Smith & Wesson Holding Corporation reported earnings vaulted 126.4 percent in its fiscal first quarter ended July 31 on a revenue gain of 40.1 percent.

First Quarter Fiscal 2017 Financial Highlights

  • Quarterly net sales were $207.0 million compared with $147.8 million for the first quarter last year, an increase of 40.1 percent.
  • Gross margin for the quarter was 42.3 percent compared with 39.8 percent for the first quarter last year.
  • Quarterly GAAP net income was $32.6 million, or $0.57 per diluted share, as compared with $14.4 million, or $0.26 per diluted share, for the comparable quarter last year.
  • Quarterly non-GAAP net income was $35.1 million, or $0.62 per diluted share compared with $17.7 million, or $0.32 per diluted share, for the comparable quarter last year. GAAP to non-GAAP adjustments in net income exclude amortization for acquisitions as well as one-time, acquisition-related transaction costs. For a detailed reconciliation, see the schedules that follow in this release.
  • Quarterly non-GAAP Adjusted EBITDAS was $65.8 million, or 31.8 percent of net sales.

James Debney, Smith & Wesson Holding Corporation president and chief executive officer, said, “We are very pleased with our first quarter results, which exceeded our financial guidance. We believe that higher revenue was driven by strong consumer demand as reflected in adjusted background checks from the National Instant Criminal Background Check System (NICS) as well as our own market share gains. During the quarter, we announced the acquisition of Taylor Brands and Crimson Trace, two accretive acquisitions, making strong in-roads on our strategy to become a leader in the market for shooting, hunting, and rugged outdoor enthusiasts. These acquisitions, which further expand our presence in the markets for outdoor products and accessories, were completed early in the second quarter. Based upon that timing, as well as our performance for the first quarter and our revised outlook for the remainder of fiscal 2017, we are raising our full year revenue and net income guidance.”

Crimson Trace Corporation Acquisition

  • The industry leader in laser sighting systems and tactical lighting for firearms
  • Trailing twelve months revenue of $44.7 million (including $10.8 million in sales to Smith & Wesson)
  • Key supplier to Smith & Wesson
  • Organic 10-year compound annual revenue growth rate of over 10 percent
  • Will form the foundation for Smith & Wesson’s new Electro-Optics Division
  • $95.0 million purchase price, utilizing cash on hand

Taylor Brands, LLC Acquisition

  • Industry leading provider of high quality knives and specialty tools
  • Trailing twelve months revenue of approximately $41.0 million
  • Organic 5-year compound annual revenue growth rate of over 12 percent
  • Long-standing licensee of Smith & Wesson
  • Other owned brands: Schrade, Uncle Henry, Old Timer, and Imperial
  • Tuck-in to accessories division; expands presence in hunting and rugged outdoor market
  • $85.0 million purchase price, utilizing cash on hand

Jeffrey D. Buchanan, Executive Vice President, Chief Financial Officer, and Chief Administrative Officer, said, “In line with our expanding presence in the market for rugged outdoors products, we have made the decision to position our accessories division and our new electro-optics division under a segment named Outdoor Products & Accessories, in order to better reflect the large and growing addressable market for those offerings. As a result, effective with the fiscal first quarter, we are now reporting results in the following two segments: Firearms and Outdoor Products & Accessories.”

Buchanan continued, “Strong gross margins in the quarter were driven by several factors, including increased production volumes in the firearms segment. Operating cash flow was positive at $38.1 million despite our seasonal inventory build as we prepare for the upcoming fall hunting and holiday shopping seasons. As a result, cash during the quarter increased to $215.0 million, providing liquidity to fund the $180.0 million in strategic acquisitions that we closed early in the second quarter. We ended the first quarter with total debt of $173.7 million and no borrowings on our $175.0 million revolving line of credit, thus affording us ample liquidity for any future acquisitions we may consider.”