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.