Smith & Wesson Holding Corporation Reports Record First Quarter Fiscal 2013 Financial Results
First Quarter Fiscal 2013 Financial Highlights
- Net sales from continuing operations for the first quarter were a record
$136.0 million , up 48.3% from the first quarter last year. The increase was led by strong sales of the M&P™ product platform. - Gross profit for the first quarter was
$51.3 million , or 37.7% of net sales, compared with gross profit of$26.5 million , or 28.9% of net sales, for the comparable quarter last year. Increased sales volume of polymer firearms positively impacted gross profit margin, resulting in an improvement in manufacturing absorption. - Operating expense for the first quarter declined to
$20.0 million , or 14.7% of net sales, compared with operating expense of$21.0 million , or 22.9% of net sales, for the first quarter last year. Increased profit sharing and incentive compensation expense was more than offset by a temporary reduction in selling and marketing expenses. - Net income from continuing operations for the first quarter was a record
$18.9 million , or$0.28 per diluted share, compared with net income from continuing operations of$2.3 million , or$0.04 per diluted share, for the first quarter last year. - Non-GAAP Adjusted EBITDAS from continuing operations for the first quarter increased to a record
$36.1 million compared with$12.2 million for the first quarter last year. - At
July 31, 2012 , firearm backlog was$392.4 million , an increase of$243.6 million , or 163.7%, compared with the end of the first quarter last year, and a decrease of$46.6 million , or 10.6%, from the most recent sequential quarter. - Operating cash flow of
$9.3 million and net capital spending of$6.3 million for the first quarter resulted in free cash flow of$3.0 million from continuing operations. In addition, during the quarter the company received an initial payment of$5.5 million in cash relating to the sale of the company's discontinued operations. Cash at the end of the first quarter was$60.5 million .
Financial Outlook for Continuing Operations
The company expects net sales from continuing operations for the second quarter of fiscal 2013 to be between
Based on the strength of the company's fiscal 2013 first quarter financial performance and current outlook for the year, the company is raising its full year fiscal 2013 financial guidance. The company now 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, loss on the sale of discontinued operations, 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 raising our full year fiscal 2013 financial guidance; our assessment that the Shield continues to be highly favored and sought after by consumers; our outlook for net sales from continuing operations, year-over-year growth from continuing operations, and GAAP earnings per diluted share from continuing operations for the second quarter of fiscal 2013 and the full 2013 fiscal year; and our belief that the typical seasonal reduction in second quarter net sales will be less pronounced than in prior years. 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 INCOME AND COMPREHENSIVE INCOME |
||||||
(Unaudited) |
||||||
For the Three Months Ended, |
||||||
July 31, 2012 |
July 31, 2011 |
|||||
(In thousands, except per share data) |
||||||
Net sales |
$ |
135,995 |
$ |
91,730 |
||
Cost of sales |
84,702 |
65,213 |
