- Fourth Quarter Sales of $99.5 Million (+20 %)
- Fourth Quarter Net Income of $7.4 Million (+125 %)
- Fourth Quarter Fully Diluted EPS of $0.14 (+75 %)
- Record Annual Sales of $335.0 Million (+13%)
- Firearms Backlog Grows to $268 Million
SPRINGFIELD, Mass., June 22 /PRNewswire-FirstCall/ -- Smith & Wesson
Holding Corporation (Nasdaq: SWHC), parent company of Smith & Wesson Corp.,
the legendary 157-year old company in the global business of safety, security,
protection and sport, today announced financial results for the fiscal year
and the fourth fiscal quarter ended April 30, 2009.
Net sales for the fourth fiscal quarter ended April 30, 2009 were $99.5
million, $16.4 million, or 19.8%, higher than net sales of $83.1 million for
the fourth fiscal quarter last year. Gross profit of $30.9 million, or 31.0%,
of sales for the fourth quarter of fiscal 2009 increased compared with gross
profit of $25.5 million, or 30.6% of sales, for the fourth quarter last year.
Net income for the fourth quarter of fiscal 2009 was $7.4 million, or $0.14
per diluted share, compared with $3.3 million, or $0.08 per diluted share, for
the fourth quarter of fiscal 2008. Adjusted EBITDAS, a non-GAAP financial
measure, was $15.6 million for the fourth quarter compared with $11.4 million
for the fourth quarter of fiscal 2008.
Smith & Wesson President and CEO, Michael F. Golden, said, "Our fourth
quarter results reflect a number of records for Smith & Wesson, including
record quarterly revenue, record net income, record earnings per share, and
record levels in both our cash balances and our firearms backlog. These
results demonstrate that we continue to capitalize on the strong consumer
demand for our products, particularly our handguns and tactical rifles."
"Sales of M&P pistols continued to be strong throughout the fourth
quarter. We received orders for our M&P pistols from a number of police
agencies, including the Detroit, Milwaukee, and Raleigh, North Carolina Police
Departments. To date, 537 domestic law enforcement agencies have adopted or
approved the M&P for duty use. The M&P pistol also continues to penetrate the
international market. In the fourth quarter, we recorded orders for our M&P
pistols from the Mumbai Police Department and from several law enforcement
agencies in Mexico."
Golden added, "Robust sales of our M&P15 tactical rifles continued
throughout the fourth quarter, benefitting from ongoing, heightened demand at
the consumer level. We continue to win new business in the law enforcement
market as well, both domestically and internationally. In the fourth quarter
we added law enforcement agencies including the North Carolina Highway Patrol,
the Detroit Police, and the Mexico Department of Energy to the growing list of
law enforcement agencies we serve. To date, 236 domestic law enforcement
agencies have approved or adopted the M&P15 rifle for duty use."
Total firearms sales for the fourth quarter were $93.9 million, an
increase of 22.4% over the fourth quarter of last year. Pistol sales
increased 32.8% to $29.0 million, driven by continued consumer demand, law
enforcement adoption of the M&P polymer pistol line, and strong consumer sales
of the Sigma pistol line. M&P tactical rifle sales increased by 195.1% to
$17.4 million for the fourth quarter as demand for this product remained
strong in both the consumer and law enforcement channels. Total revolver
sales were $20.8 million, a decrease of 2.8% versus the comparable quarter one
year ago. The decline in revolver sales was a direct function of low finished
goods inventory, which resulted from strong sales growth of 45.4% in the prior
quarter, and the high degree of labor required to replenish that inventory.
Non-firearm sales totaled $5.7 million, a 12.1% decrease from non-firearm
sales of $6.4 million for the fourth quarter last year. Hunting firearm sales
of $8.1 million represented a decline of $2.2 million, or 21.7%, from the
comparable quarter in the last fiscal year. Hunting products continued to be
negatively impacted by a number of factors, including their position in the
consumer discretionary marketplace and a distribution channel that is buying
cautiously.
William F. Spengler, Executive Vice President and Chief Financial Officer,
said, "Net sales of $335.0 million for fiscal 2009 increased 13.2% over net
product sales of $295.9 million for fiscal 2008. Net loss for fiscal 2009
of $64.2 million, or a loss of $1.37 per diluted share, compared with net
income of $9.1 million, or $0.22 per diluted share, for the prior year. The
net loss was driven by the impairment of goodwill and intangible assets,
relating to our January 2007 purchase of Thompson/Center Arms, in the net
amount of $76.5 million. Excluding the impairment charge, net income for
fiscal 2009 increased by $3.1 million, or 34.5%, over net income for fiscal
2008.
