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Financial Data and Key Metrics Changes - Net sales for Q2 fiscal 2026 were $124.7 million, a decrease of $5 million or 3.9% compared to the prior year [14] - EBITDA for the quarter was $15 million, indicating solid profitability despite lower sales [5] - Gross margin decreased to 24.3%, down 2.3% year-over-year, primarily due to lower production absorption and tariffs [15] - Net income was $1.9 million, compared to $4.5 million in the prior year, with earnings per share at $0.04 versus $0.10 a year ago [15] Business Line Data and Key Metrics Changes - Handgun unit shipments into the sporting goods channel were down 1.9%, while adjusted sell-through at retail was up 7.7%, indicating market share growth [6] - Long gun shipments into the sporting goods channel declined 5.1%, with NICS down 8.3%, reflecting typical seasonal demand patterns [7] - Overall firearm unit shipments into the sporting goods category were up 3.3%, outperforming the market which was down 2.7% [7] Market Data and Key Metrics Changes - The market for firearms remains healthy and stable, with the company gaining market share during the quarter [6] - Average selling prices (ASPs) increased by 3.5% year-over-year, with handguns at $418 and long guns at $602 [8] - Distributor inventory declined over 5% sequentially and 15% year-over-year, indicating strong sell-through and positioning for future demand [14] Company Strategy and Development Direction - The company continues to focus on innovation-driven growth, disciplined cost management, and maintaining a strong balance sheet [12] - The grand opening of the Smith & Wesson Academy aims to enhance training offerings for law enforcement and consumers, contributing to brand strength [10][11] - The capital allocation strategy remains unchanged, focusing on business investment, financial flexibility, and returning value to stockholders [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the brand's strength and product assortment, expecting Q3 sales to be 8%-10% higher than Q3 fiscal 2025 [17] - Despite uncertainties regarding macroeconomic conditions, the company anticipates continued healthy cash generation and improved gross margins in Q3 [17][18] - The company expects operating expenses in Q3 to be about 15% higher than in Q2 due to events like the SHOT Show and new product development costs [18] Other Important Information - The company ended the quarter with $27.3 million in cash and investments, and $90 million in borrowings on its line of credit [16] - A quarterly dividend of $0.13 has been authorized, to be paid to stockholders of record on December 18 [17] Q&A Session Summary Question: Input costs and gross margins outlook - Management indicated that tariff impacts may increase in the back half of the year but should not materially affect profitability [20] - Absorption is expected to improve due to increased operating days and reduced inventory levels [22] Question: Operating expenses outlook - Operating expenses are generally consistent year-to-year, with expected increases for the SHOT Show and other activities [23] Question: Q4 outlook - Management is optimistic about Q4, expecting high single-digit to low double-digit growth compared to Q3 [25]

Financial Data and Key Metrics Changes - Net sales for Q2 2026 were $124.7 million, a decrease of $5 million or 3.9% compared to the prior year [13] - EBITDA was reported at $15 million, with operating cash flow exceeding $27 million for the quarter [5][16] - Gross margin decreased to 24.3%, down 2.3% year-over-year, primarily due to lower production absorption and tariffs [15] - Net income was $1.9 million, compared to $4.5 million in the prior year, resulting in earnings per share of $0.04 versus $0.10 a year ago [15] Business Line Data and Key Metrics Changes - Handgun unit shipments into the sporting goods channel decreased by 1.9%, while adjusted sell-through at retail increased by 7.7% [6] - Long gun shipments declined by 5.1%, with NICS down 8.3%, reflecting typical seasonal demand patterns [7] - Overall firearm unit shipments into the sporting goods category increased by 3.3%, outperforming the market which was down 2.7% [7] Market Data and Key Metrics Changes - Average selling prices (ASPs) increased by 3.5% year-over-year, with handguns at $418 (up 2.1%) and long guns at $602 (up 10.2%) [8] - Distributor inventory decreased over 5% sequentially and 15% year-over-year, indicating strong retail sell-through [13] Company Strategy and Development Direction - The company remains focused on innovation-driven growth, disciplined cost management, and maintaining a strong balance sheet [12] - The grand opening of the Smith & Wesson Academy aims to enhance training offerings for law enforcement and consumers [10][11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the market's stability and the company's ability to gain market share due to strong brand performance and new product success [6][12] - For Q3, the company expects sales to increase by 8%-10% compared to Q3 fiscal 2025, with improved gross margins anticipated [17] Other Important Information - The company ended the quarter with $183 million in inventory, down from $196 million a year ago, positioning itself well for the busy second half of the fiscal year [9] - Capital spending for the year is expected to be between $25 and $30 million, with $11 million spent in Q2 primarily on the Smith & Wesson Academy [16] Q&A Session Summary Question: Input costs and gross margins outlook - Management indicated that tariff impacts may increase in the back half of the year but should not materially affect profitability [19][21] Question: Operating expenses consistency - Operating expenses are expected to remain consistent, with typical increases for the SHOT Show in January [22] Question: Q4 outlook - Management is optimistic about Q4, expecting high single-digit to low double-digit growth compared to Q3 [24]

