Smith & Wesson Holding Corporation Reports Record Fourth Quarter and Full Year Fiscal 2012 Financial Results
Fourth Quarter Fiscal 2012 Financial Highlights
- Net sales from continuing operations for the fourth quarter were a record
$129.8 million , up 27.7% from the fourth quarter last year. The increase was driven by strong sales of M&P™ polymer pistols and M&P modern sporting rifles. - Gross profit for the fourth quarter was
$46.9 million , or 36.1% of net sales, compared with gross profit of$31.2 million , or 30.7% of net sales, for the comparable quarter last year. Gross profit was positively impacted in the quarter by significant one-time benefits relating to reductions in inventory and legal reserves. In addition, the higher production volume allowed for increased overhead absorption. Higher sales volume, cost savings efforts, reduced promotion costs, and a favorable product mix also contributed to the improvement. - Operating expense for the fourth quarter totaled
$21.2 million , or 16.3% of net sales, compared with operating expense of$23.2 million , or 22.9% of net sales, for the fourth quarter last year. The decrease in operating expense reflected cost-savings efforts, including reduced legal expenses, and the impact of the consolidation of the Thompson/Center Arms operations toSpringfield, Massachusetts . - Net income from continuing operations for the fourth quarter was
$17.8 million , or$0.27 per diluted share, compared with net income from continuing operations of$4.4 million , or$0.07 per diluted share, for the fourth quarter last year. - Non-GAAP Adjusted EBITDAS from continuing operations for the fourth quarter increased to
$31.2 million compared with$14.9 million for the fourth quarter last year. - At
April 30, 2012 , firearm backlog was$439.0 million , an increase of$252.3 million , or 135.1%, compared with the end of the fourth quarter last year, and an increase of$240.5 million , or 121.1%, from the most recent sequential quarter. - Operating cash flow of
$29.6 million and net capital spending of$3.7 million resulted in free cash flow of$25.8 million from continuing operations. Cash at year end was$56.7 million .
Full Year Fiscal 2012 Financial Highlights
- Net sales from continuing operations for the full fiscal year were a record
$412.0 million compared with$342.2 million for the prior fiscal year, an increase of 20.4%. - Gross profit was 31.1% compared with 30.6% for the prior fiscal year.
- Operating expenses were
$83.1 million for fiscal 2012, or 20.2% of net sales, compared with operating expenses of$86.9 million , or 25.4% of net sales, for fiscal 2011. - Income from continuing operations was a record
$26.4 million , or$0.40 per diluted share, compared with income from continuing operations of$8.1 million , or$0.13 per diluted share, a year ago. - Non-GAAP Adjusted EBITDAS from continuing operations for the full fiscal year totaled
$68.4 million compared with$42.1 million for fiscal 2011.
Financial Outlook for Continuing Operations
The company expects net sales from continuing operations for the first quarter of fiscal 2013 to be between
The company anticipates net sales from continuing operations for fiscal 2013 of between
Conference Call and Webcast
The company will host a conference call and webcast today,
Reconciliation of U.S. GAAP to Non-GAAP Adjusted EBITDAS
In this press release, a non-GAAP financial measure known as "Adjusted EBITDAS" is presented. From time-to-time, the company considers and uses Adjusted EBITDAS as a supplemental measure 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 employee compensation expense, impairment charge to goodwill and indefinite lived long-lived intangible assets related to the acquisition of Smith & Wesson Security Solutions™ (SWSS), DOJ and
