Smith & Wesson Brands (SWBI) 5 Dec 242025 Q2 Earnings call transcript

Good day, everyone, and welcome to Smith & Wesson Brands' Second Quarter Fiscal 2025 Financial Results Conference Call. This call is being recorded.

At this time, I would like to turn the call over to Kevin Maxwell, smith & Wesson's General Counsel, who will give some information about today's call.

Thank you, and good afternoon.

Our comments today may contain forward-looking statements.

words expressions estimate, forward-looking are the and intend, statements. of similar other intended use anticipate, expect, project, believe Our to identify

our conditions conditions for Forward-looking topics products, growth market include also trends our demand, product and and as industry share, inventory statements strategies, general. development, preferences, statements consumer opportunities objectives, in may such on

expressed cause in statements along today's call. or of uncertainties materially risks and to represent are and subject differ statements our our Forward-looking by filings, our replay are to that implied current are our could today. future from and website, results judgment on a available those our about the risks which actual uncertainties with These SEC described

have statements. We update to no obligation forward-looking

We reference certain non-GAAP financial results.

expense financial reference when of costs. which can is each fully EBITDA diluted relocation and is and EPS, financial SEC measures release, on Our other measures Also, are to found non-GAAP today's our non-GAAP any GAAP EBITDA. we to in our always reference in of adjusted and referencing EPS, available be we filings results Reconciliations to press financial earnings exclude website.

firearms those we directly given I checks to market referring NICS' and Shooting to Before demand enforcement call our when not we channel. to I or Adjusted end in to share and results, background we firearms law inventory transfer purposes mostly like based on consumer is due and by period, purchases. Foundation than the Sports NICS the agencies does Adjusted levels NICS shipments to the a in best that generally removes our you Because conducted available distributors licensed only we data. proxy at any believe, not consumers, over the would counter. time are metric NICS, firearm correlate retail for federally NICS to to retailers remind National generally adjusted speakers, considered published hand discuss the other NICS FBI for

Smith, Mark and our CFO. are McPherson, our call today's on Deana CEO; President us Joining and

call With will the I that, turn Mark. over to

today. for everyone, Thank you, us and thanks, joining Kevin,

few Second firearms in as standpoint, team share, the in innovation I'll new designed outperform Despite of continue our well as which by and quarter And products a always, gained we as we've is our is many detail slowdown, expectations in industry. we in deliver very more a these late unique EBITDA. enabling to firearms moments. to profitability best-in-class to volatility our to demand before, headwinds, in for results typical with believe quarter. led react executed adjusted flexible our below solid manufacturing the quickly representing times response the detailed cover the came overall sales our the that XX% model From to again in market in normalized period, us the

FBI measured largely Looking a for increased the Wesson, second held despite share firearms distributor retail indicating overall at deteriorated strong flat by market. X.X% while strategic including & for Overall, inventories for units only firearms decline Smith quarter and increase, progressed, the adjusted up into account challenging X.X% channel as purchases, our X.X% background checks with a shipped significantly our market the a NICS October. quarter as in X% but was by growth

Handgun X.X%. category. flat by while up then long QX numbers those gun was Breaking mix mix was in

were significantly products, down mostly new outperforming strong X.X. to Wesson, the demand our On XX.X%. shipments long & our led market price shipments very for due were our Bodyguard by guns, entry-level the Smith For handgun XX.X%, up

beginning shipments year. comparable were core these down note to just hunting will Removing impactful for quarter, is largely was lever-action I typical associated we which hunting our benefit to on with enter line channel category which products. less shipments the is outliers, of of the fill with quarter X.X%, strongest that And results. the quarter products is new this rifles, are However, timing outperformance long only this and our our due since last gun the in

pressure generally the as observed anticipated. the evidence note this which in opening continues continued into we that be to spend that point driver I will discretionary that demand also was NICS than product we is cautiousness pronounced inflation. believe with by or price activity. trade-down results. of November We consumer the recent The more QX primary recent evidenced of Lower better, is performing quarters during

positioned before. flexible to sheet. We our manufacturing a many expect this we times navigate preserve balance challenging have are we profitability demand and environment model, on remaining to against strong well By executing as focused

