Smith & Wesson Brands, Inc. Q3 FY2026 earnings call

• Mark Smith noted Q3 results showed continued market share growth, strong pricing power and profitability. Handgun results exceptional with growth across semi-auto pistol line due to new products, favorable product mix, consumer demand and price increase. Long gun performance consistent with strategic positioning. New products significant in both categories. Team commended for product management, engineering, etc. • Balance sheet progress: debt reduced, inventory down, distributor inventory levels flat. Attended industry shop show with positive customer feedback. Smith & Wesson Academy and focus on professional channel exceeding expectations, law enforcement sales growing with strong pipeline. • Dena McPherson covered financials: net sales up due to new handgun products, distributor inventory changes, handgun and long gun ASPs, gross margin up, operating expenses higher, net income and EPS up, cash from operations up, capital spending and dividends discussed.

Handguns: Unit shipments into the sporting goods channel up 28% while Nix was down 2.2%, new products represented 44% of handgun shipments. ASPs up 5.2% to over $419. Long guns: Shipments into the sporting goods channel down 25% while overall mix was down 5.6%, new products represented 28% of long gun shipments. ASPs $535, down about 11% vs year ago. Net sales for third quarter $135.7 million, 17.1% above prior year.

• Expect fourth quarter sales up 10 to 12% over Q4 2025 sales with small reduction in channel inventory. • Expect Q4 gross margin to increase by several percentage points over Q3 and a point or two over last year's fourth quarter. • Operating expenses in Q4 likely about 10% higher than last year's fourth quarter due to increases in research and development, stock compensation, profit sharing, etc. • Expect continued healthy cash generation during fourth quarter. • Effective tax rate expected to be approximately 29%.

• Forward-looking statements subject to risks and uncertainties that could cause actual results to differ materially, described in SEC filings. • NICS generally not directly correlate to shipments or market share due to inventory levels in the channel. • Tariffs had a negative impact on gross margin. • Law enforcement sales is a longer sales cycle.

Q: Ask about recent pricing changes, any feedback on distributors or consumers.

A: Price increase effective Jan 1st, about 3% across the board, no pushback, uptick in demand.

Q: Ask about handgun sales strength, what helped.

A: Success with Bodyguard, refreshing entire product line, market trends understanding, moving out of subcompact into higher-priced markets.

Q: Ask about long guns, driving strength.

A: SBRs helped a bit, product portfolio weighted towards self-defense, looking at long-term opportunities in hunting.

Q: Ask about law enforcement opportunity, international military.

A: Focus area, longer sales cycle, healthy pipeline from academy, innovation, expands beyond domestic to foreign militaries.