EX-99.1 2 d883634dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

 

LOGO

Contact: Liz Sharp, VP Investor Relations

Smith & Wesson Holding Corp.

(413) 747-6284

lsharp@smith-wesson.com

Smith & Wesson Holding Corporation Reports

Third Quarter Fiscal 2015 Financial Results

SPRINGFIELD, Mass., March 3, 2015 — Smith & Wesson Holding Corporation (NASDAQ Global Select: SWHC), a leader in firearm manufacturing and design, today announced financial results for the fiscal 2015 third quarter ended January 31, 2015.

Third Quarter Fiscal 2015 Financial Highlights

 

    Total net sales for the third quarter were $130.6 million, a decrease of 10.5% from net sales of $145.9 million for the third quarter last year. Revenue exceeded the high end of the company’s stated guidance range as a result of order strength from distributors and key retailers in January 2015.

 

    Firearm division net sales for the third quarter totaled $124.5 million, a decrease of 14.7% from the comparable quarter last year. The company believes that during the quarter a portion of the consumer demand for handguns and long guns was satisfied with excess industry channel inventory. Accordingly, net sales of the company’s handguns declined $6.8 million, or 6.8%, and net sales of the company’s long guns declined $13.5 million, or 39.8%, from the comparable quarter last year.

 

    Accessories division net sales for the third quarter were $6.1 million, or 4.6% of total net sales. The company’s accessories division is comprised entirely of Battenfeld Technologies, Inc. (BTI), which was acquired on December 11, 2014. Therefore, accessories division net sales reflect only a partial quarter of revenue.

 

    Gross profit margin for the third quarter was 33.6% compared with gross profit margin of 40.2% for the third quarter last year. The decline was a result of reduced firearm manufacturing volumes, unfavorable product mix changes, increased promotions, and decreased fixed-cost absorption, partially offset by favorable spending relative to sales volumes. Amortization of the inventory step-up related to the acquisition of BTI caused a 1.4 percentage point reduction in gross profit. Excluding that accounting-related effect, gross margin for the quarter would have been 35.0%.

 

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    Operating expenses for the third quarter were $28.1 million, or 21.5% of total net sales, compared with operating expenses of $27.5 million, or 18.9% of net sales, for the third quarter last year when the company did not have an accessories division. Third quarter operating expenses now include those ongoing operating expenses related to BTI operations as well as $2.9 million in amortization of acquired intangibles and other acquisition-related costs.

 

    Operating income for the third quarter was $15.7 million, or 12.0% of total net sales, compared with $31.1 million, or 21.3% of net sales, for the third quarter last year. Excluding the $4.8 million in acquisition-related expenses noted above, total company operating income for the three months ended January 31, 2015 was $20.5 million, or 15.7% of total net sales.

 

    Income from continuing operations for the third quarter was $8.2 million, or $0.15 per diluted share, compared with $20.1 million, or $0.35 per diluted share, for the third quarter last year. Non-GAAP income from continuing operations for the third quarter was $0.20 per diluted share, compared with $0.35 per diluted share for the third quarter last year. (See attached Table 1—“Reconciliation of GAAP Financial Measures to Non-GAAP Financial Measures”.)

 

    Adjusted EBITDAS from continuing operations for the third quarter was $28.7 million, or 22.0% of net sales, compared with $37.5 million, or 25.7% of net sales, for the third quarter last year. (See attached Table 2—“Reconciliation of GAAP Income from Operations to Adjusted EBITDAS”.)

 

    Cash flow from operations was $33.4 million, although cash decreased by $5.4 million for the third quarter driven primarily by the $36.2 million of cash used for the BTI acquisition.

James Debney, Smith & Wesson Holding Corporation President and Chief Executive Officer, stated, “Our third quarter results reflect the successful navigation of a normalizing firearm market following an earlier consumer surge in firearm purchases, combined with the ongoing focused execution of our long-term strategy. Sales in our firearm division exceeded our updated expectations, reflecting solid orders from distributors and key retailers at the start of our annual industry show season in January. At the SHOT Show®, we continued to expand our product offering, providing consumers with some exciting new choices in our M&P® line of firearms as well as new hunting firearms from Smith & Wesson®, Performance Center®, and Thompson/Center Arms™. Our products remain popular with consumers and our internal data indicates that we remained the market leader in the handgun and the modern sporting rifle categories.”

