Q4 2024 Smith & Wesson Brands Inc Earnings Call

Operator: Good morning, everyone, and welcome to Smith & Wesson Brands, Inc.'s fourth quarter and full fiscal 2024 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.

Operator: Good day everyone, and welcome to Smith & Wesson Brands' Inc. Fourth Quarter and Full Fiscal 2024 Financial Results Conference call. This call is being recorded.

Good day, everyone and welcome to Smith, <unk> Wesson brands, Inc, fourth quarter and full fiscal 2024 financial results Conference call. This call is being recorded at this time I would like to turn the call over to Kevin Maxwell Smith, and Wesson as General Counsel will give us some information about today's call.

Kevin Maxwell: At this time, I would like to turn the call over to Kevin Maxwell, Smith & Wesson's general counsel. We'll give us some information about today's call.

Kevin Maxwell: 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 is 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.

Speaker Change: Thank you and good afternoon, everyone.

Speaker Change: 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.

Kevin Maxwell: Other similar expressions are intended to identify four-looking statements. Four-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. Four-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.

Speaker Change: 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.

Speaker Change: 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.

Speaker Change: These risks and uncertainties are described in our SEC filings, which are available on our website along with a replay of today's call.

Kevin Maxwell: We have no obligation to update four-looking statements.

Speaker Change: We have no obligation to update forward looking statements.

Kevin Maxwell: We reference certain non-GAAP financial results. Our non-GAAP financial results exclude a gain from the sale of certain intangible assets, costs related to an accrued legal settlement, relocation expense, and other costs. Reconciliation 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 EBITDAs is to adjusted EBITDAs.

Kevin Maxwell: We reference certain non-GAAP financial results. Our non-GAAP financial results exclude a gain from the sale of certain intangible assets, costs related to an accrued legal settlement, relocation expense, and other costs. 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 EBITDAs.

Speaker Change: We reference certain non-GAAP financial results are non-GAAP financial results exclude a gain from the sale of certain intangible assets costs related to an accrued legal settlement relocation expense and other costs.

Speaker Change: 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.

Speaker Change: Also when we reference EPS, we are always referencing fully diluted EPS and any reference to EBITDA to adjusted EBITDA.

Kevin Maxwell: Before I hand the call over to our speakers, I would like to remind you that when we discuss NYX results, we are referring to adjusted NYX, a metric published by the National Shooting Sports Foundation based on SBI NYX data. Adjusted NYX removes those background checks conducted for purposes other than firearms purchases. Adjusted NYX is generally considered the best available proxy for consumer firearms 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, NYX 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.

Kevin Maxwell: 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 background checks conducted for purposes other than firearms purchase. Adjusted NICS is generally considered the best available proxy for consumer firearm demand at the retail counter. However, because we transfer firearms only to law enforcement agencies and federally licensed distributors and retailers and not to end consumers, mix generally does not directly correlate to our shipments or market share in any given time period. We believe this is mostly due to inventory levels in the channel. Joining us on today's call are Mark Smith, our President and CEO, and Deana McPherson, our CFO. With that, I will turn the call over to Mark.

Speaker Change: Before I hand, the call over to our speakers I would like to remind you that when we discuss next results. We are referring to adjusted mix a metric published by the National shooting Sports Foundation based on F. B I mixed data.

Speaker Change: Adjusted next removes those background checks conducted for purposes other than firearms purchases.

Speaker Change: Adjusted mix is generally considered the best available proxy for consumer firearm demand at the retail counter.

Speaker Change: Cuz, we transfer firearms only to law enforcement agencies, and federally licensed distributors and retailers and Nokia and consumers next 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.

Kevin Maxwell: Joining us on today's call are Mark Smith, our president and CEO, and Dean McPherson, our CSO. With that, I will turn the call over to Mark.

Speaker Change: Joining us on today's call are Mark Smith, our president and CEO and Dana Macpherson our CFO.

Speaker Change: With that I'll turn the call over to Mark.

Mark Eric Smith: Thank you, Kevin, and thanks everyone for joining us. We are pleased to announce that Smith & Wesson delivered yet another strong quarter to close out fiscal 2024. I am very proud of the team's continuing discipline and execution against our strategic initiatives of strong brand messaging and marketing, best-in-class innovation, operational excellence, and business process efficiency. Our results in FY24 again demonstrate that our relentless focus on these long-term strategies consistently reinforces our position as a market leader and delivers solid stockholder returns.

Mark Smith: Thank you, Kevin, and thanks everyone for joining us today. We are pleased to announce that Smith and Wesson delivered yet another strong quarter to close out fiscal 2024. I am very proud of the team's continuing discipline and execution against our strategic initiatives of strong brand messaging and marketing, best in class innovation, operational excellence, and business process efficiencies. Our results in FY24 again demonstrate that our relentless focus on these long-term strategies consistently reinforces our position as a market leader and delivers solid stockholder returns. Our Q4 top line revenue was up 10% versus last year, driven by unit growth in both handguns and long guns.

Mark: Thank you, Kevin and thanks, everyone for joining us today.

Mark Eric Smith: Our Q4 top-line revenue was up 10% versus last year, driven by unit growth in both handguns and long guns. We believe this reflects robust market share gains as our shipments, once again, outpace the overall firearms market, driven once again by excellent consumer reception to our new product offerings as well as sustained demand for our core product portfolio. On a full-year basis, our revenue was up 12% year-on-year, and our unit shipments were up 13%, outpacing the market where Nick's was down by 5.4%. On the bottom line, the team delivered solid non-gap EPS of 45 cents in Q4.

Mark Eric Smith: We are pleased to announce that Smith <unk> Wesson delivered yet another strong quarter to close out fiscal 'twenty 'twenty four.

Mark Eric Smith: I am very proud of the team's continuing discipline and execution against our strategic initiatives, a strong brand messaging and marketing best in class innovation operational excellence and business process efficiencies.

Mark Eric Smith: Our results in FY 'twenty four again demonstrate that our relentless focus on these long term strategies consistently reinforces our position as a market leader and deliver solid stockholder returns.

Mark Eric Smith: Our Q4 top line revenue was up 10% versus last year, driven by unit growth in both handguns and long guns.

Mark Smith: We believe this reflects robust market share gains as our shipments, once again, outpaced the overall firearms market, driven once again by excellent consumer reception to our new product offerings, as well as sustained demand for our core product portfolio. On a full year basis, our revenue was up 12% year on year, and our unit shipments were up 13%, outpacing the market where Knicks was down by 5.4%. On the bottom line, the team delivered solid non-GAAP EPS of 45 cents in Q4. This was driven by increased production rates to meet demand for our new products and to maintain target inventory levels on our core offerings, as we mentioned last quarter.

Mark Eric Smith: We believe this reflects robust market share gains as our shipments once again outpaced the overall firearms market driven once again by excellent consumer reception to our new product offerings as well as sustained demand for our core product portfolio.

Mark Eric Smith: On a full year basis, our revenue was up 12% year on year and our unit shipments were up 13% outpacing the market, where nick's was down by five 4%.

Mark Eric Smith: On the bottom line the team delivered solid non-GAAP EPS of <unk> 45 in Q4.