||||
Gross profit |
51,293 |
26,517 |
||||
Operating expenses: |
||||||
Research and development |
1,143 |
1,338 |
||||
Selling and marketing |
6,828 |
8,125 |
||||
General and administrative |
12,026 |
11,520 |
||||
Total operating expenses |
19,997 |
20,983 |
||||
Operating income from continuing operations |
31,296 |
5,534 |
||||
Other income/(expense): |
||||||
Other income/(expense), net |
- |
34 |
||||
Interest income |
368 |
403 |
||||
Interest expense |
(1,987) |
(1,941) |
||||
Total other income/(expense), net |
(1,619) |
(1,504) |
||||
Income from continuing operations before income taxes |
29,677 |
4,030 |
||||
Income tax expense |
10,807 |
1,753 |
||||
Income from continuing operations |
18,870 |
2,277 |
||||
Discontinued operations: |
||||||
Loss from operations of discontinued security solutions division |
(1,682) |
(2,702) |
||||
Income tax benefit |
(599) |
(1,216) |
||||
Loss from discontinued operations |
(1,083) |
(1,486) |
||||
Net income/comprehensive income |
$ |
17,787 |
$ |
791 |
||
Net income per share: |
||||||
Basic - continuing operations |
$ |
0.29 |
$ |
0.04 |
||
Basic - net income |
$ |
0.27 |
$ |
0.01 |
||
Diluted - continuing operations |
$ |
0.28 |
$ |
0.04 |
||
Diluted - net income |
$ |
0.27 |
$ |
0.01 |
||
Weighted average number of common shares outstanding: |
||||||
Basic |
65,352 |
64,529 |
||||
Diluted |
66,798 |
64,942 |
SMITH & WESSON HOLDING CORPORATION AND SUBSIDIARIES |
||||||||
CONSOLIDATED BALANCE SHEETS (UNAUDITED) |
||||||||
As of: |
||||||||
July 31, 2012 |
April 30, 2012 |
|||||||
(In thousands, except par value and share data) |
||||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents, including restricted cash of $3,336 on July 31, 2012 and $3,334 on April 30, 2012 |
$ |
60,543 |
$ |
56,717 |
||||
Accounts receivable, net of allowance for doubtful accounts of $1,174 on July 31, 2012 and $1,058 on April 30, 2012 |
53,289 |
48,313 |
||||||
Inventories |
62,827 |
55,296 |
||||||
Other current assets |
9,410 |
4,139 |
||||||
Assets held for sale |
1,047 |
13,490 |
||||||
Deferred income taxes |
12,759 |
12,759 |
||||||
Total current assets |
199,875 |
190,714 |
||||||
Property, plant and equipment, net |
63,190 |
60,528 |
||||||
Intangibles, net |
4,374 |
4,532 |
||||||
Other assets |
5,496 |
5,900 |
||||||
$ |
272,935 |
$ |
261,674 |
|||||
LIABILITIES AND STOCKHOLDERS' EQUITY |
||||||||
Current liabilities: |
||||||||
Accounts payable |
$ |
25,322 |
$ |
28,618 |
||||
Accrued expenses |
17,865 |
20,685 |
||||||
Accrued payroll |
8,007 |
9,002 |
||||||
Accrued income taxes |
8,148 |
291 |
||||||
Accrued taxes other than income |
4,002 |
4,270 |
||||||
Accrued profit sharing |
10,215 |
8,040 |
||||||
Accrued product/municipal liability |
1,429 |
1,397 |
||||||
Accrued warranty |
5,218 |
5,349 |
||||||
Liabilities held for sale |
— |
5,693 |
||||||
Current portion of notes payable |
1,271 |
— |
||||||
Total current liabilities |
81,477 |
83,345 |
||||||
Deferred income taxes |
4,537 |
4,537 |
||||||
Notes payable, net of current portion |
43,556 |
50,000 |
||||||
Other non-current liabilities |
11,221 |
10,948 |
||||||
Total liabilities |
140,791 |
148,830 |
||||||
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, 66,608,175 shares issued and 65,408,175 shares outstanding on July 31, 2012 and 66,512,097 shares issued and 65,312,097 shares outstanding on April 30, 2012 |
