Smith & Wesson Holding Corporation Announces Third Quarter Financial Results
Firearms Sales of
Handgun Sales
Net Income
Net product sales for the three months ended
Total firearms sales for the third quarter were
"Sales of M&P pistols continued to be strong throughout the third quarter.
During the quarter, we received orders for our M&P pistols from a number of
police agencies, including the
Golden added, "Robust sales of our M&P15 tactical rifles also continued
throughout the third quarter, benefitting from heightened demand at the
consumer level. We expanded the M&P tactical rifle family with the
introduction in January of the M&P15-22 semi-automatic sport rifle. The
M&P15-22 has been designed along the same, popular lines as our entire M&P15
family of tactical rifles; yet, it is chambered in the much more economical
.22 caliber ammunition. We believe this new product will appeal to consumers
seeking an economical alternative in this very popular product category. We
continue to win new business in the law enforcement market as well, both
domestically and internationally, and in the third quarter we added law
enforcement agencies in
Gross profit of
Golden added, "While our hunting business continues to suffer in the
current economic environment, the market for hunting rifles in a healthy
economy is a sizeable one. In addition, this portion of our business produces
barrels for our tactical rifles, products that are clearly in very high demand
right now. Finally, the barrel manufacturing expertise we possess via our
hunting business defines us as a firearms manufacturer with a full portfolio
of products and capabilities, an important distinction when seeking business
from the federal government and military markets. For these reasons, we
continued to selectively invest in our hunting business while focusing on
reducing its cost structure. During the third quarter, we implemented a
reduction in force and a work furlough at our
Operating expenses for the third quarter increased by approximately
The Company ended the current quarter with approximately
Conference Call
The Company will host a conference call today,
Reconciliation of U.S. GAAP to Adjusted EBITDAS
In this press release, a non-GAAP financial measure, known as "Adjusted
EBITDAS" is presented. Adjusted EBITDAS excludes the effects of interest,
income taxes, depreciation of tangible fixed assets, amortization of
intangible assets, stock-based employee compensation expense and certain other
non-cash transactions. From time to time, the Company may also elect to
exclude certain significant non-recurring items in order to provide the reader
with an improved understanding of underlying performance trends. See the
attached "Reconciliation of GAAP Net Income to Adjusted EBITDAS" for a
detailed explanation of the amounts excluded and included from net income to
arrive at adjusted EBITDAS for the three-month and nine-month periods ended
Contacts:
Liz Sharp , VP Investor Relations
Smith & Wesson Holding Corp.
(413) 747-3304
lsharp@smith-wesson.com
William F. Spengler , EVP, Chief Financial Officer
Smith & Wesson Holding Corp.
(413) 747-3304
SMITH & WESSON HOLDING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
For the Three Months
Ended: For the Nine Months Ended:
-------------------- --------------------------
January 31, January 31, January 31, January 31,
2009 2008 2009 2008
----------- ----------- ----------- -----------
Net product and
services sales $83,160,093 $66,067,310 $233,922,146 $211,254,694
License revenue 552,259 497,171 1,496,408 1,547,625
Cost of products
and services sold 62,124,455 49,941,651 168,487,024 145,892,463
Cost of license
revenue - 3,125 - 3,125
--- ----- --- -----
Gross profit 21,587,897 16,619,705 66,931,530 66,906,731
---------- ---------- ---------- ----------
Operating
expenses:
Research and
development 700,455 521,204 2,092,489 1,410,209
Selling and
marketing 7,244,038 6,884,341 22,323,153 20,757,941
General and
administrative 9,063,784 8,904,196 28,972,738 28,086,078
Impairment
of long-
lived
assets - - 98,243,188 -
--- --- ---------- ---
Total
operating
expenses 17,008,277 16,309,741 151,631,568 50,254,228
---------- ---------- ----------- ----------
Income/(loss) from
operations 4,579,620 309,964 (84,700,038) 16,652,503
--------- ------- ----------- ----------
Other income/
(expense):
Other income/
(expense),
net 308,377 (729,072) (1,258,506) (552,819)
Interest
income 25,788 15,091 212,695 44,972
Interest
expense (1,218,819) (2,354,864) (4,684,143) (6,671,673)
---------- ---------- ---------- ----------
Total
other
expense,
net (884,654) (3,068,845) (5,729,954) (7,179,520)
-------- ---------- ---------- ----------
Income/(loss)
before income