Mark Eric Smith: This was driven by increased production rates to meet demand for our new products and to maintain target inventory levels on our core offerings, as we mentioned last quarter. We also benefited from continuing stabilization of the Tennessee operations and have begun realizing the associated efficiency. Breaking those Q4 sales numbers down a little further, for the sporting goods channel, our long gun unit shipments increased by over 14% versus the year-ago period, and our handgun shipments were up almost 8%, while the overall market, as measured by NICS checks, was down 6% in long guns and down 7% in handguns.

Mark Eric Smith: This was driven by increased production rates to meet demand for our new products and to maintain target inventory levels on our core offerings as we mentioned last quarter.

Mark Smith: We also benefited from continuing stabilization of the Tennessee operations and it begun realizing the associated efficiencies.

Mark Eric Smith: We also benefited from continuing stabilization of the Tennessee operations and have begun realizing the associated efficiencies.

Mark Smith: Breaking those Q4 sales numbers down a little further. For the sporting goods channel, our long gun unit shipments increased by over 14% versus the year-ago period, and our handgun shipments were up almost 8%. While the overall market, as measured by Knicks checks, was down 6% in long guns and down 7% in handguns. Innovation continued to be a key driver. With new products making up just under 30% of sales, led by the 1854 lever action rifle, which I'll cover in some more detail in a moment. And despite the outperformance in our out-the-door unit shipments into the channel, inventory levels during the period at our distributor and strategic retail partners remained healthy.

Mark Eric Smith: Breaking those Q4 numbers sales numbers down a little further for the sporting goods channel our long gun unit shipments increased by over 14% versus the year ago period, and our handgun shipments were up almost 8% while the overall market as measured by Nix checks was down 6% in long guns and down 7% in handguns.

Mark Eric 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, which I'll cover in some more detail in a moment. And despite the outperformance in our out-the-door unit shipments into the channel, inventory levels during the period at our distributor and strategic retail partners remained healthy.

Mark Eric Smith: Innovation continued to be a key driver with new products, making up just under 30% of sales led by the 18 54 lever action rifle, which I'll cover in some more detail in a moment.

Mark Eric Smith: And despite the outperformance in our out the doors unit shipments into the channel.

Mark Eric Smith: Inventory levels during the period at our distributor and strategic retail partners remained healthy.

Mark Smith: Another bright spot for the quarter was our overall ASP's, which continued to hold at healthy levels in spite of the competitive landscape. We believe this reflects the consumer's trust in the Smith and Wesson brand to deliver world-class quality firearms, innovation, and customer service. Handgun ASPs largely held steady, declining less than 2% versus the prior year quarter, mostly driven by mixed factors associated with the introduction of the very popular new entry-level priced SD2.09 millimeter; whereas long-gun ASPs beat expectations by improving by nearly 11%. The long-gun ASP increase was due to the highly successful launch of the 1854 lever action rifle, which has been hailed by the industry and consumers as an instant classic and is in high demand.

Mark Eric Smith: Another bright spot for the quarter was our overall ASPs, which continued to hold at healthy levels in spite of the competitive landscape. We believe this reflects the consumer's trust in the Smith & Wesson brand to deliver world-class quality firearms, innovation, and customer service. Handgun ASPs largely held steady, declining less than 2% versus the prior year quarter, mostly driven by mixed factors associated with the introduction of the very popular new entry-level priced SD 2.09mm, whereas Long Gun ASTs beat expectations by improving by nearly 11%.

Mark Eric Smith: Another bright spot for the quarter was our overall asps.

Mark Eric Smith: Which continued to hold at healthy levels in spite of the competitive landscape.

Mark Eric Smith: We believe this reflects the consumers trust in the Smith, <unk> Wesson brand to deliver world class quality firearms innovation and customer service.

Mark Eric Smith: Handgun asp's largely held steady declining less than 2% versus the prior year quarter, mostly driven by mixed factors associated with the introduction of the very popular new entry level price S. D 2.09 millimeter.

Mark Eric Smith: Whereas long gun asp's beat expectations by improving by nearly 11%.

Mark Eric Smith: The Long Gun ASP increase was due to the highly successful launch of the 1854 Lever Action Rifle, which has been hailed by the industry and consumers as an instant classic and is in high demand. As I covered last quarter, this successful launch creates an exciting new white space opportunity for Smith & Wesson. Our near-term category expansion plans include the introduction of new line extensions this summer and throughout the hunting season.

Mark Eric Smith: The long gun ASP increase was due to the highly successful launch of the 18 54 lever action rifle, which has been hailed by the industry and consumers as an instant classic and is in high demand.

Mark Smith: As I covered last quarter, this successful launch creates an exciting new white space opportunity for Smith and Wesson. Our near-term category expansion plans include the introduction of new line extensions this summer and throughout the hunting season. We also expect to add significant new capacity this fall to support the strong demand for our new products, helping to propel our top-line growth in the second half. Turning now to the overall firearms market, we continue to expect healthy demand for firearms in FY25, and Smith and Wesson is well positioned to deliver another solid year of growth. At the same time, we are anticipating a much more competitive marketplace throughout the traditionally slower summer months this year, as consumer discretionary spending continues to be impacted by stubborn inflation.

Mark Eric Smith: As I covered last quarter. This successful launch creates an exciting new white space opportunity for Smith <unk> Wesson.

Mark Eric Smith: Our near term category expansion plans include the introduction of new line extensions this summer and throughout the hunting season.

Mark Eric Smith: We also expect to add significant new capacity this fall to support the strong demand for our new products, helping to propel our top-line growth in the second half of the year. We continue to expect healthy demand for firearms in FY25, and Smith & Wesson is well positioned to deliver another solid year of growth. However, at the same time, we are anticipating a much more competitive marketplace throughout the traditionally slower summer months this year, as consumer discretionary spending continues to be impacted by stubborn inflation, as you have likely seen from recent quarterly results.

Mark Eric Smith: We also expect to add significant new capacity this fall to support the strong demand for our new products, helping to propel our topline growth in the second half.

Mark Eric Smith: Turning now to the overall firearms market.

We continue to expect healthy demand for firearms in FY 'twenty, five and Smith <unk> Wesson is well positioned to deliver another solid year of growth.

Mark Eric Smith: At the same time, we are anticipating a much more competitive marketplace throughout the traditionally slower summer months of this year as consumer discretionary spending continues to be impacted by stubborn inflation as you've likely seen from our recent next results.

Mark Smith: as you have likely seen from recent NYX results. This is consistent with normal seasonal patterns for firearm demand, and we do expect offsetting tailwind during our typical busy season throughout the second half. As the presidential election campaign activity ramps up in the fall and we benefit from new product introductions, and we bring online additional capacity targeted at some of our new products where we are currently constrained. Throughout the slow period this summer, we will be aggressively pursuing market share through promotions and marketing campaigns, in addition to building inventory and preparation for the busy fall season and continuing our cadence of new product introductions.

Mark Eric Smith: This is consistent with normal seasonal patterns for firearms demand, and we do expect offsetting tailwinds during our typical busy season throughout the second half, as the presidential election campaign activity ramps up in the fall, and we benefit from new product introductions, and we bring online additional capacity targeted at some of our new products where we are currently constrained. Throughout the slow period this summer, we will be aggressively pursuing market share through promotions and marketing campaigns, in addition to building inventory in preparation for the busy fall season and continuing our cadence of new product introductions.

Mark Eric Smith: This is consistent with normal seasonal patterns for firearm demand and we do expect offsetting tailwind during our typical busy season throughout the second half as the presidential election campaign activity ramps up in the fall and we benefit from new product introductions, and we bring online additional capacity targeted at some of our new products, where we are.

