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]