"Gross profit of $97.8 million for fiscal 2009 was higher than gross
profit of $92.4 million for fiscal 2008. Gross margin as a percent of revenue
was 29.2% for fiscal 2009, slightly lower than gross margin of 31.2% for
fiscal 2008. Gross profit for fiscal 2009 increased as a result of the
increase in sales, while gross profit as a percentage of revenue declined as a
result of continuing weakness in demand for hunting rifles, which caused lower
production levels at our Rochester, New Hampshire, facility and led to
reductions in labor, underutilized capacity, and reduced overhead absorption.
In addition, current year gross margins were also negatively impacted by a
$2.3 million charge for the recall of Walther pistols due to a problem with
the hammer block system.
"Operating expenses for fiscal 2009 were $170.5 million compared with
$68.2 million for fiscal 2008. Excluding the impact of an impairment charge
related to our investment in Thompson/Center Arms, operating expenses for
fiscal 2009 increased by $4.0 million, or 5.9%, over the prior fiscal year,"
continued Spengler.
"Our firearms backlog continued to increase dramatically during the
quarter, and reached its peak at $268 million dollars by the end of April.
That level is $218 million dollars higher than the same quarter one year ago.
This extraordinary backlog increase is directly related to recent, strong
consumer demand. Our backlog always represents product that has been ordered
but not yet shipped, so it is possible that portions of this backlog could be
cancelled if demand should suddenly drop."
Spengler added, "We continued to strengthen our balance sheet, reducing
inventories by the end of 2009 to $41.7 million, a reduction of $5.4 million,
or 11.5% from the year ago quarter, and a reduction of $4.4 million, or 9.5%,
from the third fiscal quarter. We also ended the current quarter with
approximately $39.8 million in cash and we did not access our revolving line
of credit during the quarter. The ending cash balance does not include the
$35.0 million of net proceeds we generated with a public offering of our
common stock in May 2009."
Golden concluded, "It is against a backdrop of solid, fourth quarter
execution in our firearms business that we were pleased to announce last week
our intended acquisition of Universal Safety Response, Inc. (USR). USR is a
profitable, rapidly growing company in the perimeter security system business.
This is an important milestone for our company and represents execution on our
strategy to grow within firearms while expanding into new non-firearms
businesses. Not only will the acquisition of USR expand our role within the
markets for safety, security and protection, it will also diversify our future
revenue base by delivering commercial customers that include a number of
Fortune 500 corporations and all branches of the U.S. military."
Conference Call
The Company will host a conference call today, June 22, 2009, to discuss
its fiscal 2009 results. The conference call may include forward-looking
statements. The conference call will be Web cast and will begin at 5:00pm
Eastern Time (2:00pm Pacific). The live audio broadcast and replay of the
conference call can be accessed on the Company's Web site at
www.smithandwesson.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 Adjusted EBITDAS
In this press release, a non-GAAP financial measure, known as "Adjusted
EBITDAS" is presented. Adjusted EBITDAS excludes the effects of interest
expense, 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/(Loss) 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 period and fiscal year ended
April 30, 2009 and 2008. 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. Our definition of these adjusted financial measures may
differ from similarly named measures used by others.
About Smith & Wesson
Smith & Wesson Holding Corporation, a global leader in safety, security,
protection and sport, is parent company to Smith & Wesson Corp., one of the
world's largest manufacturers of quality firearms and firearm safety/security
products and parent company to Thompson/Center Arms, Inc., a premier designer
and manufacturer of premium hunting rifles, black powder rifles,
interchangeable firearms systems and accessories under the Thompson/Center
brand. Smith & Wesson licenses shooter eye and ear protection, knives,
apparel, and other accessory lines. Smith & Wesson is based in Springfield,
Massachusetts with manufacturing facilities in Springfield, Houlton, Maine,
and Rochester, New Hampshire. The Smith & Wesson Academy is America's longest
running firearms training facility for law enforcement, military and security
professionals. For more information on Smith & Wesson, call (800) 331-0852 or
log on to www.smith-wesson.com. For more information on Thompson/Center Arms,
log on to www.tcarms.com.
About Universal Safety Response
Based in Franklin, Tennessee, USR is a full-service perimeter security
integrator, barrier manufacturer and installer. Founded in 1994, USR is the
original creator of GRAB(R), which has become the fastest growing barrier
technology in the world. USR serves a variety of clients in the defense,
transportation and petrol-chemical industries, as well as corporate
facilities, airports, Fortune 500 companies, and national laboratories. For
more information on Universal Safety Response, log on to www.usrgrab.com.
