American Outdoor Brands, the parent of Smith & Wesson, M&P, Thompson/Center Arms and Gemtech, reported revenues rose 7.6 percent in the first quarter ended July 31. Earnings also came in well ahead of year-ago levels and topped company guidance.
First Quarter Fiscal 2019 Financial Highlights
- Quarterly net sales were $138.8 million compared with $129.0 million for the first quarter last year, an increase of 7.6 percent.
- Gross margin for the quarter was 37.8 percent compared with 31.5 percent for the first quarter last year.
- Quarterly GAAP net income was $7.6 million, or $0.14 per diluted share, compared with a loss of $2.2 million, or $(0.04) per diluted share, for the comparable quarter last year.
- Quarterly Non-GAAP net income was $11.7 million, or 21 cents per share, compared with $1.2 million, or 2 cents per diluted share, for the comparable quarter last year. GAAP to non-GAAP adjustments to net income excludes a number of acquisition-related costs, including amortization, one-time transaction costs and a change in contingent consideration liability.
- Quarterly non-GAAP Adjusted EBITDAS was $28.4 million, or 20.4 percent of net sales, compared with $12.9 million, or 10.0 percent of net sales, for the comparable quarter last year.
American Outdoor Brands expected sales in the range of $130 million to $140 million. Adjusted earnings were expected to arrive between 10 cents and 14 cents.
On a reported basis, net income came to $7.6 million, or 14 cents a share, against a loss of $2.2 million, or 5 cents, a year ago.
James Debney, American Outdoor Brands Corporation president and chief executive officer, commented, “We are pleased with our operational and financial results for the first quarter. Our increased profitability was driven by consumer preference for our new products, reduced promotions versus the prior year and solid progress on a number of our expense reduction initiatives.
“In our Firearms segment, we introduced several new products and extensions under our Performance Center, M&P and Thompson/Center brands. New products, which we define as products launched within the past twelve months, represented 28.5 percent of our firearm revenue and included strong sales of our M&P Shield 380 EZ pistol, which we launched in February. That pistol has been extremely well-received by our consumers and continues to gain momentum. Our Outdoor Products & Accessories segment generated approximately 25 percent of our total revenue in the quarter, and Crimson Trace further expanded its product offerings in this segment with the launch of several new rail-mounted lights. Lastly, we achieved several milestones in the development of our new Logistics & Customer Services facility in Missouri, a strategic initiative that will ultimately allow us to lower our costs and better serve our customers.”
Jeff Buchanan, executive vice president, chief financial officer and chief administrative officer, commented, “During the quarter, we paid down $25.0 million on our line of credit, reducing that balance to zero. Our balance sheet remains strong with approximately $25.2 million of cash and $135.9 million of total net debt, as compared with nearly $200.0 million of net debt at the end of the comparable quarter last year. We have available an unused, $350 million line of credit, which is expandable to $500 million.”
The company had previously expected sales for the year to range between $570 million and :$600 million and non-GAAP EPS between 40 cents and 50 cents.
The company reports two segments: Firearms and Outdoor Products & Accessories. Firearms manufactures handgun, long gun and suppressor products sold under the Smith & Wesson, M&P, Thompson/Center Arms and Gemtech brands as well as provides forging, machining and precision plastic injection molding services. Outdoor Products & Accessories provides shooting, hunting and outdoor accessories, including reloading, gunsmithing and gun cleaning supplies, tree saws, vault accessories, knives, laser sighting systems, tactical lighting products and survival and camping equipment. Brands in Outdoor Products & Accessories include Smith & Wesson, M&P, Thompson/Center Arms, Crimson Trace, Caldwell Shooting Supplies, Wheeler Engineering, Tipton Gun Cleaning Supplies, Frankford Arsenal Reloading Tools, Lockdown Vault Accessories, Hooyman Premium Tree Saws, BOG POD, Golden Rod Moisture Control, Schrade, Old Timer, Uncle Henry, Imperial, Bubba Blade and UST.