Breaking News

U.S. May Home Prices Rise 0.4% From Previous Month: FHFA
Tweet TWEET

Smith & Wesson Holding Corporation Reports Third Quarter Fiscal 2013 Financial Results

Smith & Wesson Holding Corporation Reports Third Quarter Fiscal 2013 Financial
                                   Results

- Fiscal Third Quarter 2013 Net Sales from Continuing Operations of $136.2
Million, Up 38.8% Year-Over-Year

- Fiscal Third Quarter 2013 Net Income from Continuing Operations of $17.5
Million, or $0.26 Per Diluted Share

- Increasing Guidance for Fiscal 2013 Full Year Net Sales from Continuing
Operations to Between $575.0 Million and $580.0 Million

PR Newswire

SPRINGFIELD, Mass., March 5, 2013

SPRINGFIELD, Mass., March 5, 2013 /PRNewswire/ --Smith & Wesson Holding
Corporation (NASDAQ Global Select: SWHC), a leader in firearm manufacturing
and design, today announced financial results for the fiscal 2013 third
quarter ended January 31, 2013.

Third Quarter Fiscal 2013 Financial Highlights

  oNet sales from continuing operations for the third quarter were $136.2
    million, up 38.8% from the third quarter last year. The company continued
    to increase its production capacity during the third quarter and has
    operated its plant at essentially full capacity for the last four
    quarters. Despite these capacity increases, the company was unable to meet
    the ongoing demand across all of its firearm product lines.
  oGross profit for the third quarter was $50.1 million, or 36.8% of net
    sales, compared with gross profit of $30.0 million, or 30.6% of net sales,
    for the comparable quarter last year. Gross profit improved as a result
    of increased sales volume, leveraging of fixed costs, and a favorable
    product mix.
  oOperating expenses for the third quarter were $22.1 million, or 16.2% of
    net sales, compared with operating expenses of $19.7 million, or 20.1% of
    net sales, for the third quarter last year. The increase in operating
    expenses was primarily related to higher general and administrative costs
    associated with the ongoing implementation of the company's new ERP system
    and incentive compensation. The decline in operating expenses as a
    percentage of net sales was primarily driven by increased sales volume and
    controlled spending in sales and marketing.
  oOperating income from continuing operations for the third quarter was
    $28.0 million, or 20.6% percent of net sales, compared with operating
    income from continuing operations of $10.3 million, or 10.5% percent of
    net sales, for the comparable quarter last year.
  oIncome from continuing operations for the third quarter was $17.5 million,
    or $0.26 per diluted share, more than triple the net income from
    continuing operations of $5.4 million, or $0.08 per diluted share, for the
    third quarter last year.
  oNon-GAAP Adjusted EBITDAS from continuing operations for the third quarter
    increased to $33.3 million compared with $14.8 million for the third
    quarter last year. Fiscal year-to-date non-GAAP Adjusted EBITDAS was
    $101.5 million compared with $37.2 million for the comparable prior year
    period.
  oOperating cash flow of $33.0 million and net capital spending of $12.6
    million for the third quarter resulted in free cash flow of $20.4 million.
  oDuring the third quarter of fiscal 2013, the company's Board of Directors
    approved a program to repurchase up to $35.0 million of Smith & Wesson's
    common stock, subject to certain conditions, in the open market or
    privately negotiated transactions on or prior to June 30, 2013. The
    company repurchased 2.1 million shares of its common stock for $20.0
    million through this program during the third quarter of fiscal 2013
    utilizing cash on hand.

James Debney, Smith & Wesson Holding Corporation President and Chief Executive
Officer, stated, "Our success in the third quarter was highlighted by
significant year-over-year improvements in net sales, margin expansion, and
bottom line profitability as we successfully executed our growth strategy,
which is underpinned with a focus on firearms. Performance gains were driven
by continued robust consumer demand for firearms as well as increased sales of
our M&P® polymer pistols and modern sporting rifles. Based on incremental
improvements in expanding our production capacity, which will be further
deployed in the fourth quarter, we are increasing our financial guidance for
the full fiscal year 2013."

