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Smith & Wesson +5.8% AH; FQ2 report, FQ3 guidance clean out expectations

  • Smith & Wesson (SWHC) shares jump 5.8% after the company cleaned out expectations in FQ2 and issued higher-than-expected FQ3 guidance.
  • Net sales of $139.3M were up 2% Y/Y; excluding Walther products (under a distribution agreement that ended in April), revenue grew 9.2% Y/Y, driven by a 27.4% Y/Y spike in handgun sales.
  • Gross margin represented a 510bp expansion to 41.6%, building on the trend in FQ1. The company cited favorable product mix, absorption, and manufacturing efficiencies, as well as absence of lower-margin Walther sales.
  • Opex jumped to 20.9% of sales, or $29.2M, from 16% of sales, or $21.8M, in FQ2 2012; excluding one-time ERP system expenses, opex would have come in at 18.2% of sales, or $25.3M.
  • Income from continuing operations was $17.1M ($0.28/share) vs. $16.4M ($0.24/share) in Q2 2012.
  • Management sees revenue in FQ3 of $140M-$145M (well above analyst consensus of $137.4M) and EPS of $0.28-$0.30 (vs. $0.27). It reiterates FY2014 guidance for sales of $610M-$620M (vs. $617M) and EPS of $1.30-$1.35 (vs. $1.32).
  • Conference call at 5pm ET, PR
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Comments (4)
  • Nitin B. Sharma
    , contributor
    Comments (186) | Send Message
    Long room ahead in terms of valuation. As just noted on the conference call, Mr. Debney, the CEO thinks that the industry is going through a long-term growth phase.

    10 Dec 2013, 05:21 PM Reply Like
  • Ugly Duckling
    , contributor
    Comments (380) | Send Message
    30% of the float is short. I am feeling a squeeze coming.
    10 Dec 2013, 06:14 PM Reply Like
  • Pim Keulen
    , contributor
    Comments (248) | Send Message
    No major incidents with ERP implementation and a nice earnings beat, as I expected. More share price gains ahead!

    10 Dec 2013, 06:16 PM Reply Like
  • bboggs
    , contributor
    Comments (44) | Send Message
    S&WNation Strong! Been long with an average basis below 11.00. Sold a couple thousand shares at 12.25 going into earnings, just in case, to capture some profit. Looking for a nice increase this week. Then plan to sell and re-enter on pullbacks.
    10 Dec 2013, 09:05 PM Reply Like
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