Shares were up 15% after hours at $7.95 as the company beat quarterly expectations and projected upbeat full-year and first-quarter results. As of Thursday’s close, the stock was already up 58% on improving gun sales.
For the new year, the company projected earnings from continuing operations of 60 cents to 65 cents a share and net sales of $485 million to $505 million. Analysts polled by Thomson Reuters expected 50 cents a share in earnings and $466 million in sales.
The company also expects first-quarter earnings from continuing operations of 16 cents to 19 cents a share on net sales of $125 million to $130 million. Analysts predicted 12 cents a share and $113 million, respectively.
Wedbush Inc. said this week that concerns about industry deceleration proved “premature,” as gun demand has picked up since December and should continue through the summer. The firm said consumers appear to be reacting again to the prospect of tighter gun-control laws under President Obama. This concern drove strong gun sales after the 2008 presidential election and could be re-igniting sales during an election year.
Smith & Wesson has said its efforts to maximize internal manufacturing capacity and speed up deliveries from component suppliers contributed to the higher sales in the latest quarter.
The company consolidated its Thompson/Center Arms operations into its Massachusetts headquarters during the fiscal third quarter as it looked to increase shipments and improve margins. The company also has worked to divest itself from its perimeter security business in order to focus on its core firearm operations.
At the end of the quarter, Smith & Wesson’s firearms backlog was $439 million, more than double from a year earlier and from the end of the previous quarter.
For the quarter ended April 30, Smith & Wesson reported a profit of $12.5 million, or 19 cents a share, up from $1.1 million, or 2 cents a share. The latest period included an after-tax loss of $5.3 million from the discontinued security business, while the prior year included a loss of $3.2 million in such losses. Analysts most recently projected earnings of 17 cents.
Revenue grew 28% to $129.8 million. The company last month raised its revenue guidance to $129 million.
Gross margin widened to 36.1% from 30.7%, thanks to higher sales volume, reduced promotion costs and a favorable product mix, the company said. Operating costs were down 8.8% amid cost-cutting efforts.
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