Smith & Wesson Brands Q4 2026 Earnings Call Transcript

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June 17, 2026

Key Takeaways

  • Positive Sentiment: Smith & Wesson reported a strong fourth quarter, with net sales up 26.7%, adjusted EBITDA up 31.7%, and adjusted EPS up nearly 77% year over year.
  • Positive Sentiment: The company said it continued to gain market share, with handgun shipments up 23.2% and long gun shipments up 28.7% into the sporting goods channel, while channel inventory remained flat.
  • Positive Sentiment: New products were a major growth driver, accounting for about 38% of shipments for both the quarter and the full fiscal year, with management highlighting strong demand for Bodyguard, Shield, M&P, and Model 1854 launches.
  • Positive Sentiment: The balance sheet improved materially as the company generated strong cash flow, repaid $60 million of debt during the year, and ended fiscal 2026 with just $20 million of debt.
  • Neutral Sentiment: Looking ahead to fiscal 2027, management expects mid-single-digit revenue growth and a strong first quarter, but also plans about $20 million of additional capital spending for Springfield capacity expansion.
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Earnings Conference Call
Smith & Wesson Brands Q4 2026
00:00 / 00:00

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Operator

Good day everyone, and welcome to the Smith & Wesson Brands Q4 and full fiscal 2026 financial results conference call. This call is being recorded, and at this time, I would like to turn the call over to Kevin Maxwell, Smith & Wesson's General Counsel, who will give us some information about today's call.

Kevin Maxwell
Kevin Maxwell
SVP, General Counsel, Chief Compliance Officer, and Secretary at Smith & Wesson Brands

Thank you, and good afternoon. Our comments today may contain forward-looking statements. Our use of the words anticipates, project, estimate, expect, intend, believe, and other similar expressions are intended to identify forward-looking statements. Forward-looking statements may also include statements on topics such as our product development, strategies, market share, demand, consumer preferences, inventory conditions for our products, growth opportunities and trends, and industry conditions in general. Forward-looking statements represent our current judgment about the future and are subject to risks and uncertainties that could cause our actual results to differ materially from those expressed or implied by our statements today. These risks and uncertainties are described in our SEC filings, which are available on our website, along with a replay of today's call. We have no obligation to update forward-looking statements. We reference certain non-GAAP financial results.

Kevin Maxwell
Kevin Maxwell
SVP, General Counsel, Chief Compliance Officer, and Secretary at Smith & Wesson Brands

Reconciliations of GAAP financial measures to non-GAAP financial measures can be found in our SEC filings and in today's earnings press release, each of which is available on our website. Also, when we reference EPS, we are always referencing fully diluted EPS, and any reference to EBITDA is to adjusted EBITDA. I would like to remind you that when we discuss NICS results, we are referring to adjusted NICS, a metric published by the National Shooting Sports Foundation based on FBI NICS data. Adjusted NICS removes that background checks conducted for purposes other than firearm purchases. Adjusted NICS is generally considered the best available proxy for consumer firearm demand at the retail counter.

Kevin Maxwell
Kevin Maxwell
SVP, General Counsel, Chief Compliance Officer, and Secretary at Smith & Wesson Brands

Because we transfer firearms only to law enforcement agencies and federally licensed distributors and retailers, and not to end consumers, NICS generally does not directly correlate to our shipments or market share in any given time period, we believe mostly due to inventory levels in the channel. Joining us on today's call are Mark Smith, our President and CEO, and Deana McPherson, our CFO. With that, I will turn the call over to Mark.

Mark Smith
President and CEO at Smith & Wesson Brands

Thank you, Kevin, and thanks everyone for joining us today. Our excellent Q4 and full year fiscal 2026 results showcase our team's remarkable execution on our strategic priorities and the enduring power of our iconic brand. Fueled by strong consumer demand for our products and our ability to leverage our flexible manufacturing operations, we are sustaining our market share growth momentum, and our Q4 performance surpassed our expectations on every key metric. Net sales increased nearly 27% year-over-year. Adjusted EBITDA increased 31.7%, and adjusted EPS was up nearly 77%. We also delivered another strong quarter of cash generation. Cash from operations increasing by nearly $34 million compared to last year. These numbers are a direct result of the team's focus on our clearly defined strategy of growing market share through innovation and operational execution.