Jeffrey D. Buchanan, Executive Vice President and Chief Financial Officer,
stated, "The strength of our balance sheet continues to provide us enhanced
flexibility to invest in our core firearm business and fuel our growth
initiatives. At the end of the quarter, we had no borrowings under our credit
facility and a cash balance of $62.0 million. Robust free cash flow also
allowed us to return value to our stockholders by buying back shares of our
common stock in the fiscal third quarter for a total of $20.0 million."

Financial Outlook for Continuing Operations

The company expects net sales from continuing operations for the fourth
quarter of fiscal 2013 to be between $165.0 million and $170.0 million, which
would represent year-over-year growth from continuing operations of 29.0% at
the midpoint. The company anticipates GAAP earnings per diluted share from
continuing operations of between $0.38 and $0.40 for the fourth quarter of
fiscal 2013.

The company is raising its full year fiscal 2013 financial guidance. The
company currently anticipates net sales from continuing operations for fiscal
2013 of between $575.0 million and $580.0 million, which would represent
year-over-year growth from continuing operations of approximately 40.0% at the
midpoint. The company anticipates fiscal 2013 GAAP earnings per diluted share
from continuing operations of between $1.17 and $1.19, income from continuing
operations of between $78.0 million and $79.5 million, and non-GAAP Adjusted
EBITDAS from continuing operations of between $148.4 million and $150.7
million.

Conference Call and Webcast

The company will host a conference call and webcast today, March 5, 2013, to
discuss its third quarter fiscal 2013 financial and operational results.
Speakers on the conference call will include James Debney, President and CEO,
and Jeffrey D. Buchanan, Executive Vice President and CFO. The conference call
may include forward-looking statements. The conference call and webcast will
begin at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time). Those interested in
listening to the call via telephone may call directly at (866) 804-6928 and
reference conference code 35129271. No RSVP is necessary. The conference call
audio webcast can also be accessed live and for replay on the company's
website at www.smith-wesson.com, under the Investor Relations section. The
company will maintain an audio replay of this conference call on its website
for a period of time after the call. No other audio replay will be available.

Reconciliation of U.S. GAAP to Non-GAAP Financial Measures

In this press release, certain non-GAAP financial measures, including
"Adjusted EBITDAS" and "free cash flow" are presented. From time-to-time, the
company considers and uses Adjusted EBITDAS and free cash flow as supplemental
measures of operating performance in order to provide the reader with an
improved understanding of underlying performance trends. Adjusted EBITDAS
excludes the effects of interest expense, income taxes, depreciation of
tangible fixed assets, amortization of intangible assets, stock-based
compensation expense, plant consolidation costs, DOJ and SEC investigation
costs, and certain other transactions. See the attached "Reconciliation of
GAAP Net Income to Adjusted EBITDAS" for a detailed explanation of the amounts
excluded from and included in net income to arrive at Adjusted EBITDAS for the
three-month and nine-month periods ended January 31, 2013 and January 31, 2012
and the attached "Reconciliation of Estimated GAAP Income from
ContinuingOperations to Estimated Adjusted EBITDAS" for a full detailed
explanation of the amounts excluded from and included in income from
continuing operations to arrive at estimated Adjusted EBITDASfor full year
fiscal 2013. Free cash flow is defined as cash flow provided by operating
activities less capital expenditures, which include purchases of property,
equipment, and software.

Adjusted or non-GAAP financial measures provide investors and the company with
supplemental measures of operating performance and trends that facilitate
comparisons between periods before, during, and after certain items that would
not otherwise be apparent on a GAAP basis. Adjusted financial measures are
not, and should not be viewed as, a substitute for GAAP results. The company's
definition of these adjusted financial measures may differ from similarly
named measures used by others.

About Smith & Wesson

Smith & Wesson Holding Corporation (NASDAQ Global Select: SWHC) is a
U.S.-based leader in firearm manufacturing and design, delivering a broad
portfolio of quality firearms, related products, and training to the global
military, law enforcement, and consumer markets. The company's brands include
Smith & Wesson®, M&P® and Thompson/Center Arms™. Smith & Wesson facilities are
located in Massachusetts and Maine. For more information on Smith & Wesson,
call (800) 331-0852 or log on to www.smith-wesson.com.

