Maryville, Tennessee--(Newsfile Corp. - November 20, 2025) -  Smith & Wesson Brands, Inc. (NASDAQ: SWBI), a U.S.-based leader in firearm manufacturing and design, today announced it plans to release its second quarter fiscal 2026 financial results on Thursday, December 4, 2025, after the close of the market. The full text of the press release will be available on the Smith & Wesson Brands, Inc. web site at www.smith-wesson.com under the Investor Relations section.The company will host a conference call and ...

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].

Economic Indicators - Stock index futures are showing positive movement with S&P 500 futures up 0.2%, Nasdaq 100 futures up 0.2%, and Dow futures up 0.1% as investors anticipate the retail inflation report [3] - The 10-year Treasury yield remains unchanged at 4.06%, while the 2-year yield is flat at 3.56% [4] - The August Consumer Price Index (CPI) is expected to rise by 0.3% month-over-month, increasing from 0.2% in the previous month, with a year-over-year forecast of 2.9%, up from 2.7% in July [4] Gun Industry - Gun stocks have seen a rise following the shooting of conservative activist Charlie Kirk, with Smith & Wesson up 4.9% in premarket trading after a 6.7% increase on Wednesday [5][7] - American Outdoor Brands closed 5.3% higher and is slightly up in premarket, while Sturm, Ruger closed with a 3% gain and is up 7.4% postmarket [7] - The shooting incident is anticipated to drive demand for stricter gun control laws, historically leading to increased demand for firearms [6] Technology and Robotics - Ant Group has introduced its first humanoid robot, the R1 model, capable of performing various tasks such as serving as a tour guide and sorting medicine [8] - The R1 robot was demonstrated at the 2025 Inclusion Conference in Shanghai, showcasing its ability to handle complex assignments [8] Corporate Developments - Opendoor Technologies shares surged by 40% after the appointment of former Shopify COO Kaz Nejatian as CEO, with co-founders returning to the board [10] - Khosla Ventures and co-founder Eric Wu will invest $40 million in Opendoor through a private placement to support business growth [10]

Group 1 - The shooting of Charlie Kirk, a prominent conservative activist and ally of Trump, occurred during a speech in Utah, leading to a national outcry and a moment of mourning in Washington D.C. [1][3] - Kirk was a strong supporter of the Second Amendment and frequently opposed stricter gun control measures, making his death particularly significant in the ongoing gun control debate [3]. - Following the incident, there was a surge in gun purchases, with shares of firearm companies such as Smith & Wesson (SWBI.US) rising by 6.7% and American Outdoor (AOUT.US) increasing by 5.3% [3]. Group 2 - The event highlights the ongoing tensions surrounding gun violence in the U.S., as Kirk was questioned about gun violence just moments before the shooting [3]. - Local media reported that students had previously petitioned to cancel Kirk's speaking engagement, indicating a divided public sentiment regarding his views on gun rights [3].

Financial Data and Key Metrics Changes - First quarter sales were $85.1 million, reflecting a year-over-year decrease of $3.3 million or 3.7% [14] - EBITDA for the quarter was $8 million, indicating robust demand despite a seasonal slowdown [5] - Gross margin was 25.9%, down 1.5% from the prior year due to lower production absorption and tariffs [15] - The company reported a net loss of $3.4 million, translating to a loss of $0.08 per share [15] Business Line Data and Key Metrics Changes - Handgun shipments increased over 35% year-on-year, while long gun shipments decreased by 28.1% [5][6] - Average selling prices (ASPs) for handguns declined by 4%, and long guns saw a 13% decrease due to market conditions [6] - New products accounted for 37.3% of sales in the first quarter, highlighting the importance of innovation [9] Market Data and Key Metrics Changes - The market is viewed as relatively "normal" with cyclical trends and traditional seasonality [7] - Distributor inventory levels were down more than 13,000 units compared to the end of fiscal 2025, indicating strong retail demand [9] - The company expects a significant sales increase in the second quarter, projecting sales to be 3% to 5% below Q2 fiscal 2025 [17] Company Strategy and Development Direction - Innovation is a cornerstone of the company's strategy, with a strong pipeline of new products planned [9] - The company is investing in its facilities and enhancing brand support initiatives [10] - The reopening of the Smith & Wesson Academy aims to provide training for law enforcement and consumers, enhancing brand loyalty [11][12] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about maintaining or expanding market share despite macroeconomic challenges [17] - The company anticipates a normal seasonal environment for the second quarter, with no significant inventory impact expected [17] - Gross margin for Q2 is expected to align with Q1 levels, with operating expenses projected to increase by 20% [18] Other Important Information - Cash used in operations was $8.1 million, significantly lower than the prior year due to a net working capital decrease [16] - The board authorized a quarterly dividend of $0.13, with payment scheduled for October 2 [17] Q&A Session Summary Question: ASPs in handgun and long gun markets - Management is pleased with ASPs and expects to maintain or increase them as the busy season approaches [20] Question: Opportunities in long gun business - The company is expanding its lever-action product line and exploring new market segments [22] Question: Impact of regulatory changes on NFA items - There is pent-up demand in the suppressor market, which is expected to grow with upcoming regulatory changes [23] Question: Performance of legacy products - Legacy products performed well, with the company gaining market share and focusing on inventory management [26][27] Question: Promotional activity in the back half of the year - Management does not foresee a need for increased promotional activity, expecting ASPs to hold steady [28][29]

