Leading firearm manufacturer,
Smith & Wesson Holding Corporation
) reported adjusted earnings of 24 cents per share in the second
quarter of fiscal 2013, compared with 1 cent per share in the
The results of the company were a penny higher than the Zacks
The company reported net sales of $136.6 million in the
relevant quarter, up 47.9% from $92.3 million in the year-earlier
period. The year-over-year growth was driven by strong sales
across all of the company's product lines, including its M&P
Net sales in the reported quarter were nominally higher than
the Zacks Consensus forecast of $136 million.
Gross profit grew to 35.5% of net sales from 26.7% in the
second quarter of the previous fiscal. Cost reduction initiatives
yielded positive results. Operating expenses, as a percentage of
revenue, thus declined by 690 basis points year over year.
The company continues to invest consistently in research and
development (R&D) activities to develop new products. In the
second quarter of fiscal 2013, the company spent $1.27 million on
R&D versus $1.24 million in the prior-year quarter.
Operating income clocked $26.6 million versus $3.4 million in
the year-earlier period, increasing an astronomical 682.2%.
Smith & Wesson sat on a firearm backlog of $332.7 million,
increasing $182.8 million year over year from $149.9 million at
the end of the second quarter of last year.
Cash and cash equivalents of Smith & Wesson as of October
31, 2012, were $61.3 million versus $56.7 million as of April 30,
Cash from/(used in) operating activities was $13.7 million in
the second quarter of fiscal 2013 versus ($2.5) million in the
second quarter of fiscal 2012.
The company expects total revenue in the third quarter of
fiscal 2013 in the range of $126 million to $131 million,
reflecting 30% year-over-year growth. GAAP earnings per share in
the third quarter of fiscal 2013 are expected between 19 cents
and 21 cents.
Total revenue for fiscal 2013 is now expected in the range of
$550 million to $560 million, up from the prior forecast of $530
million to $540 million. This reflects an estimated 35%
year-over-year growth. GAAP earnings per share for fiscal 2013
are expected between $1.00 and $1.05.
At the Peer
The company competes with
Sturm, Ruger & Company Inc.
). The top- and bottom-line results of Sturm, Ruger & Company
in the third quarter were higher than the Zacks Consensus
Estimates. The Zacks Consensus earnings estimate for the fourth
quarter is currently at 64 cents per share.
Smith & Wesson continues to post strong results. The
firearm maker has surpassed our expectation for the last six
quarters. The company's decision to buy back shares to increase
shareholder value is appreciated.
Though the firearm backlog increased 122.2% year over year to
$332.7 million it decreased 15.2% sequentially. Whether the
sequential decline is only a seasonal effect or an indicator of a
diminishing order book is to be seen in the performance of the
future quarters. Smith & Wesson currently retains a
short-term Zacks #3 Rank (Hold rating).
Based in Springfield, Massachusetts, Smith & Wesson
Holding Corporation was founded in 1852. The company
manufactures, designs and supplies a large variety of firearms
and related items to its worldwide customers. The company
has 1,346 full time employees and a market cap of $0.71
STURM RUGER&CO (RGR): Free Stock Analysis
SMITH & WESSON (SWHC): Free Stock Analysis
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