Smith & Wesson Brands Q1 2027 Earnings Report

Smith & Wesson Brands EPS Results

• Actual EPS: $0.06
• Consensus EPS: -$0.06
• Beat/Miss: Beat by +$0.12
• One Year Ago EPS: -$0.08

Smith & Wesson Brands Revenue Results

• Actual Revenue: $112.59 million
• Expected Revenue: $98.70 million
• Beat/Miss: Beat by +$13.88 million
• YoY Revenue Growth: +32.30%

Smith & Wesson Brands Announcement Details

• Quarter: Q1 2027
• Date: 9/3/2026
• Time: After Market Closes
• Conference Call Date: Thursday, September 3, 2026
• Conference Call Time: 5:00PM ET

Smith & Wesson Brands (NASDAQ:SWBI) is an American firearms manufacturer that designs, manufactures, and sells handguns, modern sporting rifles, and related firearms products. Its portfolio includes Smith & Wesson-branded pistols and revolvers, M&P modern sporting rifles and pistols, and firearms produced through its Performance Center. The company serves the consumer, sporting, hunting, personal protection, and law-enforcement markets.

Smith & Wesson traces its history to 1852, when Horace Smith and Daniel B. Wesson formed the company that would become known for its revolvers and other firearms innovations. The business is headquartered in Maryville, Tennessee, and manufactures products in the United States. It sells through a network of independent dealers, distributors, and retailers, with products available primarily in the U.S. and through international distribution channels.

In 2020, Smith & Wesson was separated from its former parent company, American Outdoor Brands Corporation, which retained the company’s outdoor-products businesses. Smith & Wesson Brands now focuses on its firearms operations and related accessories, including suppressors and other products marketed under associated brands.

Smith & Wesson Brands Q1 2027 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Strong first-quarter performance: Net sales rose 32.3% year over year to $112.6 million, adjusted EBITDA increased 86%, and EPS improved to $0.06 from a $0.08 loss.
• Positive Sentiment: Shipments grew nearly 20%, outpacing the 7.7% increase in adjusted NICS, with the company reporting share gains in both handguns and long guns. Growth was led by polymer pistols, MSRs, and 1854 lever-action rifles, whose shipments doubled year over year.
• Positive Sentiment: Management expects second-quarter sales to be approximately 10% above last year and reiterated full-year revenue growth guidance of 5%–7%, citing healthy channel inventories, sustained demand, and momentum in the professional and international channels.
• Neutral Sentiment: Gross margin increased to 28.7%, helped substantially by $2.9 million of tariff refunds, while higher supplier, labor, volume-related, legal, and advertising costs pressured profitability. The company expects second-quarter gross margin to improve 200–300 basis points year over year, but operating expenses are expected to rise 10%–15% from Q1.
• Negative Sentiment: Capital spending is expected to reach $45 million–$50 million for the year, roughly $25 million above the historical run rate, as Smith & Wesson invests in its Springfield facility and advanced manufacturing initiatives; the company also used $8.8 million of operating cash in Q1.

Presentation

[Operator]

Good day everyone, and welcome to Smith & Wesson Brands, Inc first quarter fiscal 2027 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 us information about today's call. Thank you. You may begin.

[Kevin Maxwell, General Counsel at Smith & Wesson Brands]

Thank you, and good afternoon. Our comments today may contain forward-looking statements. Our use of the words anticipate, 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, General Counsel 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 EBITDAS is to adjusted EBITDAS. 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 those background checks conducted for purposes other than firearms purchases. Adjusted NICS is generally considered the best available proxy for consumer firearm demand at the retail counter.

[Kevin Maxwell, General Counsel 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. Thanks everyone for joining us today. As we expected, we are off to an excellent start to fiscal 2027 with strong first quarter performance. Continued solid demand for our products in both the consumer and professional channels in Q1 were a direct result of our purposeful focus on innovation, the strength of our industry partnerships, operational execution, and the power of the iconic Smith & Wesson brand. We delivered significant year-over-year increases in all key financial metrics, including 32% in growth in net sales, 86% growth in adjusted EBITDAS, and an increase in EPS to $0.06 from a loss of $0.08 last year. The firearm market continues to be solid, with overall NICS up 7.7% over our first quarter last year.

