SMITH & WESSON BRANDS, INC.
For the period ended Jul 31, 2025. Filed Sep 4, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jul 31, 2025 · Filed Sep 4, 2025
SWBI$14.47+0.9%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-01-31; filed 2025-03-06.
0000950170-25-034659
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-07-31; filed 2025-09-04.
0000950170-25-113031
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 79 previous paragraphs and 61 current paragraphs.
25 unchanged; 23 reworded; 13 added; 19 removed; 12 previous and 0 current paragraphs rearranged.
Tables are not compared: 15 previous and 8 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (13)
Current report
This section generally discusses year-to-year comparisons between the three months ended July 31, 2025 and 2024. A discussion of our results of operations, liquidity, and capital resources for the three months ended July 31, 2024 compared to July 31, 2023 is not included in this Quarterly Report on Form 10-Q and can be found in Item 2, "Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Quarterly Report on Form 10-Q for the quarterly period ended July 31, 2024, filed with the SEC on September 5, 2024. See also the discussion below related to an immaterial correction of an error.
Current report
First Quarter Fiscal 2026 Highlights
Current report
Immaterial Correction of an Error
Current report
During the fourth quarter of fiscal 2025, we identified an immaterial error related to our accrual for certain legal expenses, resulting in an overstatement of general and administrative expenses in the interim and annual periods for the fiscal year ended April 30, 2024 and during the interim periods for the fiscal year ended April 30, 2025. In accordance with SAB No. 99, Materiality, and SAB No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements, we evaluated the quantitative and qualitative considerations of the error and determined that the related impact was not material to the results of operations, financial position, or cash flows for any historical annual or interim period. Prior year amounts have been adjusted to correct the immaterial error, which overstated general and administrative expenses by $336,000 and understated income tax expense by $85,000 for the three months ended July 31, 2024. Related changes to net income, corresponding line items within cash provided by operating activities, and related disclosures within the notes accompanying these financial statements reflect the immaterial correction.
Current report
Operating Loss
Current report
The following table sets forth certain information regarding operating loss for the three months ended July 31, 2025 and 2024 (dollars in thousands):
Current report
On July 4, 2025, the reconciliation bill, commonly known as the One Big Beautiful Bill Act, or the OBBBA, was enacted into law. The OBBBA, among other things, eliminates the requirement to capitalize U.S. research and development expenses, permanently extends certain provisions of the Tax Cuts & Jobs Act of 2017, and modifies certain international tax provisions, including changes to the foreign-derived intangible income regime, with effective dates beginning in calendar year 2025 and extending through calendar year 2027. As the OBBBA was enacted during the fiscal quarter ended July 31, 2025, we have considered and reflected the impacts on the consolidated financial statements. We do not expect the impact of these provisions to have a material impact on the consolidated financial statements.
Current report
Net Loss
Current report
Cash used in operating activities was $8.1 million for the three months ended July 31, 2025 compared with $30.8 million for the three months ended July 31, 2024. The improvement was primarily driven by a $24.0 million reduction in working capital usage.
Current report
Working capital usage for the three months ended July 31, 2025 was favorably impacted by a $16.1 million reduction associated with inventory, a $5.3 million reduction associated with accounts payable, a $3.5 million reduction associated with accrued payroll and incentives, and a $3.3 million reduction associated with accounts receivable, partially offset by a $4.6 million increase in working capital usage associated with accrued expenses and deferred revenue.
Current report
On August 15, 2025, we entered into the First Amendment, which provides for (a) in connection with the calculation of Consolidated Funded Indebtedness (as defined in the Second Amended and Restated Credit Agreement), the exclusion of any Indebtedness (as defined in the Second Amended and Restated Credit Agreement) of the guarantors relating to a particular guaranty; (b) in connection with the calculation of Consolidated Fixed Charge Coverage Ratio (as defined in the Second Amended and Restated Credit Agreement), a one-time exclusion of cash taxes paid by the loan parties during fiscal 2026 in connection with the filing of amended tax returns in fiscal 2026 covering particular periods; and (c) an amendment to the minimum Consolidated Fixed Charge Coverage Ratio for particular measurement periods.