Additionally, innovation. we through expect to share maintain and gain

Highlighting Year become one the our best in of Goods we from industry. quickly pistols Magazine, after Association X.X new Ammo Handgun sought Bodyguard has proud Chamber Guns in new Sporting this XADACP, and of and launched to publications. XXXX and largest of the July, And handgun customers, one of won which carry we firearms most consumer the Wholesalers, point, also most are concealed XXXX from have National the represents the channel of popular which our

further lever rifle of the expect line this momentum year our 'XX, perform the popular FY XXXX as to action expansion throughout our this continues second half we planned Additionally, with progresses. well. build to of And even

strong to in and and of pipeline operational continue value award-winning team a strong proven of has With will in leader success. efficiency, new design a be engineering manufacturing to of a core and products, driver innovation an Wesson & very excellence Smith innovation. be quality

long reflecting to line. ASPs promotional combined Bodyguard the in sales Overall, X% year ASPs increased increased declined lower the retail gun as activity. Moving ASPs driven to prices. of factors due relative XX%, now long of with the ago a average which sales $XXX, versus XX% revolvers. around of time lever-action X.X, a remainder as by sales In mix of to were selling Handgun strong rifles has price down contrast, well the increased

the board. across the in With remainder expected, our so our thoughtfully. and fiscal activity strong sustained ASPs do increasingly of as But we promotions, on to promotional pressure become to year we'll competitive continue participation able the we're from promotional spending. Additionally, balance do throughout anticipate with market sheet, carefully evaluate has the substantial

to In disciplined the business strong our year stockholders of profitability deliver very by our the those and purchased evidenced strategy conditions. summary, value the as solid X.X QX. approach committed managing and capital healthy our XXX,XXX in dividend market balance allocation We matter to of returning of since fiscal continues quarterly no sheet, shares of shares remain million a repurchase to this our beginning with to

make want & their day putting as just successful. and Smith to Finally, thank employees always, skills us for entire Wesson tirelessly work of every to dedicated I team our to

the With to to over Deana the cover I'll call turn that, financials.

the Thanks, Net were of year and or X.X% quarter $X.X second above for sales Mark. our of Bodyguard prior quarter million on the comparable XXX pistol lever-action new our strength rifle. $XXX.X million

weeks actual QX During terms significantly Handgun levels, with of the promotions. quarter, inventory but in Bodyguard the slightly grew additional the growth terms of units, in as due in declined significantly volume. to in distribution reflecting increased expected volume combined outstanding channel from declined ASPs

As ASPs expected, for QX to returned levels. long guns

high overall mix products to loans As the ] a lower volume. reminder, QX and ASPs due and of higher-priced were [ disproportionately

onetime above the accrual to legal comparable quarter margin due of X.X% last settlement. a XX.X% Gross a for year in quarter was the prior year

selling would higher year. by was The the and accrual, and income negatively the or current Excluding current overhead XX% margin impacted been the prior this year average lower prices X.X% costs. year than margin onetime labor have higher

absence expenses the second related expenses and or $XXX,XXX the year was of basis, event sales [ than income resulted than $X.XX last $X.X prior net On by quarter, Maribor were grand ] more The offset volume costs R&D for costs lower of margin $XX.X share. a opening legal non-GAAP $X.XX. million with Operating increased in with per of our per being the associated share quarter year. income higher comparable million and

on the in increase compared million prior for quarter by current million used Cash comparable comparable to year due prior current $X.X in partially $X.X We capital quarter to million $XX.X in this was in relocation. the related due lower in with primarily net operations second the with investment year capital compared increased working offset $X.X larger income. million net the quarter quarter, in the projects year quarter, the spent in

$XX between and year We be for expect million to the our capital spending million. $XX

set million we $XX a authorization have expires. identical In line This continued of has from a prior borrowings credit. new This quarter, share and XXXX. increased new in shows our million we that Also, extended available September, by million expire Board maturity August prior repurchase our to October authorization unsecured the XXXX during credit signed banking effective our to line when total the the that new was terms partners. our new line support approved of unsecured the line $XX $XXX as nearly and

price cash of $XXX average pay shares the quarter and million million. of half. ended we expect repurchased XXX,XXX for quarter, dividends line in we approximately which and paid in at We down total our an $XX.X $X.X with the During to a million of on in credit, borrowings in $XX.XX second the million $X.X

with our on quarterly paid to X. be stockholders $X.XX be January dividend of authorized to December to on Finally, has payments Board our record XX made

we the Looking we've lower fiscal in months, expect the fiscal X% second than and half seen to have recent be on reduced now expectations forward to full to trends across revenue our of year our third the industry XXXX for softer based demand quarter, XX% XXXX.