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 our continued strong sales growth with our world-class products, including our M&P polymer pistols and our M&P modern sporting rifles; our continued increase in manufacturing capacity and outsourcing capabilities; our belief that our M&P brand continues to be well accepted by consumers; our belief regarding what our M&P Shield offers consumers and the market acceptance of the M&P Shield; our expectation that we will use the strength of our balance sheet to continue investing in our business in fiscal 2013; our expectation that we may repurchase some of our bonds; our belief that we have a solid fiscal foundation for the further expected improvement, which is reflected in our financial guidance for fiscal 2013; and our outlook for net sales from continuing operations, year-over-year growth from continuing operations, and GAAP earnings per share from continuing operations for fiscal 2013 and the first quarter of 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
Contacts:
(413) 747-3304
lsharp@smith-wesson.com
SMITH & WESSON HOLDING CORPORATION AND SUBSIDIARIES |
|||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME/(LOSS) |
|||||||||||||
For the Three Months Ended April 30, |
For the Years Ended April 30, |
||||||||||||
2012 (unaudited) |
2011 (unaudited) |
2012 |
2011 |
||||||||||
(In thousands, except per share data) |
|||||||||||||
Net sales |
$ |
129,843 |
$ |
101,667 |
$ |
411,997 |
$ |
342,233 |
|||||
Cost of sales |
82,980 |
70,427 |
284,008 |
237,545 |
|||||||||
Gross profit |
46,863 |
31,240 |
127,989 |
104,688 |
|||||||||
Operating expenses: |
|||||||||||||
Research and development |
973 |
1,264 |
4,543 |
4,363 |
|||||||||
Selling and marketing |
6,495 |
8,374 |
31,317 |
34,580 |
|||||||||
General and administrative |
13,729 |
13,609 |
47,213 |
47,954 |
|||||||||
Total operating expenses |
21,197 |
23,247 |
83,073 |
86,897 |
|||||||||
Operating income from continuing operations |
25,666 |
7,993 |
44,916 |
17,791 |
|||||||||
Other income/(expense): |
|||||||||||||
Other income/(expense), net |
16 |
(464) |
78 |
228 |
|||||||||
Interest income |
309 |
348 |
1,505 |
1,198 |
|||||||||
Interest expense |
(1,439) |
(2,024) |
(7,484) |
(5,683) |
|||||||||
Total other income/(expense), net |
(1,114) |
(2,140) |
(5,901) |
(4,257) |
|||||||||
Income from continuing operations before income taxes |
24,552 |
5,853 |
39,015 |
13,534 |
|||||||||
Income tax expense |
6,735 |
1,460 |
12,582 |
5,454 |
|||||||||
Income from continuing operations |
17,817 |
4,393 |
26,433 |
8,080 |
|||||||||
Discontinued operations: |
|||||||||||||
Loss from operations of discontinued security solutions |
(7,639) |
(2,912) |
(15,945) |
(96,055) |
|||||||||
Income tax expense/(benefit) |
(2,290) |
341 |
(5,617) |
(5,206) |
|||||||||
Loss from discontinued operations |
(5,349) |
(3,253) |
(10,328) |
(90,849) |
|||||||||
Net income/(loss)/comprehensive income/(loss) |
$ |
12,468 |
$ |
1,140 |
$ |
16,105 |
$ |
(82,769) |
|||||
Net income/(loss) per share: |
|||||||||||||
Basic - continuing operations |
$ |
0.27 |
$ |
0.07 |
$ |
0.41 |
$ |
0.13 |
|||||
Basic - net income/(loss) |
$ |
0.19 |
$ |
0.02 |
$ |
0.25 |
$ |
(1.37) |
|||||
Diluted - continuing operations |
$ |
0.27 |
$ |
0.07 |
$ |
0.40 |
$ |
0.13 |
|||||
Diluted - net income/(loss) |
$ |
0.19 |
$ |
0.02 |
$ |
0.25 |
$ |
(1.30) |
|||||
Weighted average number of common shares outstanding: |
|||||||||||||
Basic |
65,057 |
62,285 |
64,788 |
60,622 |
|||||||||
Diluted |
66,418 |
67,762 |
67,277 |
63,621 |
|||||||||
SMITH & WESSON HOLDING CORPORATION AND SUBSIDIARIES |
|||||||||
CONSOLIDATED BALANCE SHEETS |
|||||||||
As of: |
|||||||||
April 30, 2012 |
April 30, 2011 |
||||||||
(In thousands, except par value and share data) |
|||||||||
ASSETS |
|||||||||
Current assets: |
|||||||||
Cash and cash equivalents, including restricted cash of $3,334 on April 30, 2012 |
$ |
56,717 |
$ |
58,292 |
|||||
Accounts receivable, net of allowance for doubtful accounts of $1,058 on April |
48,313 |
64,753 |
|||||||
Inventories |
55,296 |
