Smith & Wesson Holding Corporation Reports Fourth Quarter and Full Year Fiscal 2014 Financial Results
Full Year Fiscal 2014 Financial Highlights
- Net sales for the full fiscal year were a record
$626.6 million compared with$587.5 million for the prior fiscal year, an increase of 6.7%. Excluding Walther products that were sold in the prior year pursuant to an agreement that has since ended, net sales increased 13.8% over the prior fiscal year. Firearm unit production for fiscal year 2014 increased by 16.2%. - Gross profit was 41.3% compared with 37.1% for fiscal 2013.
- Operating expenses were
$108.1 million , or 17.3% of net sales, for fiscal 2014 compared with operating expenses of$85.2 million , or 14.5% of net sales, for fiscal 2013. - Income from continuing operations was
$88.6 million , or$1.47 per diluted share, compared with income from continuing operations of$81.4 million , or$1.22 per diluted share, a year ago. - Non-GAAP Adjusted EBITDAS from continuing operations for the full fiscal year totaled
$179.5 million compared with$154.2 million for fiscal 2013. - For the full year, operating cash generated was
$90.2 million , net cash generated from the issuance of Senior Notes was$56.4 million , capital spending totaled$53.3 million , and cash disbursed related to the stock buyback program totaled$115.9 million . - Cash and cash equivalents as of
April 30, 2014 totaled$68.9 million , down from$100.5 million a year ago.
Fourth Quarter Fiscal 2014 Financial Highlights
- Net sales for the fourth quarter were
$170.4 million , a decline of 4.6% from the fourth quarter last year. Excluding Walther products that were sold in the prior year pursuant to an agreement that has since ended, net sales declined 1.5%, reflecting strong handgun sales offset by lower long gun sales. - Gross profit for the fourth quarter was
$69.7 million , or 40.9% of net sales, compared with gross profit of$68.4 million , or 38.3% of net sales, for the comparable quarter last year. Gross profit improved as a result of a favorable product mix, absorption, and manufacturing efficiencies, as well as reduced promotions and the absence of lower-margin Walther product sales. - Operating expenses for the fourth quarter were
$26.7 million , or 15.6% of net sales, compared with operating expenses of$21.6 million , or 12.1% of net sales, for the fourth quarter last year. The increase in operating expenses as a percentage of net sales was primarily driven by higher sales and marketing expense, ERP implementation costs, and employee-related costs. - Operating income for the fourth quarter was
$43.1 million , or 25.3% of net sales, compared with operating income of$46.9 million , or 26.2% of net sales, for the comparable quarter last year. - Income from continuing operations for the fourth quarter was
$24.9 million , or$0.44 per diluted share, compared with net income from continuing operations of$28.6 million , or$0.44 per diluted share, for the fourth quarter last year. - Non-GAAP Adjusted EBITDAS from continuing operations for the fourth quarter was
$50.0 million compared with$52.7 million for the fourth quarter last year. - Operating cash generated for the fourth quarter was
$36.0 million , and capital spending totaled$17.0 million .