Mark Eric Smith: The constraint.

Mark Eric Smith: Throughout this slow period. This summer, we will be aggressively pursuing market share through promotions and marketing campaigns. In addition to building inventory in preparation for the busy fall season, and continuing our cadence of new product introductions.

Mark Smith: Specifically, with consumers increasingly price sensitive as inflation impacts discretionary spending, we will be focused on addressing this with new entry level price launches this summer, which we believe will provide tailwinds in Q2 and throughout the second half.

Mark Eric Smith: Specifically, with consumers increasingly price-sensitive as inflation impacts discretionary spending, we will be focused on addressing this with new entry-level price launches this summer, which we believe will provide tailwinds in Q2 and throughout the second half of the year. Finally, I just want to take a moment to thank our employees, past and present, for delivering another successful year. In fiscal 2024, we launched over 100 brand new products, sales of which accounted for over 27% of our total revenue.

Mark Eric Smith: Specifically with consumers increasingly price sensitive as inflation impacts discretionary spending we will be focused on addressing this with new entry level price launches. This summer, which we believe will provide tailwind in Q2 and throughout the second half.

Mark Smith: Finally, I just want to take a moment to thank our employees, past and present, for delivering another successful year. In fiscal 2024, we launched over 100 brand new products; sales of which accounted for over 27% of our total revenue. As I mentioned earlier, we grew revenue and units shipped by nearly 12 and 13%, respectively, outpacing NYX, which was down by 5.4%. We generated more than $106 million in cash from operations, ending the year with over 60 million in cash on hand and only $40 million in debt, and reduced inventory by $16.6 million. We improved Gap EPS by 6 cents, delivering 86 cents per share for the year, with EBITUS of over $94 million.

Mark Eric Smith: Finally, I just wanted to take a moment to thank our employees past and present for delivering another successful year in fiscal 'twenty 'twenty four we launched over 100 brand new products sales of which accounted for over 27% of our total revenue.

Mark Eric Smith: As I mentioned earlier, we grew revenue and units shipped by nearly 12 and 13 percent, respectively, outpacing Nick's, which was down by 5.4 percent. We generated more than $106 million in cash from operations, ending the year with over $60 million in cash on hand and only $40 million in debt, and reduced inventory by $16.6 million. We improved Gap EPS by $0.06, delivering $0.86 per share for the year with EBITDA of over $94 million.

Mark Eric Smith: As I mentioned earlier, we grew revenue and units shipped by nearly 12, and 13%, respectively, outpacing mix, which was down by five 4%.

Mark Eric Smith: We generated more than $106 million in cash from operations ending the year with over $60 million in cash on hand, and only $40 million in debt and reduced inventory by $16 $6 million.

Mark Eric Smith: We improved GAAP EPS by 610th delivering 86 cents per share for the year with EBITDA of over $94 million.

Mark Smith: We delivered significant value to our stockholders, including $22 million in dividend payments and $10.2 million in share repurchases, and all of this while successfully relocating our headquarters, distribution, and major portions of our operations into our new facility in Merrillville, Tennessee. These accomplishments are only possible due to the commitment day in and day out of our amazing team. Many of whom continue to show unwavering dedication, even though they knew that their rules would be relocating and they would ultimately be moving on from the company. This exemplifies the Smith & Wesson way, and I am personally tremendously grateful for the impact of each employee, past and present, on our great results this year and our bright future.

Deana L. McPherson: We deliver significant value to our stockholders, including $22 million in dividend payments and $10.2 million in share repurchase, and all of this while successfully relocating our headquarters, distribution, and major portions of our operations into our new facility in Maryville, Tennessee. These accomplishments are only possible due to the commitment day in and day out of our amazing team, many of whom continue to show unwavering dedication even though they knew that their roles would be relocating and they would ultimately be moving on from the company.

We deliver significant value to our stockholders, including $22 million in dividend payments and $10 $2 million in share repurchases.

Mark Eric Smith: And all of this while successfully relocating our headquarters distribution and major portions of our operations into our new facility in Maryville, Tennessee.

Mark Eric Smith: These accomplishments are only possible due to the commitment day in and day out of our amazing team many of whom continue to show unwavering dedication, even though they knew that their rules would be relocating and they would ultimately be moving on from the company.

Deana L. McPherson: This exemplifies the Smith & Wesson way, and I am personally tremendously grateful for the impact of each employee, past and present, on our great results this year and our bright future. As we covered earlier, and as I said last quarter, we expect the firearms market to experience healthy demand through the 2024 election cycle and fiscal 25. And with our deep pipeline of new products, leading brand, new state-of-the-art facility now operational, strong balance sheet, and most importantly, world-class dedicated employees, we are excited for another year of growth and to continue delivering value for our stockholders. With that, I'll turn the call over to Deana to cover the financials.

Mark Eric Smith: This exemplifies the Smith <unk> Wesson way and I am personally tremendously grateful for the impact of each employee past and present on our great results this year and our bright future.

Mark Smith: As we covered earlier, and as I said last quarter, we expect the firearms market to experience healthy demand through the 2024 election cycle and fiscal 25.

Mark Eric Smith: As we covered earlier and as I said last quarter, we expect the firearms market to experience healthy demand through the 'twenty 'twenty four election cycle in fiscal 'twenty five.

Mark Smith: And with our deep pipeline of new products, leading brand, new state of the art facility now operational, strong balance sheet, and most importantly, world class dedicated employees, we are excited for another year of growth and to continue delivering value for our stockholders.

Mark Eric Smith: And with our deep pipeline of new products, leading brand new state of the art facility now operational strong balance sheet and most importantly world class dedicated employees. We are excited for another year of growth and to continue delivering value for our stockholders.

Deana McPherson: With that, I'll turn the call over to Dina to cover the financials. Thanks, Mark.

With that I'll turn the call over to Diana to cover the financials.

Diana: Thanks Mark.

Deana L. McPherson: Net sales for our fourth quarter of $159.1 million were $14.4 million or 9.9% above the prior year comparable quarter, with new products making up 29.1% of total revenue for the quarter. As Mark noted, the launch of the 1854 Lever Action Rifle in January was met with significant consumer interest. In addition, the new M&P 15 Sport 3 and SD9 2.0 both performed well in their categories.

Deana McPherson: Net sales for our fourth quarter of 159.1 million dollars for 14.4 million dollars or 9.9% of the prior year comparable quarter, with new products making up 29.1% of total revenue for the quarter.

Diana: Net sales for our fourth quarter, and $159 $1 million, but $14 4 million or nine 9% above the prior year comparable quarter with new products, making up 29, 1% of total revenue for the quarter.

Deana McPherson: As Mark noted, the launch of the 1854 lever action rifle in January was met with significant consumer interest. In addition, the new MMP 15 Sport 3 and FD 9 2.0 both performed well in their categories. Rose margin of 35.5% was 6.5% above the prior year comparable quarter, reflecting a combination of favorable fixed cost absorption due to increased production volume, higher long-gone ASPs driven by new products, increased sales volume, and lower promotions, partially offset by the impact of inflation on material and labor costs and increased inventory reserves. Operating expenses of $31.1 million for a fourth quarter were $7 million higher than the prior year comparable quarter due to increased profit-related compensation costs, including profit sharing, which is now recorded in the quarter it is earned.

