Smith & Wesson Brands(SWBI) - 2026 Q1 - Quarterly Results

First Quarter Fiscal 2026 Financial Results Overview 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 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] - 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] 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. 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] - The company also offers forging and machining services to third parties[9] Safe Harbor Statement 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] - 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] Conference Call and Webcast 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] - Speakers included Mark Smith (President and CEO) and Deana McPherson (Executive Vice President and CFO)[5] - 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] Contact Information Investor relations contact details are provided for inquiries - For investor relations inquiries, contact investorrelations@smith-wesson.com or call (413) 747-3448[11] Condensed Consolidated Financial Statements 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 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 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 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 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 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] - 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] - 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] GAAP to Non-GAAP Financial Measures Reconciliation Table 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 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 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) |