Current report
During the three months ended July 31, 2025, there were no common stock repurchases. During the three months ended July 31, 2024, we repurchased a total of 870,669 shares of our common stock for $12.9 million.
Current report
Dividends —Our Board of Directors has authorized a $0.13 per share quarterly dividend, which will be paid to stockholders of record on September 18, 2025 with payment to be made on October 2, 2025.
Removed paragraphs (19)
Previous report
Third Quarter Fiscal 2025 Highlights
Previous report
During the three months ended January 31, 2025, we purchased 219,773 shares of our common stock for $2.8 million.
Previous report
Net sales were $333.9 million, a decrease of $42.8 million, or 11.4%, from the comparable period last year.
Previous report
During the nine months ended January 31, 2025, we purchased 1,844,073 shares of our common stock for $25.5 million.
Previous report
Net Sales and Gross Profit – For the Nine Months Ended January 31, 2025
Previous report
The following table sets forth certain information regarding net sales and gross profit for the nine months ended January 31, 2025 and 2024 (dollars in thousands):
Previous report
Sales of our handguns decreased $42.1 million, or 15.6%, from the comparable period last year, primarily as a result of lower consumer demand within the industry and a shift in product mix to lower priced models, partially offset by increased shipments of newly introduced products, which represented 41.9% of handgun sales in the period, and a 2% to 5% price increase that became effective in the third quarter of fiscal 2024. Handgun unit shipments into the sporting goods channel decreased by 4.1% from the comparable period last year while overall consumer handgun demand decreased 3.1% (as indicated by adjusted background checks reported by NICS).
Previous report
Sales of our long guns decreased $1.6 million, or 2.0%, from the comparable period last year, primarily as a result of lower consumer demand within the industry, partially offset by increased shipments of newly introduced products, which represented 60.0% of long gun sales in the period, a shift in product mix to higher priced models, and a 2% to 5% price increase on select products that became effective in the third quarter of fiscal 2024. Long gun unit shipments into our sporting goods channel decreased 21.2% from the comparable period last year while overall consumer demand for long guns decreased 0.6% (as indicated by NICS). We believe that our unit demand declined at a significantly greater rate than NICS as a result of the impact in the current year of newly introduced products from the prior year that are at lower price points.
Previous report
Other products and services revenue increased $885,000, or 3.1%, over the comparable period last year, primarily because of increased suppressor and component parts sales, partially offset by lower business-to-business sales.
Previous report
Research and development expenses increased $2.1 million over the prior year comparable period because of higher materials and testing costs associated with new product development and higher compensation-related costs. Selling, marketing, and distribution expenses decreased $1.3 million from the prior year comparable period, primarily as a result of a $1.9 million impairment on distribution equipment related to the Relocation and one-time costs related to our grand opening event at our Maryville facility in the prior year comparable period. Excluding the impact of these one-time prior year charges, selling, marketing, and distribution expenses increased $1.5 million, primarily as a result of higher spending on promotions. General and administrative expenses decreased $3.1 million from the prior year comparable period, primarily because of lower Relocation costs and lower profit-related compensation expense, partially offset by higher legal costs.
Previous report
Operating Income
Previous report
The following table sets forth certain information regarding operating income for the three months ended January 31, 2025 and 2024 (dollars in thousands):
Previous report
The following table sets forth certain information regarding operating income for the nine months ended January 31, 2025 and 2024 (dollars in thousands):
Previous report
Operating income for the nine months ended January 31, 2025 decreased $10.2 million from the comparable period last year, primarilyfor the reasons outlined above.
Previous report
Net Income
Previous report
Net income for the nine months ended January 31, 2025 was $3.7 million compared with$13.5 million for the comparable period last year for the reasons outlined above.
