Smith & Wesson Holding Corporation has taken the next step in its plan to diversify into “new areas of safety, security, protection ad sport” with the acquisition of Thompson/Center Arms, Inc. for $102 million in cash, which closed late last week. Thompson/Center Arms provides Smith & Wesson with immediate market penetration and credibilitiy in both the black powder and long gun markets, which combined have annual sales of roughly $1.1 billion.
In a conference call with analysts, CEO and president of Smith & Wesson Holding Corporation, Mike Golden disclosed that Thompson generated approximately $65 million in sales during the 2005 calendar year with and EBITDA of $13 million and gross margin of 39%. He expects Thompson to be “accretive to [their] earnings by 15% in fiscal year 2008.”
In conjunction with the acquisition, Gregg Ritz, president and CEO of Thompson/Center Arms, will be named president of Smith & Wesson – Hunting. He will continue to lead the Thompson/Center Arms operation and will head Smith & Wesson's efforts to develop its hunting business.
The company currently believes that the revenue contribution from Thompson/Center Arms for the period from the closing date to the end of the company's 2007 full fiscal year, which is April 30, 2007, will be approximately $18.6 million. Therefore, the company now expects net product sales for the full 2007 fiscal year to be approximately $218.6 million.