“In our newly created accessories division, the acquisition of BTI in December 2014 provides us an avenue to expand our presence in firearms accessories. With a prolific product development capability and sophisticated infrastructure, BTI has established a track record of solid growth and highly accretive gross margins. Moreover, BTI has amassed a broad portfolio of hunting and shooting accessory brands that are popular with consumers. At SHOT Show in January, BTI unveiled 38 new products. We are excited about the opportunities for additional growth and profitability that our newly established accessories division will provide us.”

 

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Jeffrey D. Buchanan, Smith & Wesson Holding Corporation Executive Vice President and Chief Financial Officer, stated, “We were pleased that inventories in our firearm division declined by $14.1 million in the quarter. During the quarter, we used $100.0 million of our credit line combined with $36.2 million of cash on hand for the acquisition of BTI. At the end of the quarter, we had $75.0 million available to us associated with the unused portion of the accordion feature of our line of credit and $59.0 million in cash. Accordingly, our balance sheet remains strong as we enter our fiscal fourth quarter, which seasonally is our strongest quarter for cash generation.”

Financial Outlook

For the fourth quarter of fiscal 2015, the company expects net sales to be between $162 million and $166 million and earnings per diluted share from continuing operations to be between $0.24 and $0.26. On a non-GAAP basis, the company expects earnings per diluted share from continuing operations to be between $0.29 and $0.31. (See attached Table 3—“Reconciliation of Expected GAAP Earnings per Share from Continuing Operations to Expected Non-GAAP Earnings per Share from Continuing Operations”.)

For full fiscal 2015, the company is raising its guidance and now expects net sales to be between $532 million and $536 million and earnings per diluted share from continuing operations to be between $0.75 and $0.77. On a non-GAAP basis, the company expects earnings per diluted share from continuing operations to be between $0.87 and $0.89. (See attached Table 3—“Reconciliation of Expected GAAP Earnings per Share from Continuing Operations to Expected Non-GAAP Earnings per Share from Continuing Operations”.)

Conference Call and Webcast

The company will host a conference call and webcast today, March 3, 2015, to discuss its third quarter fiscal 2015 financial and operational results. Speakers on the conference call will include James Debney, President and Chief Executive Officer, and Jeffrey D. Buchanan, Executive Vice President and Chief Financial Officer. The conference call may include forward-looking statements. The conference call and webcast will begin at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time). Those interested in listening to the call via telephone may call directly at (866) 825-3209 and reference conference code 40677276. No RSVP is necessary. The conference call audio webcast can also be accessed live and for replay on the company’s website at www.smith-wesson.com, under the Investor Relations section. The company will maintain an audio replay of this conference call on its website for a period of time after the call. No other audio replay will be available.

Reconciliation of U.S. GAAP to Non-GAAP Financial Measures

In this press release, certain non-GAAP financial measures, including “non-GAAP income from continuing operations” and “Adjusted EBITDAS” as well as gross margin, operating expenses, operating income, and earnings per share from continuing operations excluding certain costs, expenses, and tax effects are presented. From time-to-time, the company considers and uses these supplemental measures of operating performance in order to provide the reader with an improved understanding of underlying performance trends. The company believes it is useful for itself and the reader to review, as applicable, both GAAP measures that include: (i) fair value inventory step-up and backlog expense, (ii) amortization of acquired intangible assets, (iii) acquisition-related costs, (iv) debt extinguishment

 

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costs, (v) the tax effect of non-GAAP adjustments, (vi) interest expense, (vii) income taxes, (viii) depreciation and amortization, (ix) stock-based compensation expense, and (x) DOJ and SEC costs, and the non-GAAP measures that exclude such information. The company presents these non-GAAP measures because it considers them an important supplemental measure of its performance. The company’s definition of these adjusted financial measures may differ from similarly named measures used by others. The company believes these measures facilitate operating performance comparisons from period to period by eliminating potential differences caused by the existence and timing of certain expense items that would not otherwise be apparent on a GAAP basis. These non-GAAP measures have limitations as an analytical tool and should not be considered in isolation or as a substitute for the company’s GAAP measures. The principal limitations of these measures are that they do not reflect the company’s actual expenses and may thus have the effect of inflating its financial measures on a GAAP basis.