Financial Outlook
The company expects net sales for the first quarter of fiscal 2015 to be between
Fiscal 2015 net sales are anticipated to be between
Conference Call and Webcast
The company will host a conference call and webcast today,
Analyst Day Conference Call
The company will host an analyst day tomorrow,
Reconciliation of U.S. GAAP to Non-GAAP Financial Measures
In this press release, certain non-GAAP financial measures, including "Adjusted EBITDAS" are presented. From time-to-time, the company considers and uses Adjusted EBITDAS 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
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
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 the company's belief that its
Contact:
(413) 747-3304
lsharp@smith-wesson.com
SMITH & WESSON HOLDING CORPORATION AND SUBSIDIARIES |
||||||||||||
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME |
||||||||||||
For the Three Months Ended April 30, |
For the Years Ended April 30, |
|||||||||||
2014 (Unaudited) |
2013 (Unaudited) |
2014 |
2013 |
|||||||||
(In thousands, except per share data) |
||||||||||||
Net sales |
$ |
170,425 |
$ |
178,717 |
$ |
626,620 |
$ |
587,514 |
||||
Cost of sales |
100,680 |
110,272 |
367,515 |
369,442 |
||||||||
Gross profit |
69,745 |
68,445 |
259,105 |
218,072 |
||||||||
Operating expenses: |
||||||||||||
Research and development |
1,529 |
1,398 |
5,648 |
4,790 |
||||||||
Selling and marketing |
9,365 |
6,840 |
33,515 |
30,112 |
||||||||
General and administrative |
15,770 |
13,340 |
68,954 |
50,336 |
||||||||
Total operating expenses |
26,664 |
21,578 |
108,117 |
85,238 |
||||||||
Operating income from continuing operations |
43,081 |
46,867 |
150,988 |
132,834 |
||||||||
Other income/(expense): |
||||||||||||
Other income/(expense), net |
(2,189) |
- |
(2,154) |
39 |
||||||||
Interest income |
6 |
64 |
149 |
814 |
||||||||
Interest expense |
(1,771) |
(1,210) |
(12,261) |
(5,781) |
||||||||
Total other income/(expense), net |
(3,954) |
(1,146) |
(14,266) |
(4,928) |
||||||||
Income from continuing operations before income taxes |
39,127 |
45,721 |
136,722 |
127,906 |
||||||||
Income tax expense |
14,227 |
17,090 |
48,095 |
46,500 |
||||||||
Income from continuing operations |
24,900 |
28,631 |
88,627 |
81,406 |
||||||||
Discontinued operations: |
||||||||||||
Loss from operations of discontinued security solutions division |
(108) |
(455) |
(456) |
(3,605) |
||||||||
Income tax (benefit)/expense |
(264) |
3,010 |
(1,134) |
(912) |
||||||||
Income/(loss) from discontinued operations |
156 |
(3,465) |
678 |
(2,693) |
||||||||
Net income/comprehensive income |
$ |
25,056 |
$ |
25,166 |
$ |
89,305 |
$ |
78,713 |
||||
Net income per share: |
||||||||||||
Basic - continuing operations |
$ |
0.45 |
$ |
0.45 |
$ |
1.51 |
$ |
1.25 |
||||
Basic - net income |
$ |
0.45 |
$ |
0.39 |
$ |
1.52 |
$ |
1.21 |
||||
Diluted - continuing operations |
$ |
0.44 |
$ |
0.44 |
$ |
1.47 |
$ |
1.22 |
||||
Diluted - net income |
$ |
0.44 |
$ |
0.38 |
$ |
1.49 |
$ |
1.18 |
||||
Weighted average number of common shares outstanding: |
||||||||||||
Basic |
55,112 |
64,217 |
58,668 |
65,155 |
||||||||
Diluted |
56,481 |
65,450 |
60,114 |
66,642 |
SMITH & WESSON HOLDING CORPORATION AND SUBSIDIARIES |
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CONSOLIDATED BALANCE SHEETS |
|||||||
As of: |
|||||||
April 30, 2014 |
April 30, 2013 |
||||||
(In thousands, except par value and share data) |
|||||||
ASSETS |
|||||||
Current assets: |
|||||||
Cash and cash equivalents, including restricted cash of $3,345 on April 30, 2013 |
$ |
68,860 |
$ |
100,487 |
|||
