SMITH & WESSON HOLDING CORPORATION REPORTS 4Q AND FY2014 FINANCIAL RESULTS
Jun. 23, 2014
Source: Smith & Wesson Holding Corporation press release
Springfield, Massachusetts -- Smith & Wesson Holding Corporation, a leader in firearm manufacturing and design, has announced financial results for the fiscal fourth quarter and full fiscal year ended April 30, 2014.
Full Year Fiscal 2014 Financial Highlights
•Net sales for the full fiscal year were a record $626.6 million compared with $587.5 million for the prior fiscal year, an increase of 6.7%. Excluding Walther products that were sold in the prior year pursuant to an agreement that has since ended, net sales increased 13.8% over the prior fiscal year. Firearm unit production for fiscal year 2014 increased by 16.2%.
•Gross profit was 41.3% compared with 37.1% for fiscal 2013.
•Operating expenses were $108.1 million, or 17.3% of net sales, for fiscal 2014 compared with operating expenses of $85.2 million, or 14.5% of net sales, for fiscal 2013.
•Income from continuing operations was $88.6 million, or $1.47 per diluted share, compared with income from continuing operations of $81.4 million, or $1.22 per diluted share, a year ago.
•Non-GAAP Adjusted EBITDAS from continuing operations for the full fiscal year totaled $179.5 million compared with $154.2 million for fiscal 2013.
•For the full year, operating cash generated was $90.2 million, net cash generated from the issuance of Senior Notes was $56.4 million, capital spending totaled $53.3 million, and cash disbursed related to the stock buyback program totaled $115.9 million.
•Cash and cash equivalents as of April 30, 2014 totaled $68.9 million, down from $100.5 million a year ago.
Fourth Quarter Fiscal 2014 Financial Highlights
•Net sales for the fourth quarter were $170.4 million, a decline of 4.6% from the fourth quarter last year. Excluding Walther products that were sold in the prior year pursuant to an agreement that has since ended, net sales declined 1.5%, reflecting strong handgun sales offset by lower long gun sales.
•Gross profit for the fourth quarter was $69.7 million, or 40.9% of net sales, compared with gross profit of $68.4 million, or 38.3% of net sales, for the comparable quarter last year. Gross profit improved as a result of a favorable product mix, absorption, and manufacturing efficiencies, as well as reduced promotions and the absence of lower-margin Walther product sales.
•Operating expenses for the fourth quarter were $26.7 million, or 15.6% of net sales, compared with operating expenses of $21.6 million, or 12.1% of net sales, for the fourth quarter last year. The increase in operating expenses as a percentage of net sales was primarily driven by higher sales and marketing expense, ERP implementation costs, and employee-related costs.
•Operating income for the fourth quarter was $43.1 million, or 25.3% of net sales, compared with operating income of $46.9 million, or 26.2% of net sales, for the comparable quarter last year.
•Income from continuing operations for the fourth quarter was $24.9 million, or $0.44 per diluted share, compared with net income from continuing operations of $28.6 million, or $0.44 per diluted share, for the fourth quarter last year.
•Non-GAAP Adjusted EBITDAS from continuing operations for the fourth quarter was $50.0 million compared with $52.7 million for the fourth quarter last year.
•Operating cash generated for the fourth quarter was $36.0 million, and capital spending totaled $17.0 million.
James Debney, Smith & Wesson Holding Corporation President and Chief Executive Officer, stated, "We are very pleased with our record results for fiscal 2014, which include the highest sales, gross margin, and profits in the company's history. Our successful performance was driven by robust consumer demand for our products, combined with carefully managed increases in our manufacturing capacity. Our achievements aligned directly with our growth strategy, which is underpinned by a focus on our core firearm business. That focus is further reflected in the vertical integration of a key manufacturing process by acquiring the assets of our principal injection molding supplier. This asset acquisition, completed in May 2014, strengthens our firearm business with increased flexibility, lower production costs, reduced risk in our supply chain, and more efficient new product development processes. We believe that by executing on our strategy, we are well positioned to continue to take market share and deliver profitability, even as the consumer market for firearms returns to a more normal environment."
Jeffrey D. Buchanan, Smith & Wesson Holding Corporation Executive Vice President and Chief Financial Officer, stated, "Our record profitability and robust cash flows in fiscal 2014 allowed us to invest in our business, optimize our capital structure, and generate increased value for our stockholders. We invested $30.4 million to upgrade our ERP system, providing improved scalability and operational flexibility for our business. We also leveraged the strength of our cash flows to generate value for our stockholders though an active share repurchase program. Since December 2012, we have repurchased a total of 12.3 million shares of our common stock valued at $135.0 million, representing a total reduction in shares outstanding of nearly 19.0%. In March of 2014, our Board of Directors approved the repurchase of an addition $30 million of our common stock, and we presently have $27.0 million available for share repurchases under that program."