Previous report
Cash used in operating activities was $48.1 million for the nine months ended January 31, 2025 compared with $63.0 million of cash provided for the nine months ended January 31, 2024. Cash used in operating activities for the nine months ended January 31, 2025 was unfavorably impacted by a $38.4 million increase in inventory compared with a $23.6 million decrease in inventory in the prior comparable period, a $16.8 million decrease in accounts payable compared with a $11.2 million increase in accounts payable in the prior comparable period, a $8.2 million decrease in accrued payroll and incentives compared with a $1.3 million increase in accrued payroll and incentives in the prior comparable period, and lower net income. Cash used in operating activities for the nine months ended January 31, 2025 was favorably impacted by a $1.6 million decrease in accounts receivable compared with a $5.5 million increase in accounts receivable in the prior comparable period.
Previous report
During the three months ended January 31, 2025, we repurchased a total of 219,773 shares of our common stock for $2.8 million. During the nine months ended January 31, 2025, we repurchased a total of 1,844,073 shares of our common stock for $25.5 million. During the three months ended January 31, 2024, we repurchased a total of 71,099 shares of our common stock for $916,000. During the nine months ended January 31, 2024, we repurchased a total of 716,869 shares of our common stock for $9.1 million.
Previous report
Dividends —In March 2024, our Board of Directors authorized a regular quarterly dividend for stockholders of $0.13 per share. We currently anticipate that the next dividend will be for stockholders of record as of market close on March 20, 2025 and will be payable on April 3, 2025.
Reworded paragraphs (23)
Previous wording
Net sales were $115.9 million, a decrease of $21.6 million, or 15.7%, from the comparable quarter last year.
Current wording
Net sales were $85.1 million, a decrease of $3.3 million, or 3.7%, from the comparable quarter last year.
Previous wording
Gross margin was 24.1% compared with gross margin of 28.7% for the comparable quarter last year.
Current wording
Gross margin was 25.9% compared with gross margin of 27.4% for the comparable quarter last year.
Previous wording
Net income was $1.7 million, or $0.04 per diluted share, compared with $7.9 million, or $0.17 per diluted share, for the comparable quarter last year.
Current wording
Net loss was $3.4 million, or $0.08 per diluted share, compared with $1.9 million, or $0.04 per diluted share, for the comparable quarter last year.
Previous wording
Sales of our handguns decreased $14.7 million, or 15.5%, from the comparable quarter last year, primarily as a result of lower consumer demand within the industry and a shift in product mix to lower priced models, partially offset by increased shipments of newly introduced products (defined as any new SKU not shipped in the comparable quarter last year), which represented 40.0% of handgun sales in the period. Handgun unit shipments into the sporting goods channel decreased by 3.0% from the comparable quarter last year while overall consumer handgun demand decreased 4.1% (as indicated by adjusted background checks reported in the National Instant Criminal Background Check System, or NICS).
Current wording
Sales of our handguns increased $11.7 million, or 21.9%, over the comparable quarter last year, primarily as a result of increased shipments of newly introduced products (defined as any new SKU not shipped in the comparable period last year), partially offset by a shift in product mix to lower priced models. Shipments of new products represented 37.7% of handgun sales in the quarter. Handgun unit shipments into the sporting goods channel increased by 35.1% from the comparable quarter last year while overall consumer handgun demand decreased by 2.4% (as indicated by adjusted background checks reported in the National Instant Criminal Background Check System, or NICS).
Previous wording
Sales of our long guns decreased $4.6 million, or 14.2%, from the comparable quarter last year, primarily as a result of lower consumer demand within the industry, partially offset by a shift in product mix to higher priced models. Shipments of newly introduced products represented 56.1% of long gun sales in the period. Long gun unit shipments into our sporting goods channel decreased 26.7% from the comparable quarter last year while overall consumer demand for long guns decreased 3.9% (as indicated by NICS). We believe that our unit demand declined at a significantly greater rate than NICS as a result of the impact in the current year of newly introduced products from the prior year that are at lower price points.