Safe Harbor Statement
Certain statements contained in this press release may be deemed to be
forward-looking statements under federal securities laws, and the Company
intends that such forward-looking statements be subject to the safe-harbor
created thereby. Such forward-looking statements include statements regarding
the Company's anticipated growth; the anticipated levels of the Company's and
its competitor's products within the industry's sales channel; the ability of
the Company to capitalize on strong consumer demand for its products,
particularly pistols, revolvers, and tactical rifles; the ability of the
Company to increase demand for its products in various markets, including
consumer and law enforcement channels, domestically and internationally; the
position of the Company hunting products in the consumer discretionary
marketplace and distribution channel; the Company's penetration rates in new
and existing markets; the Company's strategies; the ability of the Company to
introduce any new products; the success of any new product; and the success
of the Company's diversification strategy, including the expansion of the
Company's markets and the diversification of the Company's future revenue
base resulting from the acquisition of USR. The Company cautions 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 the Company's products, the state of the
U.S. economy, the Company's growth opportunities, the ability of the
Company's management to continue to integrate Thompson/Center Arms in a
successful manner, and other risks detailed from time to time in the Company's
reports filed with the SEC, including its Form 10-K Report for the fiscal year
ended April 30, 2008.
SMITH & WESSON HOLDING CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
As of:
April 30, April 30,
2009 2008
---- ----
(In thousands, except par value
and share data)
ASSETS
Current assets:
Cash and cash equivalents $39,822 $4,359
Accounts receivable, net of allowance
for doubtful accounts of $2,386 on
April 30, 2009 and $197 on April 30, 2008 48,232 54,163
Inventories 41,729 47,160
Other current assets 3,093 4,725
Deferred income taxes 12,505 9,947
Income tax receivable - 1,818
--- -----
Total current assets 145,381 122,172
------- -------
Property, plant and equipment, net 51,135 50,643
Intangibles, net 5,940 65,501
Goodwill - 41,173
Deferred income taxes 1,143 -
Other assets 6,632 10,262
----- ------
$210,231 $289,751
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $21,009 $21,996
Accrued expenses 17,606 17,246
Accrued payroll 7,462 5,046
Accrued income taxes 2,790 -
Accrued taxes other than income 2,208 1,747
Accrued profit sharing 6,208 4,035
Accrued product liability 3,418 2,767
Accrued warranty 4,287 1,692
Current portion of notes payable 2,378 8,920
----- -----
Total current liabilities 67,366 63,449
------ ------
Deferred income taxes - 20,216
--- ------
Notes payable, net of current portion 83,606 118,774
------ -------
Other non-current liabilities 8,633 9,461
----- -----
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, 48,967,938 shares issued
and 47,767,938 shares outstanding on April
30, 2009 and 41,832,039 shares issued and
40,632,039 shares outstanding on April 30,
2008 49 42
Additional paid-in capital 91,103 54,128
Retained earnings/(accumulated deficit) (34,203) 30,004
Accumulated other comprehensive income 73 73
Treasury stock, at cost (1,200,000 common
shares) (6,396) (6,396)
------ ------
Total stockholders' equity 50,626 77,851
------ ------
$210,231 $289,751
======== ========
SMITH & WESSON HOLDING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME/(LOSS) AND COMPREHENSIVE
INCOME/(LOSS)
For the Year Ended April 30,
----------------------------
2009 2008 2007
---- ---- ----
(In thousands, except per
share data)
Net product and services sales $334,955 $295,910 $236,552
Cost of products and services sold 237,167 203,535 160,214
------- ------- -------
Gross profit 97,788 92,375 76,338
------ ------ ------
Operating expenses:
Research and development 2,906 1,946 1,248
Selling and marketing 28,378 27,857 22,362
General and administrative 40,983 38,432 28,300
Impairment of long-lived assets 98,243 - -
------ --- ---
Total operating expenses 170,510 68,235 51,910
------- ------ ------
Income/(loss) from operations (72,722) 24,140 24,428
------- ------ ------
Other income/(expense):
Other income/(expense), net (806) (723) (497)
Interest income 295 122 217
Interest expense (5,892) (8,743) (3,569)
