Liberty Safe turned a profit in the third quarter ended Sept. 30 after sales to gun dealers jumped 41.6 percent, signaling a turnaround in firearms sales following their latest boom and bust cycle.

Parent company Compass Diversified Holdings  Inc (CODI) said the sales surged is a strong indication that firearms sales have finally returned to a more normalized level of market demand following the abnormal industry cycle in 2013 and 2014.

Liberty Safe's sales reached $23.4 million, up approximately $3.5 million or 17.5 percent, compared to the corresponding quarter a year ago.

Non-Dealer sales were approximately $12.5 million in the three months ended Sept. 30, 2015 compared to $12.2 million for the three months ended Sept. 30, 2014 representing an increase of $0.3 million or 2.5 percent. Dealer sales totaled approximately $10.9 million in the three months ended Sept. 30, 2015 compared to $7.7 million in the same period in 2014, representing an increase of $3.2 million or 41.6 percent.

CODI attributed the increase to a return to a more normalized level of market demand following the abnormal industry cycle in 2013 and 2014, particularly the market softening experienced during 2014. Liberty Safe has increased its production output continuously to meet the current demand, and has reached targeted manufacturing output levels during the third quarter of 2015.

Cost of sales
Cost of sales decreased approximately $1.6 million when compared to the same period in 2014. Gross profit as a percentage of net sales totaled approximately 30.8 percent and 10.8 percent for the quarters ended Sept. 30, 2015 and Sept. 30, 2014 , respectively. The significant increase in gross margin is attributable to favorable cost variances as a result of improved manufacturing efficiencies due to greater volume output and favorable material costs.

Selling, general and administrative expense
Selling, general and administrative expense increased to approximately $3.3 million or 13.9 percent of net sales compared $2.7 million or 13.8 percent of net sales for the same period of 2014. The $0.6 million increase was primarily attributed to a higher level of dealer advertising expense, higher sales commission expense, and an increased annual advertising allowances for national account customers.
 

Income (loss) from operations
Income from operations increased $5.2 million to $3.5 million compared to a loss from operations of $1.7 million during the same period in 2014, principally as a result of the increase in sales and gross profit, as described above.