Smith & Wesson Brands (SWBI) Q2 2025 earnings summary

Executive summary

• Q2 net sales rose 3.8% year-over-year to $129.7 million, with GAAP net income of $4.1 million ($0.09 per share) and gross margin improving to 26.6% from 25.4% last year.

• New products accounted for 44% of Q2 sales, led by the Bodyguard 380 pistol and lever action rifles.

• Adjusted EBITDAS margin was 14.3%, down from 15.5% in the prior year quarter.

• Flexible manufacturing and innovation enabled market share gains despite industry headwinds and demand normalization late in the quarter.

• For the six months ended October 31, 2024, net sales declined 8.9% to $218.0 million, with net income of $2.0 million ($0.04 per share).

Financial highlights

• Q2 net sales were $129.7 million, up 3.8% year-over-year, driven by new product launches.

• Gross margin for Q2 was 26.6%; non-GAAP gross margin was 27.1%.

• Q2 operating income was $7.0 million (5.4% margin), up 85% year-over-year.

• Cash used in operations was $38.2 million for the six months, mainly due to a $35.5 million inventory increase.

• $22.6 million in share repurchases and $11.7 million in dividends paid in the six months.

Outlook and guidance

• Full-year revenue is expected to be 5%-10% lower than fiscal 2024 due to softer demand and inflationary pressures.

• Q3 revenue projected to be 10%-15% lower year-over-year, with margins a few points lower.

• Operating expenses for Q3 are expected to be 5%-10% higher than last year due to increased R&D, promotions, and marketing.

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

• Year-end debt levels are expected to be similar to or slightly above last year, with cash generation below the $75 million target.