nLand and improvements\n\n \n\n \n\n5,752\n\n \n\n \n\n \n\n3,557\n\n \n\nRight of use assets\n\n \n\n \n\n41,437\n\n \n\n \n\n \n\n41,631\n\n \n\nConstruction in progress\n\n \n\n \n\n11,514\n\n \n\n \n\n \n\n12,392\n\n \n\nTotal property, plant, and equipment\n\n \n\n \n\n636,311\n\n \n\n \n\n \n\n611,459\n\n \n\nLess: Accumulated depreciation and amortization\n\n \n\n \n\n(397,668\n\n)\n\n \n\n \n\n(368,811\n\n)\n\nTotal property, plant, and equipment, net\n\n \n\n$\n\n238,643\n\n \n\n \n\n$\n\n242,648\n\n \n\n \n\nTotal depreciation of tangible assets and amortization of software expense amounted to $30.7 million, $31.3 million, and $32.0 million for the fiscal years ended April 30, 2026, 2025, and 2024, respectively.\n\nF-18\n\nSMITH & WESSON BRANDS, INC. AND SUBSIDIARIES\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)\n\n \n\nThe following table summarizes depreciation and amortization expense, which includes amortization of intangibles and debt financing costs, by line item for the fiscal years ended April 30, 2026, 2025, and 2024 (in thousands):\n\n \n\n \n\n \n\nFor the Year Ended April 30,\n\n \n\n \n\n2026\n\n \n\n \n\n2025\n\n \n\n \n\n2024\n\n \n\nCost of sales\n\n \n\n$\n\n17,751\n\n \n\n \n\n$\n\n18,904\n\n \n\n \n\n$\n\n20,607\n\n \n\nResearch and development\n\n \n\n \n\n1,667\n\n \n\n \n\n \n\n1,164\n\n \n\n \n\n \n\n533\n\n \n\nSelling, marketing, and distribution\n\n \n\n \n\n2,416\n\n \n\n \n\n \n\n2,115\n\n \n\n \n\n \n\n3,635\n\n \n\nGeneral and administrative\n\n \n\n \n\n9,233\n\n \n\n \n\n9,505\n\n \n\n \n\n \n\n7,693\n\n \n\nInterest expense, net\n\n \n\n \n\n244\n\n \n\n \n\n157\n\n \n\n \n\n \n\n90\n\n \n\nTotal depreciation and amortization\n\n \n\n$\n\n31,311\n\n \n\n \n\n$\n\n31,845\n\n \n\n \n\n$\n\n32,558\n\n \n\n \n\n7. Inventories\n\nThe following table sets forth a summary of inventories, net of reserves, stated at lower of cost or net realizable value, as of April 30, 2026 and 2025 (in thousands):\n\n \n\n \n\n \n\nApril 30, 2026\n\n \n\n \n\nApril 30, 2025\n\n \n\nFinished goods\n\n \n\n$\n\n85,603\n\n \n\n \n\n$\n\n115,686\n\n \n\nFinished parts\n\n \n\n \n\n53,685\n\n \n\n \n\n \n\n55,119\n\n \n\nWork in process\n\n \n\n \n\n7,520\n\n \n\n \n\n \n\n6,037\n\n \n\nRaw material\n\n \n\n \n\n9,442\n\n \n\n \n\n \n\n12,998\n\n \n\nTotal inventories\n\n \n\n$\n\n156,250\n\n \n\n \n\n$\n\n189,840\n\n \n\n \n\n8. Accrued Expenses and Deferred Revenue\n\nThe following table sets forth other accrued expenses as of April 30, 2026 and 2025 (in thousands):\n\n \n\n \n\nApril 30, 2026\n\n \n\n \n\nApril 30, 2025\n\n \n\nAccrued professional fees\n\n \n\n$\n\n3,762\n\n \n\n \n\n$\n\n1,774\n\n \n\nAccrued employee benefits\n\n \n\n \n\n3,255\n\n \n\n \n\n \n\n3,240\n\n \n\nAccrued taxes other than income\n\n \n\n \n\n3,249\n\n \n\n \n\n \n\n5,907\n\n \n\nAccrued customer incentives and promotions\n\n \n\n \n\n2,973\n\n \n\n \n\n \n\n4,853\n\n \n\nCurrent portion of finance lease obligation\n\n \n\n \n\n1,858\n\n \n\n \n\n \n\n1,701\n\n \n\nCurrent portion of operating lease obligation\n\n \n\n \n\n—\n\n \n\n \n\n \n\n233\n\n \n\nAccrued other\n\n \n\n \n\n4,049\n\n \n\n \n\n \n\n6,970\n\n \n\nTotal accrued expenses and deferred revenue\n\n \n\n$\n\n19,146\n\n \n\n \n\n$\n\n24,678\n\n \n\n \n\n9. Fair Value Measurement\n\nWe follow the provisions of ASC 820-10, Fair Value Measurements and Disclosures Topic, or ASC 820-10, for our financial assets and liabilities. ASC 820-10 provides a framework for measuring fair value under GAAP and requires expanded disclosures regarding fair value measurements. ASC 820-10 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820-10 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs, where available, and minimize the use of unobservable inputs when measuring fair value.\n\nF-19\n\nSMITH & WESSON BRANDS, INC. AND SUBSIDIARIES\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)\n\n \n\nFinancial assets and liabilities recorded on the accompanying consolidated balance sheets are categorized based on the inputs to the valuation techniques as follows:\n\nLevel 1 — Financial assets and liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market that we have the ability to access at the measurement date (examples include active exchange-traded equity securities, listed derivatives, and most U.S. Government and agency securities).\n\nOur cash and cash equivalents, which are measured at fair value on a recurring basis, totaled $28.2 million and $25.2 million as of April 30, 2026 and 2025, respectively. Our marketable securities, which are measured at fair value on a recurring basis, total $5.2 million as of April 30, 2026. The carrying value of our revolving line of credit approximated the fair value as of April 30, 2026. We utilized Level 1 of the value hierarchy to determine the fair values of these assets.\n\nLevel 2 — Financial assets and liabilities whose values are based on quoted prices in markets in which trading occurs infrequently or whose values are based on quoted prices of instruments with similar attributes in active markets. Level 2 inputs include the following:\n\n•\nquoted prices for identical or similar assets or liabilities in non-active markets (such as corporate and municipal bonds which trade infrequently);\n\n•\ninputs other than quoted prices that are observable for substantially the full term of the asset or liability (such as interest rate and currency swaps); and\n\n•\ninputs that are derived principally from or corroborated by observable market data for substantially the full term of the asset or liability (such as certain securities and derivatives).\n\nLevel 3 — Financial assets and liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. These inputs reflect our assumptions about the assumptions a market participant would use in pricing the asset or liability.\n\nAs of April 30, 2026, we did not have any Level 2 or Level 3 financial assets or liabilities.\n\n10. Self-Insurance Reserves\n\nAs of April 30, 2026 and 2025, we had reserves for workers’ compensation, product liability, and medical/dental costs totaling $9.1 million and $8.7 million, respectively (of which $3.4 million and $3.6 million, respectively, was classified as other non-current liabilities). As of April 30, 2026 and 2025, $5.6 million and $5.1 million, respectively, were included in current liabilities on the accompanying consolidated balance sheets. In addition, as of April 30, 2026 and 2025, $1.1 million of workers’ compensation receivable was classified as other assets. While we believe these reserves to be adequate, it is possible that the ultimate liabilities will exceed such estimates.\n\nThe following table summarizes the activity in the workers’ compensation, product liability, and medical/dental reserves in the fiscal years ended April 30, 2026 and 2025 (in thousands):\n\n \n\n \n\nFor the Year Ended April 30,\n\n \n\n \n\n2026\n\n \n\n2025\n\n \n\nBeginning balance\n\n \n\n$\n\n \n\n8,694\n\n \n\n \n\n$\n\n \n\n8,699\n\n \n\nAdditional provision charged to expense\n\n \n\n \n\n1,637\n\n \n\n \n\n \n\n1,395\n\n \n\nPayments\n\n \n\n \n\n(1,273\n\n)\n\n \n\n \n\n(1,400\n\n)\n\nEnding balance\n\n \n\n$\n\n \n\n9,058\n\n \n\n \n\n$\n\n \n\n8,694\n\n \n\nIt is our policy to provide an estimate for loss as a result of expected adverse findings or legal settlements on product liability, workers’ compensation, and other matters when such losses are probable and are reasonably estimable. It is also our policy to accrue for reasonably estimable legal costs associated with defending such litigation. While such estimates involve a range of possible costs, we determine, in consultation with counsel, the most likely cost within such range on a case-by-case basis. We also record receivables from insurance carriers relating to these\n\nF-20\n\nSMITH & WESSON BRANDS, INC. AND SUBSIDIARIES\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)\n\n \n\nmatters when their collection is probable and reasonably estimable. As of April 30, 2026 and 2025, we had accrued reserves for product litigation liabilities of $3.6 million and $3.1 million (of which $577,000 and $566,000, respectively, was non-current), consisting entirely of expected legal defense costs. As of April 30, 2026 and 2025, we had no receivables from insurance carriers related to these liabilities.\n\n11. Stockholders’ Equity\n\nTreasury Stock\n\nOn September 19, 2023, our Board of Directors authorized the repurchase of up to $50.0 million of our common stock, subject to certain conditions, in the open market or in privately negotiated transactions through September 19, 2024, or the 2023 Authorization. During fiscal 2025, we purchased 1,531,763 shares of our common stock for $21.4 million under the 2023 Authorization. The 2023 Authorization expired on September 19, 2024. On September 5, 2024, our Board of Directors authorized the repurchase of up to $50.0 million of our common stock, subject to certain conditions, in the open market or in privately negotiated transactions from September 20, 2024 through September 20, 2025, or the 2024 Authorization. As of April 30, 2026, we had repurchased 312,310 shares of our common stock for $4.1 million under the 2024 Authorization. On September 15, 2025, our Board of Directors authorized the repurchase of up to $50.0 million of our common stock, subject to certain conditions, in the open market or in privately negotiated transactions from September 21, 2025 through September 21, 2026, or the 2025 Authorization. As of April 30, 2026, we had not repurchased any shares of our common stock under the 2025 Authorization.