67 |
67 |
||||||
Additional paid-in capital |
190,892 |
189,379 |
||||||
Accumulated deficit |
(52,492) |
(70,279) |
||||||
Accumulated other comprehensive income |
73 |
73 |
||||||
Treasury stock, at cost (1,200,000 common shares) |
(6,396) |
(6,396) |
||||||
Total stockholders' equity |
132,144 |
112,844 |
||||||
$ |
272,935 |
$ |
261,674 |
SMITH & WESSON HOLDING CORPORATION AND SUBSIDIARIES |
||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS |
||||||||
(Unaudited) |
||||||||
For the Three Months Ended |
||||||||
July 31, 2012 |
July 31, 2011 |
|||||||
(In thousands) |
||||||||
Cash flows from operating activities: |
||||||||
Net income |
$ |
17,787 |
$ |
791 |
||||
Adjustments to reconcile net income to net cash provided by/(used in) operating activities: |
||||||||
Amortization and depreciation |
3,985 |
3,629 |
||||||
Loss on sale of discontinued operations, including $45 of stock-based compensation expense |
798 |
— |
||||||
(Gain)/loss on sale of assets |
(14) |
199 |
||||||
Provision for/(recoveries of) losses on accounts receivable |
75 |
(360) |
||||||
Change in disposal group assets and liabilities |
(1,112) |
(29) |
||||||
Stock-based compensation expense |
853 |
587 |
||||||
Excess book deduction of stock-based compensation |
— |
(249) |
||||||
Changes in operating assets and liabilities: |
||||||||
Accounts receivable |
(5,051) |
(5,991) |
||||||
Inventories |
(7,531) |
(5,887) |
||||||
Other current assets |
(2,447) |
(1,235) |
||||||
Income tax receivable/payable |
7,857 |
387 |
||||||
Accounts payable |
(3,296) |
(6,335) |
||||||
Accrued payroll |
(1,600) |
1,195 |
||||||
Accrued taxes other than income |
(268) |
(1,056) |
||||||
Accrued profit sharing |
2,175 |
1,244 |
||||||
Accrued other expenses |
(3,430) |
(2,493) |
||||||
Accrued product/municipal liability |
32 |
(174) |
||||||
Accrued warranty |
(131) |
52 |
||||||
Other assets |
174 |
(23) |
||||||
Other non-current liabilities |
423 |
192 |
||||||
Net cash provided by/(used in) operating activities |
9,279 |
(15,556) |
||||||
Cash flows from investing activities: |
||||||||
Proceeds from sale of discontinued operations |
5,500 |
— |
||||||
Receipts from note receivable |
18 |
— |
||||||
Payments to acquire patents and software |
— |
(4) |
||||||
Proceeds from sale of property and equipment |
14 |
1 |
||||||
Payments to acquire property and equipment |
(6,278) |
(4,730) |
||||||
Net cash used in investing activities |
(746) |
(4,733) |
||||||
Cash flows from financing activities: |
||||||||
Proceeds from loans and notes payable |
1,753 |
1,532 |
||||||
Cash paid for debt issue costs |
— |
(1,837) |
||||||
Proceeds from energy efficiency incentive programs |
— |
225 |
||||||
Payments on capital lease obligation |
(150) |
— |
||||||
Payments on loans and notes payable |
(6,925) |
(421) |
||||||
Proceeds from exercise of options to acquire common stock |
527 |
180 |
||||||
Excess tax benefit of stock-based compensation |
88 |
— |
||||||
Net cash used in financing activities |
(4,707) |
(321) |
||||||
Net increase/(decrease) in cash and cash equivalents |
3,826 |
(20,610) |
||||||
Cash and cash equivalents, beginning of period |
56,717 |
58,292 |
||||||
Cash and cash equivalents, end of period |
$ |
60,543 |
$ |
37,682 |
||||
Supplemental disclosure of cash flow information |
||||||||
Cash paid for: |
||||||||
Interest |
$ |
2,974 |
$ |
