Smith & Wesson Holding Corporation Reports Record Fourth Quarter and Full Year Fiscal 2013 Financial Results

SPRINGFIELD, Mass., June 25, 2013 /PRNewswire/ -- Smith & Wesson Holding Corporation (NASDAQ Global Select: SWHC), a leader in firearm manufacturing and design, today announced record financial results for the fiscal fourth quarter and full year periods ended April 30, 2013.

Fourth Quarter Fiscal 2013 Financial Highlights

• Net sales for the fourth quarter were $178.7 million, up 37.6% from the fourth quarter last year. Although the company continued to increase its production capacity, it was unable to meet the ongoing demand across most of its firearm product lines, resulting in additional growth in the company's order backlog.
• Gross profit for the fourth quarter was $68.5 million, or 38.3% of net sales, compared with gross profit of $46.9 million, or 36.1% of net sales, for the comparable quarter last year.  Gross profit improved as a result of increased sales volume, leveraging of fixed costs, and a planned favorable product mix.
• Operating expenses for the fourth quarter were $21.6 million, or 12.1% of net sales, compared with operating expenses of $21.2 million, or 16.3% of net sales, for the fourth quarter last year.  The decline in operating expenses as a percentage of net sales was primarily driven by higher sales combined with controlled spending in sales and marketing.
• The increased net sales and leverage in expenses resulted in operating income for the fourth quarter of $46.9 million, or 26.2% percent of net sales, compared with operating income of $25.7 million, or 19.8% percent of net sales, for the comparable quarter last year. 
• Income from continuing operations for the fourth quarter was $28.6 million, or $0.44 per diluted share, compared with net income from continuing operations of $17.8 million, or $0.27 per diluted share, for the fourth quarter last year. Income from continuing operations for the fourth quarter of fiscal 2013 includes the impact of a $3.0 million charge, or $0.03 per diluted share, related to anticipated expenses associated with a Thompson/Center product recall.
• Non-GAAP Adjusted EBITDAS from continuing operations for the fourth quarter increased to $52.7 million compared with $31.2 million for the fourth quarter last year.
• Operating cash flow of $51.3 million and capital spending of $13.0 million for the fourth quarter resulted in free cash flow of $38.3 million.

Full Year Fiscal 2013 Financial Highlights

• Net sales for the full fiscal year were a record $587.5 million compared with $412.0 million for the prior fiscal year, an increase of 42.6%.  Firearm unit production for the year increased by 40.4%.
• Gross profit was 37.2% compared with 31.1% for fiscal 2012.
• Operating expenses were $85.6 million, or 14.6% of net sales, for fiscal 2013 compared with operating expenses of $83.1 million, or 20.2% of net sales, for fiscal 2012.
• Income from continuing operations was $81.4 million, or $1.22 per diluted share, compared with income from continuing operations of $26.4 million, or $0.40 per diluted share, for last year. 
• Non-GAAP Adjusted EBITDAS from continuing operations for the full fiscal year totaled $154.2 million compared with $68.4 million for fiscal 2012.
• Operating cash flow was $98.1 million and capital spending was $41.4 million for fiscal 2013, resulting in full year free cash flow of $65.2 million, which includes $8.5 million from the sale of discontinued operations.
• During fiscal 2013, the company repurchased 2.1 million shares of its common stock for $20.0 million utilizing cash on hand. 
• Cash and cash equivalents as of April 30, 2013 totaled $100.5 million, up from $56.7 million a year ago.  

Jeffrey D. Buchanan, Smith & Wesson Holding Corporation Executive Vice President and Chief Financial Officer, stated, "Building on the strength of our record profitability, robust cash flows, and rising cash position in fiscal 2013, we recently accelerated a number of steps to optimize our capital structure and generate increased value for our stockholders. On June 13, 2013, we announced that we had repurchased our outstanding 9.5% notes for $49.2 million and that we had issued $75.0 million of new 5.875% notes.  Since that date, we have sold an additional $25.0 million of the 5.875% notes, which will bring the total new note issuance to $100.0 million.  Also on June 13, 2013, we announced that we initiated a $100.0 million stock buyback, a portion of which is expected to be purchased through a $75.0 million tender offer for $10.00 per share, which commenced on June 17, 2013. Overall, we believe that these changes provide a solid foundation upon which to continue to grow our core firearms business, while giving us the financial flexibility to be strategically opportunistic in the market."

James Debney, Smith & Wesson Holding Corporation President and Chief Executive Officer, stated, "We are pleased with our results, which include record fourth quarter and annual net sales and profits and a substantial expansion of our gross margins.  Our successful performance was driven by solid marketing, innovative new products, disciplined manufacturing execution, and strict financial management.  Significant increases in our manufacturing capacity, combined with continued robust consumer demand for firearms, resulted in higher sales of our most popular M&P® products.  Our achievements over the year aligned directly with our growth strategy, which is underpinned by a focus on our core firearm business.  Having completed another year of successfully executing our strategy, we are today issuing our financial outlook for the first quarter and full fiscal year 2014."

Financial Outlook

The company expects net sales for the first quarter of fiscal 2014 to be between $162.0 million and $167.0 million, which would represent year-over-year growth of approximately 21% at the midpoint. The company anticipates GAAP earnings per share from continuing operations of between $0.34 and $0.37 for the first quarter of fiscal 2014. Included in this first quarter outlook are estimated expenses of approximately $0.06 per share associated with the bond and stock repurchases.