[Filing Information](index=1&type=section&id=Filing%20Information) Provides details on the company's Form 10-Q filing, accelerated filer status, and common stock outstanding - Smith & Wesson Brands, Inc. filed its **Quarterly Report on Form 10-Q** for the period ended July 31, 2025[2](index=2&type=chunk) Common Stock Listing Information | Title of each Class | Trading Symbol | Name of exchange on which registered | | :--- | :--- | :--- | | Common Stock, par value $0.001 per share | SWBI | The Nasdaq Stock Market LLC | - The registrant is an **accelerated filer** and is not a large accelerated filer, non-accelerated filer, smaller reporting company, or emerging growth company[3](index=3&type=chunk)[4](index=4&type=chunk) - As of September 2, 2025, there were **44,341,781 shares** of common stock outstanding[4](index=4&type=chunk) [Statement Regarding Forward-Looking Information](index=4&type=section&id=Statement%20Regarding%20Forward-Looking%20Information) Clarifies that the report contains forward-looking statements and outlines factors that could cause actual results to differ materially - The report contains forward-looking statements regarding future operating results, financial position, business strategy, and objectives, identifiable by terms such as **'anticipates,'** **'believes,'** **'estimates,'** **'expects,'** **'intends,'** **'targets,'** **'contemplates,'** **'projects,'** **'predicts,'** **'may,'** **'might,'** **'plan,'** **'will,'** **'would,'** **'should,'** **'could,'** **'can,'** **'potential,'** **'continue,'** **'objective,'** or **similar expressions**[8](index=8&type=chunk) - Specific forward-looking statements include expectations for **unrecognized compensation expense**, beliefs regarding litigation outcomes, capital expenditure plans for fiscal 2026, and the adequacy of existing capital resources for the next 12 months[8](index=8&type=chunk) - Actual results may **differ significantly** due to various factors including economic, political, social, legislative, regulatory, inflationary, and health factors; increased regulation of firearms; actions of social activists; lawsuits; demand for products; and general economic conditions[9](index=9&type=chunk) [PART I - FINANCIAL INFORMATION](index=5&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) Presents the unaudited condensed consolidated financial statements and management's discussion and analysis of financial condition and results of operations [Item 1. Financial Statements (Unaudited)](index=5&type=section&id=Item%201.%20Financial%20Statements%20%28Unaudited%29) This section presents the unaudited condensed consolidated financial statements for Smith & Wesson Brands, Inc. and its subsidiaries for the three months ended July 31, 2025 and 2024, including balance sheets, statements of operations, changes in stockholders' equity, and cash flows, along with accompanying notes detailing organization, basis of presentation, debt, fair value measurements, inventories, accrued expenses, stockholders' equity, commitments, contingencies, and segment reporting [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Presents the company's financial position, detailing assets, liabilities, and stockholders' equity at specific dates Condensed Consolidated Balance Sheets (In thousands) | ASSETS | July 31, 2025 | April 30, 2025 | | :--- | :--- | :--- | | Cash and cash equivalents | $17,964 | $25,231 | | Marketable securities | $3,219 | — | | Accounts receivable, net | $41,309 | $55,868 | | Inventories | $203,097 | $189,840 | | Total current assets | $275,513 | $277,265 | | Property, plant, and equipment, net | $239,407 | $242,648 | | Total assets | $554,633 | $559,612 | | LIABILITIES AND STOCKHOLDERS' EQUITY | July 31, 2025 | April 30, 2025 | | :--- | :--- | :--- | | Accounts payable | $21,225 | $26,887 | | Accrued expenses and deferred revenue | $18,104 | $24,678 | | Total current liabilities | $52,906 | $66,640 | | Notes and loans payable | $94,147 | $79,096 | | Total liabilities | $190,254 | $187,158 | | Total stockholders' equity | $364,379 | $372,454 | | Total liabilities and stockholders' equity | $554,633 | $559,612 | - Cash and cash equivalents decreased by **$7.27 million** (**28.8%**) from April 30, 2025, to July 31, 2025[12](index=12&type=chunk) - Inventories increased by **$13.26 million** (**7.0%**) from April 30, 2025, to July 31, 2025[12](index=12&type=chunk) - Notes and loans payable increased by **$15.05 million** (**19.0%**) from April 30, 2025, to July 31, 2025[12](index=12&type=chunk) [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Details the company's financial performance, including net sales, gross profit, and net loss over specific periods Condensed Consolidated Statements of Operations (In thousands, except per share data) | | For the Three Months Ended July 31, 2025 | For the Three Months Ended July 31, 2024 | | :--- | :--- | :--- | | Net sales | $85,077 | $88,334 | | Cost of sales | $63,003 | $64,148 | | Gross profit | $22,074 | $24,186 | | Operating expenses | $25,032 | $25,712 | | Operating loss | $(2,958) | $(1,526) | | Net loss | $(3,411) | $(1,855) | | Basic - net loss per share | $(0.08) | $(0.04) | | Diluted - net loss per share | $(0.08) | $(0.04) | - Net sales decreased by **$3.26 million** (**3.7%**) from **$88.33 million** in Q1 2024 to **$85.08 million** in Q1 2025[14](index=14&type=chunk) - Gross profit decreased by **$2.11 million** (**8.7%**) from **$24.19 million** in Q1 2024 to **$22.07 million** in Q1 2025[14](index=14&type=chunk) - Net loss increased by **$1.56 million** (**83.9%**) from **$(1.86) million** in Q1 2024 to **$(3.41) million** in Q1 2025, resulting in a diluted net loss per share