[Mark Smith, President and CEO at Smith & Wesson Brands]

With our shipments up nearly 20% in the same time period, we once again outperformed, demonstrating that strong consumer preference for our leading product portfolio is driving sustained share growth and continued positive momentum into FY 2027. From a product line perspective, we gained share in both handguns and long guns in the quarter. Our handgun unit shipments into the sporting goods channel increased nearly 17%, while NICS was up only about 5%. Importantly, and continuing the trend from FY 2026, channel inventories were flat during the same period, indicating strong pull-through and meaningful share gains at the retail counter. This was driven by strong demand for our semi-auto pistols across the board, including our market-leading concealed carry products and new products within our full-size M&P lines.

[Mark Smith, President and CEO at Smith & Wesson Brands]

Long guns also performed well in the quarter, with our unit shipments into the sporting goods channel increasing almost 22%, well ahead of the 10% increase in NICS. Within the long gun category, channel inventories of our products were actually down 5,000 units during the period. Again, indicating solid share gains at retail. Growth in long guns was led by the MSR category and weighted to May and June ahead of state-level regulatory changes. We also saw strong growth in our Model 1854 lever-action rifles, with shipments doubling compared to last year. A great indicator of our increasing foothold in the hunting segment of the long gun market, where we have historically had limited exposure.

[Mark Smith, President and CEO at Smith & Wesson Brands]

The breadth of our growth in Q1 was a further testament to our ability to react to market shifts through our flexible manufacturing model, consumer preference for our brand and innovative product line, and the strength of our relationship with industry partners. We had success not only across all of our product lines, but also across our customer segments. Within the consumer channel, we saw strong double-digit gains in wholesale, big box, and buying groups. In addition, we drove high double-digit growth in law enforcement and international shipments, a strong indication of professional endorsement of the product lines and our full capabilities to service these brave men and women, not only with our firearms, but with our world-class Smith & Wesson Academy, which continues to be a competitive differentiator. Moving now to ASPs.

[Mark Smith, President and CEO at Smith & Wesson Brands]

We continued the trend of outperforming in unit shipments versus the broader market while simultaneously demonstrating resiliency in our pricing. Sustained demand for our core products throughout the period limited our need for promotions in the quarter. Combined with new products accounting for 35% of our shipments, our ASPs continued to move higher even in the typically slower summer months. Handgun ASPs held steady sequentially versus Q4 and were up nearly 9% year-over-year. While long gun ASPs increased nearly 11% sequentially and over 18% year-over-year. Finally, a quick few notes on inventory. As I mentioned earlier, channel inventories were flat and combined with our strong results indicate we continue to see healthy pull-through of our products at the retail counter. At the end of Q1, our internal inventory was $181 million, down from $203 million a year ago and up from $156 million at the end of Q4.

[Mark Smith, President and CEO at Smith & Wesson Brands]

The sequential growth reflects our normal seasonal build as we prepare for the busy fall and winter seasons, as well as restocking of long gun inventories following a strong Q4. Our disciplined sales and operations planning process, which aims to align production to forward demand across every product line, gives us confidence in our inventory position as we look to the balance of fiscal 2027. Looking forward, we believe we are well-positioned to continue gaining momentum as we move into the traditionally stronger second half of the year. Our award-winning product line is in high demand with both our loyal consumers and law enforcement and professional customers, as indicated by our shipments consistently outpacing the market and our growth in professional sales.

[Mark Smith, President and CEO at Smith & Wesson Brands]

We are making significant investments in our operational infrastructure to support our growth and drive further efficiencies, and we are well underway with installation of this new equipment in our machining center in Springfield, Massachusetts. Our balance sheet remains strong, and we continue to deploy capital efficiently to drive long-term growth and stockholder value. With this momentum, we expect our second quarter to significantly outperform last year on both the top and bottom lines, which Deana will cover in a few minutes. In closing, this continues to be a story about brand strength paired with a purposeful long-term strategy. Our focus on innovation, marketing, strong partnerships and operational excellence, and importantly, our team's relentless focus on execution across every function is what drives our outperformance.