4,109 |
||||
Income taxes |
2,397 |
398 |
SMITH & WESSON HOLDING CORPORATION AND SUBSIDIARIES |
|||||||||||||||||||||
RECONCILIATION OF GAAP NET INCOME TO NON-GAAP ADJUSTED EBITDAS (Unaudited) |
|||||||||||||||||||||
For the Three Months Ended July 31, 2012: |
For the Three Months Ended July 31, 2011: |
||||||||||||||||||||
GAAP |
Adjustments |
Adjusted |
GAAP |
Adjustments |
Adjusted |
||||||||||||||||
Net sales |
$ |
135,995 |
$ |
— |
$ |
135,995 |
$ |
91,730 |
$ |
— |
$ |
91,730 |
|||||||||
Cost of sales |
84,702 |
(3,369) |
(1) |
81,333 |
65,213 |
(3,971) |
(9) |
61,242 |
|||||||||||||
Gross profit |
51,293 |
3,369 |
54,662 |
26,517 |
3,971 |
30,488 |
|||||||||||||||
Operating expenses: |
|||||||||||||||||||||
Research and development |
1,143 |
(28) |
(1) |
1,115 |
1,338 |
(59) |
(9) |
1,279 |
|||||||||||||
Selling and marketing |
6,828 |
(62) |
(1) |
6,766 |
8,125 |
(84) |
(9) |
8,041 |
|||||||||||||
General and administrative |
12,026 |
(1,339) |
(2) |
10,687 |
11,520 |
(2,477) |
(3) |
9,043 |
|||||||||||||
Total operating expenses |
19,997 |
(1,429) |
18,568 |
20,983 |
(2,620) |
18,363 |
|||||||||||||||
Operating income from continuing |
31,296 |
4,798 |
36,094 |
5,534 |
6,591 |
12,125 |
|||||||||||||||
Other income/(expense): |
|||||||||||||||||||||
Other income/(expense), net |
— |
— |
— |
34 |
— |
34 |
|||||||||||||||
Interest income |
368 |
(317) |
(6) |
51 |
403 |
(320) |
(6) |
83 |
|||||||||||||
Interest expense |
(1,987) |
1,987 |
(4) |
— |
(1,941) |
1,941 |
(4) |
— |
|||||||||||||
Total other income/(expense), net |
(1,619) |
1,670 |
51 |
(1,504) |
1,621 |
117 |
|||||||||||||||
Income from continuing operations |
29,677 |
6,468 |
36,145 |
4,030 |
8,212 |
12,242 |
|||||||||||||||
Income tax expense |
10,807 |
(10,807) |
(5) |
— |
1,753 |
(1,753) |
(5) |
— |
|||||||||||||
Income from continuing operations |
18,870 |
17,275 |
36,145 |
2,277 |
9,965 |
12,242 |
|||||||||||||||
Discontinued operations: |
|||||||||||||||||||||
Loss from operations of discontinued security solutions division |
(1,682) |
1,161 |
(7) |
(521) |
(2,702) |
723 |
(8) |
(1,979) |
|||||||||||||
Income tax benefit |
(599) |
599 |
(5) |
— |
(1,216) |
1,216 |
(5) |
— |
|||||||||||||
Loss on discontinued operations |
(1,083) |
562 |
(521) |
(1,486) |
(493) |
(1,979) |
|||||||||||||||
Net income/comprehensive income |
$ |
17,787 |
$ |
17,837 |
$ |
35,624 |
$ |
791 |
$ |
9,472 |
$ |
10,263 |
(1) |
To exclude depreciation and amortization. |
|||||||||||||||||||||
(2) |
To exclude depreciation, amortization, stock-based compensation expense, and DOJ/SEC costs and related profit sharing impacts of DOJ/SEC. |
|||||||||||||||||||||
(3) |
To exclude depreciation, amortization, stock-based compensation expense, plant consolidation costs, and DOJ/SEC costs and related profit sharing impacts of DOJ/SEC. |
|||||||||||||||||||||
(4) |
To exclude interest expense. |
|||||||||||||||||||||
(5) |
To exclude income tax expense. |
|||||||||||||||||||||
(6) |
To exclude intercompany interest income. |
|||||||||||||||||||||
(7) |
To exclude loss on sale of discontinued operations, interest expense, and stock-based compensation expense. |
|||||||||||||||||||||
(8) |
To exclude depreciation, amortization, interest expense, and stock-based compensation expense. |
|||||||||||||||||||||
(9) |
To exclude depreciation, amortization, and plant consolidation costs. |
SOURCE