51,720 |
|||||||
Other current assets |
4,139 |
10,212 |
|||||||
Assets held for sale |
13,490 |
— |
|||||||
Deferred income taxes |
12,759 |
14,121 |
|||||||
Income tax receivable |
— |
4,513 |
|||||||
Total current assets |
190,714 |
203,611 |
|||||||
Property, plant and equipment, net |
60,528 |
62,390 |
|||||||
Intangibles, net |
4,532 |
8,692 |
|||||||
Other assets |
5,900 |
6,804 |
|||||||
$ |
261,674 |
$ |
281,497 |
||||||
LIABILITIES AND STOCKHOLDERS' EQUITY |
|||||||||
Current liabilities: |
|||||||||
Accounts payable |
$ |
28,618 |
$ |
40,119 |
|||||
Accrued expenses |
20,685 |
25,356 |
|||||||
Accrued payroll |
9,002 |
5,309 |
|||||||
Accrued income taxes |
291 |
— |
|||||||
Accrued taxes other than income |
4,270 |
11,421 |
|||||||
Accrued profit sharing |
8,040 |
4,081 |
|||||||
Accrued product/municipal liability |
1,397 |
2,584 |
|||||||
Accrued warranty |
5,349 |
3,424 |
|||||||
Liabilities held for sale |
5,693 |
— |
|||||||
Current portion of notes payable |
— |
30,000 |
|||||||
Total current liabilities |
83,345 |
122,294 |
|||||||
Deferred income taxes |
4,537 |
7,708 |
|||||||
Notes payable, net of current portion |
50,000 |
50,000 |
|||||||
Other non-current liabilities |
10,948 |
8,763 |
|||||||
Total liabilities |
148,830 |
188,765 |
|||||||
Commitments and contingencies |
|||||||||
Stockholders' equity: |
|||||||||
Preferred stock, $.001 par value, 20,000,000 shares authorized, no shares issued or |
— |
— |
|||||||
Common stock, $.001 par value, 100,000,000 shares authorized, 66,512,097 shares |
67 |
66 |
|||||||
Additional paid-in capital |
189,379 |
185,373 |
|||||||
Accumulated deficit |
(70,279) |
(86,384) |
|||||||
Accumulated other comprehensive income |
73 |
73 |
|||||||
Treasury stock, at cost (1,200,000 common shares) |
(6,396) |
(6,396) |
|||||||
Total stockholders' equity |
112,844 |
92,732 |
|||||||
$ |
261,674 |
$ |
281,497 |
SMITH & WESSON HOLDING CORPORATION AND SUBSIDIARIES |
|||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS |
|||||||||
For the Years Ended April 30, |
|||||||||
2012 |
2011 |
||||||||
(In thousands) |
|||||||||
Cash flows from operating activities: |
|||||||||
Net income/(loss) |
$ |
16,105 |
$ |
(82,769) |
|||||
Adjustments to reconcile net income/(loss) to net cash provided by operating activities: |
|||||||||
Amortization and depreciation |
16,729 |
14,935 |
|||||||
Loss on sale of business, including loss on sale of discontinued operations |
5,688 |
— |
|||||||
Loss on sale of assets |
324 |
234 |
|||||||
(Recoveries of)/provision for losses on accounts receivable |
(439) |
1,379 |
|||||||
Impairment of long-lived assets |
— |
90,503 |
|||||||
Deferred income taxes |
(1,558) |
(480) |
|||||||
Stock-based compensation expense |
2,484 |
1,680 |
|||||||
Change in contingent consideration |
— |
(3,060) |
|||||||
Excess book deduction of stock-based compensation |
(144) |
(739) |
|||||||
Changes in operating assets and liabilities: |
|||||||||
Accounts receivable |
7,803 |
7,327 |
|||||||
Inventories |
(7,927) |
(995) |
|||||||
Other current assets |
1,200 |
(1,717) |
|||||||
Income tax receivable/payable |
4,804 |
657 |
|||||||
Accounts payable |
(8,521) |
10,861 |
|||||||
Accrued payroll |
3,693 |
(4,031) |
|||||||
Accrued taxes other than income |
(7,151) |
8,892 |
|||||||
Accrued profit sharing |
3,959 |
(3,118) |
|||||||
Accrued other expenses |
(2,554) |
1,510 |
|||||||
Accrued product/municipal liability |
(1,187) |
(193) |
|||||||
Accrued warranty |
2,181 |
(341) |
|||||||
Other assets |
1,647 |
(1,453) |
|||||||
Other non-current liabilities |
714 |
206 |
|||||||
Net cash provided by operating activities |
37,850 |
39,288 |
|||||||
Cash flows from investing activities: |
|||||||||
Proceeds from sale of business |
500 |
— |
|||||||
Receipts from note receivable |
19 |
— |
|||||||
Payments to acquire patents and software |
(193) |
(562) |
|||||||
Proceeds from sale of property and equipment |