\n\nDuring the year ended April 30, 2026, there were no common stock repurchases. During the year ended April 30, 2025, we repurchased a total of 1,844,073 shares of our common stock for $25.5 million.\n\nDuring the year ended April 30, 2026, our Board of Directors authorized, and we executed, the retirement of 31,677,994 shares of our common stock held in treasury. Upon retirement, these shares were restored to the status of authorized and unissued. As a result, the accumulated cost associated with this stock was allocated to common stock, additional paid-in capital, and retained earnings.\n\nIncentive Stock and Employee Stock Purchase Plans\n\nWe have two stock incentive plans: the 2013 Incentive Stock Plan and the 2022 Incentive Stock Plan, or, together, the Incentive Stock Plans, under which employees and non-employees may have been granted (in the case of the 2013 Incentive Stock Plan), or may be granted (in the case of the 2022 Incentive Stock Plan) stock options, restricted stock awards, restricted stock units, or RSUs, stock appreciation rights, bonus stock, and awards in lieu of obligations, performance awards, and dividend equivalents. No grants have been made under the 2013 Incentive Stock Plan since our stockholders approved the 2022 Incentive Stock Plan at our annual meeting of stockholders held in September 2022. All new grants are issued under the 2022 Incentive Stock Plan.\n\nThe 2022 Incentive Stock Plan authorizes the issuance of 1,000,000 shares, plus 4,312,247 shares that were reserved and remained available for grant and delivery under the 2013 Incentive Stock Plan as of September 12, 2022, the effective date of the 2022 Incentive Stock Plan. The 2022 Incentive Stock Plan permits the grant of options to acquire common stock, restricted stock awards, RSUs, stock appreciation rights, bonus stock and awards in lieu of obligations, performance awards, and dividend equivalents. Our Board of Directors, or a committee of our Board of Directors, administers the stock plans, selects recipients to whom awards are granted, and determines the grants to be awarded. Options granted under the stock plans are exercisable at a price determined by our Board of Directors or a committee of our Board of Directors at the time of grant, but in no event less than fair market value of our common stock on the effective date of the grant. Grants of options may be made to employees and directors without regard to any performance measures. All options issued pursuant to the stock plans are generally nontransferable and subject to forfeiture.\n\nUnless terminated earlier by our Board of Directors, the 2022 Incentive Stock Plan will terminate at the earliest of (1) the tenth anniversary of the effective date of the 2022 Incentive Stock Plan, or (2) such time as no shares of common stock remain available for issuance under the plan and we have no further rights or obligations with respect\n\nF-21\n\nSMITH & WESSON BRANDS, INC. AND SUBSIDIARIES\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)\n\n \n\nto outstanding awards under the plan. The date of grant of an award is deemed to be the effective date upon which our Board of Directors or a committee authorizes the granting of such award.\n\nExcept in specific circumstances, grants of stock options vest over a period of four years and are exercisable for a period of 10 years after vesting. The 2022 Incentive Stock Plan also permits the grant of stock options to non-employees, which our Board of Directors or a committee has authorized in the past. There were no outstanding and exercisable stock options in fiscal 2026, 2025, and 2024.\n\nThe following table summarizes stock compensation expense by line item for the fiscal years ended April 30, 2026, 2025, and 2024 (in thousands):\n\n \n\n \n\n \n\nFor the Year Ended April 30,\n\n \n\n \n\n \n\n2026\n\n \n\n \n\n2025\n\n \n\n \n\n2024\n\n \n\nCost of sales\n\n \n\n$\n\n615\n\n \n\n \n\n$\n\n686\n\n \n\n \n\n$\n\n648\n\n \n\nResearch and development\n\n \n\n \n\n340\n\n \n\n \n\n \n\n625\n\n \n\n \n\n \n\n77\n\n \n\nSelling, marketing, and distribution\n\n \n\n \n\n1,150\n\n \n\n \n\n \n\n1,148\n\n \n\n \n\n \n\n930\n\n \n\nGeneral and administrative\n\n \n\n \n\n6,245\n\n \n\n \n\n \n\n5,150\n\n \n\n \n\n \n\n4,028\n\n \n\nTotal stock-based compensation\n\n \n\n$\n\n8,350\n\n \n\n \n\n$\n\n7,609\n\n \n\n \n\n$\n\n5,683\n\n \n\n \n\nAs of April 30, 2026, there were 4,424,315 shares available for grant under the 2022 Incentive Stock Plan. We use our unissued share pool for all shares issued for options, restricted stock awards, RSUs, performance share units, performance-based restricted stock units, or PSUs, and shares issued under our Employee Stock Purchase Plan, or ESPP.\n\nWe grant RSUs to employees and non-employee members of our Board of Directors. The awards are made at no cost to the recipient. An RSU represents the right to receive one share of our common stock and does not carry voting rights. Except in limited circumstances, RSUs also do not carry dividend rights. Except in specific circumstances, RSU grants to employees prior to fiscal 2026 vest over a period of four years and RSU grants to employees during fiscal 2026 vest over a period of three years with one-fourth and one-third, respectively, of the units vesting on each grant anniversary date. We amortize the aggregate fair value of our RSU grants to compensation expense over the vesting period.\n\nWe grant PSUs to our executive officers and, from time to time, certain management employees who are not executive officers. At the time of grant, we calculate the fair value of our PSUs using the Monte Carlo simulation. We incorporate the following variables into the valuation model:\n\n \n\n \n\n \n\nFor the Year Ended April 30,\n\n \n\n \n\n \n\n2026\n\n \n\n \n\n2025\n\n \n\n \n\n2024\n\n \n\nGrant date fair market value\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nSmith & Wesson Brands, Inc.\n\n \n\n$\n\n9.22\n\n \n\n \n\n$\n\n16.80\n\n \n\n \n\n$\n\n12.08\n\n \n\nRussell 2000 Index\n\n \n\n$\n\n1,975.86\n\n \n\n \n\n$\n\n1,980.23\n\n \n\n \n\n$\n\n1,769.21\n\n \n\nVolatility (a)\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nSmith & Wesson Brands, Inc.\n\n \n\n \n\n44.70\n\n%\n\n \n\n \n\n50.91\n\n%\n\n \n\n \n\n58.46\n\n%\n\nRussell 2000 Index\n\n \n\n \n\n23.56\n\n%\n\n \n\n \n\n22.98\n\n%\n\n \n\n \n\n27.08\n\n%\n\nCorrelation coefficient (b)\n\n \n\n \n\n0.3541\n\n \n\n \n\n \n\n0.3904\n\n \n\n \n\n \n\n0.3528\n\n \n\nRisk-free interest rate (c)\n\n \n\n \n\n3.66\n\n%\n\n \n\n \n\n4.73\n\n%\n\n \n\n \n\n3.81\n\n%\n\nDividend yield\n\n \n\n \n\n5.64\n\n%\n\n \n\n \n\n2.86\n\n%\n\n \n\n \n\n3.31\n\n%\n\n \n\n(a)\nExpected volatility is calculated over the most recent period that represents the remaining term of the performance period as of the valuation date, or three years.\n\n(b)\nThe correlation coefficient utilizes the same historical price data used to develop the volatility assumptions.\n\n(c)\nThe risk-free interest rate is based on the yield of a zero-coupon U.S. Treasury bill, commensurate with the three-year performance period.\n\nF-22\n\nSMITH & WESSON BRANDS, INC. AND SUBSIDIARIES\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)\n\n \n\nOur PSUs vest, and the fair value of such PSUs are recognized, over the corresponding three-year performance period. Depending on the grant date, PSUs have a maximum aggregate award equal to between 200% and 220%. In addition, there is a cap on the number of shares that can be earned under our PSUs, which is equal to six times the grant-date value of each award.\n\nPSUs granted in fiscal 2024 have a maximum aggregate award equal to 200% of the target amount granted. Generally, the number of PSUs that may be earned under the fiscal 2024 grants depends upon the total stockholder return, or TSR, of our common stock compared with the TSR of the Russell 2000 Index, or RUT, over the three-year performance period. The relative performance of our common stock must equal or exceed the relative performance of the RUT for any of the PSUs subject to the awards to be earned and vest. The relative performance of our common stock must outperform the RUT by 5% in order for the target award to vest. The relative performance of our common stock must outperform the RUT by at least 10% in order for 200% of the PSUs subject to the awards (the maximum number of PSUs) being earned and vesting.