Current wording
Sales of our long guns decreased $11.1 million, or 45.0%, from the comparable quarter last year, primarily as a result of lower consumer demand within the industry during the period. Shipments of newly introduced products represented 53.2% of long gun sales in the period. Long gun unit shipments into our sporting goods channel decreased by 28.1% from the comparable quarter last year while overall consumer demand for long guns decreased by 7.8% (as indicated by NICS). We believe the difference in our unit demand compared to NICS results was driven by stronger relative performance in categories in which we do not participate fully, specifically hunting.
Previous wording
Other products and services revenue decreased $2.3 million, or 21.7%, from the comparable quarter last year, primarily because of lower business-to-business sales, partially offset by increased suppressor sales.
Current wording
Other products and services revenue decreased $3.8 million, or 36.7%, from the comparable quarter last year, primarily because of lower business-to-business and suppressor sales.
Previous wording
Newly introduced products represented 40.9% of net sales for the three months ended January 31, 2025 and included five new pistols, five new long guns, and many new product line extensions.
Current wording
Newly introduced products represented 37.3% of net sales for the three months ended July 31, 2025 and included three new pistols, three new long guns, and many new product line extensions.
Previous wording
Gross margin for the nine months ended January 31, 2025 was 25.9% compared with 27.0% for the comparable period last year, in spite of a $3.2 million legal settlement recognized in the prior year comparable period. Excluding the impact of the prior year legal settlement, gross margin was 190 basis points lower as a result of higher material costs, higher promotional costs, and a shift in product mix, partially offset by lower inventory adjustments (including standard cost revaluations, shrink, and excess inventory write downs) and favorable fixed-cost absorption from higher production volumes.
Current wording
Gross margin for the three months ended July 31, 2025 was 25.9% compared with 27.4% for the comparable quarter last year, primarily driven by unfavorable fixed-cost absorption from lower production volumes and higher tariffs on imported materials and components, partially offset by favorable inventory adjustments (including standard cost revaluations, shrink, and excess inventory write downs), lower promotional costs, and lower federal firearms excise taxes as a result of the favorable completion of a recent audit. We estimate higher tariffs negatively impacted gross margin by approximately 120 basis points when compared to the comparable quarter last year.
Previous wording
Inventory balances increased $38.4 million between April 30, 2024 and January 31, 2025 as a result of a slowdown in demand combined with level loading of our manufacturing facilities to ensure our ability to satisfy anticipated future demand. While inventory levels, both internally and in the distribution channel, in excess of demand may negatively impact future operating results, it is difficult to forecast the potential impact of distributor inventories on future revenue and income as demand is impacted by many factors, including seasonality, new product introductions, news events, political events, and consumer tastes. We expect our inventory levels to decline during the remainder of the fiscal year.
Current wording
Inventory balances increased $13.3 million between April 30, 2025 and July 31, 2025 as a result of level loading of our manufacturing facilities to ensure our ability to satisfy anticipated future demand. While inventory levels, both internally and in the distribution channel, in excess of demand may negatively impact future operating results, it is difficult to forecast the potential impact of distributor inventories on future revenue and income as demand is impacted by many factors, including seasonality, new product introductions, news events, political events, and consumer tastes. We expect our inventory levels to decline during the remainder of the fiscal year.
Previous wording
Research and development expenses increased $900,000 over the prior year comparable quarter because of higher materials and testing costs associated with new product development. Selling, marketing, and distribution expenses increased $256,000 primarily as a result of higher promotional costs. General and administrative expenses decreased $3.1 million from the prior year comparable quarter, primarily as a result of lower Relocation costs, lower profit-related compensation expenses, and lower legal costs. During the three months ended January 31, 2025, we sold certain real estate located adjacent to our former Missouri Distribution Center for $2.3 million, net of transaction costs, and recognized a $2.3 million pre-tax gain on sale.
