Smith & Wesson’s first time gun buyers drive 102% sales jump

More than 23 million firearms were sold throughout last year

Firearms sales continued to be a sector that has not sagged during the pandemic with Springfield, Massachusetts-based gun manufacturer Smith & Wesson reporting a 102% sales jump in its fiscal third quarter to $257.6 million, compared with $127.4 million during the same period a year ago.

The company attributed the dramatic sales increase to a rise in first-time gun buyers.

"Over the past year, millions of our fellow Americans from all walks of life have chosen to empower themselves by exercising their 2nd Amendment rights for the first time," President and Chief Executive Officer, Mark Smith, said in Thursday's earnings release. "Our loyal employees have risen to the challenge – delivering over 1.8 million units in the first three quarters of our fiscal year alone, ensuring that these new members of the shooting sports community were able to choose the highest quality, innovative firearms that Smith & Wesson has been known for since 1852."

The company reported net income of $62.4 million, or $1.12 per diluted share, compared with $7.8 million, or $0.14 per diluted share, for the comparable quarter last year. Smith & Wesson reported a gross margin of 42.6%, compared with 28% for the same quarter last year.

GUN SALES SLOWN DOWN IN FEBRUARY, SHOW 10% JUMP YEAR-OVER-YEAR 

Smith & Wesson's record-breaking financial performance in the quarter, which ended Jan. 31, 2021, allowed it to generate $60 million in operational cash, complete a $50 million dollar share-repurchase program, and pay its second-quarter dividend.

Chief Financial Officer Deana McPherson said the company's board has authorized a new $100 million dollar share repurchase program and a $0.05 per share dividend to stockholders as of March 17, with payment to be made on March 31.

Ticker Security Last Change Change %
SWBI SMITH & WESSON BRANDS 19.05 +0.14 +0.74%

Smith & Wesson shares surged nearly 5% in after-hours trading on the announcement Thursday.

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The announcement comes as U.S. gun sales skyrocketed 75% year-over-year in January amid safety concerns stemming from the coronavirus, Capitol riots, and unrest that occurred in major cities last summer.

Small Arms Analytics and Forecasting (SAAF) estimates that 1.5 million guns were sold in February 2021, the third-highest February on record.

SAAF reaches its monthly conclusion by analyzing the FBI’s National Instant Criminal Background Check System (NICS). Gun background checks are indicative of sales trends, though don’t translate directly to the number of unit sales. For example, someone can buy multiple firearms at once and have only one background check conducted.

More than 23 million firearms were sold throughout last year. Meanwhile, the FBI completed 4,317,804 total background checks in January of this year, marking the start of 2021 with the highest number of checks conducted in a one-month period, according to agency data.

A recent call by President Joe Biden for potential new gun control laws may prove to be a boost to gun sales in the next quarter for Smith & Wesson as well as other gun manufacturers.

Smith & Wesson changed its name to American Outdoor Brands in 2016 as part of a diversification push that generated mixed reviews and mixed stock performance. In 2019, Smith & Wesson was spun off and the firearm business went back to the public markets under its famous name.

Fox Business' Stephanie Pagones contributed to this report