Gun maker Smith & Wesson Holding Corp. on Thursday posted a fiscal second-quarter profit, reversing a year-ago loss, as sales rose 49 percent, reflecting a jump in sales of handguns and tactical rifles and the acquisition of a security company.
But a weak sales outlook for the upcoming quarter sent shares tumbling after-hours.
Net income for the three months ended Oct. 31 was $13.3 million, or 21 cents per share, compared with a loss of $76.2 million, or $1.62 per share, for the second quarter of fiscal 2009. The per-share figures reflect 42 percent more shares outstanding in the current quarter.
The results included an accounting gain of 11 cents per share related to the July acquisition of its security unit, Universal Safety Response. Excluding that item, and a non-cash impairment charge related to another acquisition, the company's quarterly profit totaled a penny per share.
Sales for the quarter rose 49 percent to $108.8 million, from $35.6 million last year. Firearms sales rose 31 percent, driven by big gains in sales of pistols, revolvers and tactical rifles. Sales of hunting rifles were roughly flat year-over-year.
Analysts polled by Thomson Reuters, on average, expected a profit of 9 cents per share on sales of $104.9 million.
For the fiscal third quarter, Smith & Wesson said it expects sales to be between $90 million and $95 million, below analysts' average estimate of $104.8 million.
Smith & Wesson shares plunged in aftermarket electronic trading. The stock, which closed the regular session down 7.2 percent at $5.27, lost 67 cents, or 12.7 percent, to $4.60 after hours.
The company said the third-quarter outlook reflects more normal levels of demand and production versus the spike it saw early in the period. It also noted that third-quarter revenue is hurt by an annual two-week holiday shutdown at its three firearms manufacturing factories, and seasonal declines in hunting.