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Smith & Wesson: Guns & Profit

Getting rid of Walther, grabbing market share and selling to the professional market all contributed to increased sales and gross profit for Smith & Wesson in the quarter ending August 31, 2013 according to company officials.

For consumers, the best news might have been the company’s focus to eliminate the order backlog and the goal to move from operating at capacity to operating at demand.

So, what new guns does the company have in the pipeline, and what role will the state of Illinois play in the future of Smith & Wesson?  Let’s take a look at the past quarter and gaze into the future with the insights gained from the company’s latest earnings call.

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Info on Ruger’s New Plant and New Guns

Ruger Plant ExpansionRuger’s CEO, Michael Fifer, gave additional details today about the company’s pending purchase of a third manufacturing plant, and perhaps provided some insight into what new guns will be made there. The comments were made by Fifer during Ruger’s Q2 2013 earnings conference call.

The Mayodan facility is “ideally suited for what we want to do,” said Fifer.  During the call, Fifer stated there was not a lot of work that needs to be done to the facility to bring it online.  Installing the equipment for heat treating and bluing were the only significant projects mentioned by Fifer.

The importance of the new plant cannot be understated if Ruger’s growth is to continue.

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Ruger Posts 79% Earnings Increase

Ruger logoSturm, Ruger & Company announced net sales of nearly $180 million for the quarter ending June 30, which represents an earnings increase of 79% compared to the same quarter in 2012.  The company reported fully diluted earnings of $1.63/share compared to 91¢/share for the same quarter last year.

From January 1 – June 29, 2013, the company reported net sales of more than $335 million – up more than $100 million when compared to the first half of 2012.

Ruger attributed new product introductions as a “significant component” of the sales growth, citing new product sales represented $102.7 million of firearms sales in the first half of 2013.  The LC380 and SR45 pistols were specifically mentioned as being part of that sales growth.

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Smith & Wesson Gross Profit Up 35.5%

Smith Wesson LogoSmith & Wesson released the company’s financial results for the quarter ending October 31, 2012.  For the second quarter (fiscal 2013), Smith & Wesson posted a gross profit of more than $48 million, representing an increase of 35.5% over the second quarter of the previous year.

Net sales for the quarter were up $136.6 million, representing an incredible increase of 48% over the quarter from the prior year.  Keep in mind that the quarter ended before President Obama was re-elected in November.

S&W noted in their results that they have increased their production capacity and improved their supply chain efficiency.  Even with these improvements, the company continued to receive more orders than they could produce.  In fact, the order backlog increased 122% compared to the second quarter of 2012.  The total value of the backlog orders is $332.7 million.  I wonder how much that jumped after the election?

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Smith & Wesson Income and Sales Above Expectations

Smith Wesson LogoSmith & Wesson, one of just a few publicly traded gun companies, released a statement announcing preliminary sales and profit data for the second quarter of fiscal year 2013.  The numbers were a significant improvement compared to the same time one year ago and beat previous expectations for this quarter.

According to S&W, net sales were up $44 million, or about 48%, compared to the second quarter of fiscal year 2012.  Net income is expected to be between $0.23 and $0.24 per diluted share, which is above the company’s prior guidance of $0.19 to $0.21, and well above last year’s $0.01 per share.