Smith & Wesson Brands(SWBI) - 2026 Q2 - Quarterly Results

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]