Smith & Wesson Brands Stock Earnings Reports

Smith & Wesson reported solid fiscal Q2 results with net sales of $124.7M and adjusted EBITDA of $15M. Key operational wins included a significant reduction in inventory (ending inventory $183M, down sequentially and year-over-year), strong operating cash flow of $27.3M, and new products contributing ~40% of sales. Average selling prices rose (overall ASP +3.5%; handguns +2.1% to $418; long guns +10.2% to $602). Handgun sell-through after channel inventory adjustments showed outperformance (retail sell-through up 7.7%), while long guns showed typical seasonality. The company opened the Smith & Wesson Academy (operational and generating positive feedback). Gross margin was 24.3%, down ~230 bps YoY largely from lower absorption and an ~80 bps tariff headwind; management expects tariffs to have some pickup but not a material profitability impact in the back half. Q2 EPS was $0.04 vs $0.10 prior year. Capital expenditures were $11M in the quarter (FY guide $25–30M) driven by the Academy. Cash and investments were $27.3M with $90M borrowed on the credit line at quarter end (subsequently repaid $15M to $75M). The Board declared the quarterly dividend; $5.8M was paid in the quarter. For Q3 management expects sales to be up about 8–10% versus Q3 FY2025, modest margin improvement sequentially and YoY, OpEx up ~15% versus Q2 (SHOT Show, NPD, promotions, profit sharing), an effective tax rate near 28%, and continued healthy cash generation. Management emphasized disciplined inventory and production management, innovation-driven growth, and a continued focus on capital allocation and returning value to shareholders.