of **$(0.08)** compared to **$(0.04)** in the prior year[14](index=14&type=chunk)[97](index=97&type=chunk) [Condensed Consolidated Statements of Changes in Stockholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders%27%20Equity) Outlines changes in the company's equity accounts, reflecting transactions affecting stockholders' investment Changes in Stockholders' Equity (In thousands) | Item | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | | :--- | :--- | :--- | | Balance at April 30 | $372,454 | $399,914 | | Stock-based compensation | $1,892 | $1,854 | | Issuance of common stock under restricted stock unit awards, net | $(792) | $(1,057) | | Repurchase of treasury stock, including excise tax | $20 | $(12,958) | | Dividends issued, including accruals | $(5,784) | $(5,907) | | Net loss | $(3,411) | $(1,855) | | Balance at July 31 | $364,379 | $379,991 | - Total stockholders' equity decreased from **$372.45 million** at April 30, 2025, to **$364.38 million** at July 31, 2025, **primarily due to net loss and dividend distributions**[16](index=16&type=chunk) - **No common stock repurchases occurred** in the three months ended July 31, 2025, compared to **$12.9 million** in repurchases in the prior year comparable period[16](index=16&type=chunk)[47](index=47&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Summarizes the cash inflows and outflows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows (In thousands) | Cash Flow Activity | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(8,110) | $(30,815) | | Net cash used in investing activities | $(7,464) | $(4,665) | | Net cash provided by financing activities | $8,307 | $10,156 | | Net decrease in cash and cash equivalents | $(7,267) | $(25,324) | | Cash and cash equivalents, end of period | $17,964 | $35,515 | - Net cash used in operating activities significantly improved, decreasing from **$30.82 million** in Q1 2024 to **$8.11 million** in Q1 2025, **primarily due to a $24.0 million reduction in working capital usage**[19](index=19&type=chunk)[99](index=99&type=chunk) - Net cash used in investing activities increased by **$2.80 million**, **mainly due to $3.17 million in purchases of marketable securities** in Q1 2025[19](index=19&type=chunk)[101](index=101&type=chunk) - Net cash provided by financing activities decreased by **$1.85 million**, **driven by lower net borrowings and dividend distributions**[19](index=19&type=chunk)[103](index=103&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Provides detailed explanations and additional information supporting the condensed consolidated financial statements [(1) Organization](index=10&type=section&id=%281%29%20Organization) Describes the company's primary business activities and manufacturing locations - Smith & Wesson Brands, Inc. is a leading manufacturer and designer of firearms, including handguns, long guns, handcuffs, and suppressors, sold under Smith & Wesson and Gemtech brands[22](index=22&type=chunk) - Manufacturing facilities are located in Maryville, Tennessee; Springfield, Massachusetts; and Houlton, Maine. The Deep River, Connecticut facility was discontinued in fiscal 2025[22](index=22&type=chunk) [(2) Basis of Presentation](index=10&type=section&id=%282%29%20Basis%20of%20Presentation) Explains the accounting principles and policies used in preparing the financial statements, including error corrections and new ASUs - An **immaterial error related to legal expense accrual was identified and corrected**, resulting in a **$336,000** overstatement of general and administrative expenses and an **$85,000** understatement of income tax expense for the three months ended July 31, 2024[23](index=23&type=chunk) - Marketable securities, totaling **$3.2 million** as of July 31, 2025, are reported at fair value, with **$51,000** in net unrealized gains and losses recognized[26](index=26&type=chunk) - The company is evaluating the impact of new FASB ASUs on income tax disclosures (ASU 2023-09, effective FY2026) and disaggregation of income statement expenses (ASU 2024-03, effective FY2028)[28](index=28&type=chunk)[29](index=29&type=chunk)[30](index=30&type=chunk) [(3) Notes and Loans Payable](index=12&type=section&id=%283%29%20Notes%20and%20Loans%20Payable) Details the company's credit facilities, outstanding debt, and compliance with financial covenants - On October 3, 2024, the company entered into the Second Amended and Restated Credit Agreement, providing a **$175.0 million** revolving line of credit, maturing on October 3, 2029, or earlier[32](index=32&type=chunk)[33](index=33&type=chunk) - As of July 31, 2025, **$95.0 million** was outstanding on the Revolving Line, bearing interest at a weighted average **rate** of **6.69%**[35](index=35&type=chunk) - The company was **compliant with all financial covenants** (minimum consolidated fixed charge coverage ratio and maximum consolidated leverage ratio) as of July 31, 2025[36](index=36&type=chunk) [(4) Fair Value Measurement](index=14&type=section&id=%284%29%20Fair%20Value%20Measurement) Describes the valuation methods and inputs used for financial assets and liabilities measured at fair value - Cash and cash equivalents (**$18.0 million**) and marketable securities (**$3.2 million**) are measured at fair value on a recurring basis using **Level 1 inputs** (unadjusted quoted prices in active markets)[40](index=40&type=chunk) - The company had **no Level 2 or Level 3 financial assets or liabilities** as of July 31, 2025[42](index=42&type=chunk) [(5) Inventories](index=15&type=section&id=%285%29%20Inventories) Provides a breakdown of inventory components and changes over the reporting period Inventories, net of reserves (In thousands) | Category | July 31, 2025 | April 30, 2025 | | :--- | :--- | :--- | | Finished goods | $127,794 | $115,686 | | Finished parts | $58,161 | $55,119 | | Work in process | $4,622 | $6,037 | | Raw material | $12,520 | $12,998 | | Total inventories | $203,097 | $189,840 | - Total inventories increased by **$13.26 million** (**7.0%**) from April 30, 2025, to July 31, 2025, **primarily in finished goods**[44](index=44&type=chunk) [(6) Accrued Expenses and Deferred Revenue](index=15&type=section&id=%286%29%20Accrued%20Expenses%20and%20Deferred%20Revenue) Details the composition and changes in various accrued liabilities and deferred revenue Other Accrued Expenses (In thousands) | Category | July 31, 2025 | April 30, 2025 | | :--- | :--- | :--- | | Accrued employee benefits | $3,877 | $3,240 | | Accrued taxes other than income | $3,471 | $5,907 | | Accrued customer incentives and promotions | $2,564 | $4,853 | | Accrued professional fees | $2,306 | $1,774 | | Current portion of finance lease obligation | $1,736 | $1,701 | | Current portion of operating lease obligation | $222 | $233 | | Accrued other | $3,928 | $6,970 | | Total accrued expenses and deferred revenue | $18,104 | $24,678 | - Total accrued expenses and deferred revenue decreased by **$6.57 million** (**26.6%**) from April 30, 2025, to July 31, 2025, **driven by reductions in accrued taxes, customer incentives, and other accrued amounts**[45](index=45&type=chunk) [(7) Stockholders' Equity](index=15&type=section&id=%287%29%20Stockholders%27%20Equity) Discusses changes in stockholders' equity, including share repurchases, stock-based compensation, and net loss per share - The Board authorized a **$50.0 million** share repurchase program (2024 Authorization) through September 20, 2025. As of July 31, 2025, **$4.1 million** had been repurchased under this authorization[46](index=46&type=chunk)[108](index=108&type=chunk) - **No common stock repurchases occurred** during the three months ended July 31, 2025, compared to **$12.9 million** in repurchases during the same period in 2024[47](index=47&type=chunk)[109](index=109&type=chunk) Net Loss Per Share (In thousands, except per share data) | | For the Three Months Ended July 31, 2025 | For the Three Months Ended July 31, 2024 | | :--- | :--- | :--- | | Basic - net loss | $(0.08) | $(0.04) | | Diluted - net loss | $(0.08) | $(0.04) | | Weighted average common shares outstanding (Basic/Diluted) | 44,262 | 45,321 | - Total stock-based compensation expense was **$1.9 million** for both the three months ended July 31, 2025 and 2024[52](index=52&type=chunk) - As of July 31, 2025, there was **$9.1 million** of **unrecognized compensation expense** related to unvested RSUs and PSUs, **expected to be recognized over a weighted average remaining contractual term of 1.8 years**[57](index=57&type=chunk) [(8) Commitments and Contingencies](index=17&type=section&id=%288%29%20Commitments%20and%20Contingencies) Outlines significant legal proceedings, potential liabilities, and contractual commitments - The company is **actively defending several significant lawsuits**, including a breach of contract claim by Gemini Technologies, product liability cases, a class action in Ontario, Canada, and actions related to shootings in Poway, Highland Park, Buffalo, and Rochester[58](index=58&type=chunk)[59](index=59&type=chunk)[60](index=60&type=chunk)[61](index=61&type=chunk)[62](index=62&type=chunk)[64](index=64&type=chunk)[65](index=65&type=chunk) - The U.S. Supreme Court **ruled in the company's favor** on June 5, 2025, in the Mexican Government lawsuit, holding that the **Protection of Lawful Commerce in Arms Act bars the lawsuit**[62](index=62&type=chunk) - A **putative stockholder derivative lawsuit was filed** on February 4, 2025, **alleging breach of fiduciary duty and Exchange Act violations**, which the company is **moving to dismiss**[68](index=68&type=chunk) - The company is **unable to reasonably estimate the probability or range of possible losses** related to material adverse judgments for known claims but believes **adequate accruals for defense costs have been provided**[71](index=71&type=chunk)[72](index=72&type=chunk) - Commitments related to the Maryville, Tennessee relocation include **incurring at least $120.0 million in capital expenditures** by December 31, 2025, **creating 620 new jobs**, and **sustaining an average hourly wage of at least $25.97**[73](index=73&type=chunk) [(9) Segment Reporting](index=22&type=section&id=%289%29%20Segment%20Reporting) Describes the company's operating segments and how financial performance is evaluated - The company operates as **one reportable segment: firearms**, encompassing the design, manufacture, and sale of firearms and related products[74](index=74&type=chunk)[75](index=75&type=chunk) - The **Chief Executive Officer, as the chief operating decision maker**, **evaluates financial performance and allocates resources on a consolidated basis**, with **net income being the measure of segment performance**[75](index=75&type=chunk)[78](index=78&type=chunk) Segment Interest Information (In thousands) | | For the Three Months Ended July 31, 2025 | For the Three Months Ended July 31, 2024 | | :--- | :--- | :--- | | Interest income | $632 | $714 | | Interest expense | $1,837 | $1,446 | | Interest expense, net | $(1,205) | $(732) | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Analyzes the company's financial condition and results of operations, highlighting key performance indicators and liquidity [Overview](index=25&type=section&id=Overview) Provides a general introduction to the management's discussion and analysis, including key comparative periods and error corrections - The discussion focuses on year-to-year comparisons between the three months ended July 31, 2025, and 2024[82](index=82&type=chunk) - An **immaterial error in legal expense accrual was corrected**, **impacting general and administrative expenses and income tax expense** for prior periods[83](index=83&type=chunk) [First Quarter Fiscal 2026 Highlights](index=25&type=section&id=First%20Quarter%20Fiscal%202026%20Highlights) Summarizes key financial performance metrics for the first quarter of