Smith & Wesson Stumbles Over Guidance

By Chris Lange Published Jun 19, 8:35AM EDT

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Smith & Wesson Holding Corp. (NASDAQ: SWHC) reported its fiscal fourth-quarter financial results Thursday after the markets closed as $0.45 in earnings per share (EPS) on $181 million in revenue. That compared to Thomson Reuters consensus estimates of $0.35 in EPS on $175.49 million in revenue. In the same period of the previous year, the company posted EPS of $0.46 and revenue of $170.42 million.

The company gave guidance for the fiscal first quarter as $0.21 in EPS on $140 million in net sales. The consensus estimates are $0.25 in EPS on $145.35 million in revenue for the quarter.

Earlier in the year, Smith & Wesson announced that its goal was to reduce inventories, which it achieved to the tune of $20.2 million during the fourth quarter. The result from this was cash flow from operations totaling $84.9 million in the period.

Earlier this week, Smith & Wesson redeemed all of its 5.875% senior notes using the proceeds of a new $105.0 million five-year term loan.

James Debney, president and CEO, commented on earnings:

We are very pleased with our fiscal 2015 results, particularly our fourth quarter performance. During fiscal 2015, we marked a number of achievements as we remained focused on executing our long-term strategy. We moved further into the hunting and shooting accessories market by acquiring BTI and we strengthened our supply chain with the vertical integration of our principal injection molding supplier. Both acquisitions were accretive to gross margins. Our focus on gross margins resulted in a 37.1% gross margin for the fourth quarter (38.4% when the 1.3% accounting-related impact of the BTI acquisition is excluded), which was within our targeted range. Looking forward, we anticipate further sales and earnings growth in fiscal 2016 as we continue to position our company for long-term success.

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To end this quarter, the company had $42.2 million in cash and cash equivalents, compared to $68.9 million in the same period last year.

Shares of Smith & Wesson closed Thursday up 2% at $16.10. Following the release of the earnings report, shares were down 1.2% to $15.90 in premarket trading Friday. The stock has a consensus analyst price target of $17.56 and a 52-week trading range of $9.03 to $16.22.

About the Author Chris Lange →

Chris Lange is a writer for 24/7 Wall St., based in Houston. He has covered financial markets over the past decade with an emphasis on healthcare, tech, and IPOs. During this time, he has published thousands of articles with insightful analysis across these complex fields. Currently, Lange's focus is on military and geopolitical topics.

Lange's work has been quoted or mentioned in Forbes, The New York Times, Business Insider, USA Today, MSN, Yahoo, The Verge, Vice, The Intelligencer, Quartz, Nasdaq, The Motley Fool, Fox Business, International Business Times, The Street, Seeking Alpha, Barron’s, Benzinga, and many other major publications.

A graduate of Southwestern University in Georgetown, Texas, Lange majored in business with a particular focus on investments. He has previous experience in the banking industry and startups.