The Smith & Wesson quarterly report for the period ending July 31, 2011 was filed yesterday. Â Reading through these reports offers some amazing insights into the goings-on of a publicly traded company.
The reports can also make your eyes glaze over, and suck the will to live from you. Â So to help you avoid such a fate, here are a few of the highlights.
For the quarter ending July 31, 2011, Smith & Wesson net product and services sales were up 18% ($14 million) to $91.7 million as compared to the same quarter the previous year.
S&W reported a “significant increase” in the sales from their Sigma line of handguns, which they attributed to the company’s “price repositioning strategy.” Â Sigma handguns in both 9mm and .40 S&W are typically found in the $270-290 price range. At these prices, the Sigma offers an incredible value to the shooter on a budget.
The Bodyguard line of handguns also was profitable for Smith & Wesson during the last quarter. Though exact figures were not listed, S&W cited the Bodyguard line as having “continued market demand.” Large police agencies adopting the Bodyguard 380 as a back up gun certainly help.
No sales numbers were offered, but the introduction of the Governor revolver was mentioned as a reason for increased quarterly sales. The Governor started shipping to retailers in May.
The Sport model of AR-15 “significantly” increases sales in the modern sporting rifle line for S&W. Smith & Wesson stated the rifle “hits attractive price points.” With an MSRP of only $739, I have seen rifles go for less than $650 locally.
Smith & Wesson made a serious effort to re-establish the company in the law enforcement market with the introduction of the M&P line.Â Sales of firearms to state and local agencies were up 1.7% to $5.7 million.Â Sales to the federal government were 61.5% higher to $1.7 million.Â Much of the increase to the federal government is likely associated with the BATFE selection of the M&P as one of two firearms being authorized for carry (the Glock being the other).
Large orders from Australia and Taiwan increased S&W’s international sales by 26.7% to $5.6 million.
Net Product & Services Sales
- Handguns – $53.8 million, up 26.6%
- Modern Sporting Rifles – $14.9 million, up 114.4%
Smith & Wesson noted that Walther America sales were down.Â Increased competition in the small frame and concealed carry markets around the .380 ACP and .22 LR cartridges were cited as a cause of lagging Walther sales.
S&W stated the ongoing move of its hunting product line from the Rochester, NH facility to the Springfield, MA plant as a major reason why the company experienced a sales decline in this sector.Â Black powder sales, along with productivity and efficiency issues were specifically cited.
Net Product & Services Sales
- Walther – $6.7 million, a decrease of 34.4%
- Hunting Firearms – $6.7 million, a decrease of 23.5%
Under the operating expenses section of the report, S&W decreased overall administrative and marketing expenses by more than $1.1 million and increased research and development by almost 50% to nearly $1.6 million.
The effective tax rate for the quarter was a whopping 40.05%.
It would appear that Smith & Wesson has had a great deal of success with the aggressive pricing strategy for the Sigma line of pistols. Â Because of this, I would expect to see those guns remain in the S&W stable for a number of years still.
The really interesting thing is S&W has significantly increased its R&D expenditures in the quarter, suggesting they are cooking up some new toys. Â It could be an interesting SHOT Show.
The information presented in this article is NOT intended as financial advice. Â I am NOT someone you should ever listen to for financial advice. Â I do NOT offer the above information for anything other than entertainment. Â If you use this article to assist you in makingÂ financialÂ decisions, you are a fool. Â If you have an interest in making an investment in Smith & Wesson, you should go read the report for yourself, talk to an experienced investment advisor and forget you ever were here.
2 replies on “Smith & Wesson Quarterly Report Offers Insights”
Informative report! S&W M&P doing well doesnt surprise me – Sigma does. I guess in tough financial times even a dud like Sigma can shine. Next thing you’ll tell us is Jennings is surging!
Reliable, pretty, cheap – pick any two, right? The Sigma really does fill a niche: reliable handgun from a major manufacturer with an inexpensive price tag. The triggers may be less than desired, but they go “bang” when you need them to.
Speaking of Jennings…they have standards: http://blog.robballen.com/2011/08/29/p5055-the-road-to-sponsorship.post