Diana: As Mark noted the launch of the 18 54 lever action rifle in January it was met with significant consumer interest.

Diana: In addition, the new M. P 15 sport three NSC nine to Plano, both performed well in their category.

Deana L. McPherson: Growth margin of 35.5%, with 6.5 percentage points above the prior year comparable quarter, reflecting a combination of favorable fixed cost absorption due to increased production volume, higher long-run ASPs driven by new products, increased sales volumes, and lower promotions partially offset by the impact of inflation on material and labor costs and increased inventory reserves. Operating expenses of $31.1 million for our fourth quarter were $7 million higher than the prior year comparable quarter due to increased profit-related compensation costs, including profit sharing, which is now recorded in the quarter it is earned, and increased legal costs combined with the impact of a year-to-date reclassification of subleased income from other income to operating expenses in the prior year.

Gross margin of 35, 5%, plus six and a half percentage points above the prior year comparable quarter.

Diana: A combination of favorable fixed cost absorption due to increased production volumes higher long run asps driven by new products increased sales volume and lower promotions, partially offset by the impact of inflation on material and labor cost and increased inventory with her.

Diana: Operating expenses of $31.1 million for our fourth quarter were $7 million higher than the prior year comparable quarter due to increased profit related compensation cost call, including profit sharing which is now recorded in the quarter. It is earned and increased legal costs combined with the impact of a year to date reclassification.

Deana McPherson: An increased legal cost combined with the impact of a year-to-date reclassification of sublease income from other incomes to operating expenses in the prior year. The income of $26.1 million in the fourth quarter was more than double the prior year comparable quarter due to a combination of higher net sales, improved gross margin, and a $6.5 million sale of intangible assets, partially offset by profit-related compensation costs. Gap earnings per share of 57 cents was well above the prior year comparable quarter of 28 cents, while non-Gap earnings per share of 45 cents was also up from 32 cents in Q4 fiscal 2023.

Diana: Lease income from other income to operating expenses in the prior year.

Deana L. McPherson: Net income of $26.1 million in the fourth quarter was more than double the prior year comparable quarter due to a combination of higher net sales, improved gross margin, and a $6.5 million sale of intangible assets partially offset by profit-related compensation costs. Gap earnings per share of $0.57 were well above the prior year comparable quarter of $0.28, while non-gap earnings per share of $0.45 was also up from $0.32 in Q4, fiscal 2023.

Diana: Net income of $26 $1 million in the fourth quarter, but was more than double the prior year comparable quarter due to a combination of higher net sales improved gross margin and a $6 5 million dollar sale of intangible assets, partially offset by profit related compensation costs.

Diana: GAAP earnings per share of 57 pence.

Diana: Above the prior year comparable quarter of 28%, while non-GAAP earnings per share of 45 times, but also up from 32 cents in Q4 fiscal 2023.

Deana McPherson: Turning to cash loans, during the quarter, we generated $43.6 million in cash from operations and spent $5.6 million on capital projects, resulting in net free cash of $38 million. During the quarter, we repurchased approximately 77,000 shares at an average price of $14.12 for a total of $1.1 million. Subsequent to year-end, we've already repurchased approximately 137,000 shares at an average price of $16.7. And we still have nearly $38 million remaining on our authorization. We paid $5.5 million in dividends, repaid $25 million on a revolving line of credit, and ended the quarter with $60.8 million in cash and $40 million in borrowing on our line of credit.

Deana L. McPherson: Turning to cash flows, during the quarter, we generated $43.6 million in cash from operations and spent $5.6 million on capital projects, resulting in net free cash of $38 million. During the quarter, we repurchased approximately 77,000 shares at an average price of $14.12 for a total of $1.1 million. Subsequent to year-end, we've already repurchased approximately 137,000 shares at an average price of $16.07, and we still have nearly $38 million remaining on our authorization.

Diana: Turning to cash flow.

Diana: During the quarter, we generated $43.6 million in cash from operations and spent $5.6 million on capital projects, resulting in that free cash of $38 million.

Diana: During the quarter, we repurchased approximately 77000 shares at an average price of $14.12 for a total of $1 $1 million.

Diana: Subsequent to year end, we've already repurchased approximately a 137000 shares at an average price of $16.07.

Diana: We still have nearly $38 million remaining on our authorization.

Diana: We paid $5 $5 million in dividend.

Deana L. McPherson: We paid $5.5 million in dividends, repaid $25 million on our revolving line of credit, and ended the quarter with $60.8 million in cash and $40 million in borrowings on our line of credit. During the full year, we generated $106.7 million in cash from operations and spent $90.8 million on capital projects, resulting in net free cash of $16 million for the year.

Diana: We paid $25 million on our revolving line of credit and ended the quarter with $68 million in cash and $40 million in borrowings on our line of credit.

Deana McPherson: During our full year, we generated $106.7 million in cash from operations and spent $90.8 million in capital projects, resulting in net free cash of $16 million for the year.

Diana: During a full year, we generated $106 $7 million in cash from operations and spent $98 million on capital projects, resulting in that free cash of $16 million for the year.

Deana McPherson: Subsequent to $5 million remaining to be spent on the relocation, and normal operating capital returning to our historical levels of $25 to $30 million, our board has authorized an 8.3% increase in our quarterly dividend, raising it to 13 cents, to be paid to stockholders of record on July 11th, with payment to be made on July 25th.

Deana L. McPherson: With less than $5 million remaining to be spent on the relocation and normal operating capital returning to our historical levels of $25 to $30 million, our Board has authorized an 8.3% increase in our quarterly dividend, raising it to $0.13, to be paid to stockholders of record on July 11th, with payment to be made on July 25th. Looking forward to fiscal 2025. As Mark mentioned, we continue to expect healthy demand for firearms in fiscal 25, and believe we are well positioned to deliver another year of solid growth, likely in the mid to high single digits.

Diana: There's less than $5 million remaining to be spent on the relocation and normal operating capital and returning to our historical levels of $25 million to $30 million. Our board has authorized an eight 3% increase in our quarterly dividend raising it to 13 cents to be paid to stockholders of record on July 11th with payment to be made on July 25th.

Deana McPherson: Looking forward to fiscal 2025, as Mark mentioned, we continue to expect healthy demand for firearms in fiscal 25, and believe we are well positioned to deliver another year of solid growth, likely in the mid to high single digits. With mere term demands softer than we originally anticipated, sales will be more weighted to the second half of the fiscal year. We expect Q1 to be down approximately 10% from the prior year quarter in terms of units and dollars, as growth in long guns partially offset a decline in handguns. We expect Q2 to rebound a bit as we approach the election, resulting in the first half being only moderately down to last year.

Deana L. McPherson: With near-term demand softer than we originally anticipated, sales will be more weighted to the second half of the fiscal year. We expect Q1 to be down approximately 10% from the prior year quarter in terms of units and dollars, as growth in long guns partially offsets a decline in handguns.

Mark Eric Smith: Looking forward to fiscal 'twenty 'twenty five as Mark mentioned, we continue to expect healthy demand for firearms in fiscal 'twenty five and believe we are well positioned to deliver another year of solid growth likely in the mid to high single digits with near term demand is softer than we originally anticipated sales will be more weighted to the second.

Mark Eric Smith: Half of the fiscal year.

Mark Eric Smith: We expect Q1 to be down approximately 10% from the prior year quarter in terms of unit and dollar as growth in long guns, partially offset a decline in handgun.