Mark Smith
President and CEO at Smith & Wesson Brands

For the full fiscal year, our top-line revenue was up over 10% year-over-year. Adjusted EPS increased more than 25%, and adjusted EBITDA was up 7%. We also continued to fortify our balance sheet, generating over $114 million in cash from operations, retiring $60 million in debt on our credit facility, and closing the year with just $20 million in debt versus $80 million at the end of fiscal 2025. Throughout the past year, we have been highlighting the tremendous results that we've been achieving in market share growth, and this momentum certainly continued in our Q4. On the handgun side, our unit shipments into the sporting goods channel surged 23% versus a NICS increase of only 1.1%, while channel inventory remained flat, indicating strong consumer demand for our products is driving excellent sell-through and substantial market share capture at the retail counter.

Mark Smith
President and CEO at Smith & Wesson Brands

We continue to lead the concealed carry market with our Bodyguard 2.0 and Shield pistol lines. With the introduction of our newest M&P pistols, from the HD Steel to Competitor to the Carry Comp series, we are now rounding out the innovation across the categories within the semi-auto pistol market, which is only accelerating our market share growth. Revolver side, we are the market leader and have been for years. True to our disciplined focus on the long term, the team has been hard at work on renewing and revitalizing the line to maintain our leadership position. We are seeing tremendous success with our new product launches, particularly our No Lock series, Mountain Gun, and UCJ frames. In long guns, our unit shipments into the sporting goods channel increased 28.7% versus NICS rising 3.5%. In particular, we saw strong growth in the MSR category in Q4.

Mark Smith
President and CEO at Smith & Wesson Brands

As a reminder, long guns represent a relatively small portion of our overall sales, only approximately 17% in fiscal 2026. That said, we continue to build momentum in the hunting segment and will continue to look for opportunities to fill in this white space. For the net result for the year, Smith & Wesson far outpaced the broader market, with our total shipments into the channel up by 14.7% for the full fiscal year, while NICS decreased by 2.3%. I'll just highlight that in that same time period, channel inventory remained flat. Again, these impressive numbers are a direct result of our purposeful focus and execution on innovation, marketing, operational excellence, and of course, the power of the iconic Smith & Wesson brand. Just to underscore that point, new products accounted for nearly 38% of our shipments during Q4, and 38% for the full fiscal year.

Mark Smith
President and CEO at Smith & Wesson Brands

I'm exceptionally proud of our talented product management, engineering, design, and production teams, who consistently create and reliably manufacture products that resonate with our customers while upholding the world-class quality and dependability that they expect from us. Meeting those expectations for innovation and quality allows us to not only take unit share but maintain strong Average Selling Prices. Sequentially in Q4, handgun ASPs were up 4.3%, and long gun ASPs increased 4.5%. Turning now to inventory, we closed Q4 with $156 million in internal inventory, down from $190 million a year ago. Our strong balance sheet and robust sales and operations planning process, which aligns production to forward forecasts across each of our product lines, has positioned us exceptionally well as we enter fiscal 2027.

Mark Smith
President and CEO at Smith & Wesson Brands

As I spoke about earlier, channel inventory remains flat in units relative to both Q3 and last year, again, signaling healthy sell-through at retail and a very clean position as we enter FY 2027. Looking forward, we expect the positive momentum to carry into FY 2027. While we anticipate and are experiencing a typical summer season from a demand perspective, we're continuing to see relatively strong demand for our products, therefore expect our Q1 to significantly outperform last year, as Deana will cover in a few minutes. I want to emphasize that we believe the market share gains we've secured are the product of years of methodical execution of our innovation strategy, marketing, sales relationships, and focus on operational excellence, as well as our commitment to creating products that meet and surpass consumer expectations. We remain focused on preserving this momentum and maintaining our leadership position in the market.

Mark Smith
President and CEO at Smith & Wesson Brands

Given what we see on the horizon, we are planning to make investments in our Springfield facility during fiscal 2027, which will increase our capital spend this year as compared to our historical averages. This represents a strategic investment concentrated on expanding our capacity and increasing operational efficiency. We've consistently delivered high returns on our investments in the business and are confident this latest initiative will do so as well, along with further strengthening our foundation for sustained long-term growth. In closing, fiscal 2026 was an outstanding year for Smith & Wesson. We delivered strong results across every dimension of our business, from revenue to profitability, from cash flow to debt reduction. We outperformed our competitors in our core categories and achieved meaningful progress in segments that we hadn't historically competed in.