[Mark Smith, President and CEO at Smith & Wesson Brands]

As always, I just want to note that none of this is possible without each and every member of our team across all functions working together towards making Smith & Wesson the number one firearms brand. I'm incredibly proud of all of them for their exceptional talent and dedication, always striving to exceed the expectations of our passionate and loyal customers. With that, I'll turn the call over to Deana to cover the financials.

[Deana McPherson, CFO at Smith & Wesson Brands]

Thanks, Mark. Net sales for our first quarter of $112.6 million were $27.5 million or 32.3% above the prior year on strong polymer pistol, MSR, and lever-action shipments. During the quarter, inventory at distributors declined by 6.8% from the end of the prior quarter and 3.5% compared with the end of July 2025 in terms of actual units, indicating continued strong sell-through of our products at retail. Handgun ASPs remained sequentially flat versus Q4, but higher than Q1 2026 due to lower promotional spend during the current quarter and continued strong demand for our products. Long gun ASPs increased sequentially and year-over-year due to a favorable mix. Gross margin of 28.7% was 2.8% above the prior year, primarily driven by $2.9 million of tariff refunds, which accounted for 260 basis points of increased margin during the quarter.

[Deana McPherson, CFO at Smith & Wesson Brands]

Increased absorption on higher production was almost entirely offset by higher volume-related spending, supplier cost increases, and increased labor costs, both from increased headcount and increased wage rates. Operating expenses of $28.1 million for our first quarter were $3 million higher than the prior year comparable quarter, with legal expenses, profit-related compensation costs, volume-related increases in selling expenses and freight, and higher advertising costs driving the increase. The higher revenue and associated margin combined with a decrease in interest expense due to lower net debt resulted in $2.6 million of net income or $0.06 of EPS, compared with a $3.4 million net loss or an $0.08 loss per share last year. Cash used in operations for the first quarter was $8.8 million compared with $8.1 million in the prior year due to higher net income being offset by a bigger increase in inventory and the payment of profit-related compensation.

[Deana McPherson, CFO at Smith & Wesson Brands]

Because of increased demand during last quarter, internal inventory in certain product lines was depleted. In addition, we generally build inventory during the first half of the fiscal year in order to level load our operations in preparation for the busy fall and winter seasons. We spent $11.9 million in capital projects this quarter, compared with $4.3 million last year, and continue to expect our capital spending for the year to be between $45 million and $50 million. As a reminder, our capital spending this year is approximately $25 million higher than our historical run rate due to investments we are making in our Springfield facility, combined with advanced manufacturing initiatives at multiple locations. We paid $6 million in dividends and ended the quarter with $25.2 million in cash and investments and $40 million in borrowings on our line of credit.

[Deana McPherson, CFO at Smith & Wesson Brands]

Finally, our board has authorized our $0.13 quarterly dividend to be paid to stockholders of record on September 17th, with payment to be made on October 1st. Looking forward to our second quarter, we continue to expect a normal seasonal environment and strong demand for our products, resulting in anticipated sales for Q2 of roughly 10% above last year.

[Deana McPherson, CFO at Smith & Wesson Brands]

With channel inventory continuing to remain at healthy levels, we don't expect inventory to have an impact, positively or negatively, on our second quarter. For the full year, we continue to expect that our FY 2027 revenue will grow approximately 5%-7% over FY 2026. We expect Q2 gross margins to be 200 basis points-300 basis points higher than last year's Q2 on increased absorption, partially offset by increased volume-related spending and inflationary cost increases. Operating expenses in Q2 will likely be 10%-15% higher than in Q1 due to volume-related customer and freight costs, combined with continued investment in R&D and increased profit-related costs such as profit sharing. Our effective tax rate is expected to be approximately 30%. With that, operator, can we please open the call to questions from our analysts?