Operator: We expect Q2 to rebound a bit as we approach the election, resulting in the first half being only moderately down to last year. We expect the second half to benefit from normal seasonal increases, new product introductions, and investments in increased capacity, resulting in full-year revenue up mid-to-high single digits over fiscal 24. We believe channel inventory is in a good spot, and therefore, we are not anticipating a material impact from changes in inventory, either internally or externally.

Mark Eric Smith: Q2 to rebound a bit as we approach the election, resulting in the first half being only moderately down to last year.

Deana McPherson: We expect the second half to benefit from normal seasonal increases, new product introductions, and investments in increased capacity, resulting in full year revenue up, mid to high single digits over fiscal 24. We believe channel inventory is in a good spot, and therefore, we are not anticipating a material impact from changes in inventory, either internally or externally. With regard to pricing and ASPs, we expect some headwinds and handguns, particularly during normal summer slowdowns, but believe that long guns will remain reasonably strong due to new products. We expect margins to stabilize in the low 30s for the full year, in improvement over fiscal 24, with normal quarterly fluctuations impacted by both volume and operating days.

Mark Eric Smith: We expect the second half to benefit from normal seasonal increases new product introductions and investments and increase capacity, resulting in full year revenue up mid to high single digits over fiscal 'twenty four.

Mark Eric Smith: We believe channel inventories in a good spot and therefore, we're not anticipating a material impact from changes in inventory either internally or externally.

Operator: With regard to pricing and ASPs, we expect some headwinds in handguns, particularly during normal summer slowdowns, but believe that long guns will remain reasonably strong due to new products. We expect margins to stabilize in the low 30s for the full year, an improvement over fiscal 24, with normal quarterly fluctuations impacted by both volume and operating data. Margins will be affected by the full-year impact of operating our Tennessee facility, which moves certain building costs out of distribution into the cost of sales, combined with one-time costs associated with facility consolidation.

Mark Eric Smith: In regard to pricing and ask piece, we expect some headwinds in handguns.

Mark Eric Smith: Particularly during normal summer slowdown so I believe that long guns will remain reasonably strong due to new products.

Mark Eric Smith: We expect margins to stabilize in the low thirties for the full year, an improvement over fiscal 'twenty four with normal quarterly fluctuations impacted by both volume and operating days.

Deana McPherson: Margins will be affected by the full year impact of operating or Tennessee facility, which moves certain building costs out of distribution into cost of sales, combined with one-time cost associated with facility consolidation. The expected benefits associated with automation and the reduced facility footprint will begin to more fully realize later this year. Although we don't expect that the rate of inflation will materially change in fiscal 25, we should benefit from a more level-loaded manufacturing operation in stable channel inventory, which will help margins for the full year. With respect to the first quarter-gross margins, we expect it to be in line with the prior year first quarter level.

Mark Eric Smith: Margins will be affected by the full year impact of operating our Tennessee facility, which moved certain building costs out of distribution into cost of sales combined with one time cost associated with facility consolidations.

Operator: The expected benefits associated with automation and the reduced facility footprint will begin to be fully realized later this year. Although we don't expect that the rate of inflation will materially change in fiscal 25, we should benefit from a more level-loaded manufacturing operation and stable channel inventory, which will help margins for the full year. With respect to the first quarter gross margin, we expect it to be in line with the prior year first quarter levels.

Mark Eric Smith: The expected benefits associated with automation and reduced facility footprint will begin tomorrow.

Speaker Change: He realized later this year.

Speaker Change: Although we don't expect that the rate of inflation will materially change in fiscal 'twenty five we should benefit from a more level loaded manufacturing operation and stable channel inventory, which will help margins for the full year.

Speaker Change: With respect to the first quarter gross margin, we expect it to be in line with the prior year first quarter level.

Deana McPherson: Operating expenses for the full year will also likely be 3-5% higher due to compensation-related inflation, a more competitive market, and an increased investment in R&D. Adjusted EBITAS is expected to grow at a similar rate to sales in fiscal 25.

Speaker Change: Operating expenses for the full year will also likely be 3% to 5% higher due to compensation related inflation, a more competitive market and an increased investment in R&D.

Speaker Change: Adjusted EBITDA is expected to grow at a similar rate to sales in fiscal 'twenty five.

Deana McPherson: Finally, our effective tax rate is expected to be approximately 24%.

Speaker Change: Finally, our effective tax rate is expected to be approximately 24%.

Operator: With that operator, can we please open the call to questions from our analyst? Thank you. At this time, we will be conducting a question-and-answer session. If you would like to ask a question, please press a star one on your telephone keypad. A confirmation tool will indicate your lies in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please, while we pull for questions.

Operator: Operating expenses for the full year will also likely be 3 to 5 percent higher due to compensation-related inflation, a more competitive market, and an increased investment in R&D. Adjusted EBITDA is expected to grow at a similar rate to sales in fiscal 25. Finally, our effective tax rate is expected to be approximately 24%. With that, Operator, can we please open the call to questions from our analysts?

Speaker Change: With that operator can we please open the call to questions from our analysts.

Operator: Thank you. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key.

Speaker Change: Thank you at this time, we will be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May press star two she would like to remove your question from the queue for participants using speaker equipment it may be necessary.

You pick up your handset before pressing the star keys, one moment, please while we poll for questions.

Operator: One moment, please, while we poll for questions. Our first question comes from the line of Mark Smith with Lake Street Capital. Please proceed with your question.

Speaker Change: R.

Mark Smith: Our first question comes from the line of Mark Smith with Lake Street Capital. Please proceed with your question.

Speaker Change: Our first question comes from the line of Mark Smith with Lake Street Capital. Please.

Speaker Change: Proceed with your question.

Mark Smith: Hi, guys. First question, I wanted to dig in a little bit more on ASPs in handguns. You know, certainly seeing demand at kind of more of those entry-level prices, and you guys put out a soldier product to meet that demand.

Mark Eric Smith: Hi guys, first question: I wanted to dig in a little bit more on ASPs in handguns, you know, certainly seeing demand at kind of more of those entry-level prices, and you guys put out a solid new product to meet that demand. So I guess I was surprised that ASPs held up as well, but any other insights you can give us into the kind of mix and maybe products that are doing well within handguns?

Mark Eric Smith: Hi, guys.

Mark Eric Smith: First question I wanted to dig in a little bit more on Asps.

Speaker Change: In hand guns.

Speaker Change: You know certainly seen demand kind of more of those entry level prices and you guys put out it makes the soldier product you know to meet that demand. So I guess I was surprised that asps held up as well, but any other insight you can give us into kind of mix and maybe products that are doing well within handguns.

Mark Smith: So, I guess I was surprised that ASPs held up as well, but any other insight you can give us into kind of mix and maybe products that are doing well within handguns. Sure. Yeah, so queue four is still held up pretty good. As you can see from our ASPs, from our entire product portfolio, we were down a little bit on ASPs there, and that was, you know, as you said there, Mark, the demand definitely, as we entered the slower summer season, is driven much more towards that, you know, the kind of the worth of volume play right now is in that entry-level price point.

Speaker Change: Sure.

Speaker Change: Yeah. So Q4, the demand you know.

Mark Eric Smith: Yeah, so Q4, demand still held up pretty good, as you can see from our ASPs, from our entire product portfolio. We were down a little bit on ASPs there, and that was as you predicted. So, Mark.

