Smith & Wesson Q2 Profit Tops View, Shares Up

(RTTNews) - Firearm maker Smith & Wesson Holding Corp.(SWHC), Tuesday reported a drop in profit for the second quarter, due mainly to the absence of an income tax benefit recorded last year. Nevertheless, adjusted earnings for the quarter improved from a year ago, driven mainly by higher revenues and stronger margins, as sales of firearms rose.

Both earnings and revenues for the quarter came in ahead of analysts' estimates, sending shares of Smith & Wesson up six percent in after-hours trade on the Nasdaq.

Smith & Wesson, which other than its namesake brand also sells M&P and Thompson/Center Arms, said revenues for the quarter grew 2 percent to $139.3 million from $136.6 million last year. Eight analysts polled by Thomson Reuters estimated revenues of $137.52 million for the quarter.

Second-quarter gross margins, or percentage of sales left after deducting production costs, advanced to 41.6 percent from 35.5 percent a year ago. Margins were driven largely by favorable product mix, absorption, and manufacturing efficiencies, as well as the absence of Walther product sales.

Commenting on the results, CEO James Debney said, "Our results for the second quarter of fiscal 2014 reflected the continued successful execution of our growth strategy. By maintaining a strategic focus on increasing market share of our M&P polymer pistol family of products, we delivered handgun revenue growth of over 27% and a significant expansion of our gross margins."

The Springfield, Massachusetts-based company's profit for the quarter dropped to $17.0 million or $0.28 per share from $21.2 million or $0.31 per share last year. On average, nine analysts polled by Thomson Reuters expected earnings of $0.21 per share for the quarter. Analysts' estimates typically exclude special items.

Looking forward to the third quarter, the company expect earnings in the range of $0.28 to $0.30 per share on revenues of $140 million to $145 million. Analysts currently expect earnings of $0.27 per share on revenues of $137.44 million for the quarter.

For the fiscal year 2014, Smith & Wesson continues to see earnings of $1.30 to $1.35 per share and revenues of $610.0 million to $620.0 million. Analysts currently expect earnings of $1.32 per share on revenues of $616.95 million for the year.

SWHC closed Tuesday's regular trading at $12.12, down $0.08 or 0.66%. The stock, however, gained $0.68 or 5.61% in after hours trade.