Accounts receivable, net of allowance for doubtful accounts of $844 on April 30, 2014 and $1,128 on April 30, 2013 |
55,890 |
46,088 |
|||||
Inventories |
86,742 |
62,998 |
|||||
Prepaid expenses and other current assets |
5,958 |
4,824 |
|||||
Deferred income taxes |
17,094 |
12,076 |
|||||
Income tax receivable |
4,627 |
3,093 |
|||||
Total current assets |
239,171 |
229,566 |
|||||
Property, plant, and equipment, net |
120,440 |
86,382 |
|||||
Intangibles, net |
3,425 |
3,965 |
|||||
Other assets |
18,467 |
7,076 |
|||||
$ |
381,503 |
$ |
326,989 |
||||
LIABILITIES AND STOCKHOLDERS' EQUITY |
|||||||
Current liabilities: |
|||||||
Accounts payable |
$ |
37,688 |
$ |
31,220 |
|||
Accrued expenses |
16,051 |
16,033 |
|||||
Accrued payroll |
15,816 |
13,096 |
|||||
Accrued taxes other than income |
5,359 |
5,349 |
|||||
Accrued profit sharing |
11,060 |
9,587 |
|||||
Accrued product/municipal liability |
1,056 |
1,551 |
|||||
Accrued warranty |
5,513 |
5,757 |
|||||
Total current liabilities |
92,543 |
82,593 |
|||||
Deferred income taxes |
11,418 |
7,863 |
|||||
Notes payable, net of current portion |
100,000 |
43,559 |
|||||
Other non-current liabilities |
10,719 |
11,675 |
|||||
Total liabilities |
214,680 |
145,690 |
|||||
Commitments and contingencies |
|||||||
Stockholders' equity: |
|||||||
Preferred stock, $.001 par value, 20,000,000 shares authorized, no shares issued or outstanding |
— |
— |
|||||
Common stock, $.001 par value, 100,000,000 shares authorized, 68,809,986 shares issued and 55,352,679 shares outstanding on April 30, 2014 and 67,596,716 shares issued and 64,297,113 shares outstanding on April 30, 2013 |
69 |
68 |
|||||
Additional paid-in capital |
211,225 |
199,120 |
|||||
Retained earnings |
97,739 |
8,434 |
|||||
Accumulated other comprehensive income |
73 |
73 |
|||||
Treasury stock, at cost (13,457,307 common shares on April 30, 2014 and 3,299,603 common shares on April 30, 2013) |
(142,283) |
(26,396) |
|||||
Total stockholders' equity |
166,823 |
181,299 |
|||||
$ |
381,503 |
$ |
326,989 |
SMITH & WESSON HOLDING CORPORATION AND SUBSIDIARIES |
||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS |
||||||||
For the Years Ended April 30, |
||||||||
2014 |
2013 |
|||||||
(In thousands) |
||||||||
Cash flows from operating activities: |
||||||||
Net Income |
$ |
89,305 |
$ |
78,713 |
||||
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
Amortization and depreciation |
21,704 |
16,730 |
||||||
Loss on sale of business including loss on sale of discontinued operations, including $45 of stock-based compensation expense |
— |
1,222 |
||||||
Loss on sale/disposition of assets |
150 |
315 |
||||||
Provisions for losses on accounts receivable |
(214) |
720 |
||||||
Change in disposal group assets and liabilities |
— |
(1,215) |
||||||
Deferred income taxes |
(1,463) |
4,009 |
||||||
Stock-based compensation expense |
8,212 |
4,073 |
||||||
Changes in operating assets and liabilities: |
||||||||
Accounts receivable |
(9,588) |
1,505 |
||||||
Inventories |
(23,744) |
(7,702) |
||||||
Prepaid expenses and other current assets |
(1,856) |
(285) |
||||||
Income tax receivable |
(1,534) |
(3,384) |
||||||
Accounts payable |
6,468 |
2,602 |
||||||
Accrued payroll |
2,720 |
3,489 |
||||||
Accrued taxes other than income |
10 |
1,079 |
||||||
Accrued profit sharing |
1,473 |
1,547 |
||||||
Accrued other expenses |
18 |
(5,279) |
||||||
Accrued product/municipal liability |
(495) |
154 |
||||||
Accrued warranty |
(244) |
408 |
||||||
Other assets |
(356) |
(1,930) |
||||||
Other non-current liabilities |
(360) |
1,327 |
||||||
Net cash provided by operating activities |
90,206 |
98,098 |
||||||