The company anticipates net sales for fiscal 2014 of between $605.0 million and $615.0 million, which would represent year-over-year growth of approximately 4% at the midpoint. It should be noted that the company ended its Walther distribution agreement at the end of fiscal 2013. Therefore, when Walther is excluded from the full year 2013 results, estimated net sales for 2014 would represent year-over-year growth of 12% at the mid-point.  The company anticipates GAAP earnings per share from continuing operations of between $1.30 and $1.35 for fiscal 2014, and Adjusted EBITDAS of between $160.0 million and $170.0 million.

Conference Call and Webcast

The company will host a conference call and webcast today, June 25, 2013, to discuss its fourth quarter and full year fiscal 2013 financial and operational results. Speakers on the conference call will include James Debney, President and CEO, and Jeffrey D. Buchanan, Executive Vice President and CFO. The conference call may include forward-looking statements. The conference call and webcast will begin at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time). Those interested in listening to the call via telephone may call directly at (857) 244-7551 and reference conference code 34472188. No RSVP is necessary.  The conference call audio webcast can also be accessed live and for replay on the company's website at www.smith-wesson.com, under the Investor Relations section. The company will maintain an audio replay of this conference call on its website for a period of time after the call. No other audio replay will be available. 

Reconciliation of U.S. GAAP to Non-GAAP Financial Measures

In this press release, certain non-GAAP financial measures, including "Adjusted EBITDAS" and "free cash flow" are presented.  From time-to-time, the company considers and uses Adjusted EBITDAS and free cash flow as supplemental measures of operating performance in order to provide the reader with an improved understanding of underlying performance trends. Adjusted EBITDAS excludes the effects of interest expense, income taxes, depreciation of tangible fixed assets, amortization of intangible assets, stock-based compensation expense, plant consolidation costs, DOJ and SEC investigation costs, and certain other transactions.  See the attached "Reconciliation of GAAP Net Income to Non-GAAP Adjusted EBITDAS" for a detailed explanation of the amounts excluded from and included in net income to arrive at Adjusted EBITDAS for the three-month and full year periods ended April 30, 2013 and April 30, 2012 and the company's guidance for full year fiscal 2014.  Free cash flow is defined as cash flow provided by operating activities less capital expenditures, which include purchases of property, equipment, and software.

Adjusted or non-GAAP financial measures provide investors and the company with supplemental measures of operating performance and trends that facilitate comparisons between periods before, during, and after certain items that would not otherwise be apparent on a GAAP basis. Adjusted financial measures are not, and should not be viewed as, a substitute for GAAP results. The company's definition of these adjusted financial measures may differ from similarly named measures used by others.

About Smith & Wesson

Smith & Wesson Holding Corporation (NASDAQ Global Select: SWHC) is a U.S.-based leader in firearm manufacturing and design, delivering a broad portfolio of quality firearms, related products, and training to the global military, law enforcement, and consumer markets. The company's brands include Smith & Wesson®, M&P® and Thompson/Center Arms™. Smith & Wesson facilities are located in Massachusetts and Maine. For more information on Smith & Wesson, call (800) 331-0852 or log on to www.smith-wesson.com.

Safe Harbor Statement                    

Certain statements contained in this press release may be deemed to be forward-looking statements under federal securities laws, and we intend that such forward-looking statements be subject to the safe-harbor created thereby.  Such forward-looking statements include the company's anticipated expenses associated with the Thompson/Center product recall; the company's assessment that it recently executed a number of steps to optimize its capital structure and generate increased value for its stockholders building on the strength of its record profitability, robust cash flows, and rising cash position in fiscal 2013; the company's belief that its repurchases of outstanding notes and the issuance of new notes as well as the announced stock buyback will increase the company's financial flexibility and provide a solid foundation upon which to continue to grow its core firearm business while being strategically opportunistic in the market; the company's belief that its successful performance was driven by solid marketing, innovative new products, disciplined manufacturing execution, and strict financial management; the company's belief that significant increases in the company's manufacturing capacity, combined with continued robust consumer demand for firearms resulted in higher sales of its most popular M&P products; and the company's expectations for net sales, GAAP earnings per share from continuing operations, and estimated expenses associated with bond and stock repurchases for the first quarter of fiscal 2014 as well as net sales, GAAP earnings per share from continuing operations and Adjusted EBITDAS for fiscal 2014.  We caution that these statements are qualified by important factors that could cause actual results to differ materially from those reflected by such forward-looking statements.  Such factors include the demand for our products; the costs and ultimate conclusion of certain legal matters, including the DOJ and SEC matters; the state of the U.S. economy; general economic conditions, and consumer spending patterns; the potential for increased regulation of firearms and firearm-related products; speculation surrounding fears of terrorism and crime; our growth opportunities; our anticipated growth; our ability to increase demand for our products in various markets, including consumer, law enforcement, and military channels, domestically and internationally; the position of our hunting products in the consumer discretionary marketplace and distribution channel; our penetration rates in new and existing markets; our strategies; our ability to introduce new products; the success of new products; our ability to expand our markets; the potential for cancellation of orders from our backlog; and other risks detailed from time to time in our reports filed with the SEC, including our Form 10-K Report for the fiscal year ended April 30, 2013.

Contact: Liz Sharp, VP Investor Relations
Smith & Wesson Holding Corp.
(413) 747-3304
[email protected]

SOURCE Smith & Wesson Holding Corporation

WANT YOUR COMPANY'S NEWS FEATURED ON PRNEWSWIRE.COM?

440k+
Newsrooms &
Influencers

9k+
Digital Media
Outlets

270k+
Journalists
Opted In

GET STARTED