taxes 3,694,966 (2,758,881) (90,429,992) 9,472,983
Income tax expense/
(benefit) 1,339,614 (951,811) (18,807,559) 3,647,762
--------- -------- ----------- ---------
Net income/(loss)/
comprehensive
income/
(loss) $2,355,352 $(1,807,070) $(71,622,433) $5,825,221
========== =========== ============ ==========
Weighted average
number of common
and common
equivalent shares
outstanding,
basic 47,205,685 40,390,246 46,592,482 40,209,841
---------- ---------- ---------- ----------
Net income/(loss)
per share, basic $0.05 $(0.04) $(1.54) $0.14
===== ====== ====== =====
Weighted average
number of common
and
common equivalent
shares
outstanding,
diluted 48,091,426 40,390,246 46,592,482 41,877,639
---------- ---------- ---------- ----------
Net income/(loss)
per share,
diluted $0.05 $(0.04) $(1.54) $0.14
===== ====== ====== =====
SMITH & WESSON HOLDING CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
As of:
January 31, April 30,
2009 2008
----------- ---------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $21,339,717 $4,358,856
Accounts receivable, net of
allowance for doubtful accounts
of $1,143,573 on January 31,
2009 and $196,949 on April 30,
2008 42,247,648 54,162,936
Inventories 46,107,970 47,159,978
Other current assets 3,594,380 4,724,973
Deferred income taxes 11,232,290 9,947,234
Income tax receivable - 1,817,509
--- ---------
Total current assets 124,522,005 122,171,486
----------- -----------
Property, plant and equipment, net 48,416,315 50,642,953
Intangibles, net 6,083,121 65,500,742
Goodwill - 41,173,416
Deferred income taxes 949,613 -
Other assets 9,147,322 10,261,975
--------- ----------
$189,118,376 $289,750,572
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $14,570,989 $21,995,705
Accrued expenses 15,390,192 16,610,504
Accrued payroll 5,701,886 5,046,446
Accrued income taxes 1,015,354 -
Accrued taxes other than income 2,052,877 1,747,235
Accrued profit sharing 3,550,230 4,035,522
Accrued workers' compensation 645,000 422,686
Accrued product liability 3,234,063 2,767,024
Accrued warranty 3,422,012 1,691,742
Deferred revenue 197,924 212,552
Current portion of notes
payable 3,362,265 8,919,640
--------- ---------
Total current liabilities 53,142,792 63,449,056
---------- ----------
Deferred income taxes - 20,216,239
--- ----------
Notes payable, net of current
portion 84,215,902 118,773,987
---------- -----------
Other non-current liabilities 10,736,247 9,460,761
---------- ---------
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,
48,407,859 shares issued and
47,207,859 shares outstanding on
January 31, 2009 and 41,832,039
shares issued and 40,632,039
shares outstanding on April 30,
2008 48,407 41,831
Additional paid-in capital 88,916,484 54,127,721
Retained earnings/(accumulated
deficit) (41,618,107) 30,004,326
Accumulated other comprehensive
income 72,651 72,651
Treasury stock, at cost
(1,200,000 common shares) (6,396,000) (6,396,000)
---------- ----------
Total stockholders' equity 41,023,435 77,850,529
---------- ----------
$189,118,376 $289,750,572
============ ============
SMITH & WESSON HOLDING CORPORATION AND SUBSIDIARIES
RECONCILIATION OF GAAP NET INCOME TO ADJUSTED EBITDAS (Unaudited)
For the Three Months Ended January 31,
2009:
--------------------------------------
GAAP Adjustments Adjusted
---- ----------- --------
Net product and services
sales $83,160,093 $83,160,093
License revenue 552,259 552,259
Cost of products and services
sold 62,124,455 (3,858,002) (7) 58,266,453
Cost of license revenue - -
--- ---
Gross profit 21,587,897 $3,858,002 25,445,899
---------- ---------- ----------
Operating expenses:
Research and development 700,455 (19,550) (1) 680,905
Selling and marketing 7,244,038 (40,256) (1) 7,203,782
General and administrative 9,063,784 (787,425) (2) 8,276,359
---------- -------- ----------
Total operating expenses 17,008,277 (847,231) 16,161,046
---------- -------- ----------
Income/(loss) from operations 4,579,620 4,705,233 9,284,853
--------- --------- ---------
Other income/(expense):
Other income/(expense), net 308,377 (414,129) (4) (105,752)
Interest income 25,788 25,788
Interest expense (1,218,819) 1,218,819 (5) 0
---------- --------- ---
Total other expense, net (884,654) 804,690 (79,964)
-------- ------- -------
Income/(loss) before income
taxes 3,694,966 5,509,923 9,204,889
Income tax expense/(benefit) 1,339,614 (1,339,614) (6) 0
--------- ---------- ---
Net income/(loss)/
comprehensive income/(loss) $2,355,352 $6,849,537 $9,204,889
========== ========== ==========
For the Three Months Ended January 31,
2008:
--------------------------------------
GAAP Adjustments Adjusted
---- ----------- --------
Net product and services
sales $66,067,310 $66,067,310