199 |
53 |
|||||||
Payments to acquire property and equipment |
(14,392) |
(20,353) |
|||||||
Net cash used in investing activities |
(13,867) |
(20,862) |
|||||||
Cash flows from financing activities: |
|||||||||
Proceeds from loans and notes payable |
1,532 |
51,365 |
|||||||
Cash paid for debt issue costs |
(1,850) |
(1,145) |
|||||||
Cash paid for redemption of convertible notes |
(30,000) |
— |
|||||||
Payments on loans and notes payable |
(1,532) |
(51,365) |
|||||||
Proceeds from Economic Development Incentive Program |
4,400 |
— |
|||||||
Proceeds from energy efficiency incentive programs |
225 |
— |
|||||||
Proceeds from exercise of options to acquire common stock including employee stock purchase plan |
1,667 |
1,206 |
|||||||
Taxes paid related to restricted stock issuance |
— |
(50) |
|||||||
Net cash (used in)/provided by financing activities |
(25,558) |
11 |
|||||||
Net (decrease)/increase in cash and cash equivalents |
(1,575) |
18,437 |
|||||||
Cash and cash equivalents, beginning of period |
58,292 |
39,855 |
|||||||
Cash and cash equivalents, end of period |
$ |
56,717 |
$ |
58,292 |
|||||
Supplemental disclosure of cash flow information |
|||||||||
Cash paid for: |
|||||||||
Interest |
$ |
5,865 |
$ |
3,820 |
|||||
Income taxes |
3,963 |
2,146 |
SMITH & WESSON HOLDING CORPORATION AND SUBSIDIARIES |
||||||||||||||||||||||
RECONCILIATION OF GAAP NET INCOME/(LOSS) TO NON-GAAP ADJUSTED EBITDAS (Unaudited) |
||||||||||||||||||||||
For the Three Months Ended April 30, 2012: |
For the Three Months Ended April 30, 2011: |
|||||||||||||||||||||
GAAP |
Adjustments |
Adjusted |
GAAP |
Adjustments |
Adjusted |
|||||||||||||||||
Net sales |
$ |
129,843 |
$ |
— |
$ |
129,843 |
$ |
101,667 |
$ |
— |
$ |
101,667 |
||||||||||
Cost of sales |
82,980 |
(3,735) |
(1) |
79,245 |
70,427 |
(4,095) |
(1) |
66,332 |
||||||||||||||
Gross profit |
46,863 |
3,735 |
50,598 |
31,240 |
4,095 |
35,335 |
||||||||||||||||
Operating expenses: |
||||||||||||||||||||||
Research and development |
973 |
(13) |
(1) |
960 |
1,264 |
(107) |
(1) |
1,157 |
||||||||||||||
Selling and marketing |
6,495 |
(56) |
(1) |
6,439 |
8,374 |
(87) |
(1) |
8,287 |
||||||||||||||
General and administrative |
13,729 |
(1,668) |
(3) |
12,061 |
13,609 |
(2,562) |
(3) |
11,047 |
||||||||||||||
Total operating expenses |
21,197 |
(1,737) |
19,460 |
23,247 |
(2,756) |
20,491 |
||||||||||||||||
Operating income from continuing operations |
25,666 |
5,472 |
31,138 |
7,993 |
6,851 |
14,844 |
||||||||||||||||
Other income/(expense): |
||||||||||||||||||||||
Other income/(expense), net |
16 |
— |
16 |
(464) |
433 |
(4) |
(31) |
|||||||||||||||
Interest income |
309 |
(300) |
(7) |
9 |
348 |
(229) |
(7) |
119 |
||||||||||||||
Interest expense |
(1,439) |
1,439 |
(5) |
— |
(2,024) |
2,024 |
(5) |
— |
||||||||||||||
Total other income/(expense), net |
(1,114) |
1,139 |
25 |
(2,140) |
2,228 |
88 |
||||||||||||||||
Income from continuing operations before income taxes |
24,552 |
6,611 |
31,163 |
5,853 |
9,079 |
14,932 |
||||||||||||||||
Income tax expense |
6,735 |
(6,735) |
(6) |
— |
1,460 |
(1,460) |
(6) |
— |
||||||||||||||
Income from continuing operations |
17,817 |
13,346 |
31,163 |
4,393 |
10,539 |
14,932 |
||||||||||||||||
Discontinued operations: |
||||||||||||||||||||||
Loss from operations of discontinued security solutions division |
(7,639) |
6,060 |
(8) |
(1,579) |
(2,912) |
715 |
(9) |
(2,197) |
||||||||||||||
Income tax benefit |
(2,290) |
2,290 |
(6) |
— |
341 |
(341) |
(6) |
— |
||||||||||||||
Loss on discontinued operations |
(5,349) |
3,770 |
(1,579) |
(3,253) |
1,056 |
(2,197) |
||||||||||||||||
Net income/(loss)/comprehensive income/(loss) |
$ |
12,468 |
$ |
17,116 |
$ |
29,584 |
$ |
1,140 |
$ |
11,595 |
$ |
12,735 |
SMITH & WESSON HOLDING CORPORATION AND SUBSIDIARIES |
||||||||||||||||||||||
RECONCILIATION OF GAAP NET INCOME/(LOSS) TO NON-GAAP ADJUSTED EBITDAS (Unaudited) |
||||||||||||||||||||||
