Smith & Wesson Profit Rises, Lifts Outlook; Shares Up 7%

(RTTNews) - Firearms maker Smith & Wesson Holding Corp. (SWHC), Tuesday reported an increase in profit for the third quarter, as revenues grew reflecting demand for handguns. Earnings and revenues for the quarter easily beat analysts' estimates. Moving ahead, the company also lifted its full year 2014 outlook, sending shares up seven percent in the after-hours trading.

The Springfield, Massachusetts-based company's third-quarter profit rose to $20.8 million or $0.36 per share from $14.6 million or $0.22 per share last year.

Income from continuing operations for the third quarter was $20.1 million or $0.35 per share. Analysts polled by Thomson Reuters expected earnings of $0.29 per share for the third quarter.

Smith & Wesson, which other than its namesake brand also sells M&P and Thompson/Center Arms, said revenues for the third quarter rose 7.1 percent to $145.9 million from $136.2 million a year ago. Analysts expected revenues of $142.7 million for the quarter.

Handgun sales, which include sales of the company's popular M&P pistols, grew 29.9 percent from the year ago quarter.

Gross margins, or percentage of sales left after deducting production costs, advanced to 40.2 percent from 36.6 percent a year ago. Margins were driven largely by favorable product mix, absorption, and manufacturing efficiencies, as well as lower promotions and the absence of Walther product sales.

Commenting on the results, CEO James Debney said, "Our performance for the third quarter of fiscal 2014 reflected the ongoing successful execution of our growth strategy."

Looking forward to the fourth quarter, the company expects earnings from continuing operations of $0.37 to $0.40 per share and net sales of $159.0 million to $164.0 million. Analysts currently expect earnings of $0.36 per share on revenue of $164.54 million for the fourth quarter.

For full year 2014, the company now sees earnings from continuing operations of $1.39 to $1.42 per share and sales of $615.0 million to $620.0 million. Analysts currently expect earnings of $1.33 per share on revenues of $617.49 million for 2014.

Earlier, the company predicted earnings of $1.30 to $1.35 per share and sales of $610.0 million to $620.0 million.

SWHC closed Tuesday's trading at $11.80, up $0.18 or 1.55%, on the Nasdaq. The stock further gained $0.83 or 7.03%.