Smith & Wesson Holding Corporation Reports Second Quarter Fiscal 2010 Financial Results
Net sales of
For the second quarter of fiscal 2010, gross profit of
Net income for the second quarter of fiscal 2010 included a non-cash, fair-value adjustment to the contingent consideration liability related to our acquisition of USR that increased fully diluted earnings per share by
The purchase of USR included a provision whereby stockholders of USR could earn 4,080,000 shares of
Without the adjustment explained above, net income for the second quarter of fiscal 2010 would have been
Adjusted EBITDAS, a non-GAAP financial measure, was
Spengler continued, "Gross profit increased to
"The perimeter security business continued to perform well, as revenue met high growth expectations and orders on hand, or backlog, at the end of the quarter reached
Total operating expenses of
"Our firearms backlog was
Inventory levels increased by approximately
Outlook
Spengler added, "We expect total company sales for the third quarter to be between
"Based on this, we expect total company gross profit margin in the third quarter to be between 25.0% and 27.0%. We expect third quarter operating expenses to be comparable in dollars to our second quarter, reflecting increased sales and marketing expense for the SHOT show, offset by lower general and administrative costs," concluded Spengler.
Retired Rear Admiral,
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 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 ended
About
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 strong growth in revenue and profitability prospects of the Company's security business, the anticipated release of earn-out shares based on USR's EBITDAS for calendar 2009 and calendar 2010, levels of demand and production relating to the Company's firearms business, potential reduction of backlog levels, and the Company's sales, gross profit margin, and operating expense outlook for the fiscal quarter ending
Contacts:Liz Sharp , VP Investor RelationsSmith & Wesson Holding Corp. (413) 747-3304 lsharp@smith-wesson.comWilliam F. Spengler , EVP,Chief Financial Officer Smith & Wesson Holding Corp. (413) 747-3304
SMITH & WESSON HOLDING CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
As of:
October 31, April 30,
2009 2009
---- ----
(Unaudited)
(In thousands, except par
value and share data)
ASSETS
Current assets:
Cash and cash equivalents $46,396 $39,822
Accounts receivable, net of allowance
for doubtful accounts of $863 on
October 31, 2009 and $2,386 on April
30, 2009 63,791 48,232
Inventories 45,535 41,729
Other current assets 4,832 3,093
Deferred income taxes 11,026 12,505
Income tax receivable 3,583 -
----- ---
Total current assets 175,163 145,381
------- -------
Property, plant and equipment, net 54,356 51,135
Intangibles, net 17,272 5,940
Goodwill 80,545 -
Deferred income taxes - 1,143
Other assets 6,298 6,632
----- -----
$333,634 $210,231
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $19,104 $21,009
Accrued expenses 18,619 17,606
Accrued payroll 6,858 7,462
Accrued income taxes - 2,790
Accrued taxes other than income 2,565 2,208
Accrued profit sharing 11,278 6,208
Accrued product liability 3,324 3,418
Accrued warranty 3,738 4,287
Current portion of notes payable 3,592 2,378
----- -----
Total current liabilities 69,078 67,366
------ ------
Deferred income taxes 4,443 -
----- ---
Notes payable, net of current portion 82,569 83,606
------ ------
Other non-current liabilities 26,125 8,633
------ -----
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,
60,823,923 shares issued and
59,623,923 shares outstanding on
October 31, 2009 and 48,967,938
shares issued and 47,767,938 shares
outstanding on April 30, 2009 61 49
Additional paid-in capital 166,006 91,103
Retained earnings/(accumulated
deficit) (8,325) (34,203)
Accumulated other comprehensive
income 73 73
Treasury stock, at cost (1,200,000
common shares) (6,396) (6,396)
------ ------
Total stockholders' equity 151,419 50,626
------- ------
$333,634 $210,231
======== ========
SMITH & WESSON HOLDING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
For the Three For the Six
Months Ended: Months Ended:
------------- ------------
(in thousands, except per share data)
October October October October
31, 2009 31, 2008 31, 2009 31, 2008
--------- --------- --------- ---------
Net product and services
sales $108,808 $73,227 $211,045 $151,706
Cost of products and services
sold 74,245 53,418 140,859 107,049
------ ------ ------- -------
Gross profit 34,563 19,809 70,186 44,657
------ ------ ------ ------
Operating expenses:
Research and
development 1,041 617 1,921 1,392
Selling and
marketing 8,461 7,376 15,506 15,079
General and administrative 13,939 9,260 24,938 19,909
Impairment of
long-lived assets 0 98,243 0 98,243
--- ------ --- ------
Total
operating
expenses 23,441 115,496 42,365 134,623
------ ------- ------ -------
Income from operations 11,122 (95,687) 27,821 (89,966)
------ ------- ------ -------
Other income/(expense):
Other income/
(expense), net 7,282 (768) 10,487 (881)
Interest income 82 129 241 187
