Smith & Wesson Brands(US:SWBI)2025-12-04 21:15Financial 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].