The following is a summary of the Smith & Wesson Brands, Inc. (SWBI) Q2 2025 Earnings Call Transcript:

Financial Performance:

• Smith & Wesson reported Q2 2025 net sales of $129.7 million, an increase of 3.8% compared to the prior year.

• Adjusted EBITDA remained solid despite market volatility, thanks to their flexible manufacturing model.

• Gross margin of 26.6% was slightly above the previous year by 1.2%, driven by operational efficiencies despite higher labor and overhead costs.

• Net income was reported at $4.1 million, with earnings per share of $0.09, and adjusted earnings per share of $0.11.

• Operating expenses decreased by $400,000 compared to the previous year, thanks to lower event costs offset by higher R&D and legal expenses.

Business Progress:

• Smith & Wesson's product innovation remains a strong driver of success, with new products like the Bodyguard 2.0 pistol and the lever-action rifle leading sales.

• Significant awards were won, including 2024 Handgun of the Year from Guns and Ammo Magazine and best new handgun of 2024 from the National Association of Sporting Goods Wholesalers.

• Company plans to expand its lever-action rifle line throughout the second half of FY 2025.

Opportunities:

• The company continues to gain market share, led by product innovation including the recently launched Bodyguard 2.0.

• Expansion of the popular lever-action rifle line is expected to build further momentum as the year progresses.

Risks:

• The company faces increased competitive pressure leading to heightened promotional activity, which is expected to sustain pressure on average selling prices.

• Smith & Wesson noted consumer cautiousness and a downward trend in discretionary spending, particularly affecting demand for firearms.

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