About Smith & Wesson

Smith & Wesson Holding Corporation (NASDAQ Global Select: SWHC) is a U.S.-based leader in firearm manufacturing and design, delivering a broad portfolio of quality firearms, related products, and training to the global military, law enforcement, and consumer markets. The company’s firearm division brands include Smith & Wesson®, M&P®, and Thompson/Center Arms™. As an industry leading manufacturer of shooting, reloading, gunsmithing and gun cleaning supplies, the company’s accessories division produces innovative, top quality products under Battenfeld Technologies, Inc., including Caldwell® Shooting Supplies, Wheeler® Engineering, Tipton® Gun Cleaning Supplies, Frankford Arsenal® Reloading Tools, Lockdown® Vault Accessories, and Hooyman™ Premium Tree Saws. Smith & Wesson facilities are located in Massachusetts, Maine, Connecticut, and Missouri. For more information on Smith & Wesson, call (800) 331-0852 or log on to www.smith-wesson.com.

Safe Harbor Statement

Certain statements contained in this press release may be deemed to be forward-looking statements under federal securities laws, and we intend that such forward-looking statements be subject to the safe-harbor created thereby. Such forward-looking statements include our belief that a portion of the consumer demand for handguns and long guns was satisfied with excess industry channel inventory; our belief that the firearm market is normalizing; our belief regarding our ongoing focused execution of our long-term strategy; our belief that we are providing consumers with exciting new firearm choices; our belief that our products remain popular with consumers and that we remained the market leader in the handgun and the modern sporting rifle categories; our belief that BTI provides us an avenue to expand our presence in firearms accessories; our belief that BTI has prolific product development capability and sophisticated infrastructure; our excitement regarding the opportunities for growth and profitability from our new accessories division; our belief that our balance sheet remains strong; our experience that our fiscal fourth quarter is seasonally our strongest quarter for cash generation; our expectations for net sales, GAAP earnings per diluted share from continuing operations, and non-GAAP earnings per diluted share from continuing operations for the fourth quarter of fiscal 2015 as well as net sales, GAAP earnings per diluted share from continuing operations, and non-GAAP earnings per diluted share from continuing operations for fiscal 2015. We caution that these statements are qualified by important factors that could cause actual results to differ materially from those reflected

 

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by such forward-looking statements. Such factors include the demand for our products; the costs and ultimate conclusion of certain legal matters; the state of the U.S. economy in general and the firearm industry in particular; general economic conditions and consumer spending patterns; the potential for increased regulation of firearms and firearm-related products; speculation surrounding fears of terrorism and crime; our growth opportunities; our anticipated growth; our ability to increase demand for our products in various markets, including consumer, law enforcement, and military channels, domestically and internationally; the position of our hunting products in the consumer discretionary marketplace and distribution channel; our penetration rates in new and existing markets; our strategies; our ability to introduce new products; the success of new products; our ability to expand our markets; our ability to integrate acquired businesses in a successful manner; the success of our partnership with General Dynamics Ordnance and Tactical Systems; the general growth of our firearm accessories business; difficulties in the integration of BTI with our company; the potential for cancellation of orders from our backlog; and other risks detailed from time to time in our reports filed with the SEC, including our Annual Report on Form 10-K for the fiscal year ended April 30, 2014.

 

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SMITH & WESSON HOLDING CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

 

     For the Three Months Ended     For the Nine Months Ended  
     January 31, 2015     January 31, 2014     January 31, 2015     January 31, 2014  
     (In thousands, except per share data)  

Net sales

   $ 130,550     $ 145,881     $ 370,865     $ 456,195  

Cost of sales

     86,726       87,230       243,083       266,834  
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

  43,824     58,651     127,782     189,361  
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating expenses:

Research and development

  1,901     1,456     4,830     4,119  

Selling and marketing

  10,088     8,921     26,884     24,150  

General and administrative

  16,136     17,154     43,765     53,184  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

  28,125     27,531     75,479     81,453  
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

  15,699     31,120     52,303     107,908  
  

 

 

   

 

 

   

 

 

   

 

 

 

Other (expense)/income:

Other (expense)/income, net

  16     (6   (1   35  

Interest income

  240     33     284     143  

Interest expense

  (3,192   (1,771   (8,090   (10,490
  

 

 

   

 

 

   

 

 

   

 

 

 

Total other (expense)/income, net

  (2,936   (1,744   (7,807   (10,312
  

 

 

   

 

 

   

 

 

   

 

 

 

Income from continuing operations before income taxes

  12,763     29,376     44,496     97,596  

Income tax expense

  4,585     9,319     16,611     33,868  
  

 

 

   

 

 

   

 

 

   

 

 

 

Income from continuing operations

  8,178     20,057     27,885     63,728  

Discontinued operations:

Loss from operations of discontinued security solutions division

  (88   (75   (245   (349

Income tax benefit

  (31   (803   (85   (870
  

 

 

   

 

 

   

 

 

   

 

 

 

