We lease certain of our real estate, machinery, equipment, and photocopiers under non-cancelable operating and finance lease agreements.

We 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.

Many 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.

The amounts of assets and liabilities related to our operating and financing leases as of April 30, 2026 and 2025 were as follows (in thousands):


	Balance Sheet Caption	April 30, 2026			April 30, 2025
Operating Leases
Right-of-use assets		$	—		$	1,623
Accumulated amortization			—			(1,211	)
Right-of-use assets, net	Other assets	$	—		$	412

Current liabilities	Accrued expenses and deferred revenue	$	—		$	233
Non-current liabilities	Other non-current liabilities		—			318
Total operating lease liabilities		$	—		$	551
Finance Leases
Right-of-use assets		$	41,437		$	41,631
Accumulated depreciation			(14,726	)		(12,973	)
Right-of-use assets, net	Property, plant, and equipment, net	$	26,711		$	28,658

Current liabilities	Accrued expenses and deferred revenue	$	1,858		$	1,701
Non-current liabilities	Finance lease payable, net of current portion		32,163			33,703
Total finance lease liabilities		$	34,021		$	35,404

During 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.

On 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

Agreement, 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.

The 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):


Fiscal	Amount
2027	$	3,292
2028		3,350
2029		3,408
2030		3,468
2031		3,529
Thereafter		28,501
Total future receipts		45,548
Less amounts representing interest		(12,107	)
Present value of receipts	$	33,441

Future lease payments for all our finance leases for succeeding fiscal years are as follows (in thousands):


	Financing
2027	$	3,519
2028		3,596
2029		3,560
2030		3,468
2031		3,529
Thereafter		28,501
Total future lease payments		46,173
Less amounts representing interest		(12,152	)
Present value of lease payments		34,021
Less current maturities of lease liabilities		(1,858	)
Long-term maturities of lease liabilities	$	32,163

During fiscal 2026, the cash paid for amounts included in the measurement of liabilities and operating cash flows was $581,000.