Speaker Change: Still held up pretty good as you can see from our S piece from our entire product portfolio, we were down a little bit on Asp's, there and that was you know as you.

Mark Eric Smith: The demand definitely, as we've entered the slower summer season, is driven much more towards that, you know, kind of where the volume play right now is in that entry-level price point. We do anticipate in Q1, you know, we're going to be, as you might have seen, we've already launched a consumer rebate promotion. We'll also be, you know, Leaning into that category a little bit more with some new product launches coming up here in the next couple days and weeks You know to kind of you know Get some more entrance into that into that where that volume play is and that should give us a nice tail when in q2 in second half You know, so, you know, we still expect that, you know that the the overall ASPs to stay up Long guns definitely with the LAR will be no still be good But but those handguns will probably come down a little bit there in Q2

Speaker Change: So there might be Oh, the demand definitely as we've entered the slower summer season is driven much more towards that you know kind of where the volume play right now is in that entry level price point so.

Mark Smith: So, you know, we do anticipate in queue one, you know, we're going to be, as you might have seen, we've already launched a consumer rebate promotion. We'll also be, you know, leaning into that category a little bit more with some new product launches, coming up here in the next couple of days and weeks to kind of get some more entrance into that, where that volume play is, and that should give us a nice tailwind in Q2 in the second half. We still expect that the overall ASPs to stay up, long guns definitely with the LAR will still be good, but those handguns will probably come down a little bit there in Q1.

Speaker Change: You know, we we do anticipate in Q1, you know we're gonna be as you might've seen we've already launched a consumer rebate promotion. We will also be you know.

Speaker Change: Leaning into that category, a little bit more with some new product launches coming up here in the next couple of days and weeks you know to kind of get some more entrants into that into that where that volume play isn't that should get us a nice tailwind in Q2 and second half.

Speaker Change: Yeah. So.

We still expect that you know that the.

Speaker Change: The overall asps to stay up long guns definitely with the L. A or will be no still be good but put those handguns will probably come down a little bit there in Q1.

Speaker Change: Okay.

Mark Smith: Okay, any thoughts on kind of how you're holding up as we think about, you know, performance center and kind of higher end, primarily in handguns. You know, kind of, you know, we're hearing, you know, the lower end entry levels pretty positive, but yet still pretty good demand at, you know, some of the more expensive handguns. Any thoughts around kind of how that higher end businesses hold in up. Yeah, I mean, some of our, you know, our highest end products in that hierarchy are going to be our large frame revolvers. Obviously, as you mentioned, our performance center products, you know, and we have added and will continue to add capacity there in our metal M&P's also up there.

Mark Eric Smith: Any thoughts on how you're holding up as we think about performance center and higher end, primarily in handguns? We're hearing the lower-end entry level is pretty positive, but there's still pretty good demand for some of the more expensive handguns. Any thoughts on how that higher-end business is holding up?

Speaker Change: Any thoughts on kind of how you're holding up is as we think about you know performance center and kind of higher end.

Speaker Change: It's primarily in hand guns.

Speaker Change: You know we're hearing you know does the lower end entry level pretty positive, but yeah, it's still pretty good demand at some of the more expensive handguns any thoughts around kind of how that higher end business is holding up.

Mark Eric Smith: Yeah, I mean, some of our, you know, our highest-end products in that hierarchy are going to be, you know, our large frame revolvers. Obviously, as you mentioned, our performance center products, you know, and what we have added and will continue to add capacity there, you know, our metal M&P is also up there. So, that's, we mentioned in the prepared remarks that alluded to adding some capacity. It's definitely an area where we're going to be putting a little bit more capacity online to give us a nice tailwind there in the second half as well.

Speaker Change: Yeah, I mean on some of our you know our highest end products in the in that hierarchy youre going to be on our large frame revolvers, obviously as you'd mentioned our performance Center products, you know and you know what we.

Speaker Change: We have added and will continue to and to add capacity, there and our metal M. P's also up there. So now that's we mentioned in prepared remarks.

Mark Smith: So, you know, that's, we mentioned the prepared remarks; you know, we alluded towards adding some capacity as definitely an area where we're going to be, you know, putting a little bit more capacity online to give us a nice tailwind there in the second half as well.

Speaker Change: Moving towards adding some capacity that's definitely an area, where we're going to be you know be putting a little bit more capacity online to give us a nice tailwind there in the second half as well.

Mark Smith: Okay, and then I don't know if you guys gave it, but, you know, if you've got the number for the quarter of kind of new product mix in the quarter. In any additional insights into kind of how those new products are going, I know that you talked a bit about 1854, but, you know, I'd love to hear also some of the other new long guns on how those are performing. Yeah, I think for the, for Q4, we did give that number. It was just under 30%. I mean, just like, I think it was 29.9. 29.1, yep.

Speaker Change: Okay, and then I I don't know if you guys gave it but yeah. If you've got the number for the quarter of kind of new product mix in the quarter and any additional insights into kind of how those new products are going I know that you've talked a bit about $8 54, but I'd love to hear also some of the other new long guns.

Mark Eric Smith: I don't know if you guys gave it, but if you've got the numbers for the quarter of new product mix in the quarter and any additional insights into how those new products are going. I know that you talked a bit about 1854, but I'd love to hear about some of the other new long guns on how those are performing.

Speaker Change: How those are performing.

Mark Eric Smith: Yeah, I think for q4 we did give that number; it was just under 30%. I mean, just like I think it was 29.9.

Speaker Change: Yeah, I think for the for Q4, we did give that number it was just under 30% I mean, just maybe I think was $29 99, because when I put one hip enabling one so still holding up to that you know.

Mark Eric Smith: 29.1. Yep.

Mark Smith: So, you know, still holding up to that, you know, high 20s, low 30s in terms of our new products. We anticipate that that's going to continue. And yeah, that was, you know, a lot of the 1854 and Q4 mark, but, you know, I mean, we've kind of held that level for a long time. It's, you know, just, I mean, I think it more was more weighted towards 1854 just because it was the most recent launch, but, you know, we were going to continue that cadence. You know, the FPC was, you know, obviously very successful. The sport three continues to be from a lot of our retailers.

Mark Eric Smith: 29.1. So, you know, I'm still holding up to that, you know. High 20s, low 30s in terms of our new products; we anticipate that that's going to continue. And yeah, that was a lot of the 1854 and Q4, Mark, but we've kind of held that level for a long time. I think it was more weighted towards 1854 just because it was the most recent launch, but we're going to continue that cadence. The FPC was obviously very successful.

Speaker Change: High twenties low thirties in terms of our new products, we anticipate that that's going to continue and yes that was you know a lot of the $18 54 in Q4, Mark but you know I mean, we've kind of held that level for a long time. It's you know just I mean I think it more.

Speaker Change: Was more weighted towards 18 54, just because it was the most recent launch but you know we were going to continue that cadence you know P. C was obviously very successful the sport three continues to be from a lot of our retailers one of the number one selling is not the number one selling M.

Mark Eric Smith: The Sport 3 continues to be, from a lot of our retailers, one of the number one selling MSRs out there. So we're going to continue that cadence of new products. I think you can expect that same level of new product contribution to revenue going forward.

Mark Smith: One of the number one selling, if not the number one selling MSR out there. So, you know, we're going to continue that cadence and new product. We, you know, I think you can, you can expect that, that same level of new product contribution to revenue going forward.