\n\nPSUs granted after fiscal 2024, have a maximum aggregate award equal to 220% of the target amount granted. The number of PSUs that may be earned under these grants depends upon the primary performance metric of our average annual Adjusted EBITDAS Growth percentage, subject to a modifier based on the TSR of our common stock compared with the TSR of the RUT over the three-year performance period. The number of PSUs that may be earned is subject to a threshold of 40% of the average annual Adjusted EBITDAS Growth percentage target and a maximum of 220% of the average annual Adjusted EBITDAS Growth percentage target.\n\nIn certain circumstances, the vested awards will be delivered on the first anniversary of the applicable vesting date. We have applied a discount to the grant date fair value when determining the amount of compensation expense to be recorded for these RSUs and PSUs.\n\nDuring fiscal 2026, we granted 237,691 PSUs to certain of our executive officers. We also granted 603,336 service-based RSUs during fiscal 2026, including 273,374 RSUs to certain of our executive officers, 76,266 RSUs to our directors, and 253,696 RSUs to non-executive officer employees.\n\nDuring fiscal 2026, we canceled 108,736 market-condition PSUs as a result of the failure to satisfy the performance metric. We canceled 64,463 service-based RSUs as a result of the service period condition not being met. We delivered 295,841 shares of common stock to current employees and directors under vested RSUs with a total market value of $3.8 million.\n\nDuring fiscal 2025, we granted 142,878 PSUs to certain of our executive officers. We also granted 486,895 service-based RSUs during fiscal 2025, including 142,882 RSUs to certain of our executive officers, 54,666 RSUs to our directors, and 289,347 RSUs to non-executive officer employees.\n\nDuring fiscal 2025, we canceled 63,469 market-condition PSUs as a result of the failure to satisfy the performance metric and 38,521 as a result of the service period condition not being met. We canceled 36,068 service-based RSUs as a result of the service period condition not being met. We delivered 218,831 shares of common stock to current employees and directors under vested RSUs with a total market value of $4.5 million.\n\nDuring fiscal 2024, we granted 176,583 PSUs to certain of our executive officers. We also granted 357,357 service-based RSUs during fiscal 2024, including 117,724 RSUs to certain of our executive officers, 58,819 RSUs to our directors, and 180,814 RSUs to non-executive officer employees.\n\nDuring fiscal 2024, we canceled 158,100 market-condition PSUs as a result of the failure to satisfy the performance metric. We canceled 24,385 service-based RSUs as a result of the service period condition not being met. We delivered 228,087 shares of common stock to current employees and directors under vested RSUs with a total market value of $2.7 million. In addition, in connection with a 2019 grant, which vested in fiscal 2023, we delivered 55,726 market-condition PSUs to certain of our executive officers and a former executive officer with a total market value of $664,000.\n\nF-23\n\nSMITH & WESSON BRANDS, INC. AND SUBSIDIARIES\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)\n\n \n\nThe grant date fair value of RSUs and PSUs that vested in fiscal 2026, 2025, and 2024 was $5.5 million, $3.8 million, and $3.3 million, respectively.\n\nA summary of activity for unvested RSUs and PSUs for fiscal years 2026, 2025, and 2024 is as follows:\n\n \n\n \n\n \n\nFor the Year Ended April 30,\n\n \n\n \n\n \n\n2026\n\n \n\n \n\n2025\n\n \n\n \n\n2024\n\n \n\n \n\n \n\n \n\n \n\n \n\nWeighted\n\n \n\n \n\n \n\n \n\n \n\n \n\nWeighted\n\n \n\n \n\n \n\n \n\n \n\n \n\nWeighted\n\n \n\n \n\n \n\nTotal # of\n\n \n\n \n\nAverage\n\n \n\n \n\nTotal # of\n\n \n\n \n\n \n\nAverage\n\n \n\n \n\nTotal # of\n\n \n\n \n\n \n\nAverage\n\n \n\n \n\n \n\nRestricted\n\n \n\n \n\nGrant Date\n\n \n\n \n\nRestricted\n\n \n\n \n\n \n\nGrant Date\n\n \n\n \n\nRestricted\n\n \n\n \n\n \n\nGrant Date\n\n \n\n \n\n \n\nStock Units\n\n \n\n \n\nFair Value\n\n \n\n \n\nStock Units\n\n \n\n \n\n \n\nFair Value\n\n \n\n \n\nStock Units\n\n \n\n \n\n \n\nFair Value\n\n \n\nRSUs and PSUs outstanding, beginning of period\n\n \n\n \n\n1,204,133\n\n \n\n \n\n$\n\n14.21\n\n \n\n \n\n \n\n1,000,347\n\n \n\n \n\n \n\n$\n\n13.45\n\n \n\n \n\n \n\n932,705\n\n \n\n \n\n \n\n$\n\n13.14\n\n \n\nAwarded\n\n \n\n \n\n841,027\n\n \n\n \n\n \n\n9.38\n\n \n\n \n\n \n\n629,773\n\n \n\n \n\n \n\n \n\n15.60\n\n \n\n \n\n \n\n533,940\n\n \n\n \n\n \n\n \n\n12.07\n\n \n\nReleased\n\n \n\n \n\n(390,259\n\n)\n\n \n\n \n\n14.07\n\n \n\n \n\n \n\n(287,929\n\n)\n\n \n\n \n\n \n\n13.18\n\n \n\n \n\n \n\n(283,813\n\n)\n\n(a)\n\n \n\n \n\n11.54\n\n \n\nForfeited\n\n \n\n \n\n(173,199\n\n)\n\n \n\n \n\n13.22\n\n \n\n \n\n \n\n(138,058\n\n)\n\n \n\n \n\n \n\n17.01\n\n \n\n \n\n \n\n(182,485\n\n)\n\n \n\n \n\n \n\n10.83\n\n \n\nRSUs and PSUs outstanding, end of period\n\n \n\n \n\n1,481,702\n\n \n\n \n\n$\n\n11.62\n\n \n\n \n\n \n\n1,204,133\n\n \n\n \n\n \n\n$\n\n14.21\n\n \n\n \n\n \n\n1,000,347\n\n \n\n \n\n \n\n$\n\n13.45\n\n \n\n \n\n(a)\nIncludes 55,726 PSUs that vested during fiscal 2023.\n\nAs of April 30, 2026, there was $4.6 million of unrecognized compensation cost related to unvested RSUs and PSUs. This cost is expected to be recognized over a weighted average remaining contractual term of 1.3 years.\n\nOn September 27, 2021, our stockholders approved our 2021 ESPP, which authorizes the sale of up to 3,000,000 shares of our common stock to employees. All options and rights to participate in our ESPP are nontransferable and subject to forfeiture in accordance with our ESPP guidelines. Our current ESPP will be implemented in a series of successive offering periods, each with a maximum duration of 12 months. If the fair market value, or FMV, per share of our common stock on any purchase date is less than the FMV per share on the start date of a 12-month offering period, then that offering period will automatically terminate, and a new 12-month offering period will begin on the next business day. Each offering period will begin on April 1 or October 1, as applicable, immediately following the end of the previous offering period. Payroll deductions will be on an after-tax basis, in an amount of not less than 1% and not more than 20% (or such greater percentage as the committee appointed to administer our ESPP may establish from time to time before the first day of an offering period) of a participant’s compensation on each payroll date. The option exercise price per share will equal 85% of the lower of the FMV on the first day of the offering period or the FMV on the exercise date. The maximum number of shares that a participant may purchase during any purchase period is 12,500 shares, or a total of $25,000 in shares, based on the FMV on the first day of the offering period. Our ESPP will remain in effect until the earliest of (a) the exercise date that participants become entitled to purchase a number of shares greater than the number of reserved shares available for purchase under our ESPP, (b) such date as is determined by our Board of Directors in its discretion, or (c) March 31, 2032. In the event of certain corporate transactions, each option outstanding under our ESPP will be assumed or an equivalent option will be substituted by the successor corporation or a parent or subsidiary of such successor corporation. During fiscal 2026 and 2025, 198,691 and 175,134 shares were purchased under the 2021 ESPP, respectively.\n\nWe measure the cost of employee services received in exchange for an award of an equity instrument based on the grant-date fair value of the award. We calculate the fair value of our stock options issued to employees using the Black-Scholes model at the time the options were granted. That amount is then amortized over the vesting period of the option. With our ESPP, fair value is determined at the beginning of the purchase period and amortized over the term of each exercise period.\n\nF-24\n\nSMITH & WESSON BRANDS, INC. AND SUBSIDIARIES\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)\n\n \n\nThe following assumptions were used in valuing our ESPP purchases during the years ended April 30, 2026, 2025, and 2024:\n\n \n\n \n\nFor the Year Ended April 30,\n\n \n\n \n\n2026\n\n \n\n2025\n\n \n\n2024\n\n \n\nRisk-free interest rate\n\n \n\n \n\n3.726\n\n%\n\n \n\n4.136\n\n%\n\n \n\n5.225\n\n%\n\nExpected term\n\n \n\n6 months\n\n \n\n6 months\n\n \n\n6 months\n\n \n\nExpected volatility\n\n \n\n \n\n45.82\n\n%\n\n \n\n42.03\n\n%\n\n \n\n45.69\n\n%\n\nDividend yield\n\n \n\n \n\n4.61\n\n%\n\n \n\n4.97\n\n%\n\n \n\n3.27\n\n%\n\n \n\nWe estimate expected volatility using historical volatility for the expected term. The fair value of each stock option or ESPP purchase was estimated on the date of the grant using the Black-Scholes option pricing model (using the risk-free interest rate, expected term, expected volatility, and dividend yield variables, as noted in the above table). The total stock-based compensation expense, including stock options, purchases under our ESPP, and RSU and PSU awards, was $8.4 million, $7.6 million, and $5.7 million, for fiscal years 2026, 2025, and 2024, respectively.