visible new our impact are of also inflation very core on including experiencing down consumer products. a strong we're products, our trading from products Although to seeing more for behavior, we for many lower-priced support

to margin being below we activity margin result increased has addition, In XXXX. promotional significantly to line incremental or expect creating pressure full dynamics, even that in slightly year our fiscal in market due

remains remain is the inventory their that and carefully. channel believe we will inventory and manage to continue cautious Channel to stable, expected distribution

due expect a we promotions the XX% than prior be points For our with fiscal lower third few XX% line to increased lower year XXXX to margins our top quarter ASP. to lower and quarter, approximately than

to to X% expect also XX% prior promotions above operating and market quarter share. comparable to at expenses volume-related due year programs the research investments see development, in marketing and to drive We

is to be XX%. effective approximately expected tax Our rate

in hand. with expect we've share last cash with debt levels the we year similar to an the on equivalent Due repurchases changes completed, now slightly end and the above year to to that the market amount or already of roughly

completion we portion due the focus our investing and our generation while than in target be the of lower of on will allow spending also our relocation expect large capital our are to needs our This lower repay us internal to $XX revolver that outstanding business. will million, cash a annual still Although projects. of

our reminder, stockholders. capital free to invest return cash a As allocation debt in remain and be: our business, continues to plan our

our operator, open to that, please analysts? from call the can With questions we

from question Instructions] is Dyer [Operator first Steve Craig-Hallum. Our with

Raab This Steve. for on is Matthew

me. for one Just

Do half. in across and model, second takes QX kind both a little just you the more ASPs. you come than do guns? there's and it's on puts can like think hold Or in bit more the to a pressure handguns levels? sounds long you down On the that of think It going bit little the

good Yes, question.

As we I promotional increased pressure activity, Mark, due in I third the beginning more -- competitive new is in offset little some we this do prepared NICS the market. some going will believe of be remarks, from products be to the that probably of with our seeing bit than be here some that's just associated to covered quarter. we'll But as by launching

half, largely can I that long we'll the then will kind guns be on for be and overall slightly overall, So up handguns, second both. second on little up on a of actually bit QX you think for for half, ASP anticipate the flat

covered comments. level goods. of the bringing Okay. to But in in be just half then off What's it mostly Got down backdrop second gun you of the it that. inventory seems finished the channel, a on cooling probably the And the confidence in the market?

was mean a to more softer obviously, the the bit back than a a September sales sales that But and anticipated, half monthly simply have the basis market go that a little volume. planning on operations sure the robust to just I aligned specifically rose inventory in production October. than anticipated, we make we bit of the is fact and little we through into pretty Yes. with our that process related

year. very core with pretty that ours, bring there's a comfortable of rush still the is we'll able being jerk the of feel sheet no again, focus end -- of the I that the plants We're mean, need there. So by strong so ramp inventory back to around down. to and all balance And for manufacturing inventory No kind the down. with reduction kind comfortable no of company

you. Thank

next with from Our question Dionisio Aegis is Rommel Capital.

as going With for new still an is challenging early could to as early, of of us the I industry launches, initial regards you if year launch given realize us you distributors just just of well retailers a initial on is feel in maybe the product an this I give to guys. where give to backdrop proclivity Mark, it's the environment. obviously, -- and inventory, feel aggressively December, but take time for it's somewhat inflationary the wonder,

Yes, but think Smith on question, think & be this we've innovation, continue couple be are to Sure. innovation. years, And to leader in the Wesson, it's in environment, -- to ours. going a good goods, think I Rommel. I about in over market in of area the is I we last focus proven the definitely and The marketplace consumer of that's firearms this going for unique all don't the

bright XXX quickly spots in the inventory, on concealed new perform second volume the because looking Bodyguard in continues the launched that that's is right lever pistol action channel retailers and proclivity I well. for. that the for that nice carry mean the where the they're the #X for quarter looking X now. to what bring to real -- that's of kind the marketplace, the become product July So we They're and us were partners of that in

continue back to those we be new up that keep going nice of cadence we're optimistic [indiscernible]. product the in pretty to that as So a introduction are half,

a quick there. key hunting fall obviously a seemed lot factor? weather really Maybe follow-up, site this in I season it could. Okay. like noticed of primarily consumer just country. warm demand, a in the the start I markets a if It was early softening Was inflation

any was would there impact So say? from you that,

Actually, there to the strong. August September started September so. of our half say wouldn't strong, was into strong, slow and second I was Rommel, No, kind August very October. beginning of was of down it

just think we related prepared pressure really really spend as on remarks. there. it's to the I is just covered primary And the so -- that and we with consumers' it's in So really do believe and discretionary driver the inflation wallets,