Speaker Change: <unk> out there. So you know we're going to continue that cadence of new product. We you know I think you can you can expect that that same level of new product contribution to revenue going forward.

Mark Smith: Okay, and then being it just, I know you don't give as much on formal guidance, but just want to kind of sum up and make sure that we're looking at things right at the end of your prepared remarks. Sounds like, you know, looking for revenue to be up, you know, mid to high single digits, kind of a mid 30s. Ish gross margin and maybe some pressure on operating expenses that's going to put EBITOS growing that kind of a similar number to revenue. Did I sum that up, or did I miss anything in there? I think I'd say, I'd say low 30s.

Deana L. McPherson: I know you don't give as much formal guidance, but I just wanted to kind of sum up and make sure that we're looking at things right at the end of your prepared remarks. It sounds like, you know, looking for revenue to be up, you know, mid to high single digits, kind of a mid-30s-ish gross margin, and maybe some pressure on operating expenses that's going to put EBITDA growing at kind of a similar number to revenue. Did I sum that up, or did I miss anything in there?

Speaker Change: Okay.

Speaker Change: And then just I know you don't give as much on formal guidance, but just wanted to kind of sum up and make sure that we're looking at things right.

Speaker Change: But at the end of your prepared remarks. It sounds like you know looking for revenue to be up mid to high single digits kind of a mid thirties ish gross margin.

Speaker Change: And.

Speaker Change: Maybe some pressure on operating expenses, that's good but our EBITDA is growing at kind of a similar number two revenue did I sum that up or did I Miss anything in there.

Mark Eric Smith: Well, I think I'd say the low 30s. I'm not sure. You know, we're going to wait and see whether we can get to the mid-30s, but, you know, we're bringing more capacity online. We are, as I said in my remarks, doing facility consolidation and ramping up automation at the Tennessee facility. So, you know, when we look at the whole year, we'll be in the, you know, in the low 30s. I point out that, you know, the fourth quarter was, I think, somewhere around 35 percent, but one quarter doesn't make the whole year, right?

Speaker Change: I'd say I'd say low thirties I'm not sure you know, we got to wait and see whether we can get to the mid thirties, but you know we're bringing more capacity online. We are at least as I said in my remarks, we're having the facility consolidation and and ramping up automation at our Tennessee facility. So.

Mark Smith: I'm not sure, you know. We're going to wait and see whether we can get to the mid 30s, but, you know, we're bringing more capacity online. We are, as we, as I said in my remarks, we're having the facility consolidation and ramping up automation at the Tennessee facility. So, you know, when we look at the whole year, we'll be in the, you know, in the low 30s. I'd point out that, you know, fourth quarter was I think somewhere around 35%, but one quarter doesn't make the whole year, right? So, we'll have those fluctuations like we normally do.

Speaker Change: You know when we look at the whole year will be in a you know in the low thirties I'd point out that in the fourth quarter was I think somewhere around 35%, but one quarter doesn't make the whole year right. So.

Mark Eric Smith: So, we'll have those fluctuations like we normally do. The fourth quarter, for us, is usually the best because production days are the longest. We have no shutdowns where we have shutdowns in the other quarters. So, as the capacity ramps up and as the automation and the, you know, full relocation process completes, then we'll start to see, you know, toward the back half of the year where the numbers are, you know, getting back to where we used to have them, and we'll probably get to the mid-30s on the back half, but, you know, the front half will be a little bit lower.

Have those fluctuations like we normally do fourth quarter for US is usually the best because production days out of the longest we have no shutdowns, where we have shutdowns in the other quarters. So as the capacity ramps up and as the automation and the you know full relocation process completes and we will start to see you know towards the back half.

Mark Smith: Fourth quarter for us is usually the best because production days are the longest. We have no shutdowns, where we have shutdowns in the other quarters. So, as the capacity ramps up and as the automation and the, you know, full relocation process completes, then we'll start to see, you know, toward the back half of the year, where the numbers are, you know, getting back to where we used to have them. And, you know, we'll probably get to the mid 30s, you know, on the back half, but, you know, the front half will be a little bit lower.

Speaker Change: A year, where the numbers are you know are a getting back to where we used to have them and no. We will probably get to the mid thirties and on the back half but.

Speaker Change: Half would be a little bit lower.

Mark Smith: Okay, and people won't follow up on that. Just Mark or Deana, whoever kind of wants to take it, you know, it sounds like summer. You know, you guys are expecting things to remain tough, just with where the consumer is today. But it sounds like as you look at the back half, you know, seeing maybe some better growth that that's not that you guys are just looking for kind of typical seasonal growth and your outlook for new products and whatnot, but you're not expecting anything and nothing's built in for like a big rampant demand around the election isn't really built into the number since you've given that.

Mark Eric Smith: Okay, and maybe one follow-up on that, just, Mark or Deana, whoever kind of wants to take it, you know, it sounds like summer, you know, you guys are expecting things to remain tough, just with where the consumer is today, but it sounds like as you look at the back half, you know, seeing maybe some better growth, that that's not, that you guys are just looking for kind of typical seasonal growth and your outlook for new products and whatnot. You're not expecting, and nothing's built in for like a big ramp in demand around the election, isn't really built into the numbers that you've given, right? Yeah.

Speaker Change: Okay, and maybe one follow up on that just it.

Speaker Change: Mark or do you know whoever can watch take it you know it sounds like summer you know you guys are expecting things to remain tough just with where the consumer is today, but it sounds like as you look at the back half seen maybe some better growth that that's not that you guys are just looking for kind of typical seasonal growth.

Speaker Change: And your outlook for new products or whatnot, but you're not expecting and nothing built in for like a big ramp in demand around election isn't really built into the numbers that you've given right yeah.

Mark Eric Smith: Yeah, I think, you know, we definitely expected a tailwind from the election as the election campaign really, activity really kicks in, you know, usually towards the late summer and early fall through the election period. So definitely, there will be a tailwind there for our usual busy season, you know, but we've also got, you know, we're also going to have some tailwinds in the back half from, as I mentioned, some capacity additions in some of our categories where we're constrained, right?

Mark Smith: Yeah, I think, you know, we definitely expected tailwind from, from, you know, the election, as the elected election campaign really activity really kicks in, you know, usually towards the late summer or really fall through the election period. So definitely there will be a tailwind there to our usual busy season, you know, but we've also got, you know, we're also going to have some tailwinds in back half from, as I mentioned, some capacity additions and some of our categories where we're constrained, right? So we got that coming online, as I mentioned, where the volume play right now is in that lower, lower price tier, that entry level price tier, we got a couple really, really good.

Speaker Change: Yeah, I think you know we definitely expect the tailwind from from you know the election is electing a bunch and campaign really activity really kicks in you know usually towards the late summer early fall through the election period. So definitely there will be a tailwind there to our usual busy season.

Speaker Change: You know, but.

Speaker Change: We've also got you know we're also going to have some tailwind in the back half from as I mentioned some capacity additions in some of our categories, where we're constrained right. So we've got that coming online as I mentioned, where the volume play right now is in that lower lower price tier that entry level price here, we got a couple of really really good.

Mark Eric Smith: So we've got that coming online, as I mentioned, where the volume play right now is in that lower, lower price tier, that entry-level price tier. We've got a couple really, really good new products coming in the next couple weeks, which will obviously also give us a nice tailwind where we can have some more deep entry into, you know, a deeper product portfolio in that category. So yeah, it's, you know, it's a little bit of an election.