Safe Harbor Statement

Certain statements contained in this press release may be deemed to be
forward-looking statements under federal securities laws, and we intend that
such forward-looking statements be subject to the safe-harbor created
thereby. Such forward-looking statements include our outlook for fiscal 2013
full year net sales from continuing operations; the outcome of the ongoing
implementation of our new ERP system; potential future repurchases of our
common stock under our stock repurchase program; our belief regarding robust
consumer demand for firearms; our belief that our expanded production capacity
will be further deployed in the fourth quarter of fiscal 2013; increasing our
full year fiscal 2013 financial guidance; our belief regarding our enhanced
flexibility to invest in our core firearm business and fuel our growth
initiatives; our outlook for net sales from continuing operations,
year-over-year growth from continuing operations, and GAAP earnings per
diluted share from continuing operations for the fourth quarter of fiscal 2013
and the full 2013 fiscal year; and our outlook for income from continuing
operations and non-GAAP Adjusted EBITDAS from continuing operations for the
full 2013 fiscal year, including the amounts excluded from and included in net
income to arrive at Adjusted EBITDAS for our guidance for full year fiscal
2013. We caution that these statements are qualified by important factors
that could cause actual results to differ materially from those reflected by
such forward-looking statements. Such factors include the demand for our
products; the costs and ultimate conclusion of certain legal matters,
including the DOJ and SEC matters; the state of the U.S. economy; general
economic conditions, and consumer spending patterns; the potential for
increased regulation of firearms and firearm-related products; speculation
surrounding fears of terrorism and crime; our growth opportunities; our
anticipated growth; our ability to increase demand for our products in various
markets, including consumer, law enforcement, and military channels,
domestically and internationally; the position of our hunting products in the
consumer discretionary marketplace and distribution channel; our penetration
rates in new and existing markets; our strategies; our ability to introduce
new products; the success of new products; our ability to expand our markets;
the potential for cancellation of orders from our backlog; and other risks
detailed from time to time in our reports filed with the SEC, including our
Form 10-K Report for the fiscal year ended April 30, 2012.

Contact: Liz Sharp, VP Investor Relations
Smith & Wesson Holding Corp.
(413) 747-3304
lsharp@smith-wesson.com



SMITH & WESSON HOLDING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Unaudited)
                          For the Three Months      For the Nine Months
                          Ended:                    Ended:
                          January 31,  January 31,  January 31,  January 31,
                          2013         2012         2013         2012
                          (In thousands, except per share data)
Net sales                 $  136,242   $  98,125    $  408,797   $  282,154
Cost of sales                86,143       68,121       258,882      201,028
Gross profit                 50,099       30,004       149,915      81,126
Operating expenses:
  Research and              942          992          3,363        3,571
  development
  Selling and marketing     8,333        8,062        23,203       24,823
  General and               12,776       10,666       37,381       33,483
  administrative
  Total operating           22,051       19,720       63,947       61,877
  expenses
Operating income from        28,048       10,284       85,968       19,249
continuing operations
Other income/(expense):
  Other                     —            8            39           62
  income/(expense), net
  Interest income           48           394          750          1,196
  Interest expense          (1,240)      (1,629)      (4,571)      (6,044)
  Total other               (1,192)      (1,227)      (3,782)      (4,786)
  income/(expense), net
Income from continuing
operations before income     26,856       9,057        82,186       14,463
taxes
Income tax expense           9,350        3,664        29,410       5,845
Income from continuing       17,506       5,393        52,776       8,618
operations
Discontinued operations:
  Loss from operations
  of discontinued            (601)        (1,600)      (3,150)      (8,306)
  security solutions
  division
  Income tax                2,329        (645)        (3,921)      (3,326)
  expense/(benefit)
  Income/(loss) from
  discontinued               (2,930)      (955)        771          (4,980)
  operations
Net income/comprehensive  $  14,576    $  4,438     $  53,547    $  3,638
income
Net income per share:
  Basic - continuing      $  0.27      $  0.08      $  0.81      $  0.13
  operations
  Basic - net income      $  0.22      $  0.07      $  0.82      $  0.06
  Diluted - continuing    $  0.26      $  0.08      $  0.79      $  0.13
  operations
  Diluted - net income    $  0.22      $  0.07      $  0.80      $  0.06
Weighted average number
of common shares
outstanding:
  Basic                      65,149       64,874       65,457       64,700
  Diluted                    66,421       66,582       66,909       65,154





