For those who can subdue their hopes to see reality regardless whether long or short........................
1) Last quarter was great, as expected, and production ran at capacity.
2) Current quarter will be very good with production again at capacity. Quarter would be great except the prepayment penalty for calling in the old debt will reduce earnings. The fees for the new debt issuance will not be recognized in current quarter; they will reduce earnings later.
3) Management expects the distribution channel to be re-stocked during current quarter. Since they project less than full capacity and reduced earnings for the 3 quarters following the current one, they will be producing according to sell through not to re-stock channel.
4) Management predicts a very strong retail demand for the 3 quarters after the current one. (Normally, I would respect a management's expectations of retail demand for their products due to their expertise. But since the major force driving retail demand now is political, I think their very optimistic opinion is no better than the opinion of anyone else).
5) Management mislead shareholders on Jun 13 when it said it was incurring $75 million debt (net debt increase of $32 million). They secretly incurred $100 million debt (net debt increase of $57 million).
6) Management refused to reveal why the were increasing debt and holding the cash. They acknowledged they had more than enough cash to do both buyback programs without issuing any new debt.
Did they actually say that?
Quarterly earnings will be "reduced", even though annual earnings will increase?
Did they really say the "distribution channel would be restocked in the current quarter"?
I searched for the CC transcript at the SWHC corporate website, and it has not yet been published so couldn't verify your claims.
It is called deductive reasoning. Because the full year projection is for less than 4 times the 1st quarter projection, therefore the last 3 quarters have earnings "reduced" from the 1st quarter. Same deductive reasoning related to sales projections shows that the last 3 quarters are projected to be at less than full capacity production.
As long as the supply channel is not fully re-stocked, production will be at full capacity even though retail sales are already lower than that necessary to support full production. The same deductive reasoning yields the conclusion the company expects the channel to be re-stocked since they project less than full capacity production for the last 3 quarters of current year.
That is why the topic is title "meaning" of the quarter report and Conference call. You won't know much If you don't analyze information see what it fully means, not just the appearance that is presented.
No one has said thanks for sharing this info- so I will
Even though I am disgusted today, and have whined today- sorry about that, I still believe that something is up. I know a few others believe the same thing. Especially when they wont reveal why they are incurring more debt and holding onto cash.
Rumors have yapped about them either going privte or a hostile take over is happening.
If a party want my shares for say 15 they can have them. Either S&W going private or someone else-I dont care I just want to make some money- thats what investing is.
Sentiment: Strong Buy
wrong, dead wrong... but only time will tell. of course when we have billion dollar lefty hedge funds running wild, this company could cure cancer and drop 30%. This is gun control, obombastic style. jmo, glta
5) Is that the kind of secret where they properly filed Form D and also promptly reported it verbally and in writing to shareholders? Yeah I thought so. You may have the ability to post bombastic post after bombastic post, but you don't have inside knowledge that only someone on their board would have. If they changed their mind, they may have done it for good reason. It isn't necessarily something that is not in shareholders best interests, but you always lean in that direction since you are a short. Nothing wrong in wanting to know though. We all want to know and I was surprised that none of the analysts asked the question. Shows how lame they are. Even if they declined to answer, that would have been very telling.