fiscal year 2026 compared to the prior year First Quarter Fiscal 2026 Highlights (In millions, except per share data) | Metric | Q1 FY2026 (July 31, 2025) | Q1 FY2025 (July 31, 2024) | Change ($M) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net sales | $85.1 | $88.3 | $(3.2) | -3.7% | | Gross margin | 25.9% | 27.4% | -1.5 pp | - | | Net loss | $(3.4) | $(1.9) | $(1.5) | 83.9% | | Diluted net loss per share | $(0.08) | $(0.04) | $(0.04) | 100.0% | [Results of Operations](index=25&type=section&id=Results%20of%20Operations) Analyzes the company's financial performance, detailing changes in net sales, gross profit, operating expenses, and net loss Net Sales and Gross Profit (In thousands) | Category | 2025 | 2024 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Handguns | $64,944 | $53,277 | $11,667 | 21.9% | | Long guns | $13,595 | $24,721 | $(11,126) | -45.0% | | Other products & services | $6,538 | $10,336 | $(3,798) | -36.7% | | Total net sales | $85,077 | $88,334 | $(3,257) | -3.7% | | Cost of sales | $63,003 | $64,148 | $(1,145) | -1.8% | | Gross profit | $22,074 | $24,186 | $(2,112) | -8.7% | | % of net sales (gross margin) | 25.9% | 27.4% | - | - | - Handgun sales increased by **21.9%** due to **increased shipments of newly introduced products** (**37.7%** of handgun sales), partially offset by a **shift to lower-priced models**[86](index=86&type=chunk) - Long gun sales decreased by **45.0%** due to **lower consumer demand**, despite **newly introduced products representing 53.2% of long gun sales**[87](index=87&type=chunk) - Gross margin decreased from **27.4%** to **25.9%**, **primarily due to unfavorable fixed-cost absorption from lower production volumes and higher tariffs** (estimated **120 basis points** impact), **partially offset by favorable inventory adjustments and lower promotional costs**[89](index=89&type=chunk) - Inventory balances increased by **$13.3 million** to **$203.1 million**, **attributed to level loading manufacturing facilities to meet anticipated future demand**, with an **expectation for inventory levels to decline during the remainder of the fiscal year**[90](index=90&type=chunk) Operating Expenses (In thousands) | Expense Category | 2025 | 2024 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Research and development | $3,007 | $2,515 | $492 | 19.6% | | Selling, marketing, and distribution | $8,752 | $9,889 | $(1,137) | -11.5% | | General and administrative | $13,316 | $13,366 | $(50) | -0.4% | | Total operating expenses | $25,032 | $25,712 | $(680) | -2.6% | | % of net sales | 29.4% | 29.1% | - | - | - Operating loss increased by **$1.4 million** (**93.8%**) to **$(2.96) million**, resulting in an operating margin of **-3.5%**[92](index=92&type=chunk) - Interest expense, net, increased by **$473,000** (**64.6%**) due to **higher average debt balances and lower average cash balances**[93](index=93&type=chunk) - Income tax benefit increased by **$281,000** (**68.7%**) due to a **higher operating loss**. The **effective tax rate before discrete items increased to 33.7% from 25.5%** due to **decreased forecasted pretax income and changes in state apportionment**[94](index=94&type=chunk) - The recently enacted One Big Beautiful Bill Act (OBBBA) is **not expected to have a material impact** on the consolidated financial statements[95](index=95&type=chunk)[96](index=96&type=chunk) [Liquidity and Capital Resources](index=29&type=section&id=Liquidity%20and%20Capital%20Resources) Discusses the company's cash flows, debt facilities, capital expenditures, and ability to fund future operations Cash Flow Information (In thousands) | Activity | 2025 | 2024 | $ Change | | :--- | :--- | :--- | :--- | | Operating activities | $(8,110) | $(30,815) | $22,705 | | Investing activities | $(7,464) | $(4,665) | $(2,799) | | Financing activities | $8,307 | $10,156 | $(1,849) | | Total cash flow | $(7,267) | $(25,324) | $18,057 | - Cash used in operating activities improved by **$22.7 million**, **primarily driven by a $24.0 million reduction in working capital usage**, including favorable impacts from inventory, accounts payable, accrued payroll, and accounts receivable[99](index=99&type=chunk)[100](index=100&type=chunk) - Capital expenditures are expected to be **$25.0 million** to **$30.0 million** in fiscal 2026[102](index=102&type=chunk) - Cash provided by financing activities was **$8.3 million**, **mainly from $15.0 million in net borrowings under the revolving line of credit, offset by $5.9 million in dividend distributions**[103](index=103&type=chunk) - The company had **$95.0 million** outstanding on its **$175.0 million** revolving line of credit as of July 31, 2025, and was **in compliance with all debt covenants**[104](index=104&type=chunk)[107](index=107&type=chunk) - The **Board authorized a $0.13 per share quarterly dividend**, payable on October 2, 2025[109](index=109&type=chunk) - Existing capital resources and credit facilities are believed to be **adequate to fund operations for at least the next 12 months**[111](index=111&type=chunk) [Other Matters](index=32&type=section&id=Other%20Matters) Addresses critical accounting policies and recent accounting pronouncements relevant to the financial statements - **No material changes to critical accounting policies were noted** since the Fiscal 2025 Annual Report[113](index=113&type=chunk) - **Recent accounting pronouncements are discussed in Note 2** to the condensed consolidated financial statements[114](index=114&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=32&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company did not engage in any forward option contracts or have any outstanding forward contracts during the period ended July 31, 2025, indicating minimal exposure to certain market risks - **No forward option contracts were entered into or transacted**, and **no forward contracts were outstanding** during the period ended July 31, 