SMITH & WESSON HOLDING CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
                                          As of:
                                          January 31, 2013     April 30, 2012
                                          (In thousands, except par value and
                                          share data)
ASSETS
Current assets:
    Cash and cash equivalents, including
    restricted cash of $3,342 on January  $     61,999         $   56,717
    31, 2013 and $3,334 on April 30, 2012
    Accounts receivable, net of allowance
    for doubtful accounts of $785 on            38,871             48,313
    January 31, 2013 and $1,058 on
    April30, 2012
    Inventories                                 69,208             55,296
    Prepaid expenses and other current          5,689              4,139
    assets
    Assets held for sale                        —                  13,490
    Deferred income taxes                       12,759             12,759
    Income tax receivable                       5,800              —
             Total current assets              194,326            190,714
Property, plant, and equipment, net            77,807             60,528
Intangibles, net                               4,075              4,532
Other assets                                   5,333              5,900
                                          $     281,541        $   261,674
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
    Accounts payable                     $     24,377         $   28,618
    Accrued expenses                           13,677             20,685
    Accrued payroll                            11,474             9,002
    Accrued income taxes                       —                  291
    Accrued taxes other than income            4,859              4,270
    Accrued profit sharing                     7,131              8,040
    Accrued product/municipal liability        1,517              1,397
    Accrued warranty                           5,014              5,349
    Liabilities held for sale                   —                  5,693
             Total current liabilities         68,049             83,345
Deferred income taxes                          4,537              4,537
Notes payable, net of current portion          43,559             50,000
Other non-current liabilities                  10,782             10,948
             Total liabilities                 126,927            148,830
Commitments and contingencies
Stockholders' equity:
 Preferred stock, $.001par value,
 20,000,000shares authorized, no shares        —                  —
 issued or outstanding
 Common stock, $.001par value,
 100,000,000shares authorized,
 67,459,468 shares issued and 64,159,865
 shares outstanding on January 31, 2013         67                 67
 and 66,512,097shares issued and
 65,312,097 shares outstanding on
 April30, 2012
 Additional paid-in capital                    197,602            189,379
 Accumulated deficit                            (16,732)           (70,279)
 Accumulated other comprehensive income         73                 73
 Treasury stock, at cost (3,299,603
 common shares on January 31, 2013 and          (26,396)           (6,396)
 1,200,000 on April 30, 2012)
             Total stockholders' equity        154,614            112,844
                                          $     281,541        $   261,674