\n\n12. Employer Sponsored Benefit Plans\n\nContributory Defined Investment Plan — We offer two contributory defined investment plans covering substantially all employees, subject to service requirements. Employees may contribute up to 100% of their annual pay, depending on the plan. We generally make discretionary matching contributions of up to 50% of the first 6% of employee contributions to the plan. We contributed $2.3 million, $2.4 million, and $2.7 million for the fiscal years ended April 30, 2026, 2025, and 2024, respectively.\n\nNonelective Contribution Sharing Plan — We have a non-contributory profit-sharing plan covering substantially all of our employees. Employees become eligible on May 1 following the completion of a full fiscal year of continuous service. Our contributions to the plan are discretionary. For fiscal 2026, we intend to contribute approximately $5.2 million, which has been recorded in general and administrative costs and will be funded during fiscal 2027. We contributed $4.6 million and $9.1 million for the fiscal years ended April 30, 2025 and 2024, respectively. Contributions are funded after the fiscal year-end.\n\n13. Income Taxes\n\nIncome tax expense consisted of the following (in thousands):\n\n \n\n \n\n \n\nFor the Year Ended April 30,\n\n \n\n \n\n \n\n2026\n\n \n\n \n\n2025\n\n \n\n \n\n2024\n\n \n\nCurrent:\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nFederal\n\n \n\n$\n\n \n\n590\n\n \n\n \n\n$\n\n \n\n6,875\n\n \n\n \n\n$\n\n \n\n6,786\n\n \n\nState\n\n \n\n \n\n \n\n86\n\n \n\n \n\n \n\n \n\n1,977\n\n \n\n \n\n \n\n \n\n2,713\n\n \n\nTotal current\n\n \n\n \n\n \n\n676\n\n \n\n \n\n \n\n \n\n8,852\n\n \n\n \n\n \n\n \n\n9,499\n\n \n\nDeferred:\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nFederal\n\n \n\n \n\n \n\n5,866\n\n \n\n \n\n \n\n \n\n(2,638\n\n)\n\n \n\n \n\n \n\n2,558\n\n \n\nState\n\n \n\n \n\n \n\n47\n\n \n\n \n\n \n\n \n\n(394\n\n)\n\n \n\n \n\n \n\n(1,701\n\n)\n\nTotal deferred\n\n \n\n \n\n \n\n5,913\n\n \n\n \n\n \n\n \n\n(3,032\n\n)\n\n \n\n \n\n \n\n857\n\n \n\nTotal income tax expense\n\n \n\n$\n\n \n\n6,589\n\n \n\n \n\n$\n\n \n\n5,820\n\n \n\n \n\n$\n\n \n\n10,356\n\n \n\n \n\nF-25\n\nSMITH & WESSON BRANDS, INC. AND SUBSIDIARIES\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)\n\n \n\nThe effective income tax rate for the year ended April 30, 2026 differs from the statutory federal income tax rate as follows:\n\n \n\n \n\n \n\nFor the Year Ended April 30, 2026\n\n \n\n \n\n \n\n$\n\n \n\n \n\n%\n\n \n\nU.S. Federal Statutory Tax Rate\n\n \n\n$\n\n \n\n5,265\n\n \n\n \n\n \n\n \n\n21.0\n\n%\n\nState income taxes, net of federal tax effects (a)\n\n \n\n \n\n \n\n189\n\n \n\n \n\n \n\n \n\n0.8\n\n%\n\nEffect of cross-border tax laws\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nForeign derived intangible income (FDII) deductions\n\n \n\n \n\n \n\n(24\n\n)\n\n \n\n \n\n \n\n-0.1\n\n%\n\nTax credits\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nResearch & development and fuel\n\n \n\n \n\n \n\n(312\n\n)\n\n \n\n \n\n \n\n-1.2\n\n%\n\nNontaxable or nondeductible items\n\n \n\n \n\n \n\n441\n\n \n\n \n\n \n\n \n\n1.8\n\n%\n\nOther adjustments\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nDeferral adjustment for stock compensation\n\n \n\n \n\n \n\n988\n\n \n\n \n\n \n\n \n\n3.8\n\n%\n\nOther\n\n \n\n \n\n \n\n42\n\n \n\n \n\n \n\n \n\n0.2\n\n%\n\nTotal income tax expense\n\n \n\n$\n\n \n\n6,589\n\n \n\n \n\n \n\n \n\n26.3\n\n%\n\n \n\n(a)\nState taxes in California, Louisiana, Minnesota, North Carolina, and Texas make up the majority (greater than 50%) of the tax effect in this category.\n\nPrior to the adoption of ASU 2023-09, the following table presents a reconciliation of income tax expense from continuing operations at the statutory rate of 21% to the expense in the consolidated financial statements (in thousands):\n\n \n\n \n\n \n\nFor the Year Ended April 30,\n\n \n\n \n\n \n\n2025\n\n \n\n \n\n2024\n\n \n\nFederal income taxes expected at the statutory rate\n\n \n\n$\n\n \n\n4,041\n\n \n\n \n\n$\n\n \n\n10,861\n\n \n\nState income taxes, net of federal tax effects\n\n \n\n \n\n \n\n1,406\n\n \n\n \n\n \n\n \n\n(144\n\n)\n\nStock compensation\n\n \n\n \n\n \n\n386\n\n \n\n \n\n \n\n \n\n467\n\n \n\nBusiness meals and entertainment\n\n \n\n \n\n \n\n113\n\n \n\n \n\n \n\n \n\n100\n\n \n\nResearch and development tax credit\n\n \n\n \n\n \n\n(335\n\n)\n\n \n\n \n\n \n\n(281\n\n)\n\nAmendments to prior year returns\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n \n\n(1,176\n\n)\n\nOther\n\n \n\n \n\n \n\n209\n\n \n\n \n\n \n\n \n\n529\n\n \n\nTotal income tax expense\n\n \n\n$\n\n \n\n5,820\n\n \n\n \n\n$\n\n \n\n10,356\n\n \n\n \n\nF-26\n\nSMITH & WESSON BRANDS, INC. AND SUBSIDIARIES\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)\n\n \n\nDeferred tax assets and liabilities related to temporary differences consisted of the following (in thousands):\n\n \n\n \n\n \n\nFor the Years Ended April 30,\n\n \n\n \n\n \n\n2026\n\n \n\n \n\n2025\n\n \n\nDeferred Tax Assets\n\n \n\n \n\n \n\n \n\n \n\n \n\nInventory reserves\n\n \n\n$\n\n9,794\n\n \n\n \n\n$\n\n11,637\n\n \n\nAccrued expenses, including compensation\n\n \n\n \n\n3,783\n\n \n\n \n\n \n\n2,930\n\n \n\nNet operating loss carryforwards and tax credits\n\n \n\n \n\n9,931\n\n \n\n \n\n \n\n8,200\n\n \n\nOperating lease liability\n\n \n\n—\n\n \n\n \n\n \n\n128\n\n \n\nProduct liability\n\n \n\n \n\n198\n\n \n\n \n\n \n\n151\n\n \n\nWorkers' compensation\n\n \n\n \n\n606\n\n \n\n \n\n \n\n684\n\n \n\nState bonus depreciation\n\n \n\n \n\n880\n\n \n\n \n\n \n\n980\n\n \n\nWarranty reserve\n\n \n\n \n\n643\n\n \n\n \n\n \n\n760\n\n \n\nStock-based compensation\n\n \n\n \n\n562\n\n \n\n \n\n \n\n1,573\n\n \n\nSection 174 capitalized R&D expense\n\n \n\n \n\n95\n\n \n\n \n\n \n\n2,983\n\n \n\nOther\n\n \n\n \n\n978\n\n \n\n \n\n \n\n942\n\n \n\nTotal deferred tax assets before valuation allowance\n\n \n\n \n\n27,470\n\n \n\n \n\n \n\n30,968\n\n \n\nValuation allowance\n\n \n\n \n\n(7,408\n\n)\n\n \n\n \n\n(6,169\n\n)\n\nNet deferred tax assets\n\n \n\n \n\n20,062\n\n \n\n \n\n \n\n24,799\n\n \n\nDeferred Tax Liabilities\n\n \n\n \n\n \n\n \n\n \n\n \n\nOperating lease right-of-use assets\n\n \n\n—\n\n \n\n \n\n \n\n(96\n\n)\n\nProperty, plant & equipment\n\n \n\n \n\n(12,549\n\n)\n\n \n\n \n\n(11,679\n\n)\n\nIntangible assets\n\n \n\n \n\n(2,803\n\n)\n\n \n\n \n\n(2,418\n\n)\n\nOther\n\n \n\n \n\n(363\n\n)\n\n \n\n \n\n(346\n\n)\n\nTotal deferred tax liabilities\n\n \n\n \n\n(15,715\n\n)\n\n \n\n \n\n(14,539\n\n)\n\nNet Deferred Tax Asset\n\n \n\n$\n\n4,347\n\n \n\n \n\n$\n\n10,260\n\n \n\n \n\nThe supplemental schedule of cash paid for income taxes, net of refunds is as follows:\n\n \n\n \n\n \n\nFor the Year Ended\nApril 30, 2026\n\n \n\nCash paid during the period for income taxes:\n\n \n\n \n\n \n\n \n\nU.S. Federal\n\n \n\n$\n\n \n\n3,870\n\n \n\nU.S. State and local\n\n \n\n \n\n \n\n \n\nLouisiana\n\n \n\n \n\n \n\n403\n\n \n\nOther\n\n \n\n \n\n \n\n1,388\n\n \n\nTotal cash paid during the period for income taxes\n\n \n\n$\n\n \n\n5,661\n\n \n\n \n\nCash paid for income taxes, prior to the adoption of ASU 2023-09, was $7.3 million and $12.7 million for the years ended April 30, 2025 and 2024, respectively.\n\nWe had no federal net operating losses as of April 30, 2026.\n\nWe had $109.2 million and $77.3 million in state net operating loss carryforwards as of April 30, 2026 and 2025, respectively. The state net operating loss carryforwards will expire between April 30, 2027 and April 30, 2041. We had $5.5 million and $5.3 million of state tax credit carryforwards as of April 30, 2026 and 2025, respectively. Of the $5.5 million, $2.4 million can be carried forward indefinitely and $3.1 million will expire between April 30, 2027 and April 30, 2052.\n\nAs of April 30, 2026 and 2025, valuation allowances related to our deferred tax assets for state net operating loss carryforwards were $5.6 million and $4.0 million, respectively, and $1.8 million and $2.2 million were provided on our deferred tax assets for state tax credits, respectively, that we do not anticipate using prior to expiration.\n\nF-27\n\nSMITH & WESSON BRANDS, INC. AND SUBSIDIARIES\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)\n\n \n\nThe income tax provisions represent effective tax rates of 26.3% and 30.2% for fiscal 2026 and 2025, respectively.\n\nWith limited exception, we are subject to U.S. federal, state, and local income tax audits by tax authorities for fiscal years subsequent to April 30, 2019.\n\nAs of April 30, 2026 and 2025, we have not recorded any unrecognized tax benefits. We maintain an accounting policy of recording interest and penalties, if applicable, related to uncertain tax positions as a component of income taxes. As of April 30, 2026 and 2025, there were no interest and penalties accrued.