Mark Smith
President and CEO at Smith & Wesson Brands

We launched our state-of-the-art Smith & Wesson Academy, further strengthening our commitment to our professional customers and providing world-class training to our consumers. We introduced dozens of new products, which were enthusiastically received by our customers. As I said earlier, this momentum continues into FY 2027. The combined strength of our brand, our team, our disciplined strategic focus, and strong balance sheet put us in an excellent position to continue creating long-term value for our stockholders. Finally, I cannot stress enough that all of this is only possible due to the amazing team of employees that work tirelessly every day of the year across every function of our business. As always, I want to thank them, each and every one, for their unwavering dedication and for applying their skills every single day to drive our success.

Mark Smith
President and CEO at Smith & Wesson Brands

With that, I turn the call over to Deana to review the financials.

Deana McPherson
Deana McPherson
EVP and CFO at Smith & Wesson Brands

Thanks, Mark. Please note that all comparisons are between the Q4 of fiscal 2026 and the Q4 of fiscal 2025, unless otherwise stated. Net sales of $178.4 million were $37.6 million, or 26.7% above the prior year, with new products making up 37.5% of total revenue for the quarter. As Mark noted, our outperformance was mostly driven by handgun shipments, which represented over 80% of our units shipped. Our handgun unit sales into the sporting goods channel increased 23.2% over the prior year, while NICS increased only 1.1% with nearly no change in channel inventory, demonstrating strong consumer preference for our products. We also benefited in Q4 from a short-term increase in long gun demand, although the volumes there are much lower than in our handgun line.

Deana McPherson
Deana McPherson
EVP and CFO at Smith & Wesson Brands

Gross margin of 29.8% was one percentage point above last year, reflecting a 23% increase in production volume, lower promotions, and a 2%-3% price increase from January, partially offset by increased volume-related spending tariffs and inventory reserves. Operating expenses of $31.7 million for our Q4 were $4.3 million higher than the prior year due to increased profit-related compensation costs, including profit sharing and incentives, increased freight-related costs, and higher R&D costs. Net income of $16.2 million in the Q4 was $7.6 million more than the prior year due to a combination of higher net sales and gross margin, partially offset by increased profit-related compensation costs. Earnings per share of $0.36 was above the prior year of $0.19. Turning to cash flows.

Deana McPherson
Deana McPherson
EVP and CFO at Smith & Wesson Brands

During the quarter, we generated $74.6 million in cash from operations and spent $4.8 million on capital projects, resulting in net free cash of $69.7 million. We paid $5.8 million in dividends and repaid $55 million on a revolving line of credit. We ended the quarter with $28.2 million in cash and $20 million in borrowings on our line, representing a net cash position of $8.2 million. During our full fiscal year, we generated $114 million in cash from operations and spent $23.7 million in capital projects, resulting in net debt free cash generated of $90.4 million. Our board has authorized our quarterly dividend of $0.13 to be paid to stockholders of record on July 1st, with payment to be made on July 15th. Looking forward to fiscal 2027, we expect firearm industry demand in fiscal 2027 to continue to be healthy and slightly higher than in fiscal 2026.

Deana McPherson
Deana McPherson
EVP and CFO at Smith & Wesson Brands

Combined with our market share growth, we expect our full fiscal 2027 revenue to grow in mid-single digits compared to full fiscal 2026. We believe our Q1 revenues will be approximately 15%-20% higher than last year, with margins a point or two higher on increased volume. As a reminder, our prior results were negatively impacted by a reduction in channel inventory, which we are not anticipating this year. With regard to Average Selling Prices, we expect our Q1 to be sequentially lower, in the 5% range, with a decline in handguns being partially offset by an increase in long guns, both due to mix of products sold. Operating expenses for the Q1 are expected to be approximately 20% higher than last year's Q1 due to volume and profit-related costs such as freight, customer marketing allowances, and profit-sharing.

Deana McPherson
Deana McPherson
EVP and CFO at Smith & Wesson Brands

Our effective tax rate is expected to be approximately 30%, which is higher than in fiscal 2026, due to prior year favorable adjustments that impacted 2026. With that, operator, can we please open the call to questions from our analysts?

Operator

Thank you. With that, we will now be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star two if you would like to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys. One moment while we poll for questions. Our first question comes from the line of Mark Smith with Lake Street Capital. Please proceed with your question.

Mark Smith
Analyst at Lake Street Capital

Hi, guys. I wanted to ask first off; you guys had mentioned meaningful progress in segments you haven't historically competed in. Can you elaborate a little bit more on where all you saw some incremental growth?

