Smith & Wesson Brands, Inc.

Good day, everybody, and welcome to Smith & Wesson Brands Incorporated third quarter fiscal 2026 financial release and 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. You may begin.

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, 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. 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 published 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. We are very pleased with our third quarter results, which demonstrated continued market share growth while simultaneously maintaining resiliency in our pricing power and profitability. This is a direct function of the entire team's discipline in staying focused and executing against our long-term strategy. The strength of the iconic Smith & Wesson brand, along with our laser focus on innovating to keep ahead of market trends, once again drove impressive average selling prices in the quarter, which together with increased unit shipments delivered not only solid top-line performance, but also translated into both strong profit margins and balance sheet performance. Our Q3 performance exceeded our expectations across the board. Net sales increased over 17% year-over-year to nearly $136 million. EBITDA of $16.8 million was up nearly 21%, and adjusted EPS of 8 cents compared with 3 cents in the prior year period. Importantly, we also delivered another quarter of significant growth in operating cash flow. which is up more than $30 million year over year. We believe our purposeful deployment of capital will allow us to continue consistently delivering long-term value for our stockholders. Looking at our performance by category, our handgun results were exceptional. Our unit shipments of handguns into the sporting goods channel were up 28% while Nix was down 2.2%. With distributor inventory weeks of supply remaining flat during the period, This indicates significant market share growth. This outstanding performance was driven by several factors, including strong demand for our newer products, a favorable shift in product mix towards higher price models, robust consumer demand, and the benefit of a modest 2% to 3% price increase that we implemented late in the quarter on January 1st. Notably, we saw this growth across our entire semi-auto pistol line, indicating that the hard work that the team has been putting in on marketing messaging, targeted promotions, and new product development execution across the line is paying dividends. Performance in long guns was consistent with our strategic positioning in the market, and we were pleased with our performance in the categories where we actively compete. For the quarter, our long gun shipments into the sporting goods channel were down 25%, while overall mix was down 5.6%. However, we believe this is largely due to channel fill in the prior year period, several new caliber introductions on our higher-end 1854 lever-action rifle products, combined with the relative outperformance in the industry of the hunting segment versus the self-defense segment, where our product line is more heavily weighted. Diving a little deeper into innovation, new products represented 44% of handgun shipments and 28% of long gun shipments during the quarter. In handguns, while we continue to have success with the bodyguard platform, as I just mentioned, the growth we experienced in Q3 was across the entire line of our semi-auto pistols, where we introduced several new models outside the subcompact space, most of which are positioned at higher price points. Once again, I'm incredibly proud of our award-winning product management, engineering, design, and production teams who consistently deliver products that resonate with consumers while meeting their expectations of world-class quality and reliability associated with our legendary brand. Driven by this mixed shift, and as I mentioned earlier, we were again pleased to continue seeing strong overall average selling prices in the handgun category, with ASPs of 5.2% versus a year ago to over $419 and also above Q2 levels. On the long gun side, ASPs were also strong at $535, although down about 11% versus a year ago. Similarly, mixed with the primary driver here, as I just mentioned, with the year-ago period including the channel fill of higher-priced new product introductions on the 1854 rifles. For both categories, the strength of the Smith & Wesson brand and our ability to ensure our product assortment is aligned to market trends continues to allow us to maintain healthy pricing and profitability while only participating selectively in promotions. Turning now to our balance sheet, We continue to make significant progress reducing our debt and further strengthening our financial position. We ended Q3 with $75 million in debt versus $90 million at the end of Q2, and we paid down an additional $20 million subsequent to the end of Q3. We were pleased with our internal inventory position of $175 million, which was down $23 million versus last Q3, resulting in excellent cash generation in the period of over $20 million. I'd like to once again commend the team for their hard work on our disciplined process for aligning production to sales expectations across the product portfolio, which drove these results. And we're also very pleased with our distributor inventory levels, which remain flat in terms of weeks of supply, maintaining at approximately nine weeks throughout the quarter, right in line with our target. With our strong sales in the period, this indicates solid sell-through of our products at the retail counter. Before I turn the call over to Dina, I want to touch on a couple of additional points. First, we attended the annual industry shop show in Las Vegas at the end of the quarter, where we were very pleased with customer feedback on our performance, product portfolio, and forward strategy. This feedback, combined with our recent results and strong outlook for the remainder of the fiscal year, which Gina will cover in a moment, indicates we are winning in the marketplace. And looking forward, we will continue to be laser focused on execution across the business and sustaining these gains. Next. The Smith & Wesson Academy, which launched just six months ago, along with our focus on the professional channel, is already exceeding our expectations. Thanks to the hard work of our academy staff and law enforcement sales team, and the ongoing success of our purpose-built, rugged, and reliable duty weapons, we are not only growing in the consumer channel, but also gaining significant momentum on the law enforcement side. You may have seen that we were awarded a number of large agency awards recently, and as a matter of fact, have shifted to nearly 1,000 separate federal, state, and local law enforcement agencies just within the past 18 months. With a strong sales pipeline and growing momentum, we're very pleased with the results to date and beyond proud and humbled to be trusted by these men and women with the tools they need to come home safe to their families every day as they put themselves in harm's way to protect and serve our country and our communities. In summary, momentum is strong and building, and our brand and product assortment are driving continued healthy profitability And we remain confident in the direction and trajectory of our business against the backdrop of a healthy and stable market. We continue to lead with a proven innovation strategy that consistently resonates with consumers. Backed by the powerful Smith & Wesson brand, along with our commitment to operational excellence and maintaining a strong balance sheet, we are well-positioned to continue winning in the marketplace and delivering long-term value to our stockholders. As always, I want to thank our entire team of talented Smith & Wesson employees for their tireless dedication and 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.