\n\n14. Commitments and Contingencies\n\nLitigation\n\nIn January 2018, Gemini Technologies, Incorporated, or Gemini, commenced an action against us in the U.S. District Court for the District of Idaho. The complaint alleges, among other things, that we breached the earn-out and other provisions of the asset purchase agreement and ancillary agreements between the parties in connection with our acquisition of the Gemtech business from Gemini. The complaint seeks a declaratory judgment interpreting various terms of the asset purchase agreement and damages in the sum of $18.6 million. In November 2019, we filed an answer to Gemini’s complaint and a counterclaim against Gemini and its stockholders at the time the asset purchase agreement was signed. Plaintiffs amended their complaint to add a claim of fraud in the inducement. In September 2021, Gemini filed a motion for summary judgment seeking to dismiss our counterclaim. In June 2022, the district court denied Gemini's motion for summary judgment. Gemini filed a second motion for summary judgment, and in August 2023, the district court again denied Gemini’s motion. In November 2023, we entered into a settlement agreement with plaintiffs on the indemnity and counterclaims. On the same day, plaintiffs filed a motion for leave, seeking to file a second amended complaint. In January 2024, the district court allowed plaintiffs’ amended allegations of fraud, and denied without prejudice their motion to add punitive damages. In August 2025, we filed a motion for summary judgment, and plaintiff filed a motion for leave to file a third amended complaint, seeking to properly name the defendants and to add punitive damages as relief. On January 23, 2026, the district court (i) granted our motion for summary judgment, in part, dismissing with prejudice plaintiffs’ fraud in the inducement and breach of the implied covenant of fair dealing claims; (ii) denied our motion for summary judgment, in part, permitting plaintiffs’ breach of contract claim to proceed; (iii) denied plaintiffs’ motion to amend the complaint to add punitive damages as relief; and (iv) granted plaintiffs’ motion to properly name a successor-in-interest party. On May 12, 2026, the trial court issued an order setting the trial to begin on January 11, 2027. We believe the remaining breach of contract claim has no merit, and we intend to aggressively defend this action.\n\nWe are a defendant in three product liability cases and are aware of six other product liability claims, primarily alleging defective product design, defective manufacturing, or failure to provide adequate warnings. In addition, we are a co-defendant in a case filed in August 1999 by the city of Gary, Indiana, or the City, against numerous firearm manufacturers, distributors, and dealers seeking to recover monetary damages, as well as injunctive relief, allegedly arising out of the misuse of firearms by third parties. In January 2018, the Lake Superior Court, County of Lake, Indiana granted defendants’ Motion for Judgment on the Pleadings, dismissing the case in its entirety. In February 2018, plaintiffs appealed the dismissal to the Indiana Court of Appeals. In May 2019, the Indiana Court of Appeals issued a decision, which affirmed in part and reversed in part, and remanded for further proceedings, the trial court’s dismissal of the City’s complaint. In March 2024, a bill was signed into law that purports to prohibit political subdivisions in Indiana from bringing certain legal actions against certain firearm industry members and to apply to actions or lawsuits filed before, after, or on August 27, 1999. Defendants subsequently filed a joint motion for judgment on the pleadings based on the new law. In August 2024, the trial court denied defendants’ joint motion for judgment on the pleadings and, in October 2024, stayed its proceedings pending an interlocutory appeal with the Indiana Court of Appeals. In December 2025, the Indiana Court of Appeals held that the retroactive application of the legislation was constitutional, reversing the trial court’s order and remanding the action to the trial court for dismissal of the action. On January 28, 2026, the City filed a petition for rehearing with the Indiana Court of Appeals, which was denied on February 2, 2026. On March 4, 2026, the City filed a petition to transfer with the Indiana Supreme Court, requesting the Court to grant transfer of the case to the Indiana Supreme Court, to vacate the Indiana Court of Appeals’ decision, and to affirm the trial court's order. In March 2026, the defendants jointly filed a response to the City's petition to transfer. On May 21, 2026, the Illinois Supreme Court denied the City’s petition to transfer. On May 26, 2026, the trial court granted the defendants’ motion to dismiss with prejudice.\n\nF-28\n\nSMITH & WESSON BRANDS, INC. AND SUBSIDIARIES\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)\n\n \n\nWe are a defendant in a putative class proceeding before the Ontario Superior Court of Justice in Toronto, Canada that was filed in December 2019. The action claims CAD$50 million in aggregate general damages, CAD$100 million in aggregate punitive damages, special damages in an unspecified amount, together with interest and legal costs. The named plaintiffs are two victims of a shooting that took place in Toronto in July 2018 and their family members. One victim was shot and injured during the shooting. The other victim suffered unspecified injuries while fleeing the shooting. The plaintiffs sought to certify a claim on behalf of classes that include all persons who were killed or injured in the shooting and their immediate family members. The plaintiffs allege negligent design and public nuisance. In July 2020, we filed a Notice of Motion for an order striking the claim and dismissing the action in its entirety. In February 2021, the court granted our motion in part and dismissed the plaintiffs’ claims in public nuisance and strict liability. The court declined to strike the negligent design claim and ordered that the claim proceed to a certification motion. In March 2021, we filed a motion for leave to appeal the court’s refusal to strike the negligent design claim with the Divisional Court, Ontario Superior Court of Justice. In July 2021, plaintiffs filed a motion to stay our motion for leave to appeal with the Divisional Court, on grounds that the appeal is premature. In November 2021, the Divisional Court granted plaintiffs’ motion, staying our motion for leave to appeal until 30 days after the decision on the balance of plaintiffs’ certification motion. In March 2024, the court denied the plaintiffs’ motion for class certification. Three appeals were filed: (1) our appeal from the dismissal of our motion to strike the negligent design claim; (2) the plaintiffs’ appeal from the order striking out their public nuisance and strict liability claims; and (3) the plaintiffs’ appeal from the order dismissing their certification motion. In June 2025, the Court of Appeals for Ontario issued a decision: (1) dismissing our appeal from the dismissal of our motion to strike the negligent design claim; (2) dismissing plaintiffs’ appeal from the order striking out their public nuisance and strict liability claims; and (3) granting plaintiffs’ appeal from the order dismissing their certification order and certifying their negligence claim as a class proceeding. In September 2025, we filed an application with the Supreme Court of Canada, requesting that the court grant leave to appeal the duty of care issue related to our negligent design claim. In October 2025, plaintiffs filed both an opposition to our application seeking leave to appeal the duty of care issue related to our negligent design claim and a cross-appeal of the dismissal of their strict liability and public nuisance claims with the Supreme Court of Canada. Later in October 2025, the Court of Appeal issued and entered the formal order in the case, which was submitted to the Supreme Court of Canada.\n\nIn May 2020, we were named in an action related to the Chabad of Poway synagogue shooting that took place in April 2019. The complaint was filed in the Superior Court of the State of California for the County of San Diego – Central and asserts claims against us for product liability, unfair competition, negligence, and public nuisance. The plaintiffs allege they were present at the synagogue on the day of the incident and suffered physical and/or emotional injury. The plaintiffs seek compensatory and punitive damages, attorneys’ fees, and injunctive relief. In September 2020, we filed a demurrer and motion to strike, seeking to dismiss plaintiffs’ complaint. In July 2021, the court granted our motion in part and reversed it in part, ruling that (1) the Protection of Lawful Commerce in Arms Act barred plaintiffs’ product liability action; (2) plaintiffs did not have standing to maintain an action under the Unfair Competition Law for personal injury related damages, but the court gave plaintiffs leave to amend to plead an economic injury; and (3) the Protection of Lawful Commerce in Arms Act did not bar plaintiffs’ ordinary negligence and public nuisance actions because plaintiffs had alleged that we violated 18 U.S.C. Section 922(b)(4), which generally prohibits the sale of fully automatic “machineguns.” In February 2022, the court consolidated the case with three related cases, in which we are not a party. In March 2022, the court granted our motion, dismissing plaintiffs’ Unfair Competition Law claim, without further leave to amend. In February 2023, we filed a motion for summary judgment. In May 2023, the court denied our motion for summary judgment without prejudice and allowed plaintiffs time for additional discovery. In December 2024, the court granted our renewed motion for summary judgment, and we later filed a proposed notice of final judgment with the court, requesting the court to enter a final judgment in our favor and to dismiss all claims against us. In February 2025, the court entered the final judgment. In April 2025, plaintiffs filed a notice of appeal with the California Court of Appeal and, in March 2026, they filed their opening appellate brief.