Our is next Lake Street Markets. from Smith Mark with question Capital

Handful for today. of me questions

sure of wanted to guidance, make just caught that First, I walk here. the through everything right kind

the to you last margins, to for said revenue, XX%, believe, on X% Just year. in similar down I year

your those, on of but if me missed expense operating for wrong correct the Just guidance I I'm either of then year. kind

We only up the operating Quarter X% expense to didn't XX%. for will be guidance give We year. gave for the quarter.

what I That's Okay. Perfect. missed.

what relevant in. firearm you into maybe to NICS of maybe as out mix your used handgun, board well on due talk little relevant wanted handgun but make maybe ASP business the you towards how at bit Mark, aren't how kind in NICS that as back and brands to products. around ASP, pressure to success have consumer a to that trading maybe items, higher looking just any jump just not Bodyguard cater in much them about price gravitating less maybe pullback Can primarily showing maybe maybe but kind under budget -- lower-priced maybe item thoughts that the of other of lower-priced maybe as versus market of that's across and general was a to just a is and

Sure.

specifically combination in it's remarks, think little of down I -- the the I to success the a trading think lower-priced share, we Bodyguard handguns. covered both, on I bit products us. a took XXX mean and in for in ASPs I probably as of the of Mark, terms of

mean, frankly, And sorry, in other us I terms the a or think trade-down the so was for factor. don't of brands, -- I think for out I trading that,

Whoever's the right Bodyguard card, to want going a That's bus We driving to great. success got think challenging product new we what bigger winning. environment. just now the the the we're was be is which best when win. innovation now, of it's right And I factor the is want.

good. that's So

yes, used kind kind the On a bit. starts any little of gun market up gun to market, time because soften firearms the this of market like tick used

now. like bit And so right just it little a up has, is it always picking

ones promotional response there. any seems, environment about been feel then feel programs from you're those, some still how of you in little the out give you rebate on kind you It but Maybe that later of guys it successful And the your consumers. of how bit. like bang getting kind Okay. talked quarter, that's buck like about for of the indication ran, current kind a us

Yes.

As going far about return really take the we I exceeding make that They're spent said promotions, for we're be that us. towards it I and as active thoughtful be on evaluate pretty it. don't doing whether or they're remarks, a mean, dollar we the in channel we're the time the are and the that our not -- so we get with consumer. targeted within to reactionary, really We're have, sheet and to strength make sure expectations. on we X now, and rebate right it sure for or as balance meeting well And have

sit So we That approach us we're that's participate continue need we're for kind we to measured competitive to going to environment. a and forward, pretty to -- make of a as need it's go continue take likely to sure going just to more said, there working that. -- it's because back to

Okay.

around of your Is should Or be talked levels? Looking bit kind broadly of Are backing than stockpiling inventory? thoughtful, within by of kind kind feel inventory inventory you've being higher seeing retailer about the industry levels. up there you at guess, or getting any how of the industry about industry? and industry, you the do jammed is distributors, things a inventory fear kind it I

They're opposite. it's Actually, all. with the see very levels inventory comfortable They're not very stockpiling the being at channel. thoughtful. We're the in Yes. we

looking We're not measuring getting their basis. levels frequent and at making very of a on measured we out they're at know, distributor's they're SKUs. where you as and sure think inventory I

very comfortable standing. very out We're The not. -- where and are And they're with there levels healthy. inventory so they're

Excellent. the quantify to last or X, think or here kind is And buying there kind think over maybe me, one weaker We of and just reason here. maybe saw kind in fear-based [indiscernible] firearms any do of couple kind of we've sports that the fear I industry about think Obviously, big just to the it. of big answer in past. the maybe year lot But of X that a a the firearm beyond than next a just people purchased like past for that over you picture in given years X, we as spikes of saw election regulations? the seen the a past we're shooting last we and government past. feel as into for mix ones outlook courts, demand here we're or demand But increased

Yes.

price I the buy pinched think I the the discretionary that et and -- wallet are inflation, buy. think right the to the in customers just grocery state obviously, by is our is the look, and cetera, spend the or having driver, having and the necessities other and consumers that of now are being consumer's all primary fact economy of to

outweighed that obviously, any this regulation election in cycle. baseline So around

still However, is driver there primary the there driver to the -- of that personal think out -- I protection. move is

definitely that fear-based abated. but accurate regulation so you're I in is look the saying And around buying to that at, control continue we factor a think has

would further questions back no hand this time. to are over to There Mark Smith closing like comments. floor any for at the I

next Smith interest joining for & and operator, in you all your We speaking quarter. look today everyone, to us and you, again thanks, with forward Wesson. Thank

conference. This concludes today's

your time. disconnect Thank at this lines you your for may You participation.