License revenue 497,171 497,171
Cost of products and services
sold 49,941,651 (1,609,254) (1) 48,332,397
Cost of license revenue 3,125 3,125
----- -----
Gross profit 16,619,705 $1,609,254 18,228,959
---------- ---------- ----------
Operating expenses:
Research and development 521,204 (15,803) (1) 505,401
Selling and marketing 6,884,341 (33,570) (1) 6,850,771
General and administrative 8,904,196 (2,316,352) (2) 6,587,844
---------- ---------- ----------
Total operating expenses 16,309,741 (2,365,725) 13,944,016
---------- ---------- ----------
Income/(loss) from operations 309,964 3,974,979 4,284,943
------- --------- ---------
Other income/(expense):
Other income/(expense), net (729,072) 131,952 (4) (597,120)
Interest income 15,091 15,091
Interest expense (2,354,864) 2,354,864 (5) 0
---------- --------- ---
Total other expense, net (3,068,845) 2,486,816 (582,029)
---------- --------- --------
Income/(loss) before income
taxes (2,758,881) 6,461,795 3,702,914
Income tax expense/(benefit) (951,811) 951,811 (6) 0
-------- ------- ---
Net income/(loss)/
comprehensive income/(loss) $(1,807,070) $5,509,984 $3,702,914
=========== ========== ==========
SMITH & WESSON HOLDING CORPORATION AND SUBSIDIARIES
RECONCILIATION OF GAAP NET INCOME TO ADJUSTED EBITDAS (Unaudited)
For the Nine Months Ended January 31, 2009:
-------------------------------------------
GAAP Adjustments Adjusted
---- ----------- --------
Net product and
services sales $233,922,146 $233,922,146
License revenue 1,496,408 1,496,408
Cost of products and
services sold 168,487,024 (7,645,834) (7) 160,841,190
Cost of license
revenue - -
--- ---
Gross profit 66,931,530 $7,645,834 74,577,364
---------- ---------- ----------
Operating expenses:
Research and
development 2,092,489 (63,832) (1) 2,028,657
Selling and
marketing 22,323,153 (123,305) (1) 22,199,848
General and
administrative 28,972,738 (5,173,031) (2) 23,799,707
Impairment of long-
lived assets 98,243,188 (98,243,188) (3) 0
---------- ----------- ---
Total operating
expenses 151,631,568 (103,603,356) 48,028,212
----------- ------------ ----------
Income/(loss) from
operations (84,700,038) 111,249,190 26,549,152
----------- ----------- ----------
Other income/
(expense):
Other income/
(expense), net (1,258,506) 453,258 (4) (805,248)
Interest income 212,695 212,695
Interest expense (4,684,143) 4,684,143 (5) 0
---------- --------- ---
Total other
expense, net (5,729,954) 5,137,401 (592,553)
---------- --------- --------
Income/(loss) before
income taxes (90,429,992) 116,386,591 25,956,599
Income tax expense/
(benefit) (18,807,559) 18,807,559 (6) 0
----------- ---------- ---
Net income/(loss)/
comprehensive income/
(loss) $(71,622,433) $97,579,032 $25,956,599
============ =========== ===========
For the Nine Months Ended January 31, 2008:
-------------------------------------------
GAAP Adjustments Adjusted
---- ----------- --------
Net product and
services
sales $211,254,694 $211,254,694
License revenue 1,547,625 1,547,625
Cost of products and
services sold 145,892,463 (4,715,181) (1) 141,177,282
Cost of license
revenue 3,125 3,125
----- -----
Gross profit 66,906,731 $4,715,181 71,621,912
---------- ---------- ----------
Operating expenses:
Research and
development 1,410,209 (21,559) (1) 1,388,650
Selling and
marketing 20,757,941 (102,390) (1) 20,655,551
General and
administrative 28,086,078 (7,385,861) (2) 20,700,217
Impairment of long-
lived assets - 0
--- ---
Total operating
expenses 50,254,228 (7,509,810) 42,744,418
---------- ---------- ----------
Income/(loss) from
operations 16,652,503 12,224,991 28,877,494
---------- ---------- ----------
Other income/
(expense):
Other income/
(expense), net (552,819) 159,777 (4) (393,042)
Interest income 44,972 0 44,972
Interest expense (6,671,673) 6,671,673 (5) 0
---------- --------- ---
Total other
expense, net (7,179,520) 6,831,450 (348,070)
---------- --------- --------
Income/(loss) before
income taxes 9,472,983 19,056,441 28,529,424
Income tax expense/
(benefit) 3,647,762 (3,647,762) (6) 0
--------- ---------- ---
Net income/(loss)/
comprehensive income/
(loss) $5,825,221 $22,704,203 $28,529,424
========== =========== ===========
(1) To eliminate depreciation expense.
(2) To eliminate depreciation, amortization, stock-based compensation
expense. To also remove impact of Walther PPK recall on profit
sharing.
(3) To eliminate write down of long-lived assets.
(4) To eliminate unrealized mark-to-market adjustments on foreign
exchange contracts.
(5) To eliminate interest expense.
(6) To eliminate income tax expense.
(7) To eliminate depreciation expense and impact of Walther PPK recall.
SOURCE
CONTACT:
lsharp@smith-wesson.com
or
both of
1-413-747-3304
Web Site: http://www.smith-wesson.com