Sign in

You're signed outSign in or to get full access.

S&

SMITH & WESSON BRANDS, INC. (SWBI)·Q4 2025 Earnings Summary

Executive Summary

  • Q4 FY2025 came in soft versus expectations: revenue $140.8M and GAAP EPS $0.19 missed S&P consensus of $152.4M and $0.23, respectively; non-GAAP EPS $0.20 also missed, with gross margin compressing to 28.8% from 35.5% YoY . Estimates from S&P Global: Revenue $152.4M*, EPS $0.23*; actual revenue $140.8M and EPS $0.20 non-GAAP .
  • Sequentially, revenue improved vs Q3 ($115.9M) while margin recovered from 24.1% to 28.8%, aided by cost control, but mix and promotions continued to pressure profitability .
  • Management flagged persistent macro headwinds, elevated promotional intensity, and tariff-related cost uncertainty; new products remained a bright spot, contributing ~44% of Q4 revenue and supporting share gains in handguns .
  • Near-term outlook: Q1 FY2026 revenue ~10% lower YoY, margins lower, ASPs sequentially down 5–10%, OpEx roughly flat YoY; effective tax rate ~30%—setting a cautious tone into the summer quarter and making tariff headlines and promotions key stock catalysts .

What Went Well and What Went Wrong

What Went Well

  • New products drove resilience and share gains: “new products remain an area of strength, accounting for 44% of sales in the fourth quarter,” with handguns shipments down only 2.1% vs NICS down 3.4%—implying share gains .
  • Strong Q4 cash generation: operating cash flow $40.8M and free cash flow $33.5M; dividend of $0.13 per share authorized, supporting capital return continuity .
  • Sequential margin recovery: GAAP gross margin rose to 28.8% from 24.1% in Q3, aided by cost discipline and flexible manufacturing .

What Went Wrong

  • Top line and margins under pressure YoY: Q4 revenue down 11.6% YoY to $140.8M; gross margin down to 28.8% vs 35.5% in Q4 FY2024; GAAP EPS $0.19 vs $0.59 last year .
  • Long guns softness and mix drag: long gun shipments fell 31.7% vs NICS down 7.1%, with higher material content in newer long guns and promotions weighing on margin .
  • Estimates miss: revenue and EPS both missed S&P Global consensus, indicating weaker demand and higher costs than modeled by the Street (Revenue $152.4M* vs $140.8M; EPS $0.23* vs $0.20 non-GAAP) .

Financial Results

Consolidated Performance vs Prior Periods and Estimates

MetricQ4 2024Q2 2025Q3 2025Q4 2025
Revenue ($USD Millions)$159.1 $129.7 $115.9 $140.8
GAAP Diluted EPS ($)$0.59 $0.09 $0.04 $0.19
Non-GAAP Diluted EPS ($)$0.48 $0.11 $0.02 $0.20
Gross Margin % (GAAP)35.5% 26.6% 24.1% 28.8%
Gross Margin % (Non-GAAP)35.6% 27.1% 25.1% 29.2%
Adjusted EBITDAS ($USD Millions)$37.6 $18.5 $13.3 $24.1
Adjusted EBITDAS Margin %23.6% 14.3% 11.5% 17.2%

Actual vs S&P Global Consensus (Quarterly)

MetricQ2 2025Q3 2025Q4 2025
Revenue Actual ($USD)$129.7M $115.9M $140.8M
Revenue Consensus Mean ($USD)$133.5M*$119.5M*$152.4M*
GAAP/Primary EPS Actual ($)$0.09 $0.04 $0.19
EPS Normalized/Primary EPS Consensus Mean ($)$0.165*$0.02*$0.23*

Values retrieved from S&P Global.*

Segment/Category Indicators (reported commentary)

KPIQ4 2025
New products as % of sales43.9%
Handguns: NICS vs SWBI shipments (YoY)NICS -3.4% vs shipments -2.1%
Long guns: NICS vs SWBI shipments (YoY)NICS -7.1% vs shipments -31.7%
ASP trends (overall/handguns/long guns vs YoY)Overall -4.5%; Handguns -6.3%; Long guns +11%
Free Cash Flow (quarter)$33.5M
Dividend declared$0.13 per share

Margin Drivers (management detail)

  • Margin headwinds: lower volume absorption, mix toward lower-priced high-volume products (Bodyguard 380/SD9), higher material content in newer long guns, and increased promotions; partially offset by lower spending and lower inventory reserves .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueQ3 2025Top line ~10–15% lower than fiscal 2024 Actual: $115.9M (inline with lowered outlook) Maintained (framed in Q2)
RevenueQ4 2025Down 2–5% YoY; margins several pts lower; OpEx in line; ETR ~28% Actual: $140.8M (down 11.6% YoY); margin 28.8%; GAAP EPS $0.19 Lower than guided (demand/mix/promo headwinds)
RevenueQ1 2026—~10% lower YoY; margins lower; ASPs sequentially -5–10%; OpEx roughly flat YoY; ETR ~30% New cautious outlook
ASPsQ1 2026—Sequentially lower 5–10% (long guns more impacted; handguns lower end due to promotions) New cautious outlook
OpExQ3 2025Up 5–10% YoY —Maintained (quarter-specific)
OpExQ4 2025In line with prior year —Maintained
OpExQ1 2026—Roughly flat YoY New
Tax RateQ3 2025~25% —Maintained
Tax RateQ4 2025~28% —Maintained
Tax RateQ1 2026—~30% Raised
DividendOngoing$0.13 quarterly dividend $0.13 quarterly dividend (record 7/7/2025; pay 7/21/2025) Maintained