SMITH & WESSON HOLDING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
                                          For the Nine Months Ended:
                                          January 31, 2013  January 31, 2012
                                          (In thousands)
Cash flows from operating activities:
 Net income                              $    53,547       $    3,638
 Adjustments to reconcile net income to
 net cash provided by operating
 activities:
  Amortization and depreciation                12,023            11,286
  Loss on sale of business including loss
  on sale of discontinued operations,          1,222             241
  including $45 of stock-based
  compensation expense
  Loss on sale/disposition of assets           277               251
  Provisions for/(recoveries of) losses        378               (326)
  on accounts receivable
  Change in disposal group assets and          (1,215)           5,241
  liabilities
  Stock-based compensation expense             3,086             1,797
  Excess book deduction of stock-based         —                 (266)
  compensation
  Changes in operating assets and
  liabilities:
  Accounts receivable                         9,064             15,555
  Inventories                                 (13,912)          (9,988)
  Other current assets                        (1,150)           1,578
  Income tax receivable/payable               (6,091)           1,239
  Accounts payable                            (4,241)           (13,519)
  Accrued payroll                             1,867             2,785
  Accrued taxes other than income             589               (8,000)
  Accrued profit sharing                      (909)             (459)
  Accrued other expenses                      (7,795)           (5,348)
  Accrued product/municipal liability         120               (149)
  Accrued warranty                            (335)             1,687
  Other assets                                (45)              (64)
  Other non-current liabilities               284               599
            Net cash provided by              46,764            7,778
            operating activities
Cash flows from investing activities:
 Proceeds from sale of business including      7,500             500
 discontinued operations
 Receipts from note receivable                55                —
 Payments to acquire patents and              (36)              (124)
 software
 Proceeds from sale of property and           1,037             15
 equipment
 Payments to acquire property and             (28,399)          (10,067)
 equipment
            Net cash used in investing        (19,843)          (9,676)
            activities
Cash flows from financing activities:
 Proceeds from loans and notes payable         1,753             1,532
 Cash paid for debt issue costs                —                 (1,859)
 Proceeds from energy efficiency               —                 225
 incentive programs
 Payments on capital lease obligation          (450)             —
 Cash paid for redemption of convertible       —                 (30,000)
 notes
 Payments on loans and notes payable           (8,034)           (1,264)
 Payments to acquire treasury stock            (20,000)          —
 Proceeds from exercise of options to
 acquire common stock, including employee      4,095             717
 stock purchase plan
 Excess tax benefit of stock-based             997               —
 compensation
            Net cash used in financing        (21,639)          (30,649)
            activities
Net increase/(decrease) in cash and cash      5,282             (32,547)
equivalents
Cash and cash equivalents, beginning of       56,717            58,292
period
Cash and cash equivalents, end of period $    61,999       $    25,745
Supplemental disclosure of cash flow
information
 Cash paid for:
  Interest                                $    5,252        $    5,745
  Income taxes                                 30,976            1,524