Mark Smith
President and CEO at Smith & Wesson Brands

Hey, Mark. Obviously, the biggest one is in the Model 1854, with the entry into that hunting category that we traditionally had not participated in. Continuing to see a really nice market share there for a product that we just introduced within the last 18 months. Continues to do really well for us, really pleased with the progress there. Also on the long gun side, on the carbine side, continue to do really well with that FPC. Just some new entrants into some of the categories that we do play in, but I guess a subcategory within the carbines and then just brand-new category for us on the hunting side.

Mark Smith
Analyst at Lake Street Capital

Perfect. Looking at gross profit margin, I know you discussed it a little bit on the call, but wanted to dig in more on that, just on kind of what helped drive the gross profit margin improvement in the Q4, maybe how much of that was just volume versus the 2%-3% price increase, or any other moving parts that helped drive some of that outperformance.

Mark Smith
President and CEO at Smith & Wesson Brands

Yeah. There's going to be some tailwinds and headwinds there, obviously. Headwinds continue to be the tariffs. Tailwinds there, obviously margin. I think you well know that as a major manufacturing operation, more volume drives more absorption. Obviously that 2%-3% price increase that went through very smoothly back in December, obviously helped there as well. A little bit of combination of all of those.

Deana McPherson
Deana McPherson
EVP and CFO at Smith & Wesson Brands

Yeah. I think you'll remember, Mark, that in fiscal 2025, we were pulling down inventory. Production levels were quite a bit lower, and we sort of got to a place in fiscal 2026 where we were comfortable with inventory, we were increasing inventory to match. I think we talked about that maybe in the last couple of quarters. That increase in production volume really gave us a lift on the margin side.

Mark Smith
Analyst at Lake Street Capital

Okay. Just looking at the price increases that were taken in January, any thoughts on how those were received by distributors?

Mark Smith
President and CEO at Smith & Wesson Brands

Yeah, the price increase in January.

Mark Smith
Analyst at Lake Street Capital

Maybe how.

Mark Smith
President and CEO at Smith & Wesson Brands

Sorry, go ahead.

Mark Smith
Analyst at Lake Street Capital

Oh, go ahead.

Mark Smith
President and CEO at Smith & Wesson Brands

Price increase in January went through really, Mark, without any fanfare whatsoever. I think that just kind of speaks to, again, as we talk about a lot, the power of the brand and that innovation strategy of introducing new products that are going to resonate with that consumer. Those two things together really hold those ASPs up nicely, so

Mark Smith
Analyst at Lake Street Capital

Okay. Perfect. Yeah, new products were kind of my other part of that question, just how much of that was kind of driven by new products versus kind of across-the-board price increases.

Mark Smith
President and CEO at Smith & Wesson Brands

Yeah, I think it's important to note that the new products also help the core line because it just elevates the overall perception with the consumer of the brand itself. A lot of those new products, I think you've seen them out there, the HD, the competitor, I mentioned some of them on the prepared remarks. Of course, the marketing power that we have with our team here and really being the number one voice in the firearms industry really helps the overall brand. It's not just new products. It helps with the core line as well.

Mark Smith
Analyst at Lake Street Capital

Okay. I think the last one from me, just you guys did a good job cleaning up the balance sheet here, paying down debt. Curious your thoughts around capital allocation. It sounds like some investments back into Springfield, maybe how you weigh the dividend buybacks, or any other investments as we look forward here to fiscal 2027.

Mark Smith
President and CEO at Smith & Wesson Brands

Sure. Yeah, I'll take that in a couple sections. The investments back into Springfield, I think is just a reflection of the business and our comfort level with how sustainable that growth is. I think you know our flexible manufacturing model. We've always got a mix of internal and external machining capacity. As we look at the performance of the core line and the products that we have out there in the marketplace today, market share growth, how sustainable that is, we look down the line at that new product pipeline, we're always looking at what is the optimal balance of internal versus external there. To the extent we see that being sustainable, we're going to make the investments internally to be able to increase our capacity. Also, some of the new products coming down the line, we need some additional capabilities as well.

Mark Smith
President and CEO at Smith & Wesson Brands

Just give you a little color there. Right now, the initial phase is about 20 new CNC machines. You can expect about half of those will be online this summer, and the remaining throughout the rest of this calendar year. By the end of the calendar year, they should all be operational. The impact to the CapEx spends for this year, I think, Mark, you can expect probably an additional about $20 million above our usual $25-$30 million. With that said, back to the capital allocation that you just mentioned, we've always talked about capital allocation priorities is first and foremost invest back in the business where we see a return, and obviously this is going to have a pretty healthy return for us. That's going to be the focus this year.