Financial Performance - Net sales for the three months ended October 31, 2025, were $124.7 million, a decrease of $5.0 million, or 3.9%, compared to the same quarter last year[88]. - Net income for the three months ended October 31, 2025, was $1.9 million, or $0.04 per diluted share, compared to $4.5 million, or $0.10 per diluted share, in the same quarter last year[88]. - For the six months ended October 31, 2025, total net sales were $209.7 million, a decrease of $8.3 million, or 3.8%, from the same period last year[88]. - Operating income for the three months ended October 31, 2025 decreased by $3.4 million to $4.1 million, representing a 45.4% decline compared to the same period in 2024[103]. - For the six months ended October 31, 2025, operating income fell by $4.9 million to $1.2 million, a decrease of 80.7% year-over-year[104]. - Net income for the three months ended October 31, 2025 was $1.9 million, down $2.6 million or 57.8% from $4.5 million in the same quarter of 2024[111]. - The net loss for the six months ended October 31, 2025 was $1.5 million, a decline of $4.2 million or 155.5% compared to a net income of $2.7 million in the prior year[112]. Cost and Expenses - Gross margin for the same period was 24.3%, down from 26.6% in the prior year, primarily due to unfavorable fixed-cost absorption and higher tariffs[92]. - Gross margin for the six months ended October 31, 2025, was 25.0%, down from 26.9% in the prior year, impacted by higher materials costs and tariffs[98]. - Research and development expenses increased by $704,000, or 14.9%, for the six months ended October 31, 2025, due to higher tooling-related costs[102]. - Selling, marketing, and distribution expenses for the three months ended October 31, 2025, increased by $723,000, primarily due to one-time costs related to a grand opening event[101]. Sales Performance - Handgun sales decreased by $3.0 million, or 3.2%, while long gun sales decreased by $453,000, or 1.8%, due to lower consumer demand[89][90]. - Newly introduced products accounted for 42.8% of handgun sales and 38.1% of long gun sales in the quarter[89][90]. Cash Flow and Financing - Cash provided by operating activities was $19.2 million for the six months ended October 31, 2025, a significant improvement of $57.4 million from cash used in operating activities of $38.2 million in the same period of 2024[114]. - Cash used in investing activities increased by $12.0 million to $19.9 million for the six months ended October 31, 2025, primarily due to a $7.3 million increase in capital expenditures[117]. - Cash used by financing activities was $2.1 million for the six months ended October 31, 2025, compared to $24.3 million provided in the same period of 2024[119]. - As of October 31, 2025, the company had $90.0 million of borrowings outstanding on the revolving line of credit, with an average interest rate of 6.28%[123]. - The company expects to spend between $25.0 million and $30.0 million on capital expenditures in fiscal 2026[118]. - As of October 31, 2025, the company had $22.4 million in cash and cash equivalents on hand[128]. - The company believes that its existing capital resources and credit facilities will be adequate to fund operations for at least the next 12 months[128]. Corporate Governance - The Board of Directors has authorized a quarterly dividend of $0.13 per share, payable on January 2, 2026[126]. - There have been no material changes in significant accounting policies as disclosed in the Fiscal 2025 Annual Report[129]. - The company did not enter into or transact any forward option contracts during the period ended October 31, 2025[131].

Financial Performance - Q2 net sales were $124.7 million, a decrease of $5.0 million, or 3.9%, from the comparable quarter last year[6] - Q2 gross margin was 24.3%, down from 26.6% in the comparable quarter last year[6] - Q2 net income was $1.9 million, or $0.04 per diluted share, compared to $4.5 million, or $0.10 per diluted share, for the comparable quarter last year[6] - Adjusted EBITDAS for Q2 was $15.1 million, or 12.1% of net sales, compared to $19.1 million, or 15.0% of net sales, for the comparable quarter last year[6] - GAAP net sales for the three months ended October 31, 2025, were $124,670,000, a decrease from $129,679,000 in the same period of 2024, representing a decline of approximately 1.0%[19] - Non-GAAP net sales for the six months ended October 31, 2025, were $209,748,000, compared to $213,800,000 in 2024, reflecting a decrease of about 1.5%[19] - The company reported a GAAP gross profit of $30,349,000 for the three months ended October 31, 2025, which is 24.3% of sales, down from 26.6% in the same period of 2024[19] - Non-GAAP adjusted EBITDAS for the six months ended October 31, 2025, was $23,184,000, down from $29,287,000 in the same period of 2024, indicating a margin of 11.1%[21] Cash Flow and Investments - Operating cash flow for Q2 was over $27 million, an increase of $34.7 million over the comparable quarter last year[6] - Operating cash flows for the six months ended October 31, 2025, provided $19,158,000, a significant improvement from cash used of $38,212,000 in the prior year[17] - Free cash flow for the six months ended October 31, 2025, was $3,877,000, compared to a negative free cash flow of $46,216,000 in the same period of 2024[22] - The company’s net cash used in investing activities for the six months ended October 31, 2025, was $19,859,000, compared to $7,879,000 in the prior year[17] - The company’s net cash provided by financing activities for the six months ended October 31, 2025, was a net outflow of $2,099,000, contrasting with a net inflow of $24,345,000 in the same period of 2024[17] Product and Sales Strategy - New products accounted for 38.7% of sales in the quarter, highlighting the success of the innovation strategy[4] - Distributor inventory declined by over 5% from the end of the prior quarter and by 15% compared to the end of October 2024, indicating positive sell-through at retail[4] - The company expects Q3 sales to be 8-10% higher than Q3 fiscal 2025 sales, with no significant impact from channel inventory[4] Dividends and Assets - A quarterly dividend of $0.13 per share has been authorized, to be paid on January 2, 2026[4] - Total assets as of October 31, 2025, were $548.6 million, a decrease from $559.6 million as of April 30, 2025[13] Losses and Expenses - For the six months ended October 31, 2025, the company reported a net loss of $1,494,000 compared to a net income of $2,691,000 for the same period in 2024[17] - The company incurred stock-based compensation expenses of $3,990,000 for the six months ended October 31, 2025, compared to $3,722,000 in the same period of 2024[17]

