Smith & Wesson Brands Q1 Earnings Call Highlights

Key Points

• Strong first-quarter results: Fiscal 2027 Q1 sales rose 32.3% year over year to $112.6 million, while Smith & Wesson returned to profitability with net income of $2.6 million versus a $3.4 million loss a year earlier.
• Shipments outpaced market demand: Company shipments increased nearly 20%, exceeding adjusted NICS growth of 7.7%, with particularly strong gains in long guns, modern sporting rifles, Model 1854 rifles, law enforcement and international channels.
• Positive outlook maintained: Management expects second-quarter sales to grow about 10% year over year and reaffirmed fiscal 2027 revenue-growth guidance of approximately 5% to 7%, alongside planned capital expenditures of $45 million to $50 million.

Smith & Wesson Brands NASDAQ: SWBI reported higher first-quarter fiscal 2027 sales and a return to profitability, citing demand across its consumer and professional firearms channels, increased product shipments and higher average selling prices.

Net sales rose 32.3% year over year to $112.6 million, while net income totaled $2.6 million, or $0.06 per diluted share. That compared with a net loss of $3.4 million, or $0.08 per share, in the prior-year quarter. President and CEO Mark Smith said the company’s adjusted EBITDAS increased 86% from a year earlier.

“We are off to an excellent start to fiscal 2027 with strong first quarter performance,” Smith said, pointing to innovation, industry partnerships, operational execution and the company’s brand strength.

Shipments Outpaced Market Indicators

Smith said overall adjusted NICS, a firearms-demand proxy based on FBI background-check data, increased 7.7% during the quarter compared with the prior-year period. Company shipments rose nearly 20%, which management said reflected market-share gains.

Handgun unit shipments into the sporting-goods channel increased nearly 17%, compared with roughly 5% growth in NICS for the category. Channel inventories for the company’s handguns were flat during the period, which Smith said indicated continued retail pull-through.

Long-gun unit shipments into the sporting-goods channel climbed almost 22%, outpacing a 10% increase in long-gun NICS. Channel inventories of the company’s long guns declined by about 5,000 units. Growth was led by modern sporting rifles, or MSRs, and was weighted toward May and June ahead of state-level regulatory changes, according to management.

Shipments of the Model 1854 lever-action rifle doubled from the prior year, with Smith describing the result as evidence of a growing presence in the hunting segment. The company also reported strong double-digit gains among wholesale, big-box and buying-group customers, as well as high double-digit growth in law-enforcement and international shipments.

Pricing, Margins and Inventory

Average selling prices for handguns were unchanged sequentially from the fourth quarter and increased nearly 9% from a year earlier. Long-gun average selling prices increased nearly 11% sequentially and more than 18% year over year.

Smith attributed long-gun pricing gains partly to product mix, including Model 1854 shipments, while saying limited promotional activity supported pricing across the company’s product lines. New products represented 35% of total shipments during the quarter.

Gross margin was 28.7%, up 2.8 percentage points from the prior-year quarter. Chief Financial Officer Deana McPherson said $2.9 million in tariff refunds accounted for 260 basis points of the increase. Higher production absorption was largely offset by volume-related spending, supplier cost increases and higher labor expenses.

Operating expenses rose $3 million year over year to $28.1 million, driven by legal costs, profit-related compensation, higher selling expenses and freight, and increased advertising. Lower interest expense, resulting from lower net debt, also supported the company’s return to profitability.

Distributor inventory declined 6.8% from the end of the prior quarter and 3.5% from July 2025 on a unit basis, McPherson said. Internal inventory stood at $181 million at quarter-end, down from $203 million a year earlier but up from $156 million at the end of the fourth quarter. The sequential increase reflected seasonal inventory building ahead of the fall and winter selling periods, as well as long-gun restocking after a strong fourth quarter.

Capital Spending and Outlook

Cash used in operations was $8.8 million, compared with $8.1 million in the prior-year period. The company spent $11.9 million on capital projects during the quarter, up from $4.3 million a year earlier, and maintained its expectation for full-year capital expenditures of $45 million to $50 million.

Management said this year’s capital spending is approximately $25 million above its historical run rate, reflecting investments at its Springfield, Massachusetts, facility and advanced manufacturing initiatives at multiple locations.

Smith & Wesson ended the quarter with $25.2 million in cash and investments and $40 million borrowed under its line of credit. The board authorized a quarterly dividend of $0.13 per share for stockholders of record as of Sept. 17, with payment scheduled for Oct. 1.

For the second quarter, the company expects sales to increase roughly 10% from the prior-year quarter and forecasts gross margin to improve by 200 to 300 basis points year over year. Operating expenses are expected to rise 10% to 15% from the first quarter because of volume-related customer and freight costs, research and development investment, and profit-related expenses.

The company reaffirmed its fiscal 2027 revenue-growth outlook of approximately 5% to 7% over fiscal 2026. Smith said management expects growth to be steadier than the prior fiscal year, when state regulatory changes contributed to a strong fourth quarter for MSRs.

About Smith & Wesson Brands (NASDAQ:SWBI)

Smith & Wesson Brands, Inc is a leading American manufacturer of firearms and related products, designing, producing and marketing a broad array of handguns, long guns and shooting accessories. The company’s portfolio includes revolvers, semi-automatic pistols and rifles under well-known brands such as M&P® (Military & Police) and Performance Center®, which are used by military, law enforcement, commercial and private customers. In addition to complete firearms, Smith & Wesson offers suppressors, optics mounts, holsters and other shooting accessories to support a full spectrum of professional and recreational shooting activities.

Founded in 1852 by Horace Smith and Daniel B.

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