2025[115](index=115&type=chunk) [Item 4. Controls and Procedures](index=32&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's internal control over financial reporting was not effective as of July 31, 2025, due to a material weakness related to the review of legal expense accruals. Remediation plans are underway, including personnel training, and are expected to continue throughout fiscal 2026 - Management concluded that **internal control over financial reporting was not effective** as of July 31, 2025[119](index=119&type=chunk)[123](index=123&type=chunk) - A **material weakness was identified in the control to review the accrual for certain legal expenses**, stemming from **insufficient knowledge and experience of personnel**[121](index=121&type=chunk) - This **material weakness led to immaterial misstatements in legal expense accruals** in prior interim and annual periods[122](index=122&type=chunk) - **Remediation plans include developing a training program for personnel to enhance knowledge of legal expense accruals**, with efforts **ongoing through fiscal 2026**[124](index=124&type=chunk)[125](index=125&type=chunk) - **No changes in internal control over financial reporting occurred** during the first fiscal quarter of 2026 that **materially affected or are reasonably likely to materially affect internal control**[126](index=126&type=chunk) [PART II - OTHER INFORMATION](index=35&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) Contains additional information including legal proceedings, risk factors, equity sales, and exhibits [Item 1. Legal Proceedings](index=35&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 8 for a detailed discussion of the nature of legal proceedings against the company, which includes various product liability, class action, and other lawsuits - **Details regarding legal proceedings are incorporated by reference from Note 8**—Commitments and Contingencies of the condensed consolidated financial statements[129](index=129&type=chunk) [Item 1A. Risk Factors](index=35&type=section&id=Item%201A.%20Risk%20Factors) Investors are directed to review the Risk Factors section in the Fiscal 2025 Form 10-K for factors that could materially affect the business. No material changes to these risk factors were identified in this report - **No material changes to the Risk Factors discussed in the Fiscal 2025 Form 10-K were identified**[130](index=130&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=35&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Reports on the absence of unregistered equity sales or common stock repurchases by the company during the period - **No purchases of common stock by the company or affiliated purchasers occurred** during the three months ended July 31, 2025[131](index=131&type=chunk) [Item 5. Other Information](index=35&type=section&id=Item%205.%20Other%20Information) States that no directors or officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the reporting period - **None of the company's directors or officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements** during the three months ended July 31, 2025[132](index=132&type=chunk) [Item 6. Exhibits](index=36&type=section&id=Item%206.%20Exhibits) Lists the exhibits included with or incorporated by reference into the Quarterly Report on Form 10-Q, including certifications, employment agreements, and credit agreement amendments - The **report includes various exhibits**, such as **Rule 13a-14(a)/15d-14(a) Certifications (31.1, 31.2), Section 1350 Certifications (32.1, 32.2), and an Amended and Restated Employment Agreement for Mark P. Smith**[135](index=135&type=chunk)[138](index=138&type=chunk) [SIGNATURES](index=37&type=section&id=SIGNATURES) Confirms the official signing of the Quarterly Report on Form 10-Q by authorized officers - The report was **signed on September 4, 2025, by Mark P. Smith, President and Chief Executive Officer, and Deana L. McPherson, Executive Vice President, Chief Financial Officer, Treasurer, and Assistant Secretary**[140](index=140&type=chunk)

[First Quarter Fiscal 2026 Financial Results Overview](index=1&type=section&id=First%20Quarter%20Fiscal%202026%20Financial%20Results%20Overview) Smith & Wesson Brands, Inc. reported better-than-expected Q1 FY26 results driven by new product demand and strong market share, despite a seasonal slowdown [Executive Summary & Key Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Key%20Highlights) Smith & Wesson Brands, Inc. reported better-than-expected first-quarter fiscal year 2026 results, driven by robust demand for new products and strong market share - CEO Mark Smith highlighted that Q1 results exceeded expectations due to strong demand for new products and sustained market share across all firearms categories, with new products contributing **37.3%** of Q1 sales[4](index=4&type=chunk) - CFO Deana McPherson noted a more than **10%** decline in distributor inventory from the prior quarter and over **13%** year-over-year, with Q2 fiscal sales expected to grow significantly over Q1 and be **3-5%** below Q2 FY25, and a quarterly dividend of **$0.13** per share authorized[4](index=4&type=chunk) Q1 Fiscal 2026 Financial Highlights (in thousands, vs. Q1 Fiscal 2025) | Metric | Q1 FY26 (July 31, 2025) | Q1 FY25 (July 31, 2024) | Change (YoY) | | :-------------------------- | :---------------------- | :---------------------- | :------------ | | Net Sales | $85,100 | $88,300 | -3.7% | | Gross Margin | 25.9% | 27.4% | -1.5 pp | | Non-GAAP Gross Margin | 26.0% | 29.3% | -3.3 pp | | GAAP Net Loss per Diluted Share | $0.08 | $0.04 | +$0.04 | | Non-GAAP Net Loss per Diluted Share | $0.08 | $0.02 | +$0.06 | | Non-GAAP Adjusted EBITDAS | $8,000 | $10,200 | -21.6% | | Non-GAAP Adjusted EBITDAS Margin | 9.5% | 11.8% | -2.3 pp | [About Smith & Wesson Brands, Inc.](index=2&type=section&id=About%20Smith%20%26%20Wesson%20Brands%2C%20Inc.) Smith & Wesson Brands, Inc. is a leading U.S.