(Loss)/income from discontinued operations

  (57   728     (160   521  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

$ 8,121   $ 20,785   $ 27,725   $ 64,249  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income per share:

Basic - continuing operations

$ 0.15   $ 0.36   $ 0.52   $ 1.07  
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic - total

$ 0.15   $ 0.37   $ 0.51   $ 1.07  
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted - continuing operations

$ 0.15   $ 0.35   $ 0.50   $ 1.03  
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted - total

$ 0.15   $ 0.36   $ 0.50   $ 1.04  
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average number of common shares outstanding:

Basic

  53,724     55,583     54,033     59,815  

Diluted

  54,859     57,024     55,258     62,065  

 

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SMITH & WESSON HOLDING CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

     As of  
     January 31, 2015     April 30, 2014  
     (In thousands, except par value and share data)  
ASSETS   

Current assets:

    

Cash and cash equivalents

   $ 59,010     $ 68,860  

Accounts receivable, net of allowance for doubtful accounts of $1,013 on January 31, 2015 and $844 on April 30, 2014

     61,030       55,890  

Inventories

     97,021       86,742  

Prepaid expenses and other current assets

     8,164       5,958  

Deferred income taxes

     15,882       17,094  

Income tax receivable

     1,834       4,627  
  

 

 

   

 

 

 

Total current assets

  242,941     239,171  
  

 

 

   

 

 

 

Property, plant, and equipment, net

  135,478     120,440  

Intangibles, net

  76,050     3,425  

Goodwill

  76,067     —    

Other assets

  16,681     18,467  
  

 

 

   

 

 

 
$ 547,217   $ 381,503  
  

 

 

   

 

 

 
LIABILITIES AND STOCKHOLDERS’ EQUITY   

Current liabilities:

Accounts payable

$ 20,866   $ 37,688  

Accrued expenses

  16,817     16,051  

Accrued payroll

  7,003     15,816  

Accrued taxes other than income

  4,872     5,359  

Accrued profit sharing

  3,750     11,060  

Accrued product/municipal liability

  799     1,056  

Accrued warranty

  5,093     5,513  
  

 

 

   

 

 

 

Total current liabilities

  59,200     92,543  
  

 

 

   

 

 

 

Deferred income taxes

  32,697     11,418  
  

 

 

   

 

 

 

Notes payable

  275,000     100,000  
  

 

 

   

 

 

 

Other non-current liabilities

  10,743     10,719  
  

 

 

   

 

 

 

Total liabilities

  377,640     214,680  
  

 

 

   

 

 

 

Commitments and contingencies

Stockholders’ equity:

Preferred stock, $.001 par value, 20,000,000 shares authorized, no shares issued or outstanding

  —       —    

Common stock, $.001 par value, 100,000,000 shares authorized, 69,324,412 shares issued and 53,761,790 shares outstanding on January 31, 2015 and 68,809,986 shares issued and 55,352,679 shares outstanding on April 30, 2014

  69     69  

Additional paid-in capital

  216,294     211,225  

Retained earnings

  125,464     97,739  

Accumulated other comprehensive income

  73     73  

Treasury stock, at cost (15,562,622 shares on January 31, 2015 and 13,457,307 shares on April 30, 2014)

  (172,323   (142,283
  

 

 

   

 

 

 

Total stockholders’ equity

  169,577     166,823  
  

 

 

   

 

 

 
$ 547,217   $ 381,503  
  

 

 

   

 

 

 

 

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SMITH & WESSON HOLDING CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

     For the Nine Months Ended  
     January 31, 2015     January 31, 2014  
     (In thousands)  

Cash flows from operating activities:

    

Net income

   $ 27,725     $ 64,249  

Adjustments to reconcile net income to net cash provided by operating activities:

    

Amortization and depreciation

     21,196       16,066  

(Gain)/loss on sale/disposition of assets

     (54     52  

Provisions for losses on accounts receivable

     213       80  

Deferred income taxes

     1,363       —    

Stock-based compensation expense

     4,249       6,651  

Changes in operating assets and liabilities:

    

Accounts receivable

     5,139       (6,654

Inventories

     5,430       (23,809

Prepaid expenses and other current assets

     (1,787     (1,869

Income tax receivable/(payable)

     3,186       (5,576

Accounts payable

     (18,839     14,157  

Accrued payroll

     (10,078     (1,083

Accrued taxes other than income

     (496     13  

Accrued profit sharing

     (7,310     (1,899

Accrued expenses

     300       (5,204

Accrued product/municipal liability

     (257     (196

Accrued warranty

     (420     (483

Other assets

     (84     (141

Other non-current liabilities

     471       (129
  

 

 

   

 

 

 

Net cash provided by operating activities

  29,947     54,225  
  

 

 

   

 

 

 

Cash flows from investing activities:

Payments for the net assets of Tri Town Precision Plastics, Inc.

