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SMITH & WESSON BRANDS, INC. (SWBI)·Q1 2026 Earnings Summary

Executive Summary

  • Q1 FY2026 came in better than expected operationally: revenue $85.1M, gross margin 25.9%, GAAP diluted EPS -$0.08; non-GAAP Adjusted EBITDAS $8.0M, with new products 37.3% of sales .
  • Versus S&P Global consensus, SWBI beat on revenue ($85.1M vs $79.2M*) and EPS (-$0.08 vs -$0.12*), and outperformed on EBITDA (S&P EBITDA actual $5.4M vs $3.6M*) driven by strong handgun demand and selective promotions; coverage remains light (EPS 1 estimate, Revenue 3 estimates)*.
  • Q2 outlook: sales to grow sequentially but be 3–5% below Q2 FY2025; gross margin ~in line with Q1; OpEx ~20% higher vs Q1; ETR ~33%, reflecting extended August shutdown and ongoing steel tariffs headwinds .
  • Narrative catalysts: Handgun shipments +35% YoY into sporting goods channel vs adjusted NICS -2.4%, clean distributor inventories (-13k units QoQ, -17k YoY), launch of Shield X, and the new Smith & Wesson Academy supporting LE/military training demand .

What Went Well and What Went Wrong

What Went Well

  • Handguns outperformed: shipments into sporting goods channel +35% YoY vs NICS -2.4%, highlighting share gains across Bodyguard, Shield, and M&P .
  • New product engine continued to drive mix: 37.3% of Q1 sales from recent innovations; Shield X launch saw very positive initial reception .
  • Channel inventories improved materially, positioning SWBI to convert demand: distributor inventory down >10% QoQ and >13% YoY, and down >13k units vs end of FY2025 .

What Went Wrong

  • Gross margin compression to 25.9% (-150 bps YoY) from lower absorption and ~120 bps tariff impact (primarily steel); promotions and mix pressured ASPs (handguns -4% seq; long guns -13% seq) .
  • GAAP net loss -$3.4M and diluted EPS -$0.08 vs -$0.04 in prior-year Q1, reflecting lower revenue, margin pressure, and higher interest expense from increased borrowings .
  • Long guns lagged: shipments into sporting goods -28.1% YoY vs NICS -7.8% given weaker shotgun/bolt-action categories where SWBI has limited presence .

Financial Results

Core P&L and Profitability (chronological: prior-year Q1 → Q3 → Q4 → current Q1)

MetricQ1 FY2025Q3 FY2025Q4 FY2025Q1 FY2026
Revenue ($USD Millions)$88.334 $115.885 $140.762 $85.077
GAAP Diluted EPS ($)-$0.04 $0.04 $0.19 -$0.08
Gross Margin %27.4% 24.1% 28.8% 25.9%
Adjusted EBITDAS ($USD Millions)$10.237 $13.280 $24.141 $8.045

Actual vs S&P Global Consensus (Q1 FY2026)

MetricConsensusActualNotes
Revenue ($USD Millions)$79.227*$85.077 Beat
Primary EPS ($)-$0.12*-$0.08 Beat
EBITDA ($USD Millions)$3.585*$5.435*Beat (S&P Global “actual” EBITDA differs from company’s Adjusted EBITDAS of $8.045M )

Values marked with * are retrieved from S&P Global.

Segment/Category Indicators (Q1 FY2026)

MetricHandgunsLong GunsTotal/Other
Shipments into sporting goods (YoY)+35% vs NICS -2.4% -28.1% vs NICS -7.8% —
ASP sequential change-4% -13% Total ASP -6.1%
New products % of sales——37.3%
Distributor inventory——Down >10% QoQ and >13% YoY; -13k units vs end FY2025

KPIs, Balance Sheet, and Cash Flow (Q1 FY2026)

KPIValue
Cash used in operations$(8.110)M
Capex$4.291M
Free cash flow$(12.401)M
Cash & equivalents (end)$17.964M
Marketable securities (end)$3.219M
Borrowings (revolver)$95M
Dividend declared$0.13 per share (record 9/18; pay 10/2)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net SalesQ2 FY2026NAGrow sequentially; ~3–5% below Q2 FY2025 New
Gross MarginQ2 FY2026NA~In line with Q1 GM (25.9%) New
Operating ExpensesQ2 FY2026NA~20% higher than Q1; ~50% of increase from profit sharing New
Effective Tax RateQ2 FY2026~30% (FY2026 color from Q4 call) ~33% Raised
ASPsQ1 FY2026Seq -5% to -10% expected (Q4 call) Selective promos; expect to maintain strong ASPs through FY2026 More constructive tone
DividendOngoingQuarterly $0.13 Quarterly $0.13 Maintained

