Firearm maker Smith & Wesson Holding Corp.(SWHC) said Thursday after the markets closed that it swung to a second quarter profit, as sales surged and margins improved.
The company's quarterly earnings per share from continuing operations came in line with analysts' expectations, while its quarterly sales topped analysts' forecast.
At the same time, the company forecast third quarter sales and earnings above analysts' current consensus estimates, and raised its full year forecast.
The company also said that its Board of Directors has approved a program to repurchase up to $20.0 million of the company's outstanding shares of common stock from time to time until June 30, 2013.
Jeffrey Buchanan, Smith & Wesson's Chief Financial Officer, said, "By continuing to focus on our core firearm business, we delivered a second consecutive quarter of record sales combined with strong net income growth and earnings per share performance."
Smith & Wesson shares are currently gaining 3.13% in after hours trading after closing the day's regular trading session at $10.85, up 27 cents or 2.55%.
For the second quarter ended October 31, 2012, the Springfield, Massachusetts-based company reported net income of $21.2 million or $0.31 per share, compared to a net loss of $1.6 million or $0.02 per share for the year-ago quarter.
Income from continuing operations for the second quarter was $16.4 million or $0.24 per share, compared to $948,000 or $0.01 per share in the prior year quarter.
On average, 6 analysts polled by Thomson Reuters expected the company to earn $0.24 per share for the second quarter.
Gross margin for the quarter improved to 35.5% from 26.7% a year ago, while operating margin increased to 19.5% from 3.7% last year. Net sales for the second quarter rose 48% to $136.56 million from $92.30 million in the same quarter last year, led by continued strong sales across all of the company's firearm product lines, including M&P branded products, such as pistols, modern sporting rifles, and the recently launched Shield pistol designed for concealed carry and personal protection. Five analysts had a consensus revenue estimate of $134.78 million for the second quarter.
Looking forward to the third quarter, the company forecast net sales of $126.0 million to $131.0 million and earnings from continuing operations of $0.19 to $0.21 per share. Analysts currently expect the company to earn $0.16 per share on revenue of $125.16 million for the third quarter.
For the fiscal year 2013, the company now forecasts net sales of $550 million to $560 million and earnings from continuing operations of $1.00 to $1.05 per share. Previously, the company forecast earnings of $0.85 and $0.90 per share and net sales of $530 million to $540 million.
Analysts currently expect the company to earn $0.91 per share on revenues of $537.94 million for the fiscal year 2013.
James Debney, Smith & Wesson President and Chief Executive Officer, said, "Our strong fiscal second quarter financial performance reflects the ongoing successful execution of our strategic plan, and accordingly today we are increasing our full year fiscal 2013 financial guidance."
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