Smith & Wesson Brands Stock Earnings Reports

Key points for investors: Revenues softened — Q3 net sales were $115.9M, down 15.7% year-over-year — driven by weak demand for legacy/core products and lower ASPs driven by mix. New products remain a growth engine: items introduced in the past year accounted for over 41% of Q3 sales (Bodyguard 2.0 is a standout), and management says two-year long-gun unit sales grew at a ~20% CAGR. Profitability held up versus guidance through cost control and flexible manufacturing, but gross margin compressed to 24.1% (down ~4.6 percentage points) due to lower production absorption and higher promotions. Q3 GAAP net income was $1.7M ($0.04 EPS); non-GAAP EPS was $0.02. Cash used in operations was $9.8M in the quarter; the company ended Q3 with $26.7M cash and $110M drawn on its credit line, with a $10M repayment made post-quarter and plans for further paydown. Capital allocation remains shareholder-friendly: a $0.13 quarterly dividend, continued share repurchases (220k shares in Q3; >1.5M net reduction YTD), and targeted capex of $20–25M for fiscal year. Guidance and outlook: management still expects full-year revenue down 5–10% vs. FY24 but now expects results near the lower end (close to a 10% decline); Q4 revenue expected down ~2–5% and margins likely to be a few percentage points lower as production absorption is reduced. Channel inventory is healthy (~<9 weeks) though internal inventory is slightly elevated; management emphasizes continued investment in innovation, disciplined expense control, flexible manufacturing, and debt reduction to sustain cash flow and shareholder returns.