Smith & Wesson 1Q Going Great Guns
Leading firearms manufacturer Smith & Wesson Holding Corporation (SWHC) reported adjusted earnings of 28 cents per share in the first quarter of fiscal 2013, compared with 4 cents per share in the year-ago quarter.
The results of the company were 55.5% higher than the Zacks Consensus Estimate of 18 cents.
Total Revenue
The company reported net sales of $136 million in the relevant quarter, up 48.3% from $91.7 million in the year-earlier period. The year-over-year growth was driven by strong sales of the M&P product platform.
Net sales in the reported quarter were higher than the Zacks Consensus forecast of $129 million.
Quarterly Highlights
Gross profit grew to 37.7% of net sales from 29% in the first quarter of the previous fiscal. Cost reduction initiatives boosted margins, as operating expenses as a percentage of revenue declined by 816 basis points year over year.
The company continues to invest consistently in research and development (R&D) activities to develop new products. In the first quarter of fiscal 2013, the company spent $1.1 million on R&D versus $1.3 million in the prior-year quarter.
The rise in revenue and reduction in operating expenses benefited the company’s margins. Operating income clocked $31.3 million versus $5.5 million in the year-earlier period, increasing an astronomical 465.5%.
Smith & Wesson sat on a firearm backlog of $392.4 million, increasing 163.7% year over year from $243.6 million at end of the first quarter last year.
Financial Update
Cash and cash equivalents of Smith & Wesson as of July 31, 2012, were $60.5 million versus $56.7 million as of April 30, 2012.
Cash provided by/(used in) operating activities was $9.2 million in the first quarter of fiscal 2013 versus ($15.6) million in the first quarter of fiscal 2012.
Guidance
The company expects its total revenue in the second quarter of fiscal 2013 in the range of $130 million to $135 million, reflecting 40% year-over-year growth. The revenue momentum is expected to be driven by the company’s strong manufacturing capacity. GAAP earnings per share in the second quarter of fiscal 2013 are expected between 19 cents and 21 cents.
Total revenue for fiscal 2013 is expected in the range of $530 million to $540 million, reflecting 30% year-over-year growth. GAAP earnings per share in fiscal 2013 are expected between 85 cents and 90 cents.
Zacks Rank
Smith & Wesson retains a Zacks #3 Rank which translates into a short-term Hold rating. The company competes with Sturm, Ruger & Company Inc. (RGR).
Based in Springfield, Massachusetts, Smith & Wesson Holding Corporation was founded in 1852. The company manufactures, designs and supplies a large variety of fire arms and related items to its worldwide customers. The company has 1,346 full time employees and a market cap of $0.59 billion.
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