Smith & Wesson Brands (SWBI) risk factors, FY2025 10-K

Risks Relating to Economic, Political, Social, Legislative, Regulatory, and Inflationary Factors

1. 01A variety of economic, political, social, legislative, regulatory, and inflationary factors could materially and adversely affect our business, operating results, and financial condition
2. 02Environmental Compliance
3. 03Employment and Occupational Health and Safety Compliance
4. 04We face risks associated with international activities
5. 05We are exposed to protectionist trade restrictions, including tariffs and potential trade laws
6. 06High levels of inflation have adversely affected us and may continue to adversely affect us
7. 07We must continue to introduce new products that are successful in the marketplace
8. 08We are subject to risks associated with the Relocation
9. 09We operate in only four facilities located in three locations, and our success depends on our ability to operate each facility efficiently
10. 10A disruption in the activities of these facilities could adversely affect our firearm manufacturing operations
11. 11labor shortages and disputes
12. 12We rely on our supply chain for our production, and any interruptions in these arrangements could disrupt our ability to fill our customers’ orders
13. 13We may be unable to forecast demand for our products accurately
14. 14the domestic political environment, including debates over the regulation of various consumer products related to our industry
15. 15We may fail to align our capacity with demand for our products
16. 16Shortages of and price increases for components, parts, raw materials, and other supplies may delay or reduce our sales and increase our costs
17. 17We believe that maintaining a high level of brand recognition and a strong reputation are critical to our success, particularly with respect to retaining existing customers and attracting new customers
18. 18effectively manage marketing costs, including creative and media expenses, in order to maintain acceptable customer acquisition costs
19. 19Poor product quality or performance, or defects in our products, could harm us
20. 20We face intense competition
21. 21We may be unsuccessful in making and integrating mergers, acquisitions, and investments, and completing divestitures
22. 22We may have difficulty collecting amounts owed to us
23. 23Liability insurance coverage is expensive and may be difficult to obtain at commercially reasonable rates, or at all
24. 24International, LLC case. Our liability insurance costs were $7.8 million, $8.4 million, and $7.8 million in fiscal 2025, 2024, and 2023, respectively

Risks Relating to Legal Proceedings, Product Recalls, and Other Product Liabilities

1. 25We are subject to lawsuits and governmental investigations and inquiries
2. 26Our business involves the potential for product recalls and product liability and other claims against us
3. 27We produce or source and sell products that create exposure to potential product liability, warranty liability, and personal injury claims and litigation

Risks Relating to Intellectual Property, Information Systems, and Cybersecurity

1. 28We may be unable to protect our intellectual property or obtain the right to use intellectual property from third parties
2. 29We may incur substantial expenses and devote significant resources in prosecuting others for their unauthorized use of our intellectual property rights
3. 30Interruptions in the proper functioning of our information systems or other issues with our ERP systems could disrupt our operations
4. 31We are subject to cybersecurity risks, including risks related to customer, employee, vendor, and other company data

Risks Relating to Certain Business Matters and Securities Markets

1. 32Our operating results may involve significant fluctuations
2. 33changes in laws and regulations that may affect the marketability of our products
3. 34The trading price of our common stock has fluctuated widely in the past and may fluctuate widely in the future
4. 35factors relating to suppliers and competitors
5. 36We are subject to risks related to corporate social responsibility
6. 37Actions of stockholder activists could cause us to incur substantial costs and divert management’s attention and our resources
7. 38Our ability to operate our business efficiently may be adversely impacted if service providers and other businesses that permit firearm-related activities refuse to work with us
8. 39We operate in a challenging market for talent and may fail to attract, motivate, train, and retain qualified personnel, including key personnel
9. 40Nevada law could make it more difficult for a third party to acquire us and discourage a takeover
10. 41We have identified a material weakness in our internal control over financial reporting that may, if not remediated, result in material misstatements in our financial statements