[Operator]

Thank you. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question is from Mark Smith with Lake Street Capital Markets. Please proceed.

[Alex Ewig, Analyst at Lake Street Capital Markets]

Hey, this is Alex Ewig asking questions for Mark Smith.

[Mark Smith, President and CEO at Smith & Wesson Brands]

Hey, Alex.

[Alex Ewig, Analyst at Lake Street Capital Markets]

Q1 net sales grew 32% versus the 15%-20% you guys guided in June. But the full-year guidance, you guys kind of left unchanged at 5%-7%, and Q2 is only 10% above last year. What drove this upside, and was it timing or pull forward from Q2? What does the implied back half deceleration look like, kind of projecting flat to down in the back half? What does this kind of assume about demand?

[Mark Smith, President and CEO at Smith & Wesson Brands]

Yeah, thanks, Alex. The growth this year, I'll just point you back to the full year. Yeah, it's going to be a little bit more steady this year. I think last year, as you can see, it was a big Q4. Some of that was some of the state regulatory changes driving a pretty big Q4 for us, specifically on the MSRs. This year, great start to the year with a little outperformance in Q1. We just think this year it's going to be just a little steadier than it was last year. But at the end of the day, we kind of think of that as that's good news. It's steady growth, it's sustained market share gains, and something that we can kind of really build on that momentum as we go into the back half of the year.

[Mark Smith, President and CEO at Smith & Wesson Brands]

Still up significantly versus last year, 5%-10% growth. Pretty happy with that. It's going to be a little smoother this year than it was last.

[Alex Ewig, Analyst at Lake Street Capital Markets]

ASP on both handguns and long guns outpaced our expectations. How much of this is mix versus price increases this year? Do you guys expect ASPs to kind of remain at these levels moving forward?

[Mark Smith, President and CEO at Smith & Wesson Brands]

Yeah, we've been pretty happy with the ASPs. I think in Q1, as Deana covered, on the long gun side, definitely mix. We're really happy with the performance of the Model 1854, which as you know is kind of the top end of the pricing hierarchy for us. That was really good and continued proof that we're really gaining a nice foothold there in that hunting segment of the market, whereas in the prepared remarks we historically kind of had a smaller presence. So a little bit of mix, but a lot of it also is really limited promotions. We've had pretty solid demand for our core line as well. Q1 I think was a story of a little bit of mix, but no need to participate to a meaningful degree in promotions, and we do anticipate that those ASP levels will continue going forward.

[Alex Ewig, Analyst at Lake Street Capital Markets]

Professional channel units jumped pretty sharp off of a relatively small base. What type of long-term opportunity do you guys see in that professional channel?

[Mark Smith, President and CEO at Smith & Wesson Brands]

Yeah, we're really pleased with the performance on the LE side. The investments in the Smith & Wesson Academy are really starting to pay dividends, and a lot of the efforts we've been putting in over the last 12, 18 months really coming to fruition. That's a longer sales cycle there with the professional channel. I think you're starting to see some of the results and some of those efforts come to fruition. So really starting to gain momentum there. We're pretty pleased there. We're continuing to invest in the Smith & Wesson Academy. A lot of traction there with the law enforcement and professional user community, and we expect that to continue. We have a lot in the pipeline, nice pipeline as we look to the back half of the year.

[Alex Ewig, Analyst at Lake Street Capital Markets]

Great. Thank you. I'll turn it over.

[Mark Smith, President and CEO at Smith & Wesson Brands]

Thanks, Alex.

[Operator]

There are no further questions at this time. I would like to turn the conference back over to Mark Smith for closing remarks.

[Mark Smith, President and CEO at Smith & Wesson Brands]

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

[Operator]

Thank you. This will conclude today's conference. You may disconnect at this time, and thank you for your participation.

Participants

Executives

• Kevin Maxwell, General Counsel
• Deana McPherson, CFO

Analysts

• Mark Smith, President and CEO at Smith & Wesson Brands
• Alex Ewig, Analyst at Lake Street Capital Markets