\n\nIn September 2022, we were named as defendants in 12 nearly identical, separate actions related to a shooting in Highland Park, Illinois on July 4, 2022. The complaints were filed in the Circuit Court of the Nineteenth Judicial Circuit in Lake County, Illinois and assert claims against us for negligence and deceptive and unfair practices under the Illinois Consumer Fraud and Deceptive Business Practices Act. The plaintiffs allege they were present at a parade at the time of the incident and suffered physical and/or emotional injury. The plaintiffs seek compensatory damages, attorneys’ fees, and injunctive relief. We filed motions for removal of each case to the U.S. District Court for the Northern District of Illinois. In November 2022, we filed a motion to consolidate the cases for preliminary motion\n\nF-29\n\nSMITH & WESSON BRANDS, INC. AND SUBSIDIARIES\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)\n\n \n\npurposes. In December 2022, plaintiffs filed motions to remand the cases back to the state court. In September 2023, the court granted plaintiffs’ motion to remand. In October 2023, we filed a notice of appeal to the U.S. Court of Appeals for the Seventh Circuit. In March 2024, three new lawsuits were filed in the Circuit Court of Lake County, Illinois. In April 2024, the Seventh Circuit affirmed the remand decision. In May 2024, plaintiffs filed a motion for attorneys’ fees incurred as a result of removal. In March 2025, the district court granted plaintiffs’ motion, ordering us to pay certain of plaintiffs’ attorneys’ fees. In June and July 2024, the district court remanded the 12 separate actions to state court, with some plaintiffs amending their complaints to remove references to violations of federal law and asserting additional claims against us, including claims alleging violation of the Illinois Uniform Deceptive Trade Practices Act, the Illinois Consumer Fraud and Deceptive Business Practices Act, negligent and intentional infliction of emotional distress, and negligent entrustment. We were also named in 13 additional separate cases against us in the same state court during the same time period, largely raising similar allegations against us as in the initial and amended complaints. In July 2024, the trial court consolidated all cases for purposes of motions to dismiss and discovery. In September 2024, we filed our motions to dismiss plaintiffs’ 25 separate complaints. In April 2025, the court granted our motion to dismiss without prejudice with respect to plaintiffs’ counts for violation of the Illinois Consumer Fraud and Deceptive Business Practices Act for lack of standing (with respect to the deceptive claims only) and negligent entrustment and denied all remaining counts. Later in April 2025, we filed a motion to certify issues for interlocutory appeal with the trial court. In May 2025, the court ordered an expedited briefing schedule for the motion and stayed discovery. In June 2025, the court certified several issues for interlocutory appeal, lifted the discovery stay, set an initial trial date for March 8, 2027, and scheduled a status conference. We also filed our answers to plaintiffs' complaints. In July 2025, we filed an application for interlocutory appeal with the Court of Appeal. In September 2025, the Court of Appeal denied our application. We filed a petition for leave for an interlocutory appeal to the Illinois Supreme Court in October 2025. On January 28, 2026, the Illinois Supreme Court issued an order directing the Court of Appeal to accept our application for interlocutory appeal. On April 9, 2026, we filed our opening brief with the Court of Appeal. Discovery is ongoing.\n\nIn December 2022, the City of Buffalo, New York filed a complaint in the Supreme Court of the State of New York, County of Erie, against numerous manufacturers, distributors, and retailers of firearms. Later in December 2022, the City of Rochester, New York filed an almost identical complaint in the Supreme Court of the State of New York, County of Monroe against the same defendants. The complaints allege violation of the New York General Business Law, public nuisance, and deceptive business practices in violation of the New York General Business Law. In January 2023, we filed notices of removal of the cases to the U.S. District Court for the Western District of New York. In March 2023, defendants filed a motion to stay both cases pending a ruling by the U.S. Court of Appeals for the Second Circuit in the NSSF v. James case. In June 2023, the court granted defendants’ motions to consolidate and to stay pending resolution of the NSSF v. James appeal. In July 2025, the U.S. Court of Appeals for the Second Circuit ruled against NSSF in the NSSF v. James appeal. Defendants filed a joint motion to dismiss in September 2025. On January 22, 2026, the Cities of Buffalo and Rochester filed amended complaints against us and three other manufacturers. The complaints state claims for violation of New York General Business Law 898-b(2) and common law public nuisance. Plaintiffs seek injunctive relief, compensatory and punitive/exemplary damages, costs, and interest. On March 23, 2026, defendants filed a motion to dismiss the amended complaint, and, on May 22, 2026, plaintiffs filed their opposition to defendants’ motion to dismiss.\n\nWe believe that the various allegations described above are unfounded, and, in addition, that any incident and any results from them or any injuries were due to negligence or misuse of the firearm by the claimant or a third party.\n\nIn addition, from time to time, we are involved in lawsuits, claims, investigations, and proceedings, including commercial, environmental, premises, and employment matters, which arise in the ordinary course of business.\n\nThe relief sought in individual cases primarily includes compensatory and, sometimes, punitive damages. Certain of the cases and claims seek unspecified compensatory or punitive damages. In others, compensatory damages sought may range from less than $75,000 to approximately $50.0 million. In our experience, initial demands do not generally bear a reasonable relationship to the facts and circumstances of a particular matter. We believe that our accruals for product liability cases and claims are a reasonable quantitative measure of the cost to us of product liability cases and claims.\n\nF-30\n\nSMITH & WESSON BRANDS, INC. AND SUBSIDIARIES\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)\n\n \n\nWe are involved in a putative stockholder derivative lawsuit filed in February 2025 in the U.S. District Court for the District of Nevada. The action was brought by plaintiffs seeking to act on our behalf against our directors and certain of our executive officers. The complaint alleges a breach of fiduciary duty (for allegedly allowing us to become exposed to significant liability for intentionally violating federal, state, and local laws through our manufacturing, marketing, and sales of “AR-15 style rifles” and similar semiautomatic firearms) and violations of Section 14(a) of the Exchange Act. The derivative plaintiffs seek, among other things, damages, as well as reforms and improvements to our compliance procedures and governance policies. In May 2025, we filed a motion to dismiss plaintiffs’ complaint. On March 23, 2026, the district court (i) granted our motion to dismiss without prejudice, (ii) ordered that, if plaintiffs sought to amend their complaint, they must do so within 21 days of the court’s order, and (iii) ordered that plaintiffs must post a $500,000 bond security within 14 days of the court’s order and failure to post the bond would result in the action being dismissed without prejudice. Plaintiffs did not amend their complaint or post the bond pursuant to the court’s order. On April 17, 2026, plaintiffs filed a motion for reconsideration, requesting the court to reconsider the dismissal of the case and the imposition of the bond. On May 15, 2026, we filed our opposition to plaintiffs’ motion for reconsideration, and, on May 27, 2026, plaintiffs filed their reply.