Interest expense (1,191) (1,413) (2,522) (3,465)
------ ------ ------ ------
Total other income/
(expense), net 6,173 (2,052) 8,206 (4,159)
----- ------ ----- ------
Income before income taxes 17,295 (97,739) 36,027 (94,125)
Income tax expense 3,990 (21,509) 10,149 (20,147)
----- ------- ------ -------
Net income/comprehensive
income $13,305 $(76,230) $25,878 $(73,978)
======= ======== ======= ========
Weighted average number of
common and common
equivalent shares
outstanding, basic 59,526 47,109 56,652 46,263
------ ------ ------ ------
Net income per share, basic $0.22 $(1.62) $0.46 $(1.60)
===== ====== ===== ======
Weighted average number of
common and common
equivalent shares
outstanding, diluted 66,806 47,109 63,965 46,263
------ ------ ------ ------
Net income per share, diluted $0.21 $(1.62) $0.42 $(1.60)
===== ====== ===== ======
SMITH & WESSON HOLDING CORPORATION AND SUBSIDIARIES
RECONCILIATION OF GAAP NET INCOME TO ADJUSTED EBITDAS (Unaudited)
For the Three Months Ended For the Three Months Ended
October 31, 2009: October 31, 2008:
----------------- -----------------
GAAP Adjustments Adjusted GAAP Adjustments Adjusted
---- ----------- -------- ---- ----------- --------
Net product and
services sales $108,808 $108,808 $73,227 $73,227
Cost of products
and services
sold 74,245 $(2,083)(8) 72,162 53,418 $(1,868)(1) 51,550
------ ------- ------ ------ ------- ------
Gross profit 34,563 2,083 36,646 19,809 1,868 21,677
------ ----- ------ ------ ----- ------
Operating
expenses:
Research and
development 1,041 (20)(1) 1,021 617 (21)(1) 596
Selling and
marketing 8,461 (43)(1) 8,418 7,376 (40)(1) 7,336
General and
administrative 13,939 (2,882)(2) 11,057 9,260 (1,953)(2) 7,307
Impairment of
long-lived
assets 0 - (3) - 98,243 (98,243)(7) -
--- --- --- ------ ------- ---
Total
operating
expenses 23,441 (2,945) 20,496 115,496 (100,257) 15,239
------ ------ ------ ------- -------- ------
Income/(loss)
from operations 11,122 5,028 16,150 (95,687) 102,125 6,438
------ ----- ------ ------- ------- -----
Other income/
(expense):
Other income/
(expense), net 7,282 (7,204)(6) 78 (768) 770 (5) 2
Interest income 82 82 129 129
Interest
expense (1,191) 1,191 (3) 0 (1,413) 1,413 (3) 0
------ ----- --- ------ ----- ---
Total other
income/
(expense),
net 6,173 (6,013) 160 (2,052) 2,183 131
----- ------ --- ------ ----- ---
Income before
income taxes 17,295 (985) 16,310 (97,739) 104,308 6,569
Income tax
expense 3,990 (3,990)(4) 0 (21,509) 21,509 (4) 0
----- ------ --- ------- ------ ---
Net income/(loss)/
comprehensive
income/
(loss) $13,305 $3,005 $16,310 $(76,230) $82,799 $6,569
======= ====== ======= ======== ======= ======
SMITH & WESSON HOLDING CORPORATION AND SUBSIDIARIES
RECONCILIATION OF GAAP NET INCOME/(LOSS) TO ADJUSTED EBITDAS (Unaudited)
For the Six Months Ended For the Six Months Ended
October 31, 2009: October 31, 2008:
----------------- -----------------
GAAP Adjustments Adjusted GAAP Adjustments Adjusted
---- ----------- -------- ---- ----------- --------
Net product
and services
sales $211,045 $211,045 $151,706 $151,706
Cost of
products and
services sold 140,859 $(4,034)(8) 136,825 107,049 $(3,788)(1) 103,261
------- ------- ------- ------- ------- -------
Gross profit 70,186 4,034 74,220 44,657 3,788 48,445
------ ----- ------ ------ ----- ------
Operating expenses:
Research and
development 1,921 (40)(1) 1,881 1,392 (44)(1) 1,348
Selling and
marketing 15,506 (86)(1) 15,420 15,079 (83)(1) 14,996
General and
administ-
rative 24,938 (4,223)(2) 20,715 19,909 (4,386)(2) 15,523
Impairment of
long-lived
assets 0 0 0 98,243 (98,243)(7) 0
--- --- --- ------ ------- ---
Total
operating
expenses 42,365 (4,349) 38,016 134,623 (102,756) 31,867
------ ------ ------ ------- -------- ------
Income/(loss)
from
operations 27,821 8,383 36,204 (89,966) 106,544 16,578
------ ----- ------ ------- ------- ------
Other income/
(expense):
Other income/
(expense),
net 10,487 (10,405)(6) 82 (881) 867 (5) (14)
Interest income 241 241 187 187
Interest
expense (2,522) 2,522 (3) 0 (3,465) 3,465 (3) 0
------ ----- --- ------ ----- ---
Total other
expense,
net 8,206 (7,883) 323 (4,159) 4,332 173
----- ------ --- ------ ----- ---
Income/(loss)
before income
taxes 36,027 500 36,527 (94,125) 110,876 16,751
Income tax
expense/
(benefit) 10,149 (10,149)(4) 0 (20,147) 20,147 (4) 0
------ ------- --- ------- ------ ---
Net income/(loss)/
comprehensive
income/(loss) $25,878 $10,649 $36,527 $(73,978) $90,729 $16,751
======= ======= ======= ======== ======= =======
(1) To eliminate depreciation expense.
(2) To eliminate depreciation, amortization, and stock-based compensation
expense.
(3) To eliminate interest expense.
(4) To eliminate income tax expense.
(5) To eliminate unrealized mark-to-market adjustments on foreign
exchange contracts.
(6) To eliminate impact of adjustment to fair value of contingent
consideration liability.
(7) To eliminate write down of long-lived assets.
(8) To eliminate depreciation and amortization expense.
SOURCE
Liz Sharp, VP Investor Relations, lsharp@smith-wesson.com, or William F. Spengler, EVP, Chief Financial Officer, both of Smith & Wesson Holding Corp., +1-413-747-3304,