------ ------ ------
Total other expense, net (6,403) (9,344) (3,849)
------ ------ ------
Income/(loss) before income taxes (79,125) 14,796 20,579
Income tax expense/(benefit) (14,918) 5,675 7,618
------- ----- -----
Net income/(loss)/comprehensive
income/(loss) $(64,207) $9,121 $12,961
======== ====== =======
Weighted average number of common
and common equivalent shares
outstanding, basic 46,802 40,279 39,655
------ ------ ------
Net income/(loss) per share, basic $(1.37) $0.23 $0.33
====== ===== =====
Weighted average number of common
and common equivalent shares
outstanding, diluted 46,802 41,939 41,401
------ ------ ------
Net income/(loss) per share,
diluted $(1.37) $0.22 $0.31
====== ===== =====
SMITH & WESSON HOLDING CORPORATION AND SUBSIDIARIES
RECONCILIATION OF GAAP NET INCOME TO ADJUSTED EBITDAS (Unaudited)
For the Quarter Ended For the Quarter Ended
April 30, 2009: April 30, 2008:
--------------------- ---------------------
GAAP Adjustments Adjusted GAAP Adjustments Adjusted
---- ----------- -------- ---- ----------- --------
Net product and
services sales $99,536 $99,536 $83,107 $83,107
Cost of products
and services
sold 68,681 $(2,113)(7) 66,568 57,640 $(1,669)(1) 55,971
------ ------- ------ ------ ------- ------
Gross profit 30,855 2,113 32,968 25,467 1,669 27,136
------ ----- ------ ------ ----- ------
Operating
expenses:
Research and
development 813 (20)(1) 793 536 (26)(1) 510
Selling and
marketing 6,055 (44)(1) 6,011 7,099 (46)(1) 7,053
General and
Administrative 12,010 (1,259)(2) 10,751 10,346 (2,428)(2) 7,918
------ ------ ------ ----- ------ -----
Total operating
expenses 18,878 (1,323) 17,555 17,981 (2,500) 15,481
------ ------ ------ ------ ------ ------
Income
from operations 11,977 3,436 15,413 7,486 4,169 11,655
------ ----- ------ ----- ----- ------
Other income/
(expense):
Other income/
(expense), net 452 (356)(4) 96 (170) (130)(4) (300)
Interest income 82 82 77 77
Interest expense (1,207) 1,207(5) 0 (2,071) 2,071(5) 0
------ ----- --- ------ ----- ---
Total other
expense, net (673) 851 178 (2,164) 1,941 (223)
---- --- --- ------ ----- ----
Income
before income
taxes 11,304 4,287 15,591 5,322 6,110 11,432
Income tax
expense 3,889 (3,889)(6) 0 2,027 (2,027)(6) 0
----- ------ --- ----- ------ ---
Net income
comprehensive
income $7,415 $8,176 $15,591 $3,295 $8,137 $11,432
====== ====== ======= ====== ====== =======
SMITH & WESSON HOLDING CORPORATION AND SUBSIDIARIES
RECONCILIATION OF GAAP NET INCOME/(LOSS) TO ADJUSTED EBITDAS
(Unaudited)
For the Year Ended For the Year Ended
April 30, 2009: April 30, 2008:
------------------- -------------------
GAAP Adjustments Adjusted GAAP Adjustments Adjusted
---- ----------- -------- ---- ----------- --------
Net product
and services
sales $334,955 $334,955 $295,910 $295,910
Cost of
products
and services
sold 237,167 $(9,758)(7) 227,409 203,535 $(6,384)(1) 197,151
------- ------- ------- ------- ------- -------
Gross profit 97,788 9,758 107,546 92,375 6,384 98,759
------ ----- ------- ------ ----- ------
Operating
expenses:
Research and
development 2,906 (83)(1) 2,823 1,946 (48)(1) 1,898
Selling and
marketing 28,378 (167)(1) 28,211 27,857 (149)(1) 27,708
General and
Administ-
rative 40,983 (6,433)(2) 34,550 38,432 (9,814)(2) 28,618
Impairment
of long-
lived
assets 98,243 (98,243)(3) 0 - 0
------ ------- --- --- ---
Total
operating
expenses 170,510 (104,926) 65,584 68,235 (10,011) 58,224
------- -------- ------ ------ ------- ------
Income/(loss)
from
operations (72,722) 114,684 41,962 24,140 16,395 40,535
------- ------- ------ ------ ------ ------
Other income/
(expense):
Other
income/
(expense),
net (806) 97(4) (709) (723) 28(4) (695)
Interest
income 295 295 122 0 122
Interest
expense (5,892) 5,892(5) 0 (8,743) 8,743(5) 0
------ ----- --- ------ ----- ---
Total other
expense, net (6,403) 5,989 (414) (9,344) 8,771 (573)
------ ----- ---- ------ ----- ----
Income/(loss)
before income
taxes (79,125) 120,673 41,548 14,796 25,166 39,962
Income tax
expense/
(benefit) (14,918) 14,918(6) 0 5,675 (5,675)(6) 0
------- ------ --- ----- ------ ---
Net income/
(loss) /
comprehensive
income/
(loss) $(64,207)$105,755 $41,548 $9,121 $30,841 $39,962
======== ======== ======= ====== ======= =======
(1) To eliminate depreciation expense.
(2) To eliminate depreciation, amortization, stock-based compensation
expense and 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.
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
Web Site: http://www.smith-wesson.com
(SWHC)