Earnings Call Themes & Trends

TopicQ3 FY2025Q4 FY2025Q1 FY2026Trend
Pricing/ASPsOverall ASP -3.1% YoY; handguns -7.8%; long guns +17.2% Overall ASP -4.5% YoY; long guns +11%; handguns -6.3% ASPs held relatively healthy despite promotions; total ASP -6.1% seq; handguns -4%; long guns -13% Stabilizing with selective promos
Tariffs/MacroInflation/tariff concerns pressuring margins Tariff uncertainty; exposure mainly steel; US-sourced mitigants ~120 bps GM headwind from tariffs; Q2 GM ~Q1 Persistent headwind
Innovation/New ProductsNew products 41% of sales New products 43.9% of sales New products 37.3% of sales; Shield X reception positive Sustained high mix
Channel InventoryUnder 9 weeks; clean Distributor inventory up ~5k units (~8 weeks supply) Distributor inventory down >10% QoQ, >13% YoY; -13k units Improving/clean
Long Gun StrategyLever-action expansion planned Long guns soft; MSR weakness Continued lever-action buildout; two new calibers pending Expanding platform
Regulatory/Legal——Anticipated suppressor demand lift tied to tax law change in January; Gemtech brand positioned Potential demand catalyst
Operations—Extended shutdown for inventory alignment Extended August shutdown drives lower absorption; Q2 GM ~Q1 Prudent inventory mgmt
Capital AllocationBuybacks/dividends ongoing Dividend maintained; debt paydown focus Dividend maintained; $95M debt; $21M cash+investments Balanced return/deleveraging

Management Commentary

  • “First quarter results came in better than expected, with sales of $85.1 million and EBITDA of $8 million… new products accounting for 37.3% of sales in the first quarter.” .
  • “Distributor inventory was down more than 13,000 units at the end of July compared with the end of fiscal 2025, and down more than 17,000 units year-over-year.” .
  • “Gross margin of 25.9%… due primarily to decreased absorption on lower production and a 120 basis point negative impact from tariffs stemming primarily from steel.” .
  • “We expect a normal seasonal environment… Q2 sales to grow significantly over the first quarter and to land roughly at 3% to 5% below our Q2 fiscal 2025… Q2 gross margin to be in line with Q1.” .
  • On strategic assets: “The Smith & Wesson Academy is back and better than ever… nearly 30 acres of purpose-built ranges… to provide yet another advantage to our LE/federal/military customers.” .

Q&A Highlights

  • Pricing/ASPs: Management sees ability to maintain ASPs with selective promotional participation; strength of brand and innovation supports pricing resilience into busy season .
  • Long gun expansion: Lever-action platform (Model 1854) success paves way for additional calibers and entry into white spaces beyond MSR; two more calibers coming shortly .
  • Regulatory catalyst: Expected step-up in suppressor demand tied to tax changes in January; early promos suggest healthy market; Gemtech well positioned .
  • Legacy products and inventory: Legacy SKUs performed well; company focused on reducing internal inventory through adjusted run rates; no expiration risk on inventory .
  • Promotional cadence: Thoughtful, selective participation; no significant increase in back-half promos anticipated, aiming to hold ASPs .
  • Tariffs: Exposure mainly to steel; US-sourcing mitigates but costs may rise as supply shifts onshore; cost control and potential pass-through opportunities monitored .

Estimates Context

  • Q1 FY2026 vs S&P Global consensus: Revenue $85.1M (beat vs $79.2M*), EPS -$0.08 (beat vs -$0.12*), EBITDA $5.4M* (beat vs $3.6M*) while company-reported non-GAAP Adjusted EBITDAS was $8.0M (different definition) .
  • Coverage is light (EPS based on 1 estimate; revenue on 3 estimates)*, implying potential for estimate volatility after results.
    Values marked with * are retrieved from S&P Global.

Key Takeaways for Investors

  • Mix-led resilience: Handgun strength and new product contribution (37.3%) supported a top-line and EPS beat vs consensus despite promotional intensity and tariffs .
  • Margins constrained near term: Expect Q2 gross margin ~Q1 (25.9%) given extended shutdown and steel tariffs; monitor pass-through potential and cost actions .
  • Clean channel positions SWBI for seasonal ramp: Distributor inventory down materially; anticipate sequential sales growth in Q2, albeit 3–5% below prior-year Q2 .
  • Long gun roadmap and regulatory tailwinds: Lever-action buildout plus anticipated suppressor demand could provide incremental growth catalysts into calendar Q1 .
  • Capital allocation steady: Dividend maintained at $0.13; focus on debt reduction supported by expected cash generation and inventory normalization .
  • Estimate implications: Revenue/EPS/EBITDA beats should prompt upward revisions; limited analyst coverage can amplify post-print estimate and price volatility*.
  • Trading setup: Near-term stock drivers include execution on Q2 sales ramp, margin containment vs tariff headwinds, and commercial traction of Shield X and Gemtech promotions .

Note: Values marked with * are retrieved from S&P Global.