Current wording
Research and development expenses increased $492,000 over the prior year comparable quarter because of higher tooling-related costs associated with new product development, partially offset by lower compensation-related costs. Selling, marketing, and distribution expenses decreased $1.1 million, primarily as a result of lower promotional costs and the timing of certain industry events. General and administrative expenses were largely flat compared to the prior year comparable quarter.
Previous wording
Operating income for the three months ended January 31, 2025 decreased $7.2 million from the comparable quarter last year, primarilyfor the reasons outlined above.
Current wording
Operating loss for the three months ended July 31, 2025 increased $1.4 million over the comparable quarter last year, primarilyfor the reasons outlined above.
Previous wording
Interest expense, net increased by $768,000 over the comparable quarter last year, primarily as a result of higher average debt balances and lower average cash balances during the three months ended January 31, 2025 compared with the comparable quarter last year.
Current wording
Interest expense, net increased by $473,000 over the comparable quarter last year, primarily as a result of higher average debt balances and lower average cash balances during the three months ended July 31, 2025 compared with the comparable quarter last year.
Previous wording
Income tax expense decreased $1.7 million from the comparable quarter last year, primarily as a result of lower operating income. Before adjusting for discrete items related to stock-based compensation, the effective tax rate was 30.1% in the current quarter and 23.6% in the prior year comparable quarter. The increase in the effective tax rate was due to changes in state apportionment and a decrease in pre-tax profitability.
Current wording
Income tax benefit increased $281,000 from the comparable quarter last year, primarily as a result of higher operating loss. Before adjusting for discrete items related to stock-based compensation, the effective tax rate was 33.7% in the current quarter and 25.5% in the prior year comparable quarter. The increase in the effective tax rate before adjusting for discrete items was due to decreased forecasted pretax income and changes in state apportionment.
Previous wording
The following table sets forth certain information regarding net income and the related per share data for the three months ended January 31, 2025 and 2024 (dollars in thousands, except per share data):
Current wording
The following table sets forth certain information regarding net loss and the related per share data for the three months ended July 31, 2025 and 2024 (dollars in thousands, except per share data):
Previous wording
Net income for the three months ended January 31, 2025 was $1.7 million compared with$7.9 million for the comparable quarter last year for the reasons outlined above.
Current wording
Net loss for the three months ended July 31, 2025 was $3.4 million compared with$1.9 million for the comparable quarter last year for the reasons outlined above.
Previous wording
The following table sets forth certain cash flow information for the nine months ended January 31, 2025 and 2024 (dollars in thousands):
Current wording
The following table sets forth certain cash flow information for the three months ended July 31, 2025 and 2024 (dollars in thousands):
Previous wording
Cash used in investing activities decreased $70.7 million for the nine months ended January 31, 2025 compared with the prior year comparable period. We paid $14.3 million for capital expenditures for the nine months ended January 31, 2025, which was $70.9 million lower than the prior year comparable period, primarily as a result of payments related to the Relocation in the prior year period.
Current wording
Cash used in investing activities increased $2.8 million for the three months ended July 31, 2025 compared with the prior year comparable period, primarily as a result of $3.2 million of purchases of marketable securities during the three months ended July 31, 2025 compared to no purchases in the prior year period.
Previous wording
We currently expect to spend $20.0 million to $25.0 million on capital expenditures in fiscal 2025.
Current wording
We currently expect to spend $25.0 million to $30.0 million on capital expenditures in fiscal 2026.
Previous wording
Cash provided by financing activities was $25.7 million for the nine months ended January 31, 2025 compared with $13.3 million of cash provided by financing activities for the nine months ended January 31, 2024. Cash provided by financing activities during the nine months ended January 31, 2025 was primarily the result of $70 million in borrowings under our revolving line of credit, partially offset by $25.5 million of share repurchases and $17.4 million in dividend distributions.