  (23,805   —    

Payments to acquire Battenfeld Technologies, Inc., net of cash acquired

  (136,152   —    

Refunds of/(payments for) deposits on machinery & equipment

  1,398     (12,415

Receipts from note receivable

  60     57  

Payments to acquire patents and software

  (171   (135

Proceeds from sale of property and equipment

  263     101  

Payments to acquire property and equipment

  (24,240   (36,283
  

 

 

   

 

 

 

Net cash used in investing activities

  (182,647   (48,675
  

 

 

   

 

 

 

Cash flows from financing activities:

Proceeds from loans and notes payable

  175,000     101,584  

Cash paid for debt issue costs

  (2,483   (3,786

Payments on capital lease obligation

  (447   (447

Payments on notes payable

  —       (44,824

Payments to acquire treasury stock

  (30,040   (115,887

Proceeds from exercise of options to acquire common stock, including employee stock purchase plan

  1,664     2,026  

Payroll taxes paid as a result of restricted stock unit withholdings

  (1,124   (1,087

Excess tax benefit of stock-based compensation

  280     1,672  
  

 

 

   

 

 

 

Net cash provided by/(used in) financing activities

  142,850     (60,749
  

 

 

   

 

 

 

Net decrease in cash and cash equivalents

  (9,850   (55,199

Cash and cash equivalents, beginning of period

  68,860     100,487  
  

 

 

   

 

 

 

Cash and cash equivalents, end of period

$ 59,010   $ 45,288  
  

 

 

   

 

 

 

Supplemental disclosure of cash flow information

Cash paid for:

Interest

$ 8,139   $ 4,600  

Income taxes

  12,000     29,157  

 

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SMITH & WESSON HOLDING CORPORATION AND SUBSIDIARIES

TABLE 1

RECONCILIATION OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES

(Dollars in thousands, except per share data)

(Unaudited)

 

    For the Three Months Ended January 31,     For the Nine Months Ended January 31,  
    2015     2014     2015     2014  
    $     % of Sales     $     % of Sales     $     % of Sales     $     % of Sales  

GAAP gross profit

  $ 43,824        33.6   $  58,651        40.2   $ 127,782        34.5   $ 189,361        41.5

Fair value inventory step-up and backlog expense

    1,865       1.4     —          0.0     1,983       0.5     —          0.0
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP gross profit

  $ 45,689        35.0   $  58,651        40.2   $ 129,765        35.0   $ 189,361        41.5
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

GAAP operating expenses

  $ 28,125        21.5   $  27,531        18.9   $ 75,479        20.4   $ 81,453        17.9

Amortization of acquired intangible assets

    (1,327     -1.0     —          0.0     (1,424     -0.4     —          0.0

Acquisition-related costs

    (1,584     -1.2     —          0.0     (2,042     -0.6     —          0.0

Debt extinguishment costs

    —          0.0     —          0.0     —          0.0     (5,080     -1.1
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP operating expenses

  $ 25,214        19.3   $  27,531        18.9   $ 72,013        19.4   $ 76,373        16.7
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

GAAP operating income from continuing operations

  $ 15,699        12.0   $  31,120        21.3   $ 52,303        14.1   $ 107,908        23.7

Fair value inventory step-up and backlog expense

    1,865       1.4     —          0.0     1,983       0.5     —          0.0

Amortization of acquired intangible assets

    1,327       1.0     —          0.0     1,424       0.4     —          0.0

Acquisition-related costs

    1,584       1.2     —          0.0     2,042       0.6     —          0.0

Debt extinguishment costs

    —          0.0     —          0.0     —          0.0     5,080       1.1
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP operating income from continuing operations

  $ 20,475        15.7   $  31,120        21.3   $ 57,752        15.6   $ 112,988        24.8
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

GAAP income from continuing operations

  $ 8,178        6.3   $  20,057        13.7   $ 27,885        7.5   $ 63,728        14.0