SMITH & WESSON HOLDING CORPORATION AND SUBSIDIARIES
RECONCILIATION OF GAAP NET INCOME TO ADJUSTED EBITDAS (Unaudited)
                       For the Three Months Ended January      For the Three Months Ended January
                       31, 2013:                               31, 2012:
                       GAAP       Adjustments      Adjusted    GAAP       Adjustments     Adjusted
                       (In thousands)
Net sales             $ 136,242  $ —              $ 136,242   $ 98,125   $ —             $ 98,125
Cost of sales           86,143     (3,414)  (8)     82,729      68,121     (3,185)  (1)    64,936
Gross profit            50,099     3,414            53,513      30,004     3,185           33,189
Operating expenses:
     Research and        942        (29)     (8)     913         992        (42)     (1)    950
     development
     Selling and         8,333      (44)     (8)     8,289       8,062      (51)     (1)    8,011
     marketing
     General and         12,776     (1,739)  (2)     11,037      10,666     (1,228)  (2)    9,438
     administrative
     Total operating     22,051     (1,812)          20,239      19,720     (1,321)         18,399
     expenses
Operating income from   28,048     5,226            33,274      10,284     4,506           14,790
continuing operations
Other
income/(expense):
     Other
     income/(expense),   —          —                —           8          —               8
     net
     Interest income     48         —        (6)     48          394        (361)    (6)    33
     Interest expense    (1,240)    1,240    (4)     —           (1,629)    1,629    (4)    —
     Total other
     income/(expense),   (1,192)    1,240            48          (1,227)    1,268           41
     net
Income from continuing
operations before        26,856     6,466            33,322      9,057      5,774           14,831
income taxes
Income tax expense       9,350      (9,350)  (5)     —           3,664      (3,664)  (5)    —
Income from continuing   17,506     15,816           33,322      5,393      9,438           14,831
operations
Discontinued
operations:
Loss from operations
of discontinued          (601)      424      (10)    (177)       (1,600)    759      (7)    (841)
security solutions
division
Income tax               2,329      (2,329)  (5)     —           (645)      645      (5)    —
expense/(benefit)
Loss on discontinued     (2,930)    2,753            (177)       (955)      114             (841)
operations
Net
income/comprehensive   $ 14,576   $ 18,569         $ 33,145    $ 4,438    $ 9,552         $ 13,990
income
SMITH & WESSON HOLDING CORPORATION AND SUBSIDIARIES
RECONCILIATION OF GAAP NET INCOME TO ADJUSTED EBITDAS (Unaudited)
                       For the Nine Months Ended January 31,   For the Nine Months Ended January
                       2013:                                   31, 2012:
                       GAAP       Adjustments      Adjusted    GAAP       Adjustments     Adjusted
                       (In thousands)
Net sales             $ 408,797  $ —              $ 408,797   $ 282,154  $ —             $ 282,154
Cost of sales           258,882    (10,211) (8)     248,671     201,028    (10,815) (1)    190,213
Gross profit            149,915    10,211           160,126     81,126     10,815          91,941
Operating expenses:
     Research and        3,363      (87)     (8)     3,276       3,571      (145)    (1)    3,426
     development
     Selling and         23,203     (168)    (8)     23,035      24,823     (225)    (1)    24,598
     marketing
     General and         37,381     (4,874)  (2)     32,507      33,483     (6,578)  (3)    26,905
     administrative
     Total operating     63,947     (5,129)          58,818      61,877     (6,948)         54,929
     expenses
Operating income from   85,968     15,340           101,308     19,249     17,763          37,012
continuing operations
Other
income/(expense):
     Other
     income/(expense),   39         —                39          62         —               62
     net
     Interest income     750        (608)    (6)     142         1,196      (1,043)  (6)    153
     Interest expense    (4,571)    4,571    (4)     —           (6,044)    6,044    (4)    —
     Total other
     income/(expense),   (3,782)    3,963            181         (4,786)    5,001           215
     net
Income from
continuing operations    82,186     19,303           101,489     14,463     22,764          37,227
before income taxes
Income tax expense      29,410     (29,410) (5)     —           5,845      (5,845)  (5)    —
Income from continuing   52,776     48,713           101,489     8,618      28,609          37,227
operations
Discontinued
operations:
Loss from operations
of discontinued          (3,150)    1,808    (9)     (1,342)     (8,306)    2,261    (7)    (6,045)
security solutions
division
Income tax benefit       (3,921)    3,921    (5)     —           (3,326)    3,326    (5)    —
Income/(loss) on
discontinued             771        (2,113)          (1,342)     (4,980)    (1,065)         (6,045)
operations
Net
income/comprehensive   $ 53,547   $ 46,600         $ 100,147   $ 3,638    $ 27,544        $ 31,182
income
(1)  To exclude depreciation, amortization, and plant consolidation costs.
(2)  To exclude depreciation, amortization, stock-based compensation expense, and DOJ/SEC costs and
     related profit sharing impacts of DOJ/SEC.
     To exclude depreciation, amortization, stock-based compensation expense, plant consolidation
(3)  costs, severance benefits for our former President and CEO, and DOJ/SEC costs and related
     profit sharing impacts of DOJ/SEC.
(4)  To exclude interest expense.
(5)  To exclude income tax expense.
(6)  To exclude intercompany interest income.
(7)  To exclude depreciation, amortization, interest expense, and stock-based compensation expense.
(8)  To exclude depreciation and amortization.
(9)  To exclude loss on sale of discontinued operations, depreciation, amortization, interest
     expense, stock-based compensation expense.
(10) To exclude loss on sale of discontinued operations.





SMITH & WESSON HOLDING CORPORATION AND SUBSIDIARIES
RECONCILIATION OF ESTIMATED GAAP INCOME FROM CONTINUING OPERATIONS TO
ESTIMATED ADJUSTED EBITDAS
                                       For the Year Ended April 30, 2013:
                                       Low Range              High Range
                                       (In thousands)
Income from continuing operations      $     78,000           $     79,500
Interest expense                             5,800                  5,800
Income tax expense                           43,900                 44,700
Depreciation and amortization                15,500                 15,500
Stock-based compensation expense             4,200                  4,200
DOJ/SEC costs, net of profit sharing         1,000                  1,000
impact
Adjusted EBITDAS                       $     148,400          $     150,700



SOURCE Smith & Wesson Holding Corporation

Website: http://www.smith-wesson.com