SPRINGFIELD, Mass., Dec. 6, 2012 /PRNewswire/ — Smith & Wesson Holding Corporation (NASDAQ Global Select: SWHC), a leader in firearm manufacturing and design, today announced financial results for the fiscal 2013 second quarter ended October 31, 2012.

Second Quarter Fiscal 2013 Financial Highlights

• Net sales from continuing operations for the second quarter were a record $136.6 million, up 48.0% from the second quarter last year.  The increase was 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.
• Gross profit for the second quarter was $48.5 million, or 35.5% of net sales, compared with gross profit of $24.6 million, or 26.7% of net sales, for the comparable quarter last year.  Increased sales volume of polymer pistols and modern sporting rifles positively impacted gross profit. In addition, gross margin last year reflected costs related to the consolidation of our Thompson/Center Arms business to Springfield, Massachusetts.
• Operating expenses for the second quarter were $21.9 million, or 16.0% of net sales, compared with operating expense of $21.2 million, or 22.9% of net sales, for the second quarter last year.  Increased profit sharing and incentive compensation expenses were almost entirely offset by savings resulting from an ongoing company-wide focus on cost reduction activities and the favorable impact in the current year of the Thompson/Center Arms consolidation that occurred in the prior year.
• Operating income from continuing operations for the second quarter was $26.6 million, or 19.5% percent of net sales, compared with operating income from continuing operations of $3.4 million, or 3.7% percent of net sales for the comparable quarter last year.
• Net income from continuing operations for the second quarter was $16.4 million, or $0.24 per diluted share, compared with net income from continuing operations of $948,000, or $0.01 per diluted share, for the second quarter last year.
• Non-GAAP Adjusted EBITDAS from continuing operations for the second quarter increased to $32.0 million compared with $10.2 million for the second quarter last year.
• At October 31, 2012, firearm backlog was $332.7 million, an increase of $182.8 million, or 122.0%, compared with the end of the second quarter last year, and a decrease of $59.7 million, or 15.2%, from the most recent sequential quarter.
• Operating cash flow of $4.5 million and net capital spending of $9.6 million for the second quarter resulted in free cash outflow of $5.1 million. The sequentially lower operating cash flow reflected hunting seasonality, in which some receivables are extended until after the hunting season, as well as $8.0 million in early employee profit sharing payments.  Profit sharing payments historically occurred in the company’s third quarter.   Despite the free cash outflow, cash and cash equivalents increased to $61.3 million at the end of the second quarter, primarily as a result of proceeds from the exercise of options.

The company also today announced 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.  The amount and timing of any repurchases will depend on a number of factors, including price, trading volume, general market conditions, legal requirements, and other factors. The repurchases may be made on the open market, in block trades, or in privately negotiated transactions.  Any shares of common stock repurchased under the program will be considered issued but not outstanding shares of the company’s common stock.

James Debney, Smith & Wesson Holding Corporation President and Chief Executive Officer, stated, “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. During the second quarter, consumers continued to demonstrate their desire for our products, driving strong demand for our M&P modern sporting rifles and polymer pistols, including our M&P Shield pistol designed for concealed carry and personal protection.  Increases in internal production capacity combined with improvements in our supply chain integration allowed us to offset the impact of the annual two-week shutdown as well as exceed our revenue and earnings guidance.  As always, we engaged in product innovation and marketing activities designed to support and expand our user base.  We unveiled several high-end pistols for our competitive and professional customers, including our M&P™ Pro Series C.O.R.E. pistols.  We also announced our presenting sponsorship of the NRA Women’s Network, a meaningful resource for the growing number of female gun enthusiasts of all ages and skill levels.”

Jeffrey D. Buchanan, Executive Vice President and Chief Financial Officer, stated, “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.  In addition, our Board of Directors has approved a program authorizing the repurchase of up to $20.0 million of our common stock. We believe that this program demonstrates the confidence that our Board and management team have in the future of the company and our ongoing commitment to enhancing stockholder value.”