Fair value inventory step-up and backlog expense

    1,865       1.4     —          0.0     1,983       0.5     —          0.0

Amortization of acquired intangible assets

    1,327       1.0     —          0.0     1,424       0.4     —          0.0

Acquisition-related costs

    1,584       1.2     —          0.0     2,042       0.6     —          0.0

Debt extinguishment costs

    —          0.0     —          0.0     —          0.0     5,080       1.1

Tax effect of non-GAAP adjustments

    (1,767     -1.4     —          0.0     (2,016     -0.5     (1,880     -0.4
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP income from continuing operations

  $ 11,187        8.6   $  20,057        13.7   $ 31,318        8.4   $ 66,928        14.7
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

GAAP income from continuing operations per share - diluted

  $ 0.15        $  0.35        $ 0.50        $ 1.03     

Fair value inventory step-up and backlog expense

    0.03          —            0.04          —       

Amortization of acquired intangible assets

    0.02          —            0.03          —       

Acquisition-related costs

    0.03          —            0.04          —       

Debt extinguishment costs

    —            —            —            0.08     

Tax effect of non-GAAP adjustments

    (0.03       —            (0.04       (0.03  
 

 

 

     

 

 

     

 

 

     

 

 

   

Non-GAAP income from continuing operations per share - diluted

  $ 0.20        $  0.35        $ 0.57        $ 1.08     
 

 

 

     

 

 

     

 

 

     

 

 

   

 

Page 9 of 11


SMITH & WESSON HOLDING CORPORATION AND SUBSIDIARIES

TABLE 2

RECONCILIATION OF GAAP INCOME FROM OPERATIONS TO ADJUSTED EBITDAS

(In thousands)

(Unaudited)

 

     For the Three Months Ended January 31, 2015      For the Three Months Ended January 31, 2014  
     Firearm      Discontinued     Total      Continuing     Discontinued     Total  

Income/(loss) from operations

   $ 8,178       $ (57   $ 8,121       $ 20,057      $ 728      $ 20,785   

Interest expense

     3,192        —          3,192         1,771        —          1,771   

Income tax expense/(benefit)

     4,585        (31     4,554         9,319        (803     8,516   

Depreciation and amortization

     7,819        —          7,819        4,673       —          4,673  

Stock-based compensation expense

     1,448        —          1,448        1,877       —          1,877  

Acquisition-related costs

     1,584        —          1,584        —          —          —     

Fair value inventory step-up and backlog expense

     1,865        —          1,865        —          —          —     

DOJ/SEC costs

     13        —          13        (237     —          (237
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Adjusted EBITDAS

$ 28,684    $ (88 $ 28,596    $ 37,460    $ (75 $ 37,385   
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 
     For the Nine Months Ended January 31, 2015      For the Nine Months Ended January 31, 2014  
     Firearm      Discontinued     Total      Continuing     Discontinued     Total  

Income/(loss) from operations

   $ 27,885       $ (160   $ 27,725       $ 63,728      $ 521      $ 64,249   

Interest expense

     8,090        —          8,090         10,490        —          10,490   

Income tax expense/(benefit)

     16,611        (85     16,526         33,868        (870     32,998   

Depreciation and amortization

     20,139        —          20,139        14,363       —          14,363  

Stock-based compensation expense

     4,248        —          4,248        6,651       —          6,651  

Acquisition-related costs

     2,042        —          2,042        —          —          —     

Fair value inventory step-up and backlog expense

     1,983        —          1,983        —          —          —     

DOJ/SEC costs

     708        —          708        445       —          445  
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Adjusted EBITDAS

$ 81,706    $ (245 $ 81,461    $ 129,545    $ (349 $ 129,196   
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

 

Page 10 of 11


SMITH & WESSON HOLDING CORPORATION AND SUBSIDIARIES

TABLE 3

RECONCILIATION OF EXPECTED GAAP EARNINGS PER SHARE FROM CONTINUING OPERATIONS TO EXPECTED NON-GAAP EARNINGS PER SHARE FROM CONTINUING OPERATIONS

(Unaudited)

 

                                                   
     Range for the Three Months
Ended April 30, 2015
    Range for the Year
      Ended April 30, 2015      
 

GAAP income from continuing operations per share - diluted

   $ 0.24      $ 0.26      $ 0.75      $ 0.77   

Fair value inventory step-up and backlog expense

     0.04        0.04        0.08        0.08   

Amortization of acquired intangible assets

     0.04        0.04        0.07        0.07   

Acquisition-related costs

     —          —          0.04        0.04   

Tax effect of non-GAAP adjustments

     (0.03     (0.03     (0.07     (0.07
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP income from continuing operations per share - diluted

$ 0.29    $ 0.31    $ 0.87    $ 0.89   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

Page 11 of 11