Gunmaker Smith & Wesson's second-quarter forecast disappoints

Thu Sep 5, 2013 6:41pm EDT

(Reuters) - Gunmaker Smith & Wesson Holding Corp (SWHC.O) forecast current-quarter results below analysts' estimates as it expects fewer days of production, and warned of higher operating expenses, sending its shares down more than 4 percent in extended trading.

The company expects operating expenses to go up about 20 percent in the second quarter from the preceding quarter, Chief Financial Officer Jeffrey Buchanan said on a conference call with analysts.

Smith & Wesson, which reported a higher profit for the first quarter, said it expects second-quarter income from continuing operations of 20 cents to 22 cents per share on sales of $135.0 million to $140.0 million.

Analysts on average were expecting earnings of 29 cents per share on revenue of $143 million, according to Thomson Reuters I/B/E/S.

The company, which sells guns under brands such as Smith & Wesson, M&P and Thompson/Center, said it would lose several days of production in the second quarter due to a shift to a new resource planning system.

The company, however, raised its full-year sales forecast to $610.0 million-$620.0 million from $605 million-$615 million.

"Management is doing all it can to increase capacity, as fast as it can, through outsourcing, while maintaining its high level of quality," Benchmark Research analyst Ronald Bookbinder said.

Smith & Wesson, which records higher sales in the early spring months, said it will now report only full-year backlog numbers and not provide quarterly updates.

FIRST-QUARTER RESULTS BEAT ESTIMATES

Fears of new gun controls in the wake of mass shootings such as the Newtown school massacre and the Aurora theater shooting have driven demand for guns especially among first-time buyers, including a growing number of women and pensioners.

The gunmaker reported better-than-expected quarterly results, helped by higher sales of its M&P brand firearms.

Net income rose to $26.5 million, or 40 cents per share, from $17.8 million, or 27 cents per share, a year earlier.

Revenue rose to $171.0 million in the quarter ended July 30.

Analysts on average had expected a profit of 36 cents per share on revenue of 165 million.

Smith & Wesson's shares, which have risen more than 30 percent this year, were down about 4.3 percent at $10.97 in after market trading.

(Reporting by Aditi Shrivastava and Chris Peters in Bangalore; Editing by Don Sebastian)

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