Smith & Wesson Brands, Inc.

Good day, everyone, and welcome to Smith & Wesson Brands, Inc. First Quarter Fiscal 2026 Financial Results Conference Call. This call is being recorded. At this time, I would like to turn the call over to Kevin Maxwell, Smith & Wesson's General Counsel, who will give us some information about today's call.

Thank you, and good afternoon. Our comments today may contain forward-looking statements. Our use of the words anticipate, project, estimate, expect, intend, believe, and other similar expressions are intended to identify forward-looking statements. Forward-looking statements may also include statements on topics such as our product development, objectives, strategies, market share, demand, consumer preferences, inventory conditions for our products, growth opportunities and trends, and industry conditions in general. Forward-looking statements represent our current judgment about the future and are subject to risks and uncertainties that could cause our actual results to differ materially from those expressed or implied by our statements today. These risks and uncertainties are described in our SEC filings, which are available on our website, along with a replay of today's call. We have no obligation to update forward-looking statements. We reference certain non-GAAP financial results. our non-GAAP financial results exclude relocation expense. Reconciliations of GAAP financial measures to non-GAAP financial measures can be found in our SEC filings and in today's earnings press release, each of which is available on our website. Also, when we reference EPS, we are always referencing fully diluted EPS, and any reference to EBITDA is to adjusted EBITDA. Before I hand the call over to our speakers, I would like to remind you that when we discuss NICS results, we are referring to adjusted NICS, a metric by the National Shooting Sports Foundation based on FBI NICS data. Adjusted NICS removes those background checks conducted for purposes other than firearms purchases. Adjusted NICS is generally considered the best available proxy for consumer firearm demand at the retail counter. Because we transfer firearms only to law enforcement agencies and federally licensed distributors and retailers and not to end consumers, NICS generally does not directly correlate to our shipments or market share in any given time period, we believe mostly due to inventory levels in the channel. Joining us on today's call are Mark Smith, our president and CEO, and Dena McPherson, our CFO. With that, I will turn the call over to Mark.

Thank you, Kevin, and thanks, everyone, for joining us today. First quarter results came in better than expected, with sales of $85.1 million and EBITDAs of $8 million, reflecting robust demand for our new products and continued strong market share for our broader portfolio in every firearms category in which we compete. Our performance during the seasonal slow period for firearms demonstrates the strength of our brand and the ongoing success of our innovation strategy. During the first quarter, our performance in handguns was exceptional, with our shipments into the sporting goods channel increasing just over 35% year-on-year versus Nick's being down 2.4%. These results were driven by strength across several product lines, including Bodyguard, Shield, and M&P, showing the power of the Smith & Wesson brand supported by our incredibly passionate and loyal customers. In long guns, Our shipments into the sporting goods channel were down 28.1% year-over-year versus NICS being down 7.8%. However, this reflects the divergent conditions between the shotgun and bolt-action rifle markets, where we do not play meaningfully, and the MSR and lever-action markets, where we continue to maintain very strong market positions. As expected, average selling prices trended lower in the first quarter, declining 6.1% sequentially. Handgun ASPs were down 4%, while long guns declined 13% due to mix. While the market remains highly promotional, our focus on new products, strong marketing campaigns, such as the Red, White, and Big Blue campaign we ran throughout July, and continued consumer preference for our brand have allowed us to participate in promotions more selectively. As a result, we maintain relatively healthy ASPs throughout the summer. With the typically busy fall and winter seasons now upon us, we continue to expect to maintain strong ASPs throughout fiscal 2026. Moving now to market conditions, we continue to view the market as relatively quote-unquote normal. It remains cyclical and reflects traditional seasonality throughout the year. While the current environment is more challenging than a few years ago, as we have seen many times before during these market cycles, underlying consumer demand is above what we saw before the last surge. as we now have more consumers who are participating in the category. Through all the ups and downs of the market over time, our leadership position in key categories has endured, and feedback from our distributor and retail partners supports the view that our disciplined execution of our strategy continues to position Smith & Wesson at or near the top in the categories in which we compete. Innovation remains a cornerstone of that strategy, with new products accounting for 37.3% of sales in the first quarter. Underscoring this, we've seen a very positive initial reception to our Shield X, which we introduced in late July. And as I've said many times before, our award-winning engineering and design teams consistently deliver products that resonate with consumers. With a strong pipeline of new products upcoming, we will continue to invest in innovation to keep the line fresh and ensure that we maintain our leadership position. Looking at inventory levels in the channel, distributor inventory is very healthy, with strong sell-through of our products. Distributor inventory was down more than 13,000 units at the end of July compared with the end of fiscal 2025, and down more than 17,000 units year over year, which indicates strong demand for our products at the retail counter. Due to this clean inventory position, we are well-placed to quickly convert incremental demand into shipments as we enter the typically busy firearm season. As we now prepare for the traditionally stronger second half of the year, we remain disciplined in managing our business and our capital allocation strategy is unchanged. Invest in our business, maintain our strong balance sheet, and return value to stockholders. In fiscal 2026, our internal investments continue to prioritize leveraging our state-of-the-art facility in Tennessee, optimizing and modernizing several value-add elements of our facility in Massachusetts, and investing in special initiatives to further enhance our brand and support our customers. On that note, and before I hand the call over to Dina, I want to provide an update on a very special project that the team has been hard at work on at our Tennessee facility. For decades prior to its closure several years ago, the Smith & Wesson Academy in Springfield, Massachusetts, was an industry staple, providing training for countless law enforcement officers, consumers, and agencies around the world. Today, I'm thrilled to announce that the Smith & Wesson Academy is back and better than ever. This state-of-the-art facility encompasses nearly 30 acres of purpose-built ranges, training facilities, fitness equipment to allow training under physical duress, classrooms, and even a two-story modular building rated for simulation live fire to allow situational training for law enforcement and military customers. The Academy will be run by Mark Cocciolo, a true American hero. Mark is a retired U.S. Navy SEAL veteran and firearms training expert. After proudly serving our country for 25 years, including with the prestigious SEAL Team 6, he spent the next 13 years of his career as one of the top firearms instructors at Basic Underwater Demolition SEAL Training, or BUDS, in San Diego, where he helped revamp the firearm training curriculum and trained nearly 4,000 Navy SEAL candidates. The goal with this new facility will be to provide yet another advantage to our current and prospective law enforcement, federal agency, and military customers who will all have access to Mark and his team's knowledge and our facilities free of charge. In addition, and in keeping with our goal to promote responsible firearms ownership, we aim to enhance the firearms proficiency of our loyal consumers who will be able to sign up for a variety of courses custom designed for any skill set from beginners to experts. and come to Smith & Wesson to learn from the best of the best. All, of course, while showcasing our world-class firearms. We'll be hosting a grand opening celebration next Friday on September 12th and are excited to share more details as we begin leveraging this amazing asset. Finally, and as always, I just want to thank our entire team of talented Smith & Wesson employees for their tireless dedication to our brand and in putting their skills to work each and every day to make us successful. With that, I'll turn the call over to Dena to cover the financials.