Smith & Wesson Holding Corporation has entered into a definitive agreement to acquire Universal Safety Response, Inc., a privately held, full-service security systems solutions provider, for up to 9.7 million shares of common stock and up to $26.2 million in cash.
Representatives for Smith & Wesson said the transaction provides the firearms maker with entry into the rapidly growing perimeter security market and is a move that will expand its revenue base into commercial non-firearms categories.
“Growing demand for enhanced security measures at government, military and corporate facilities presents USR with numerous opportunities,” said Michael Golden, president and CEO of Smith & Wesson, “ there are opportunities in areas of transportation, railroad crossings, work zone safety, ballistics, law enforcement, energy-producing facilities and international markets yet to be addressed.”
USR operates primarily in two facilities in Franklin, TN with a workforce of approximately 110. Management for Smith & Wesson said the purchase price of USR will include 5.6 million shares at closing and up to 4.1 million shares of the companys common stock depending on USRs targeted EBITDAS for 2009 and 2010. The purchase price, depending on the companys stock price on the closing date, will be between $8.8 million and $26.2 million in cash.
The company expects the acquisition to supplement fiscal 2010 year-end revenues by approximately $50.0 million and fiscal 2011 year-end revenues by approximately $100.0 million, with EBITDA expected to exceed $15.0 million in that period.
In the current year, which ends April 30, 2010, the acquisition will be immediately accretive, excluding the purchase accounting impact on a per share basis and approximately breakeven per share on a U.S. GAAP basis. The acquisition is expected to be accretive to EPS on a U.S. GAAP basis in future periods.
In other Smith & Wesson Holding Corporation news, the company issued preliminary fiscal 2009 fourth quarter results, handily beating analysts forecasts for the period ended April 30. Revenues were $99.5 million for the quarter, a 20% jump from $83.1 million in the year-ago period. Analysts polled by Thomson Reuters had forecast revenues of $90.8 million.
Gross margins improved to 31.0% of sales for the quarter, an improvement of 40 basis points over margins of 30.6% in the year-ago period.
Demand for handguns and tactical rifles boosted the companys backlog to over $200 million as of April 30.
The company will report full fourth quarter and year-end results numbers Monday.