Q2 Net Sales of $124.7 MillionQ2 Gross Margin of 24.3%Q2 EPS of $0.04/Share; Q2 Adjusted EPS of $0.04/ShareQ2 Net Income of $1.9 million; Q2 Adjusted EBITDAS of $15.1 MillionQ2 Net Cash Provided by Operating Activities of $27.3 millionMaryville, Tennessee--(Newsfile Corp. - December 4, 2025) - Smith & Wesson Brands, Inc. (NASDAQ: SWBI), a U.S.-based leader in firearm manufacturing and design, today announced financial results for the second quarter of fiscal 2026, ended October 31, 2025. Second Quarter Fis ...

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Core Viewpoint - Smith & Wesson Brands, Inc. plans to release its second quarter fiscal 2026 financial results on December 4, 2025, after market close [1] Group 1: Financial Results Announcement - The financial results will be discussed in a conference call and webcast on the same day, featuring Mark Smith (President and CEO) and Deana McPherson (Executive VP and CFO) [2] - The conference call is scheduled to begin at 5:00 p.m. Eastern Time [2] Group 2: Participation Details - Interested parties in North America can join by dialing 1-877-704-4453, while international participants can call 1-201-389-0920 [3] - Participants are advised to dial in at least 10 minutes prior to the start of the call [3] Group 3: Company Overview - Smith & Wesson Brands, Inc. is a leader in firearm manufacturing and design, offering a wide range of products including handguns, long guns, and suppressors [4] - The company also provides manufacturing services and firearm training programs through the Smith & Wesson Academy in Maryville, TN [4]

Company Overview - Smith & Wesson Brands, Inc. (NASDAQ: SWBI) is a historic American company that has been in operation since before the Civil War, specializing in the manufacture of firearms, which are considered a uniquely American product [1] Investment Insights - The focus on small-cap opportunities that provide asymmetric upside is highlighted, along with an interest in generating income through sustainable high dividend yields [2] - Key factors for investment consideration include insider buying, high insider ownership, a long history of free cash flow growth, and substantial catalysts for turnaround [2] - The investment strategy is oriented towards long-term holding, with a preference for matching market returns during bull runs and generating superior returns during market downturns [2]

Market Reaction - Shares of gun manufacturers experienced a significant spike following the assassination of conservative activist Charlie Kirk, a trend commonly observed after high-profile shootings as consumers tend to purchase firearms out of fear of potential restrictions on gun sales [1][4]. - Smith & Wesson Brands Inc. saw its shares rise by 6.7% on Wednesday afternoon, with an additional increase of 2.6% during premarket trading on Thursday before declining by approximately 2% after the market opened [1]. - Sturm Ruger & Company closed up more than 3% on Wednesday and surged an additional 3% during after-hours trading, while American Outdoor Brands rose by 5.3% on the same day [2]. Historical Context - Historical data indicates that gun stocks typically surge after mass shooting incidents. For instance, following the assassination attempt on President Donald Trump, Smith & Wesson shares increased by 11% and Sturm Ruger & Company by 5% [5]. - After the Uvalde elementary school shooting in 2022, Smith & Wesson stocks surged by 7% and Sturm Ruger & Company jumped by 4% [5]. Industry Insights - Experts have noted that the gun industry operates under "perverse incentives," where sales and stock prices tend to rise in the aftermath of violent events [3]. - Research indicates that high-profile shootings lead to increased gun purchases as individuals seek to protect themselves and hedge against potential firearm bans [4].