-based firearm manufacturer and designer, offering a wide range of handgun, long gun, and suppressor products - Smith & Wesson Brands, Inc. is a U.S.-based leader in firearm manufacturing and design, providing handguns, long guns, and suppressors under the Smith & Wesson® and Gemtech® brands to global consumer and professional markets[9](index=9&type=chunk) - The company also offers forging and machining services to third parties[9](index=9&type=chunk) [Safe Harbor Statement](index=2&type=section&id=Safe%20Harbor%20Statement) The report contains forward-looking statements, including plans for continued innovation investment and expectations for Q2 fiscal sales growth, subject to significant risks - Forward-looking statements include plans to continue investing in innovation to maintain leadership and expectations for second fiscal quarter sales to grow significantly over the first quarter, landing roughly **3-5%** below the second quarter of fiscal 2025[10](index=10&type=chunk) - Key risk factors that could cause actual results to differ include economic, social, political, legislative, and regulatory factors; tariffs; potential for increased firearms regulation; actions of social activists; lawsuits; demand for products; U.S. economy and firearm industry conditions; competition; raw material costs; growth opportunities; brand recognition; relocation management; new product introduction and success; and order cancellations[10](index=10&type=chunk) [Conference Call and Webcast](index=1&type=section&id=Conference%20Call%20and%20Webcast) Smith & Wesson Brands, Inc. hosted a conference call and webcast on September 4, 2025, to discuss its first quarter fiscal 2026 financial and operational results - A conference call and webcast were held on September 4, 2025, at 5:00 p.m. Eastern Time to discuss Q1 FY26 results[5](index=5&type=chunk) - Speakers included Mark Smith (President and CEO) and Deana McPherson (Executive Vice President and CFO)[5](index=5&type=chunk) - Access was available via dialing 1-877-704-4453 (North America) or 1-201-389-0920 (outside North America), and a live/archived webcast on the company's investor relations website[5](index=5&type=chunk) [Contact Information](index=2&type=section&id=Contact%20Information) Investor relations contact details are provided for inquiries - For investor relations inquiries, contact investorrelations@smith-wesson.com or call (413) 747-3448[11](index=11&type=chunk) [Condensed Consolidated Financial Statements](index=3&type=section&id=Condensed%20Consolidated%20Financial%20Statements) This section presents the company's balance sheets, statements of operations, and cash flows for the specified periods, highlighting key financial changes [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet shows a slight decrease in total assets and stockholders' equity from April 30, 2025, to July 31, 2025, while total liabilities increased Condensed Consolidated Balance Sheet Highlights (in thousands) | Item | July 31, 2025 | April 30, 2025 | Change | | :-------------------------------- | :------------ | :------------- | :----- | | Cash and cash equivalents | $17,964 | $25,231 | -$7,267 | | Accounts receivable, net | $41,309 | $55,868 | -$14,559 | | Inventories | $203,097 | $189,840 | +$13,257 | | Total current assets | $275,513 | $277,265 | -$1,752 | | Total assets | $554,633 | $559,612 | -$4,979 | | Total current liabilities | $52,906 | $66,640 | -$13,734 | | Notes and loans payable | $94,147 | $79,096 | +$15,051 | | Total liabilities | $190,254 | $187,158 | +$3,096 | | Total stockholders' equity | $364,379 | $372,454 | -$8,075 | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For the three months ended July 31, 2025, Smith & Wesson reported a decrease in net sales and gross profit compared to the prior year, leading to an increased operating loss and net loss Condensed Consolidated Statements of Operations Highlights (in thousands, except per share data) | Item | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | Change (YoY) | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------- | | Net sales | $85,077 | $88,334 | -$3,257 | | Cost of sales | $63,003 | $64,148 | -$1,145 | | Gross profit | $22,074 | $24,186 | -$2,112 | | Operating expenses | $25,032 | $25,712 | -$680 | | Operating loss | $(2,958) | $(1,526) | -$1,432 | | Loss before income taxes | $(4,101) | $(2,264) | -$1,837 | | Net loss | $(3,411) | $(1,855) | -$1,556 | | Diluted - net loss per share | $(0.08) | $(0.04) | -$0.04 | [Condensed Consolidated Statements of Cash Flows](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) The company experienced a net decrease in cash and cash equivalents for the quarter, primarily due to cash used in operating and investing activities, partially offset by cash provided by financing activities Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Item | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | Change (YoY) | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------- | | Net cash used in operating activities | $(8,110) | $(30,815) | +$22,705 | | Net cash used in investing activities | $(7,464) | $(4,665) | -$2,799 | | Net cash provided by financing activities | $8,307 | $10,156 | -$1,849 | | Net decrease in cash and cash equivalents | $(7,267) | $(25,324) | +$18,057 | | Cash and cash equivalents, end of period | $17,964 | $35,515 | -$17,551 | [Reconciliation of GAAP to Non-GAAP Financial Measures](index=2&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Financial%20Measures) This section explains and reconciles non-GAAP financial measures to their most directly comparable GAAP measures, providing insights into underlying performance [Non-GAAP Measures Explanation](index=2&type=section&id=Non-GAAP%20Measures%20Explanation) Smith & Wesson presents non-GAAP financial measures to provide a clearer understanding of underlying performance trends by excluding certain expense items - Non-GAAP measures (non-GAAP