Mark Smith: New products coming, you know, in the next couple of weeks, which obviously also give a nice tailwind where we can have some more deep entrance into a deeper product portfolio in that category. So yeah, it's, you know, it's, a little bit of election, but it's also, you know, just standard core businesses as well in the back half. So yeah, you know, it's a little bit of election, but it's also, you know, just standard core businesses as well in the back half. So yeah, it's a little bit of election, but it's also, you know, just standard core businesses as well in the back half.

Speaker Change: New products coming you know in the next couple of weeks, which you. Obviously also give a nice tailwind where we go from something or deep entrants into it.

Speaker Change: A deeper product portfolio in that category. So yeah. It's you know, it's it's a little bit of election, but it's also you know just standard core businesses as well in the back half so yes.

Mark Eric Smith: But it's also, you know, just standard core businesses as well in the back half. So yes, the overall year should be a nice growth. It's just, as it has been historically, it'll be more weighted towards the back half.

Mark Smith: Yes, you know, you know, the overall year should be a nice growth. It's just, you know, it's kind of as it has been historically; it'll be more weighted towards the back half.

Speaker Change: The overall year it should be a nice growth. It's just gonna it's kind of as it has been historically it'll be more weighted towards the back half.

Mark Smith: Perfect. Thank you, guys. Thanks, Mark. Thanks, Max.

Operator: Perfect. Thank you, guys.

Speaker Change: Perfect. Thank you guys.

Mac: Thanks, Mark it's Mac.

Mark Smith: Thank you.

Operator: Thank you. Our next question comes from the line of Steve Dyer with Craig Hallam. Please proceed with your question.

Speaker Change: Thank you.

Steve Dyer: Our next question comes from a line of Steve Dyer with Craig Adam.

Speaker Change: Our next question comes from the line of Steve Dyer with Craig Hallum. Please proceed with your question.

Matthew Raab: Please proceed with your question.

Matthew Raab: Hey guys, this is Matthew Rob on first Steve.

Speaker Change: Hey, guys. This is Matthew Rob on for Steve Most of my questions have already been answered, but can you just talk about what you're doing on the marketing front. Obviously, you said kind of the summer is typically a slower weaker time of year. I mean are you looking at the vendor discounts. Obviously you talked about rebates what other areas are you looking into for the unknown.

Mark Eric Smith: Hey guys, this is Matthew Robb on First Steve. Most of my questions have already been answered, but can you just talk about what you're doing on the marketing front? Obviously, you said the summer is typically the slower, weaker time of year. I mean, are you looking at vendor discounts? Obviously, you talked about rebates. What other areas are you looking into on the marketing side working with retailers?

Matthew Raab: Most of my questions have already been answered, but. Can you just talk about what you're doing on the marketing front? Obviously, you said, you know, the summer's typically the slower, you know, weaker time a year. I mean, are you looking at the vendor discounts? Obviously, you talked about rebates. What are their areas? Are you looking into for the marketing side working with retailers? Anything there?

Speaker Change: On the marketing side working with retailers anything there.

Mark Eric Smith: Yeah, we're very active in working with retailers. It's, you know, our number one focus as we kind of come into the summer, usually, and this summer is no different, is, you know, getting pretty aggressive on promotions. We're always going to, you know, participate as we find, as we see appropriate, depending on what the marketing conditions are in the summer, you know, as we, as I think you can see from Nick's results, it's going to be competitive.

Mark Smith: Yeah, we're very active in working with retailers. You know, our number one focus has the kind of come into the summer usually, and that summer is no different is, you know, getting pretty aggressive on promotions. We're always going to, you know, participate as we find, as we see appropriate depending on what the marketing conditions are in the summer. You know, as we, as you think you can see, from next result, it's going to be competitive. So you saw that, you know, we're pretty aggressive with the consumer rebate, but just launched early June. We're also doing a whole bunch of channel, while we always want to focus on pull through rather than push in on inventory.

Speaker Change: Yeah, we're very active in working with our with retailers as you know are our number one focus as we kind of come into the summer usually in the summer is no different as you know you know getting pretty aggressive on promotions, we're always going to you know.

Speaker Change:

Speaker Change: Participating as we find you know as we see appropriate depending on what the market conditions are in the summer.

Nick: As you think you can see from Nick's results, it's going to be competitive. So you saw that you know, we're pretty aggressive with a consumer rebate, but just launched early June. We're also doing a whole bunch of channel, while we always want to focus on pull through rather than pushing inventory. We all are also working with a lot of the retailers on some targeted promotions that you know individual retailers or with.

Mark Eric Smith: So you saw that, you know, we're pretty aggressive with the consumer rebate that just launched early June. We're also doing a whole bunch of channel. While we always want to focus on pull through rather than pushing in on inventory, we all are also working with a lot of the retailers on some targeted promotions that, you know, individual retailers or, you know, with distributors on promotional programs, whether it be Spiffs, et cetera.

Mark Smith: We all are also working with a lot of the retailers on some targeted promotions that, you know, individual retailers. Or, you know, with distributors on promotional programs, whether it be spits, etc. So we kind of, you know, we have a pretty deep playbook here in terms of, you know, levers we can pull throughout the channel. And, you know, and when we're working pre-actively on that right now, actually, you know, today we've got a number of retailers in our facility. I'm kind of doing a round table and brainstorming.

Nick: Peter's on promotional programs, whether it be spits etcetera. So we kind of you know this is a.

Mark Eric Smith: So we kind of, you know, this is a... We have a pretty deep playbook here in terms of levers we can pull throughout the channel, and we're working pretty actively on that right now, actually. Today we've got a number of retailers in our facility kind of doing a roundtable and brainstorming. OK. Great.

Operator: Okay, great. Thank you very much.

Nick: And we have a pretty deep playbook here in terms of levers we can pull throughout the channel and you know and when we're.

Nick: Working proactively on that right now actually.

Nick: Today, we've got a number of retailers in our facility I'm kind of doing a round table and brainstorming.

Matthew Raab: Okay, great. Thank you very much. Thank you.

Okay, great. Thank you very much.

Mark Eric Smith: Thank you. And we have reached the end of the question and answer session. I'll now turn the call back over to Mark Smith for closing remarks.

Speaker Change: Thank you and we have reached the end of the question and answer session. I will now turn the call back over to Mark Smith for closing remarks.

Mark Smith: And we have reached the end of the question in our session. I'll now turn the call back over to Mark Smith for closing remarks.

Mark Smith: All right. Well, thank you, Everett, and thank you everyone for joining us today, and your interest in our company is Methamwesson.

Mark Eric Smith: Alright, well, thank you everyone for joining us today and for your interest in our company at Smith & Wesson. We look forward to speaking with everybody again next quarter.

Mark Eric Smith: Alright, well. Thank you operator, and thank you everyone for joining us today and your interest in our company and Smith <unk> Wesson, we look forward to speaking with everybody again next quarter.

Mark Smith: We look forward to speaking up to everybody again next quarter.

Operator: And this concludes today's conference, and you may disconnect your line at this time. Thank you for your participation.

Operator: And this concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.

Speaker Change: And this concludes today's conference and you may disconnect. Your lines at this time. Thank you for your participation.

Yeah.

Speaker Change: [music].

Speaker Change: Yeah.

Speaker Change: [music].

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Speaker Change:

Speaker Change: Yeah.

Speaker Change: [music].

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