Executive Summary
Smith & Wesson Brands, Inc. delivered a solid QQ4 2024 performance with revenue of $159.1 million, up 9.9% year over year, supported by higher unit shipments in both handguns and long guns and a robust new-product cycle. The quarter featured a margin expansion, with gross margin at 35.5% and operating margin near 15.9%, driven by better fixed-cost absorption, favorable ASPs on long guns, and ongoing production ramp-ups. Net income reached $26.1 million (GAAP EPS $0.57), aided by a $6.5 million gain from an intangible asset sale, while non-GAAP EPS was $0.45. Operating cash flow was strong at $43.6 million, and free cash flow stood at $38.0 million, reinforcing a healthy balance sheet with $60.8 million in cash and only $78.4 million of total debt (net debt about $17.5 million). Management highlighted the 1854 lever-action rifle and other new products as key growth catalysts, with new products contributing 29.1% of quarterly sales. The company reiterated a favorable medium-term outlook for FY25, emphasizing mid-to-high single-digit revenue growth, continued margin stabilization in the low-30s, and meaningful capacity additions to support demand. Management also signaled a continued focus on promotions and channel partnerships to defend share during a seasonally softer summer period, with a stronger back-half driven by election-related demand and product introductions.
Looking ahead, SWBI projects mid-to-high single-digit revenue growth for fiscal 2025, with margins benefitting from automation, Tennessee facility consolidation, and a higher-volume production plan. However, near-term demand remains soft in Q1 2025 (expected roughly 10% lower year-over-year in units and dollars), and inflation-driven input costs could weigh on margins in the near term. The decision to increase the quarterly dividend by 8.3% to $0.13 per share and ongoing share repurchases underscore the company’s confidence in its cash-generative model and capital allocation discipline. Overall, SWBI’s earnings quality appears solid, anchored by a strong product cadence, improving operating leverage, and ample liquidity to fund capex and returns to shareholders.
Key Performance Indicators
QoQ: 108.99% | YoY:41.84%
QoQ: 231.26% | YoY:103.40%
QoQ: 235.29% | YoY:103.57%
Key Insights
Revenue: $159.147 million in Q4 2024, up 9.9% yoy; Gross profit: $56.663 million; Gross margin: 35.60%; Operating income: $25.286 million; Operating margin: 15.89%; Net income: $26.11 million; Net margin: 16.41%; EPS (GAAP): $0.57; EPS (Diluted): $0.57; EBITDA: $40.528 million; Cash flow from operations: $43.616 million; Free cash flow: $38.023 million; Debt: Total debt $78.369 million; Net debt: $17.53 million; Cash and cash equivalents: $60.839 million; Current ratio: 2.98; Inventory: $160.5 m...
Financial Highlights
Revenue: $159.147 million in Q4 2024, up 9.9% yoy; Gross profit: $56.663 million; Gross margin: 35.60%; Operating income: $25.286 million; Operating margin: 15.89%; Net income: $26.11 million; Net margin: 16.41%; EPS (GAAP): $0.57; EPS (Diluted): $0.57; EBITDA: $40.528 million; Cash flow from operations: $43.616 million; Free cash flow: $38.023 million; Debt: Total debt $78.369 million; Net debt: $17.53 million; Cash and cash equivalents: $60.839 million; Current ratio: 2.98; Inventory: $160.5 million; New product contribution: 29.1% of quarterly sales; New product launches include 1854 lever-action rifle, M&P 15 Sport III, SD9 2.0; Full-year context: FY2024 revenue up ~12% and units up ~13% versus prior year; Q4 new products accounted for nearly 30% of sales; Management sees FY25 revenue growth in the mid-to-high single digits with margin stabilization in the low 30%s.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
159.15M |
9.93% |
15.76% |
| Gross Profit |
56.66M |
35.03% |
41.42% |
| Operating Income |
25.29M |
41.84% |
108.99% |
| Net Income |
26.11M |
103.40% |
231.26% |
| EPS |
0.57 |
103.57% |
235.29% |
Key Financial Ratios
operatingProfitMargin
15.9%
operatingCashFlowPerShare
$0.96
freeCashFlowPerShare
$0.84
dividendPayoutRatio
20.9%
Management Commentary
Key management insights and quotes from the QQ4 2024 earnings call:
- Strategy and growth: Mark Smith stated, “Our Q4 top-line revenue was up 10% versus last year, driven by unit growth in both handguns and long guns,” underscoring the multi-product growth engine and market-share gains. He highlighted a larger long-term growth opportunity from the 1854 lever-action rifle and ongoing capacity investments to support new product rollouts.
- Product pipeline and mix: “Innovation continued to be a key driver, with new products making up just under 30% of sales, led by the 1854 lever action rifle,” and Deana McPherson added that new products contributed 29.1% of quarterly revenue.
- ASP and pricing: The team noted that handgun ASPs were “largely held steady, declining less than 2%,” while long gun ASPs rose “nearly 11%,” driven by the 1854 launch, with ongoing expectations of a durable ASP trajectory as new products penetrate the market.
- Capacity and efficiency: Mark articulated plans to add capacity in the fall to support demand and to capitalize on the Tennessee facility relocation, with automation and footprint reductions expected to lift efficiency later in 2025.
- Market outlook and seasonality: The leadership expects healthy firearms demand into FY25 but anticipates a more competitive summer period; they expect tailwinds in the second half from the election cycle, new product introductions, and capacity improvements. Deana emphasized that Q1 margins should be in line with prior-year levels, and that full-year gross margins are projected to stabilize in the low-30s, with improvements in the back half as the Tennessee consolidation benefits are realized. The company also noted an 8.3% dividend increase to $0.13 per share for July 2024 and ongoing share repurchases as part of capital allocation.
“Our Q4 top-line revenue was up 10% versus last year, driven by unit growth in both handguns and long guns.”
— Mark Smith
“Innovation continued to be a key driver, with new products making up just under 30% of sales, led by the 1854 lever action rifle.”
— Mark Smith
Forward Guidance
Outlook and assumptions presented by management for FY2025 include: (1) Revenue to grow in the mid-to-high single digits versus FY2024, with the second half carrying a larger proportion of growth due to seasonality and election-driven demand; (2) Gross margins stabilizing in the low-30% range (with potential to approach mid-30% in the back half as the Tennessee automation and footprint optimization mature); (3) Operating expenses anticipated to be 3%–5% higher year over year due to compensation inflation and greater R&D investment; (4) Adjusted EBITDAS expected to grow at a pace similar to sales; (5) Effective tax rate around 24%; (6) Near-term Q1 gross margin expected to be in line with prior-year levels, with the full-year benefiting from automation, capacity expansion, and more stable channel inventory. Key risk factors highlighted include ongoing inflation, the election cycle influencing demand, and potential regulatory/shipment channel headwinds. Investors should monitor: (i) progress on Tennessee facility consolidation and automation realization; (ii) the pace of capacity commissioning and its impact on gross margins and unit volumes; (iii) the evolution of NICS-demand proxies and end-market demand through election cycles; (iv) the company’s ability to maintain ASPs in a competitive pricing environment; (v) channel inventory levels and promotional intensity.