Smith & Wesson Brands (SWBI) Q2 2026 earnings summary

Executive summary

• Net sales for Q2 fiscal 2026 were $124.7 million, down 3.9% year-over-year, with gross margin at 24.3% versus 26.6% last year.

• Net income was $1.9 million ($0.04/share), compared to $4.5 million ($0.10/share) in the prior year; adjusted EBITDAS was $15.1 million (12.1% of sales).

• New products accounted for 38.7% of sales, driving market share gains and positive retail sell-through.

• Operating cash flow for Q2 was $27.3 million, a significant improvement from a $7.4 million outflow last year.

• Inventory management led to a significant reduction, generating strong cash flow.

Financial highlights

• Handgun sales for the quarter were $90.8 million (down 3.2%), long gun sales $24.7 million (down 1.8%), and other products/services revenue dropped 14.1%.

• Gross profit for Q2 was $30.3 million, down from $34.5 million last year; operating income was $4.1 million, down from $7.5 million.

• Free cash flow for Q2 was $19.9 million, up from negative $10.7 million last year.

• Cash and cash equivalents at period end were $22.4 million; borrowings outstanding were $90 million on the revolving line of credit.

• Average selling prices increased: handguns up 2.1% to $418, long guns up 10.2% to $602.

Outlook and guidance

• Q3 sales are expected to be 8–10% higher than Q3 fiscal 2025, with no significant channel inventory impact anticipated.

• Q3 gross margins anticipated to increase sequentially and year-over-year.

• Q4 projected to see high single-digit to low double-digit growth over Q3.

• Operating expenses in Q3 expected to rise about 15% due to SHOT Show, new product development, promotions, and profit sharing.

• Inventory levels are expected to decline further during the remainder of the fiscal year.