Cash flows from investing activities: |
||||||||
Proceeds from sale of business |
— |
7,500 |
||||||
Deposits on machinery and equipment |
(9,269) |
— |
||||||
Receipts from note receivable |
77 |
73 |
||||||
Payments to acquire patents and software |
(243) |
(102) |
||||||
Proceeds from sale of property and equipment |
101 |
1,040 |
||||||
Payments to acquire property and equipment |
(53,282) |
(41,421) |
||||||
Net cash used in investing activities |
(62,616) |
(32,910) |
||||||
Cash flows from financing activities: |
||||||||
Proceeds from loans and notes payable |
101,584 |
1,753 |
||||||
Cash paid for debt issue costs |
(3,791) |
— |
||||||
Payments on capital lease obligation |
(596) |
(600) |
||||||
Payments on loans and notes payable |
(45,143) |
(8,195) |
||||||
Proceeds from Economic Development Incentive Program |
722 |
— |
||||||
Payments to acquire treasury stock |
(115,887) |
(20,000) |
||||||
Proceeds from exercise of options to acquire common stock, including employee stock purchase plan |
3,315 |
4,808 |
||||||
Taxes paid related to restricted stock issuance |
(2,068) |
(209) |
||||||
Excess tax benefit of stock-based compensation |
2,647 |
1,025 |
||||||
Net cash used in financing activities |
(59,217) |
(21,418) |
||||||
Net (decrease)/increase in cash and cash equivalents |
(31,627) |
43,770 |
||||||
Cash and cash equivalents, beginning of period |
100,487 |
56,717 |
||||||
Cash and cash equivalents, end of period |
$ |
68,860 |
$ |
100,487 |
||||
Supplemental disclosure of cash flow information |
||||||||
Cash paid for: |
||||||||
Interest |
$ |
7,688 |
$ |
5,295 |
||||
Income taxes |
48,778 |
44,087 |
SMITH & WESSON HOLDING CORPORATION AND SUBSIDIARIES |
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RECONCILIATION OF GAAP INCOME FROM OPERATIONS TO ADJUSTED EBITDAS (Unaudited) |
|||||||||||||||||
For the Three Months Ended April 30, 2014: |
For the Three Months Ended April 30, 2013: |
||||||||||||||||
Continuing |
Discontinued |
Total |
Continuing |
Discontinued |
Total |
||||||||||||
Income from operations |
$ |
24,900 |
$ |
156 |
$ |
25,056 |
$ |
28,631 |
$ |
(3,465) |
$ |
25,166 |
|||||
Interest expense |
1,771 |
- |
1,771 |
1,210 |
- |
1,210 |
|||||||||||
Income tax expense |
14,227 |
(264) |
13,963 |
17,090 |
3,010 |
20,100 |
|||||||||||
Depreciation and amortization |
5,396 |
- |
5,396 |
4,584 |
- |
4,584 |
|||||||||||
Stock compensation expense |
1,562 |
- |
1,562 |
987 |
- |
987 |
|||||||||||
Accrued settlement charges |
2,000 |
- |
2,000 |
- |
- |
- |
|||||||||||
DOJ/SEC costs |
150 |
- |
150 |
231 |
- |
231 |
|||||||||||
Adjusted EBITDAS |
$ |
50,006 |
$ |
(108) |
$ |
49,898 |
$ |
52,733 |
$ |
(455) |
$ |
52,278 |
|||||
For the Year Ended April 30, 2014: |
For the Year Ended April 30, 2013: |
||||||||||||||||
Continuing |
Discontinued |
Total |
Continuing |
Discontinued |
Total |
||||||||||||
Income from operations |
$ |
88,627 |
$ |
678 |
$ |
89,305 |
$ |
81,406 |
$ |
(2,693) |
$ |
78,713 |
|||||
Interest expense |
12,261 |
- |
12,261 |
5,173 |
609 |
5,782 |
|||||||||||
Income tax expense |
48,095 |
(1,134) |
46,961 |
46,500 |
(912) |
45,588 |
|||||||||||
Depreciation and amortization |
19,758 |
- |
19,758 |
16,049 |
- |
16,049 |
|||||||||||
Stock compensation expense |
8,212 |
- |
8,212 |
4,096 |
(23) |
4,073 |
|||||||||||
Loss on sale of discontinued operations |
- |
- |
- |
- |
1,222 |
1,222 |
|||||||||||
Accrued settlement charges |
2,000 |
- |
2,000 |
- |
- |
- |
|||||||||||
DOJ/SEC costs |
593 |
- |
593 |
997 |
- |
997 |
|||||||||||
Adjusted EBITDAS |
$ |
179,546 |
$ |
(456) |
$ |
179,090 |
$ |
154,221 |
$ |
(1,797) |
$ |
152,424 |
SOURCE