\n\nWe were named in a putative class action lawsuit filed in April 2025 in the U.S. District for the Northern District of California. The complaint alleges violation of the California Invasion of Privacy Act, or CIPA, the California Privacy Act, invasion of privacy, intrusion upon seclusion, fraud/deceit/misrepresentation, breach of contract, breach of implied contract and fair dealing, trespass to chattels, and unjust enrichment. Plaintiffs allege that after they clicked on the “reject all” cookies button on our website, our website enabled third parties to place cookies and similar tracking technologies on their browsers and devices and/or to transmit their user data to third parties for their financial gain and other purposes. Plaintiffs seek compensatory damages (including statutory damages), punitive damages, nominal damages, restitution, disgorgement of revenues and profits, injunctive relief, and attorneys’ fees and costs. In May 2025, we filed a motion to dismiss the complaint. In November 2025, the parties filed a stipulation and proposed order selecting an alternative dispute resolution process, notifying the court of their selection of a private mediator and their proposed June 30, 2026 deadline to mediate the case. On February 17, 2026, the court: (a) granted, in part, our motion to dismiss, dismissing with leave to amend plaintiffs’ CIPA, common law fraud (for one named-plaintiff), breach of contract, breach of implied covenant of good faith and fair dealing, and trespass to chattels claims; and (b) denied, in part, our motion to dismiss, permitting plaintiffs’ intrusion upon seclusion, invasion of privacy, common law fraud (for certain named-plaintiffs), and unjust enrichment claims to proceed. On March 17, 2026, plaintiffs filed a first amended complaint, removing the breach of contract, breach of implied covenant of good faith and fair dealing, and trespass to chattels claims and attempting to cure the pleading deficiencies the court identified with the CIPA claims. In late March 2026, we filed a motion to dismiss the amended complaint, which has been fully briefed. The parties were unable to resolve the matter at the court-ordered mediation on May 15, 2026. The parties are engaged in discovery.\n\nWe are vigorously defending ourselves in the lawsuits to which we are subject. An unfavorable outcome or prolonged litigation could harm our business. Litigation of this nature also is expensive, time consuming, and diverts the time and attention of our management.\n\nWe monitor the status of known claims and the related product liability accrual, which includes amounts for defense costs for asserted and unasserted claims. After consultation with litigation counsel and a review of the merit of each claim, we have concluded that we are unable to reasonably estimate the probability or the estimated range of reasonably possible losses related to material adverse judgments related to such claims and, therefore, we have not accrued for any such judgments. In the future, should we determine that a loss (or an additional loss in excess of our accrual) is at least reasonably possible and material, we would then disclose an estimate of the possible loss or range of loss, if such estimate could be made, or disclose that an estimate could not be made. We believe that we have provided adequate accruals for defense costs.\n\nFor the fiscal years ended April 30, 2026, 2025, and 2024, we paid $81,000, $155,000, and $320,000, respectively, in defense and administrative costs relative to product liability and municipal litigation. In addition, during fiscal 2026, 2025, and 2024, we paid an aggregate of $20,000, $30,000, and $1.6 million, respectively, in settlements related to product liability cases. As of April 30, 2026, we had no accruals for settlements, that were subsequently paid in the following fiscal year. As of April 30, 2025, we had $20,000 accrued for settlements that were subsequently paid in the following fiscal year.\n\nF-31\n\nSMITH & WESSON BRANDS, INC. AND SUBSIDIARIES\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)\n\n \n\nWe have recorded our liability for defense costs before consideration for reimbursement from insurance carriers. We have also recorded the amount due as reimbursement under existing policies from the insurance carriers as a receivable shown in other current assets and other assets.\n\nWhen changes to our prior estimates of product liability provisions and municipal litigation liabilities are warranted, we recognize additional expense or reductions in expense. In fiscal 2026, 2025, and 2024, we recorded additional expense of $296,000, $62,000, and $35,000, respectively.\n\nCommitments\n\nIn connection with the Relocation, we entered into a project agreement, or the Project Agreement, with The Industrial Development Board of Blount County and the cities of Alcoa and Maryville, Tennessee, a public, nonprofit corporation organized and existing under the laws of the state of Tennessee, or the IDB. Pursuant to the Project Agreement, we represented to the IDB that we intend to incur, or cause to be incurred, no less than $120.0 million in aggregate capital expenditures on or before December 31, 2025, create no less than 620 new jobs, and sustain an average hourly wage of at least $25.97 at the facility. Further, pursuant to the Project Agreement, we are required to, among other things, (a) execute a facility lease and an equipment lease with the IDB; (b) cause the construction of the new facility at our sole cost and expense to commence on or before May 31, 2022; (c) incur, or cause to be incurred, aggregate capital expenditures in connection with the construction and equipping of the new facility in an aggregate amount of not less than $120.0 million on or before December 31, 2025; (d) cause the construction of the new facility to be substantially completed and for a certificate of occupancy to be issued therefore on or before December 31, 2023; (e) provide the IDB with a written report certified by one of our authorized officers, not later than January 31 of each year during the period between January 31, 2024 and January 31, 2031; and (f) make certain payments to the IDB in the event that our actual capital expenditures, number of employees, or average hourly wage of such employees are less than our projections.\n\nIn connection with the Relocation, we entered into an accountability agreement, or the Accountability Agreement, with the Tennessee Department of Economic and Community Development and the Blount Partnership economic development organization. Pursuant to the Accountability Agreement, the Blount Partnership received a grant in the amount of $9.0 million, which was paid to us pursuant to a grant contract. Among other performance requirements in the Accountability Agreement, we committed that we would create and maintain 750 new jobs at the facility, measured as the average number of full-time jobs at the facility on three test dates: January 1, 2027, January 1, 2028, and January 1, 2029, or the Compliance Period. In the event that the three-year average number of full-time jobs during the Compliance Period equals or exceeds 90% of the 750-job commitment, no recapture payment will be required. If the three-year average number of full-time jobs during the Compliance Period is less than 90% of the committed number, but greater than 50% of such number, we will be required to make a recapture payment equal to the percentage of full-time jobs at the facility below the 750 jobs committed, times the grant amount. If the three-year average number of full-time jobs during the Compliance Period is less than 50% of the committed number, we will be required to make a recapture payment equal to the full amount of the grant. The payment, if any, would be made on a one-time basis and due no later than 45 days after the state’s demand, which would likely be in the second calendar quarter of 2029, if required.\n\nDuring fiscal 2024, we determined that we would have no use for certain distribution equipment in the Missouri distribution center and could not fully recover the net book value of such equipment. Therefore, we recorded an impairment of $1.9 million in selling, marketing, and distribution on the consolidated statements of income during that period. We vacated the Missouri distribution center effective January 1, 2024 and sold assets we could no longer utilize to AOUT at their remaining net book value of $2.9 million, relocating all remaining assets to our Maryville facility. During fiscal 2025, we sold certain real estate located adjacent to the Missouri distribution center for $2.3 million, net of transaction costs, and recognized a $2.3 million pre-tax gain on sale.\n\nEnvironmental Remediation\n\nWe are subject to numerous federal, state, and local laws and regulations that regulate the health and safety of our workforce, including those regulations monitored by the Occupational Health and Safety Administration, or OSHA, the National Fire Protection Association, and the Department of Public Health. Though not exhaustive, examples of applicable regulations include confined space safety, walking and working surfaces, machine guarding, and life safety.