net income, Adjusted EBITDAS, free cash flow) are used to provide an improved understanding of underlying performance trends by excluding specific items like interest expense, income tax benefit, depreciation and amortization, stock-based compensation, relocation expense, and their tax effects[8](index=8&type=chunk) - These non-GAAP measures facilitate period-to-period operating performance comparisons by eliminating potential differences caused by the existence and timing of certain expense items not apparent on a GAAP basis[8](index=8&type=chunk) - Limitations of non-GAAP measures include not reflecting actual expenses and potentially inflating financial measures on a GAAP basis; they should not be considered in isolation or as a substitute for GAAP measures[8](index=8&type=chunk) [GAAP to Non-GAAP Financial Measures Reconciliation Table](index=6&type=section&id=GAAP%20to%20Non-GAAP%20Financial%20Measures%20Reconciliation%20Table) The reconciliation table details adjustments made to GAAP figures to arrive at non-GAAP results, primarily due to relocation expenses GAAP to Non-GAAP Financial Measures Reconciliation (in thousands, except per share data) | Item | July 31, 2025 (GAAP) | Relocation Adj. (2025) | July 31, 2025 (Non-GAAP) | July 31, 2024 (GAAP) | Relocation Adj. (2024) | July 31, 2024 (Non-GAAP) | | :-------------------------- | :------------------- | :--------------------- | :----------------------- | :------------------- | :--------------------- | :----------------------- | | Net sales | $85,077 | — | $85,077 | $88,334 | $(1,659) | $86,675 | | Gross profit | $22,074 (25.9%) | $85 | $22,159 (26.0%) | $24,186 (27.4%) | $1,182 | $25,368 (29.3%) | | Operating expenses | $25,032 (29.4%) | $53 | $25,085 (29.5%) | $25,712 (29.1%) | $(125) | $25,587 (29.5%) | | Operating loss | $(2,958) (-3.5%) | $32 | $(2,926) (-3.4%) | $(1,526) (-1.7%) | $1,307 | $(219) (-0.3%) | | Net loss | $(3,411) (-4.0%) | $32 | $(3,390) (-4.0%) | $(1,855) (-2.1%) | $1,307 | $(881) (-1.0%) | | Net loss per share - diluted | $(0.08) | — | $(0.08) | $(0.04) | $0.03 | $(0.02) | [GAAP Income from Operations to Non-GAAP Adjusted EBITDAS Reconciliation](index=7&type=section&id=GAAP%20Income%20from%20Operations%20to%20Non-GAAP%20Adjusted%20EBITDAS%20Reconciliation) The reconciliation shows the calculation of Non-GAAP Adjusted EBITDAS from GAAP net loss, adding back various non-operating and non-cash expenses, with Adjusted EBITDAS decreasing significantly year-over-year GAAP Net Loss to Non-GAAP Adjusted EBITDAS Reconciliation (in thousands) | Item | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | | GAAP net loss | $(3,411) | $(1,855) | | Interest expense | $1,837 | $1,446 | | Income tax benefit | $(690) | $(408) | | Depreciation and amortization | $8,385 | $8,025 | | Stock-based compensation expense | $1,892 | $1,854 | | Relocation expense | $32 | $1,175 | | Non-GAAP Adjusted EBITDAS | $8,045 | $10,237 | | Non-GAAP Adjusted EBITDAS Margin | 9.5% | 11.8% | [Net Cash Used in Operating Activities to Free Cash Flow Reconciliation](index=7&type=section&id=Net%20Cash%20Used%20in%20Operating%20Activities%20to%20Free%20Cash%20Flow%20Reconciliation) The reconciliation of net cash used in operating activities to free cash flow indicates a negative free cash flow for both periods, with a slight improvement in Q1 FY26 compared to Q1 FY25 Net Cash Used in Operating Activities to Free Cash Flow Reconciliation (in thousands) | Item | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | | Net cash used in operating activities | $(8,110) | $(30,815) | | Payments to acquire property and equipment | $(4,291) | $(4,702) | | Free cash flow | $(12,401) | $(35,517) |

Financial Performance - Q1 net sales were $85.1 million, a decrease of $3.3 million or 3.7% from the same quarter last year [6] - Q1 gross margin was 25.9%, down from 27.4% in the comparable quarter last year [6] - The company reported a net loss of $3.4 million, or $0.08 per diluted share, compared to a net loss of $1.9 million, or $0.04 per diluted share, for the same quarter last year [6][12] Product Demand and Strategy - The first quarter results exceeded expectations, driven by strong demand for new products, which accounted for 37.3% of sales [3] - The company plans to continue investing in innovation to maintain its leadership position in the firearms market [3] Inventory and Sales Outlook - Distributor inventory declined by over 10% from the end of the previous quarter, indicating positive sell-through at retail [3] - The company expects significant sales growth in the second fiscal quarter compared to the first quarter, projecting sales to be approximately 3-5% below the second quarter of fiscal 2025 [3] Dividend Announcement - The board of directors has authorized a quarterly dividend of $0.13 per share, payable to stockholders of record on September 18, 2025 [3] Non-GAAP Financial Measures - Non-GAAP adjusted EBITDAS for Q1 was $8.0 million, or 9.5% of net sales, compared to $10.2 million, or 11.8% of net sales, for the same quarter last year [6][19] - Non-GAAP net loss was $3.4 million, or $0.08 per diluted share, compared to $881 thousand, or $0.02 per diluted share, for the comparable quarter last year [6][16]

Group 1 - Smith & Wesson Brands, Inc. plans to release its first quarter fiscal 2026 financial results on September 4, 2025, after market close [1] - A conference call and webcast will be held on the same day to discuss the financial and operational results, featuring CEO Mark Smith and CFO Deana McPherson [2] - Interested parties can participate in the conference call via specific phone numbers for North America and international callers, with a live and archived webcast available on the company's website [3] Group 2 - Smith & Wesson Brands, Inc. is a leader in firearm manufacturing and design, offering a wide range of handgun, long gun, and suppressor products under the Smith & Wesson® and Gemtech® brands [4]