Smith & Wesson Brands (SWBI) Q3 2026 earnings summary

Executive summary

• Net sales for Q3 FY26 rose 17.1% year-over-year to $135.7 million, driven by strong new handgun products and increased unit shipments, with gross margin improving to 26.2% from 24.1% and net income increasing to $3.8 million from $2.1 million.

• EBITDA increased nearly 21% to $16.8 million, with adjusted EBITDAS at $16.8 million (12.4% of sales), and adjusted EPS of $0.08 versus $0.03 last year.

• Handgun sales and shipments drove growth, offsetting declines in long gun sales; new products contributed significantly to revenue.

• Operating cash flow grew by more than $30 million year-over-year, reflecting disciplined capital deployment.

• Law enforcement and professional channel momentum continues, with nearly 1,000 agency shipments in 18 months.

Financial highlights

• Gross margin improved by 210 basis points to 26.2%, aided by higher production, lower promotion costs, and lower Federal Excise Tax, partially offset by tariffs.

• Net income reached $3.8 million, up from $2.1 million year-over-year, with GAAP and non-GAAP EPS both at $0.08.

• Operating income for Q3 FY26 was $6.7 million (4.9% of sales), up 41.5% year-over-year.

• Cash from operations was $20.5 million in Q3 and $39.6 million for nine months, compared to cash used of $9.8 million and $48.1 million, respectively, in the prior year.

• Ended Q3 with $18.4 million in cash and equivalents and $75 million in debt, with $20 million repaid after quarter-end.

Outlook and guidance

• Q4 sales are expected to increase 10–12% over Q4 2025, with a slight reduction in channel inventory.

• Q4 gross margin projected to rise several percentage points over Q3 and year-over-year.

• Operating expenses in Q4 anticipated to be about 10% higher than last year due to R&D, stock compensation, and profit sharing.

• Capital expenditures for fiscal 2026 expected to be $25–30 million.

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