\n\nF-32\n\nSMITH & WESSON BRANDS, INC. AND SUBSIDIARIES\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)\n\n \n\nWe are also subject to numerous federal, state, and local environmental laws and regulations concerning, among other things, emissions in the air; discharges to land, surface, subsurface strata and water; and the generation, handling, storage, transportation, treatment, and disposal of hazardous wastes and other materials. These laws have required us to make significant expenditures of both a capital and expense nature. Several of the more significant federal laws applicable to our operations include the Clean Air Act, the Clean Water Act, the Comprehensive Environmental Response, Compensation and Liability Act, or CERCLA, and the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act.\n\nWe have in place programs and personnel to monitor compliance with various federal, state, and local environmental regulations. In the normal course of our manufacturing operations, we are subject to governmental proceedings and orders pertaining to waste disposal, air emissions, and water discharges into the environment. We fund our environmental costs through cash flows from operations. We believe that we are in compliance with applicable environmental regulations in all material respects.\n\nWe are required to remediate hazardous waste at our facilities. Currently, we own a designated site in Springfield, Massachusetts that contains two release areas, which are the focus of remediation projects as part of the Massachusetts Contingency Plan, or MCP. The MCP provides a structured environment for the voluntary remediation of regulated releases. We may be required to remove hazardous waste or remediate the alleged effects of hazardous substances on the environment associated with past disposal practices at sites not owned by us. We have received notice that we are a potentially responsible party from the Environmental Protection Agency and/or individual states under CERCLA or a state equivalent at two sites.\n\nAs of April 30, 2026, and 2025, we did not have an open environmental reserve recorded in our consolidated balance sheet.\n\nWhen the available information is sufficient to estimate the amount of liability, that estimate has been used. When the information is only sufficient to establish a range of probable liability and no point within the range is more likely than any other, the lower end of the range has been used. We may not have insurance coverage for our environmental remediation costs. We have not recognized any gains from probable recoveries or other gain contingencies.\n\nBased on information known to us, we do not expect current environmental regulations or environmental proceedings and claims to have a material adverse effect on our consolidated financial position, results of operations, or cash flows. However, it is not possible to predict with certainty the impact on us of future environmental compliance requirements or the cost of resolving future environmental health and safety proceedings and claims, in part because the scope of the remedies that may be required is not certain, liability under federal environmental laws is joint and several in nature, and environmental laws and regulations are subject to modification and changes in interpretation. There can be no assurance that additional or changing environmental regulation will not become more burdensome in the future and that any such development would not have a material adverse effect on our company.\n\nContracts\n\nEmployment Agreements — We have employment, severance, and change of control agreements with certain employees.\n\n15. Restructuring\n\nAs a result of the Relocation, ($509,000), $1.2 million, and $7.1 million of restructuring charges, net of adjustments to our prior estimates, were recorded in fiscal 2026, 2025, and 2024, respectively.\n\nF-33\n\nSMITH & WESSON BRANDS, INC. AND SUBSIDIARIES\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)\n\n \n\nThe following table summarizes restructuring charges by line item for fiscal 2026, 2025 and 2024 (in thousands):\n\n \n\n \n\n \n\nFor the Year Ended April 30,\n\n \n\n \n\n \n\n2026\n\n \n\n \n\n2025\n\n \n\n \n\n2024\n\n \n\nCost of sales\n\n \n\n$\n\n(137\n\n)\n\n \n\n$\n\n1,063\n\n \n\n \n\n$\n\n2,116\n\n \n\nSelling, marketing, and distribution\n\n \n\n \n\n(39\n\n)\n\n \n\n \n\n132\n\n \n\n \n\n \n\n2,974\n\n \n\nGeneral and administrative\n\n \n\n \n\n(333\n\n)\n\n \n\n \n\n(22\n\n)\n\n \n\n \n\n1,963\n\n \n\nTotal restructuring charges, net\n\n \n\n$\n\n(509\n\n)\n\n \n\n$\n\n1,173\n\n \n\n \n\n$\n\n7,053\n\n \n\n \n\nThe components of the restructuring charges recorded in our consolidated statements of income are as follows (in thousands):\n\n \n\n \n\n \n\nFor the Year Ended April 30,\n\n \n\n \n\n \n\n2026\n\n \n\n \n\n2025\n\n \n\n \n\n2024\n\n \n\nConsulting and outside services\n\n \n\n$\n\n377\n\n \n\n \n\n$\n\n1,462\n\n \n\n \n\n$\n\n992\n\n \n\nEmployee relocation (a)\n\n \n\n \n\n(316\n\n)\n\n \n\n \n\n520\n\n \n\n \n\n \n\n887\n\n \n\nEmployee relations\n\n \n\n \n\n—\n\n \n\n \n\n \n\n113\n\n \n\n \n\n \n\n2,011\n\n \n\nOffice rent and equipment\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n2,298\n\n \n\nPublic relations\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n904\n\n \n\nFreight\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n199\n\n \n\nSeverance and employee-related benefits (a)\n\n \n\n \n\n(570\n\n)\n\n \n\n \n\n(922\n\n)\n\n \n\n \n\n(238\n\n)\n\nTotal restructuring charges, net\n\n \n\n$\n\n(509\n\n)\n\n \n\n$\n\n1,173\n\n \n\n \n\n$\n\n7,053\n\n \n\n \n\n(a)\nRecorded in accrued payroll and incentives.\n\nThe following table summarizes the activity in the severance and employee-related benefits and relocation accruals for fiscal 2026 and fiscal 2025 (in thousands):\n\n \n\n \n\n \n\nSeverance and\nemployee-\nrelated\nbenefits\n\n \n\n \n\nRelocation\n\n \n\n \n\nTotal (a)\n\n \n\nAccrual at April 30, 2024\n\n \n\n$\n\n5,527\n\n \n\n \n\n$\n\n828\n\n \n\n \n\n$\n\n6,355\n\n \n\nCharges\n\n \n\n \n\n(922\n\n)\n\n \n\n \n\n520\n\n \n\n \n\n \n\n(402\n\n)\n\nCash payments and settlements\n\n \n\n \n\n(3,233\n\n)\n\n \n\n \n\n(890\n\n)\n\n \n\n \n\n(4,123\n\n)\n\nAccrual at April 30, 2025\n\n \n\n \n\n1,372\n\n \n\n \n\n \n\n458\n\n \n\n \n\n \n\n1,830\n\n \n\nCharges\n\n \n\n \n\n(570\n\n)\n\n \n\n \n\n(316\n\n)\n\n \n\n \n\n(886\n\n)\n\nCash payments and settlements\n\n \n\n \n\n(478\n\n)\n\n \n\n \n\n(142\n\n)\n\n \n\n \n\n(620\n\n)\n\nAccrual at April 30, 2026\n\n \n\n$\n\n324\n\n \n\n \n\n$\n\n(0\n\n)\n\n \n\n$\n\n324\n\n \n\n \n\n(a)\nRecorded in accrued payroll and incentives.\n\nF-34\n\nSMITH & WESSON BRANDS, INC. AND SUBSIDIARIES\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)\n\n \n\n16. Segment Reporting\n\nWe operate our business as one operating segment, which also represents one reportable segment: firearms. Therefore, results of our operations are reported on a consolidated basis for purposes of segment reporting, consistent with internal management reporting.\n\nThe firearms segment is engaged in the design, manufacture, and sale of a variety of firearms and firearm-related products. Our Chief Executive Officer has been identified as the chief operating decision maker (CODM). The CODM manages and allocates resources on a consolidated basis. The determination of a single segment is consistent with the financial information regularly reviewed by the CODM for purposes of evaluating performance and allocating resources, which is reviewed on a consolidated basis.\n\nAs our CODM evaluates the financial performance of our firearms segment on a consolidated basis, the measure of segment performance is net income, as reflected in the consolidated statements of income. The CODM uses net income to allocate resources on a consolidated basis, which enables the CODM to assess both the overall level of resources available and optimize distribution of resources in line with our long-term strategic goals. Our segment net sales, segment significant expenses, and segment profit, as provided to the CODM, align to the captions presented on our consolidated statements of income. As we manage our assets on a consolidated basis, the measure of segment assets is total assets, as reflected in the consolidated balance sheets.\n\nThe following table summarizes additional segment information, not already disclosed elsewhere (in thousands):\n\n \n\n \n\n \n\nFor the Year Ended April 30,\n\n \n\n \n\n2026\n\n \n\n \n\n2025\n\n \n\n \n\n2024\n\n \n\nInterest income\n\n \n\n$\n\n2,376\n\n \n\n \n\n$\n\n2,667\n\n \n\n \n\n$\n\n2,783\n\n \n\nInterest expense\n\n \n\n \n\n(7,186\n\n)\n\n \n\n \n\n(7,289\n\n)\n\n \n\n \n\n(4,838\n\n)\n\nInterest expense, net\n\n \n\n$\n\n(4,810\n\n)\n\n \n\n$\n\n(4,622\n\n)\n\n \n\n$\n\n(2,055\n\n)\n\n \n\nF-35"}