Smith & Wesson Profit Rises, Details Weak Outlook; Shares Down - Update

(RTTNews) - Firearms maker Smith & Wesson Holding Corp. (SWHC), Thursday reported a better-than-expected increase in first-quarter profit, driven by strong sales of its M&P brand pistol, and margins improved amid volumes and a benign product mix.

Looking to the second quarter, Smith & Wesson expects weak sales as the implementation of its enterprise resource system is expected to bring down the number of production days. However, the company raised its revenue guidance for 2014. Shares of Smith & Wesson slid 4.5 percent in after-hours trading on the Nasdaq.

The Springfield, Massachusetts-based company reported first-quarter net earnings of $27 million or $0.40 per share, compared with $18 million or $0.27 per share last year.

On average, seven analysts polled by Thomson Reuters expected earnings of $0.36 per share for the quarter. Analysts' estimates typically exclude special items.

Revenue for the quarter grew 26 percent to $171 million from $136 million a year ago, topping analysts' expectations of $165 million.

"Ongoing increases in our manufacturing capacity, combined with strong consumer demand for firearms, resulted in increased market share and higher sales of our most popular M&P products," said CEO James Debney.

Gross margin expanded to 42.6 percent from 37.7 percent in the prior year, while operating margin rose to 28 percent from 23 percent.

For the second quarter, the company expect earnings in the range of $0.20 to $0.22 per share and revenue of $135 million to $140 million. Analysts expect earnings of $0.29 per share on revenue of $142.99 million.

For fiscal 2014, Smith & Wesson continues to expect earnings of $1.30 to $1.35 per share. The company now estimates revenue of $610 million to $620 million, from prior range of $605 million to $615 million. Analysts expect earnings of $1.30 per share on revenue of $612.85 million.

The company's stock closed Thursday at $11.48, up $0.39 or 3.52%, on a volume of 3.7 million shares. In after hours, the stock dropped $0.52 or 4.53%.