Earnings Call Themes & Trends

TopicQ2 2025 (Dec 5)Q3 2025 (Mar 6)Q4 2025 (Jun 18)Trend
Macro & tariffsDemand normalized late; inflation pressuring discretionary spend; promotions rising Persistent inflation; post-election demand soft; margins pressured by volume/promotions Inflation, high rates, tariff concerns impacting demand/costs; uncertain tariff trajectory Headwinds intensified; tariff uncertainty added
Product performanceBodyguard 2.0 and lever-action strong; new products 44% of sales New products ~41% of sales; share gains in handguns; long gun softness vs prior-year launch comps New products ~44% of sales; share gains in handguns; long guns down sharply Consistently strong new product contribution
Pricing/ASPsOverall ASP -8%; handguns -11%; long guns +11% Overall ASP -3.1%; handguns -7.8%; long guns +17.2% Overall ASP -4.5%; handguns -6.3%; long guns +11% Ongoing handgun ASP pressure; long guns favorable mix
Inventory/channelChannel cautious; stable inventories Distributor inventory under ~9 weeks; internal inventory elevated but targeted reduction Distributor inventory ~8 weeks; +5k units; extending shutdown to align inventories Healthy but conservatively managed
Capital allocationDividend $0.13; $50M buyback authorization; new $175M LOC Debt paydown expected; strong cash flows in Q4; dividend $0.13 Q4 OCF $40.8M; FCF $33.5M; dividend $0.13; expect debt reduction in FY2026 Ongoing cash return; deleveraging focus
Tax rate~25% ~28% ~30% (Q1 FY2026 outlook) Rising ETR expectation

Management Commentary

  • CEO: “Fourth quarter proved more difficult than we anticipated largely due to macro-economic and industry trends... consumers generally being cautious due to macro-economic factors pressuring discretionary spending... headwinds will likely persist” .
  • CFO: “Gross margin of 28.8% was 6.7 percentage points below the prior year... reflecting lower production volume, lower-priced, higher-volume products... higher material content in newer long guns, and increased promotions, partially offset by lower spending and lower inventory reserves” .
  • CEO on tariffs: “We are 100% American-made... some exposure from foreign source components/raw materials... impact may be less pronounced than for some competition... closely monitoring and looking to offset/pass through costs” .
  • CFO on cash: “Generated $40.8M in cash from operations... $33.5M net free cash... paid $5.7M in dividends, repaid $30M on revolver... ended with $25.2M cash and $80M in borrowings” .

Q&A Highlights

  • Tariffs/materials: Exposure primarily to steel and some components; aim to offset costs; expect broader industry pass-throughs; monitoring volatility .
  • Pricing/promotions: Brand strength reduces need for across-the-board price cuts; targeted promotions and bundles to maintain ASPs and drive conversion .
  • Inventory and shutdown: Extending summer shutdown by one additional week (in Q2 FY2026) to align inventories with demand .
  • Debt reduction: Expect healthy cash generation and a “significant reduction” in debt balance during FY2026 via inventory conversion and paydowns .
  • Demand mix: Bifurcation continues—entry-level and high-end performing; Bodyguard success at ~$400 retail driving unit share .

Estimates Context

  • Q4 FY2025: Revenue $140.8M vs S&P consensus $152.4M* (MISS); EPS non-GAAP $0.20 vs EPS consensus $0.23* (MISS) .
  • Q3 FY2025: Revenue $115.9M vs $119.5M* (MISS); EPS $0.04 vs $0.02* (slight BEAT on EPS) .
  • Q2 FY2025: Revenue $129.7M vs $133.5M* (MISS); EPS $0.09 vs $0.165* (MISS) .
    Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Near-term setup is cautious: Management guides Q1 FY2026 revenue ~10% lower YoY with margins/ASPs under pressure; watch tariff actions and promotional cadence as key stock drivers .
  • Narrative remains innovation-led: New products continue to drive share gains in handguns, partially offsetting macro softness; lever-action continues to support long-gun ASPs .
  • Mix and promotions are the margin swing factors: Long-gun material content and handgun trade-down pressure margins; targeted promotions necessary to sustain volume .
  • Cash generation supports deleveraging and returns: Strong Q4 FCF and a maintained $0.13 dividend indicate continued capital return even amid softer demand .
  • Expect operating discipline: Extended shutdown and flexible manufacturing to align inventories, aiming to protect margins and cash flow through the downturn .
  • Watch ETR trend: Effective tax rate rising (25% → 28% → ~30%) adds to EPS headwinds absent pricing relief or cost offsets .
  • Estimate resets likely: Given misses and cautious outlook, Street models may need to mark-to-market on revenue, margin, and ASP assumptions (especially tariffs/material costs)*.

Values retrieved from S&P Global.*