Mark Smith
President and CEO at Smith & Wesson Brands

We still do have authorization on the buyback from the board, so we'll continue to be opportunistic there. If there's an opportunity, it's still on the table. The dividend, as Deana discussed, we still remain committed to the dividend.

Mark Smith
Analyst at Lake Street Capital

Great. Thank you, guys.

Mark Smith
President and CEO at Smith & Wesson Brands

Thanks, Mark.

Operator

Thank you. Our next question comes from the line of Rommel Dionisio with Aegis Capital Corp. Please proceed with your question.

Rommel Dionisio
Analyst at Aegis Capital Corp

Good morning. Good afternoon. Thanks for taking my question. Did I hear you say correctly much of the capital expenditure this year would be in Springfield and not in Tennessee? I wonder if you could just clarify that and just maybe the thought behind kind of reinvesting in Springfield as opposed to the newer facility. Thanks.

Mark Smith
President and CEO at Smith & Wesson Brands

Sure. Thanks, Rommel. As I think you're probably aware, our Springfield facility is really our machining center of excellence, where we've got all of our skilled labor there, a great team there that they do all the machining work there in Springfield. Then this facility here in Tennessee, it's kind of our state-of-the-art facility where we're doing distribution, we're doing assembly, doing some finishing operations, plastic injection molding, and obviously the headquarters. That is going to be the plan going forward, is that Springfield is going to be the machining center and then Tennessee is going to be the headquarters and all the operations I just mentioned. The investment in capacity is happening in Springfield because that's the machining center, where that capacity is going to be planned to be. The machining is going to be planned to be forever.

Mark Smith
President and CEO at Smith & Wesson Brands

That facility is going to continue to be part of our plans for the future.

Rommel Dionisio
Analyst at Aegis Capital Corp

Okay, great. That's helpful. Maybe just to follow up on the new products, you already talked about a little bit, I don't mean to beat it to death, but just on the handgun side, could you just comment on some of the most recent introductions, which maybe didn't necessarily impact the quarter you just reported, like BODYGUARD 38, 2.0, and I guess you've had the Shield X for several months now. Yeah, I wonder if you could just comment on the most recent introductions in handguns and obviously the impact that that's having in helping to drive these significant share gains, you're seeing. Thanks.

Mark Smith
President and CEO at Smith & Wesson Brands

Sure. Yeah, I think, if we're going to point to one thing that's kind of driving the share gains, I think it is new product and its handgun new products. It's just been, frankly, one home run after another. The BODYGUARD 38 that you just mentioned, as you know, was just introduced very recently within the last few weeks. That's doing very well for us. The Bodyguard 380 pistol continues to be a very successful product for us, one of the leading, if not the leading concealed carry pistol on the market. The Shield X, doing very well for us as well. Also, I'll just mention on the, as I mentioned in the prepared remarks, it's not just on the, all of those are kind of concealed carry guns. We're really rounding out the line to the entire semi-auto pistol line with the Competitor, the HD series.

Mark Smith
President and CEO at Smith & Wesson Brands

Really, all of those new products are doing very well for us, as I mentioned earlier, really just helping to elevate the brand in general, right. It's just the consumer's perception of the brand is already good and only getting better with all these new product introductions. They're really doing what we expected.

Rommel Dionisio
Analyst at Aegis Capital Corp

Great. Thanks very much.

Mark Smith
President and CEO at Smith & Wesson Brands

Thanks, Rommel.

Operator

Thank you. With that, there are no questions at this time. I would like to turn the floor back to Mark Smith for any closing remarks.

Mark Smith
President and CEO at Smith & Wesson Brands

Well, I just want to thank you, operator, and thank you everybody for joining us today and your interest in our company and Smith & Wesson. Look forward to speaking with you all again next quarter.

Operator

Thank you. With that, ladies and gentlemen, this does conclude today's teleconference. We thank you for your participation. You may disconnect your lines at this time and have a wonderful rest of your day.

Executives
    • Deana McPherson
      Deana McPherson
      EVP and CFO
    • Kevin Maxwell
      Kevin Maxwell
      SVP, General Counsel, Chief Compliance Officer, and Secretary
Analysts
    • Mark Smith
      Analyst at Lake Street Capital
    • Mark Smith
      President and CEO at Smith & Wesson Brands
    • Rommel Dionisio
      Analyst at Aegis Capital Corp
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