Current wording
Cash provided by financing activities was $8.3 million for the three months ended July 31, 2025 compared with $10.2 million for the three months ended July 31, 2024. Cash provided by financing activities during the three months ended July 31, 2025 was primarily the result of $15.0 million in net borrowings under our revolving line of credit, partially offset by $5.9 million in dividend distributions.
Previous wording
Credit Facilities — We entered into the Second Amended and Restated Credit Agreement on October 3, 2024. The Second Amended and Restated Credit Agreement provides for a revolving line of credit of $175.0 million at any one time, or the Revolving Line. The Revolving Line bears interest at either the Base Rate (as defined in the Second Amended and Restated Credit Agreement) or the SOFR rate, plus an applicable margin based on our consolidated leverage ratio. The Second Amended and Restated Credit Agreement also provides a swingline facility in the maximum amount of $5.0 million at any one time (subject to availability under the Revolving Line). Each Swingline Loan (as defined in the Amended and Restated Credit Agreement) bears interest at the Base Rate, plus an applicable margin based on our Adjusted Consolidated Leverage Ratio (as defined in the Second Amended and Restated Credit Agreement). Subject to the satisfaction of certain terms and conditions described in the Second Amended and Restated Credit Agreement, we have an option to increase the Revolving Line by an aggregate amount not exceeding $50.0 million. The Revolving Line matures on the earlier of October 3, 2029 or the date that is six months in advance of the earliest maturity of any Permitted Notes (as defined in the Second Amended and Restated Credit Agreement) under the Second Amended and Restated Credit Agreement.
Current wording
Credit Facilities — We entered into the Second Amended and Restated Credit Agreement on October 3, 2024. The Second Amended and Restated Credit Agreement provides for a revolving line of credit of $175.0 million at any one time, or the Revolving Line. The Revolving Line bears interest at either the Base Rate (as defined in the Second Amended and Restated Credit Agreement) or the Adjusted Term SOFR rate, plus an applicable margin based on our consolidated leverage ratio. The Second Amended and Restated Credit Agreement also provides a swingline facility in the maximum amount of $5.0 million at any one time (subject to availability under the Revolving Line). Each Swingline Loan (as defined in the Second Amended and Restated Credit Agreement) bears interest at the Base Rate, plus an applicable margin based on our Adjusted Consolidated Leverage Ratio (as defined in the Second Amended and Restated Credit Agreement). Subject to the satisfaction of certain terms and conditions described in the Second Amended and Restated Credit Agreement, we have an option to increase the Revolving Line by an aggregate amount not exceeding $50.0 million. The Revolving Line matures on the earlier of October 3, 2029 or the date that is six months in advance of the earliest maturity of any Permitted Notes (as defined in the Second Amended and Restated Credit Agreement) under the Second Amended and Restated Credit Agreement.
Previous wording
As of January 31, 2025, we had $110.0 million of borrowings outstanding on the Revolving Line, bearing interest at an average rate of 6.63%, which was equal to the SOFR rate plus an applicable margin.
Current wording
As of July 31, 2025, we had $95.0 million of borrowings outstanding on the Revolving Line, bearing interest at an average rate of 6.69%, which is equal to the Adjusted Term SOFR rate plus an applicable margin.
Previous wording
Share Repurchase Programs — On September 19, 2023, our Board of Directors authorized the repurchase of up to $50.0 million of our common stock, subject to certain conditions, in the open market or in privately negotiated transactions through September 19, 2024, or the 2023 Authorization. During fiscal 2024, we purchased 793,551 shares of our common stock for $10.2 million under the 2023 Authorization. During fiscal 2025, we have purchased 1,531,763 shares of our common stock for $21.4 million under the 2023 Authorization. The 2023 Authorization expired on September 19, 2024. On September 5, 2024, our Board of Directors authorized the repurchase of up to $50.0 million of our common stock, subject to certain conditions, in the open market or in privately negotiated transactions from September 20, 2024 through September 20, 2025, or the 2024 Authorization. As of January 31, 2025, we had repurchased 312,310 shares of our common stock for $4.1 million under the 2024 Authorization.
