Firearms maker Smith & Wesson Holding Corp. (SWHC), Tuesday reported a drop in profit for the third quarter, as revenues and margins declined reflecting lower sales of long guns. However, earnings for the quarter came in ahead of Wall Street estimates as did revenues.
Moving ahead, the company boosted its outlook for the full-year 2015, while detailing a strong guidance for the fourth quarter. Shares of Smith $ Wesson gained over 10 percent in after-hours trade on the Nasdaq.
Springfield, Massachusetts-based Smith & Wesson's third-quarter profit dropped to $8.1 million or $0.15 per share from $20.8 million or $0.36 per share a year ago.
Excluding items, adjusted earnings from continuing operations for the third quarter dropped to $0.20 per share from $0.35 per share last year. Analysts polled by Thomson Reuters expected the company to earn $0.11 per share for the third quarter. Analysts' estimates typically exclude special items.
Smith & Wesson, which other than its namesake brand also sells M&P and Thompson/Center Arms, said sales for the third quarter fell 10.5 percent to $130.6 million from $145.9 million a year earlier. Analysts had a consensus revenue estimate of $123.32 million for the quarter.
The company said revenues exceeded its guidance reflecting the order strength from distributors and key retailers in January 2015. Sales of long guns, primarily modern sporting rifles, plunged 39.8 percent, while handgun sales declined 6.8 percent.
Gross margin, or percentage of sales left after deducting production costs, dropped sharply to 33.6 percent from 40.2 percent last year. Operating expenses, as a percent of sales, rose to 21.5 percent from 18.9 percent last year.
Looking forward to the fourth quarter, the company expects adjusted earnings from continuing operations of $0.29 to $0.31 per share and sales of $162 million to $166 million. Analysts currently expect earnings of $0.25 per share on revenue of $159.43 million for the quarter.
For the fiscal year 2015, the company now sees adjusted earnings from continuing operations of $0.87 to $0.89 per share and sales of $532 million to $536 million. Analysts currently expect earnings of $0.70 per share on revenue of $526.89 million for 2015.
Earlier, the company projected adjusted earnings from continuing operations of $0.74 to $0.78 per share and sales of $526.0 million to $530.0 million.
SWHC closed Tuesday's trading at $13.05, down $0.59 or 4.33%, on the Nasdaq. The stock, however, gained $1.34 or 10.27% in the after-hours trade.
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