Smith & Wesson Brands (SWBI) investor relations material

Executive summary

• Q1 net sales were $85.1 million, down 3.7% year-over-year, with a net loss of $3.4 million or $0.08 per share, as gross margin declined to 25.9% due to lower production volumes and higher tariffs.

• Handgun sales rose 21.9% year-over-year, while long gun sales fell 45.0%; new products contributed 37.3% of sales, reflecting strong innovation and market share.

• Handgun shipments into the sporting goods channel increased over 35% year-over-year, while long gun shipments declined 28.1%.

• Distributor inventory levels declined significantly, indicating strong retail sell-through and a healthy channel position.

• Inventory increased $13.3 million since April 30, 2025, to support anticipated future demand.

Financial highlights

• Net sales for Q1 were $85.1 million, down $3.3 million or 3.7% year-over-year, with gross profit of $22.1 million and gross margin of 25.9%.

• Net loss was $3.4 million, or $0.08 per share, compared to $1.9 million loss last year; operating loss was $3.0 million.

• Adjusted EBITDAS was $8.0 million (9.5% margin), down from $10.2 million (11.8% margin) year-over-year.

• Cash and cash equivalents at quarter-end were $18.0 million; borrowings were $95 million.

• Free cash flow was negative $12.4 million, an improvement from negative $35.5 million last year.

Outlook and guidance

• Q2 sales are expected to grow significantly over Q1 but remain 3% to 5% below Q2 of the prior fiscal year.

• Q2 gross margin is expected to be in line with Q1, with operating expenses about 20% higher, half due to profit sharing.

• Effective tax rate for Q2 is projected at approximately 33%.

• Inventory levels are expected to decline during the remainder of the fiscal year.

• Full-year outlook remains cautious due to macroeconomic conditions, but market share is expected to be maintained or expanded.