Smith Wesson Brands Inc (0HEM.L) Q4 2025 Earnings Report

Smith & Wesson Brands Inc (0HEM.L) posted QQ4 2025 revenue of $140.8 million, down 11.6% year over year (YoY) but up 21.5% quarter over quarter (QoQ). The gross margin stood at 28.8%, a QoQ improvement from prior periods that helped deliver a positive operating margin of 10.4% (Q4). Net income reached $9.74 million with earnings per share (EPS) of $0.22, translating to a 6.92% net income margin. While annualized trends show softness in top-line demand versus the prior year, the quarter benefited from meaningful cost discipline and favorable working capital dynamics that unlocked robust operating cash flow of $40.83 million and free cash flow of $33.50 million. This underscores meaningful cash generation capabilities even as revenue declined. From a capital allocation perspective, management executed sizable shareholder-friendly activity in the quarter, including a stock repurchase of $27.07 million and $5.72 million in dividends, alongside debt repayment of $30.05 million. Net debt stood at $89.50 million, with total debt of $114.73 million and cash balances of $25.23 million, underscoring a disciplined approach to leverage given the current operating environment. The company also benefitted from a positive working capital release of $24.70 million, highlighting efficient working capital management. Looking ahead, there is no formal full-year guidance published for QQ4 2025 in the provided data. The near-term valuation and outlook will hinge on demand normalization in the end-customer base, ongoing cost controls, and the ability to sustain free cash flow generation to support deleveraging and potential capital returns. The following analysis synthesizes quantitative results with qualitative considerations to outline the investment thesis, risks, and catalysts.