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What were the key takeaways from Smith & Wesson’s earnings call?

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- **Q2 Financial Strength**: $124.7M revenue, $15M EBITDAS, and $27.3M cash flow highlight operational efficiency.
- **Market Outperformance**: 3.3% unit growth vs. -2.7% market, driven by 7.7% handgun sell-through and 3.5% ASP increase.
- **Q3 Growth Guidance**: 8-10% sales growth YoY, with gross margin improvement and $25-30M capital spending.
- **Tariff Mitigation**: 80 basis point impact offset by inventory management and production ramp-up.
- **Positive Industry Sentiment**: Distributors praise clean inventory and brand strength, with strong new product pipeline.

**【Management Opening Remarks】**
- Emphasized forward-looking statements and non-GAAP financial measures, including adjusted NICS as a proxy for consumer demand.
- Highlighted the importance of inventory management and capital allocation strategy.

**【CEO Commentary】**
- Q2 revenue of $124.7 million, with EBITDAS of $15 million and operating cash flow of $27.3 million.
- Inventory reduced by $20 million year-over-year, channel inventory down 15% YoY, positioning for Q3 growth.
- New products accounted for 40% of sales, driving 7.7% handgun sell-through growth and 3.5% ASP increase.
- Long guns underperformed due to seasonal hunting demand, but overall market outperformance of 3.3% vs. -2.7%.
- Smith & Wesson Academy successfully launched, with positive feedback from law enforcement and consumers.

**【CFO Financial Commentary】**
- Gross margin 24.3%, down 2.3% YoY due to lower production absorption and tariffs.
- Operating expenses down $733,000 YoY, driven by lower legal costs.
- Q3 guidance: 8-10% sales growth YoY, gross margin improvement, and 15% higher OpEx due to SHOT Show and promotions.
- Capital spending $25-30 million for the year, with $15 million repaid on $75 million line of credit.

**【Q&A Highlights】**
- Tariffs: 80 basis point headwind, offset by inventory absorption and Q3 production ramp-up.
- G&A: Expect steady performance, with Q3 OpEx up 15% for SHOT Show and promotions.
- Q4 outlook: High single to low double-digit growth, driven by stable market and new products.
- Industry feedback: Distributors and retailers praise clean inventory, brand strength, and new product pipeline.

Smith & Wesson Brands, Inc. (SWBI) Q2 2026 Earnings Call Transcript

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