Current wording
Share Repurchase Programs — On September 19, 2023, our Board of Directors authorized the repurchase of up to $50.0 million of our common stock, subject to certain conditions, in the open market or in privately negotiated transactions through September 19, 2024, or the 2023 Authorization. During fiscal 2025, we purchased 1,531,763 shares of our common stock for $21.4 million under the 2023 Authorization. The 2023 Authorization expired on September 19, 2024. On September 5, 2024, our Board of Directors authorized the repurchase of up to $50.0 million of our common stock, subject to certain conditions, in the open market or in privately negotiated transactions from September 20, 2024 through September 20, 2025, or the 2024 Authorization. As of July 31, 2025, we had repurchased 312,310 shares of our common stock for $4.1 million under the 2024 Authorization.
Previous wording
As of January 31, 2025, we had $26.7 million in cash and cash equivalents on hand. Based upon our current working capital position, current operating plans, and expected business conditions, we believe that our existing capital resources and credit facilities will be adequate to fund our operations for at least the next 12 months.
Current wording
As of July 31, 2025, we had $18.0 million in cash and cash equivalents on hand. Based upon our current working capital position, current operating plans, and expected business conditions, we believe that our existing capital resources and credit facilities will be adequate to fund our operations for at least the next 12 months.
Rearranged previous paragraphs (12)
Previous report — wording carried elsewhere
Our operating results for the nine months ended January 31, 2025 included the following:
Previous report — wording carried elsewhere
Gross margin was 25.9% compared with gross margin of 27.0% for the comparable period last year.
Previous report — wording carried elsewhere
Net income was $3.7 million, or $0.08 per diluted share, compared with $13.5 million, or $0.29 per diluted share, for the comparable period last year.
Previous report — wording carried elsewhere
Gross margin for the three months ended January 31, 2025 was 24.1% compared with 28.7% for the comparable quarter last year, primarily because of unfavorable fixed-cost absorption from lower production volumes and higher promotional costs, partially offset by lower labor costs.
Previous report — wording carried elsewhere
The following table sets forth certain information regarding firearm units shipped by trade channel for the nine months ended January 31, 2025 and 2024 (units in thousands):
Previous report — wording carried elsewhere
Newly introduced products represented 42.4% of net sales for the nine months ended January 31, 2025 and included five new pistols, six new long guns, and many new product line extensions.
Previous report — wording carried elsewhere
The following table sets forth certain information regarding operating expenses for the nine months ended January 31, 2025 and 2024 (dollars in thousands):
Previous report — wording carried elsewhere
The following table sets forth certain information regarding interest expense, net for the nine months ended January 31, 2025 and 2024 (dollars in thousands):
Previous report — wording carried elsewhere
Interest expense, net increased by $2.4 million over the comparable period last year as a result of higher average debt balances, lower capitalized interest, and lower average cash balances during the nine months ended January 31, 2025 compared with the comparable period last year.
Previous report — wording carried elsewhere
The following table sets forth certain information regarding income tax expense for the nine months ended January 31, 2025 and 2024 (dollars in thousands):
Previous report — wording carried elsewhere
Income tax expense decreased $3.0 million from the comparable period last year, primarily as a result of lower operating income. Before adjusting for discrete items related to stock-based compensation, the effective tax rate was 27.6% in the current period and 23.9% in the prior year comparable period. The increase in the effective tax rate was due to changes in state apportionment and a decrease in pre-tax profitability.
Previous report — wording carried elsewhere
The following table sets forth certain information regarding net income and the related per share data for the nine months ended January 31, 2025 and 2024 (dollars in thousands, except per share data):