Categories AlphaGraphs, Analysis, Industrials

Gun-maker American Outdoor Brands decimates estimates with Q3 earnings

Smith & Wesson gunmaker American Outdoor Brands (AOBC) posted its third-quarter 2019 results on Mar 7, post the closing bell. Quarterly net sales for AOBC slipped 2.9% to were $162.0 million. Non-GAAP net income was $8.9 million or $0.16 per diluted share.

However, the stock slipped slightly in after-market trade following the announcement — possibly on a downgrade in GAAP earnings outlook for fiscal 2019 by the company, along with the effect of Electro-Optics impairment on the currently reported quarter.

The ballistics parent incurred a net loss of $5.73 million or 10 cents in loss per diluted share, compared to the year-ago profit of $11.4 million or $0.21 per share.

According to Zacks Research, the ballistic giant was expected to generate earnings of 12 cents a share on revenue of $162.6 million. According to the company outlook announced earlier, American Outdoor Brands expected to post adjusted earnings between 9 to 13 cents per share on estimated revenue of $155-165 million.

American Outdoor Brands Q4 2019 earnings infographic

 

According to AOBC, “Based upon long-term sales forecasts for its Electro-Optics operating unit, the company has decided to restructure and combine that business with its Outdoor Products & Accessories operating unit in order to drive efficiencies and increase operating performance.”

“As a result of those forecasts, the company conducted an evaluation to assess the fair value of the Electro-Optics operating unit and, as a result, recorded a $10.4 million partial impairment of the goodwill in that operating unit during the third quarter,” read a company statement.

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CFO Jeff Buchanan weighed in, “For the nine months ending January 2019, we had positive operating cash flow of $20.7 million, as compared with cash outflow of $4.5 million for the nine months ending January 2018.”

“During the quarter, we had $25.0 million outstanding on our $350 million line of credit, which is expandable to $500 million,” the CFO added.

 

LOOKING FORWARD

For the fiscal fourth-quarter, the Smith & Wesson maker is looking at net sales of $162-172 million, generating an expected GAAP diluted income between 3 cents and 7 cents a share.

On a non-GAAP basis, AOBC is expected to earn $0.11-0.15 per diluted share in the upcoming quarter.

“The ramp up of initial operations at our new Logistics & Customer Services facility in Missouri is well underway and on track. This 633,000 square foot, state-of-the-art facility will serve as our centralized logistics, warehousing, and distribution operation for all of our products, facilitating our growth, enhancing our efficiencies, and allowing us to better serve customers across our entire organization,” CEO James Debney added.

 

 

 

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