Smith & Wesson Brands (SWBI) Q3 2025 earnings summary

Executive summary

• Q3 net sales were $115.9 million, down 15.7% year-over-year, with gross margin at 24.1% and non-GAAP gross margin at 25.1%.

• GAAP net income was $1.7 million ($0.04/share), compared to $7.9 million ($0.17/share) last year; non-GAAP net income was $962 thousand ($0.02/share).

• New products accounted for over 41% of sales in Q3, with strong performance from recent launches like Bodyguard 2.0.

• Market share gains in handguns were noted, despite overall market softness and a competitive environment.

• Operating income for Q3 was $4.1 million (3.6% margin), down 63.4% year-over-year.

Financial highlights

• Net sales for Q3 were $115.9 million, down 15.7% year-over-year; nine-month sales were $333.9 million, down 11.4%.

• Gross margin was 24.1%, a 4.6% decrease from the prior year, due to lower production volumes and higher promotional costs.

• Q3 operating expenses were $23.8 million, $4.3 million lower year-over-year, aided by a $2.3 million gain on property sale.

• Cash used in operations was $9.8 million for Q3 and $48.1 million for nine months, compared to $25.4 million provided and $63.0 million provided in the prior year, respectively.

• Interest expense rose 80.4% in Q3 due to higher debt and lower cash balances.

Outlook and guidance

• Full-year revenue is expected to decline 5-10% from fiscal 2024, with Q4 likely down 2-5% year-over-year.

• Margins for Q4 and full year are expected to be several percentage points lower than the prior year due to lower production and inventory reduction efforts.

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

• Capital spending for the year projected at $20–$25 million.

• Management believes existing capital resources and credit facilities are adequate for at least the next 12 months.