Olin (OLN) said the backlog for its Winchester ammunition unit has multiplied nearly 10-fold since the end of 2011, and it expects business to stay strong in the months ahead thanks partly to consumer demand that's being stoked by the debate about new firearms laws.
At the close of the year, Winchester's commercial backlog stood at $138 million, up from $92 million at the end of September. Since 2013 arrived, Olin said demand has only continued to swell, with backlog reaching approximately $280 million in January. By comparison, the backlog on Dec. 31, 2011, was $29 million -- that's a leap of about 9.65 times in 13 months.
The Clayton, Mo., company said in a press release late Monday that Winchester started seeing heightened interest around the time of the November election "and the elevated level of demand continued through the balance of the year." During the fourth quarter, commercial volume, covering shipments to retailers, rose more than 20% from the same quarter the prior year, Olin said.
Source: Olin. Sales in $ millions.
Olin's primary business is the chlor-alkali division for products such as chlorine and caustic soda, with Winchester normally accounting for just under 30% of its quarterly revenue. Sales for the unit in the most recent quarter were 26.5% of Olin's total sales of $587.6 million, but were sharply higher than analysts expected, reaching $155.8 million. That's up from $122.5 million the previous year and $29 million ahead of the FactSet consensus forecast. The segment earned $16.5 million in the quarter.
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For the time being, sales of Winchester ammunition are "currently only being limited by product availability," executives said on a conference call Tuesday morning. Winchester ammunition is sold to retailers, law enforcement and the military, but long guns with the Winchester name are made outside of Olin under a license.
Gun owners have been scrambling to buy ammunition and firearms ahead of possible tighter restrictions coming from Washington and state capitals. After the shooting at Sandy Hook Elementary School in Connecticut last December, President Obama directed Vice President Joe Biden to lead a team that would offer recommendations from the federal level on addressing gun violence.
In other cases, states have been exploring new gun laws, and New York has already implemented legislation limiting magazine sizes and expanding background information on buyers, among other things. According to Bloomberg's count, "Democratic governors and lawmakers in at least 10 states are seeking new firearms controls."
Olin's comments on Winchester's sales line up with anecdotes that have been surfacing for several weeks regarding high demand. While it's only one sample market, some stores in the Dallas-Fort Worth area, such as a Dallas Dick's Sporting Goods location and a Cabela's in Allen, are noticeably short of many ammunition brands and types, in particular popular ones such as the .22 long.
Prices, at least in cases, are rising as well. At a Fort Worth gun show in late December, 9mm cartridges were selling in the $17.95 to $18.95 range per box. Five weeks later, at another gun show in nearby Lewisville, dealers were displaying prices of $29.95 to $31.95.
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