For the Year Ended April 30, 2012: |
For the Year Ended April 30, 2011: |
|||||||||||||||||||||
GAAP |
Adjustments |
Adjusted |
GAAP |
Adjustments |
Adjusted |
|||||||||||||||||
Net sales |
$ |
411,997 |
$ |
— |
$ |
411,997 |
$ |
342,233 |
$ |
— |
$ |
342,233 |
||||||||||
Cost of sales |
284,008 |
(14,554) |
(1) |
269,454 |
237,545 |
(11,848) |
(1) |
225,697 |
||||||||||||||
Gross profit |
127,989 |
14,554 |
142,543 |
104,688 |
11,848 |
116,536 |
||||||||||||||||
Operating expenses: |
||||||||||||||||||||||
Research and development |
4,543 |
(157) |
(1) |
4,386 |
4,363 |
(213) |
(1) |
4,150 |
||||||||||||||
Selling and marketing |
31,317 |
(277) |
(1) |
31,040 |
34,580 |
(271) |
(1) |
34,309 |
||||||||||||||
General and administrative |
47,213 |
(8,246) |
(2) |
38,967 |
47,954 |
(11,615) |
(3) |
36,339 |
||||||||||||||
Total operating expenses |
83,073 |
(8,680) |
74,393 |
86,897 |
(12,099) |
74,798 |
||||||||||||||||
Operating income from continuing operations |
44,916 |
23,234 |
68,150 |
17,791 |
23,947 |
41,738 |
||||||||||||||||
Other income/(expense): |
||||||||||||||||||||||
Other income/(expense), net |
78 |
— |
78 |
228 |
(186) |
(4) |
42 |
|||||||||||||||
Interest income |
1,505 |
(1,343) |
(7) |
162 |
1,198 |
(882) |
(7) |
316 |
||||||||||||||
Interest expense |
(7,484) |
7,484 |
(5) |
— |
(5,683) |
5,683 |
(5) |
— |
||||||||||||||
Total other income/(expense), net |
(5,901) |
6,141 |
240 |
(4,257) |
4,615 |
358 |
||||||||||||||||
Income from continuing operations before income taxes |
39,015 |
29,375 |
68,390 |
13,534 |
28,562 |
42,096 |
||||||||||||||||
Income tax expense |
12,582 |
(12,582) |
(6) |
— |
5,454 |
(5,454) |
(6) |
— |
||||||||||||||
Income from continuing operations |
26,433 |
41,957 |
68,390 |
8,080 |
34,016 |
42,096 |
||||||||||||||||
Discontinued operations: |
||||||||||||||||||||||
Loss from operations of discontinued security solutions division |
(15,945) |
8,321 |
(8) |
(7,624) |
(96,055) |
90,428 |
(10) |
(5,627) |
||||||||||||||
Income tax benefit |
(5,617) |
5,617 |
(6) |
— |
(5,206) |
5,206 |
(6) |
— |
||||||||||||||
Loss on discontinued operations |
(10,328) |
2,704 |
(7,624) |
(90,849) |
85,222 |
(5,627) |
||||||||||||||||
Net income/(loss)/comprehensive income/(loss) |
$ |
16,105 |
$ |
44,661 |
$ |
60,766 |
$ |
(82,769) |
$ |
119,238 |
$ |
36,469 |
||||||||||
(1) |
To eliminate depreciation, amortization, and plant consolidation costs. |
|||||||||||||||||||||
(2) |
To eliminate depreciation, amortization, stock-based compensation expense, plant consolidation costs, severance benefits for our former President and CEO, and DOJ/SEC costs and related profit sharing impacts of DOJ/SEC. |
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(3) |
To eliminate depreciation, amortization, stock-based compensation expense, plant consolidation costs, and DOJ/SEC costs and related profit sharing impacts of DOJ/SEC. |
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(4) |
To eliminate unrealized mark-to-market adjustments on foreign exchange contracts. |
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(5) |
To eliminate interest expense. |
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(6) |
To eliminate income tax expense. |
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(7) |
To eliminate intercompany interest income. |
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(8) |
To eliminate depreciation, amortization, loss on sale of discontinued operations, interest expense, and stock-based compensation expense. |
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(9) |
To eliminate depreciation, amoritzation, interest expense, and stock-based compensation expense. |
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(10) |
To eliminate depreciation, amortization, impairment of long-lived assets, interest expense, fair value of contingent consideration liability, and stock-based compensation expense. |
SOURCE