S&W AR-15 sales down over 60% !!!

S&W 2015 first quarter results have published. Long gun sales are down 67.2% from the same quarter last year. Decreased demand for “Modern Sporing Rifles” were identified as a cause of the decline in long gun sales. I expect hunting rifle demand stayed the same, and so AR-15 sales likely decreased more than 67.2%. Handgun sales were down just 3.2%. The total decrease in sales was 22.9%, a decrease of $39.2 million.  The share price closed down 11.2% yesterday.

SPRINGFIELD, Mass.Aug. 26, 2014 /PRNewswire/ — Smith & Wesson Holding Corporation (NASDAQ Global Select: SWHC), a leader in firearm manufacturing and design, today announced its financial results for the fiscal 2015 first quarter ended July 31, 2014.

First Quarter Fiscal 2015 Financial Highlights

  • Net sales for the first quarter were $131.9 million, a decrease of $39.2 million from the first quarter last year, primarily due to lower sales of long guns, including modern sporting rifles, which drove 87% of the first quarter decline.  As expected, sales of long guns, including modern sporting rifles, were negatively impacted by lower consumer demand.  Handgun sales showed continued consumer demand for the company’s small concealed carry polymer pistols and revolvers, although those sales were more than offset by lower sales of large frame polymer pistols.
  • Gross profit for the first quarter was $49.1 million, or 37.2% of net sales, compared with gross profit of $72.8 million, or 42.6% of net sales, for the comparable quarter last year.  While gross profit margin was favorably impacted by the company’s acquisition of the assets of its principal injection molding supplier in May, total gross profit declined as a result of reduced sales volumes of modern sporting rifles and related decreases in fixed-cost absorption, combined with three fewer production days versus the first quarter last year.
  • Operating expenses for the first quarter were $23.3 million, or 17.7% of net sales, compared with operating expenses of $24.8 million, or 14.5% of net sales, for the first quarter of 2014.
  • Operating income for the first quarter was $25.8 million, or 19.5% of net sales, compared with operating income of $48.0 million, or 28.1% of net sales, for the first quarter of 2014.
  • Income from continuing operations for the first quarter was $14.6 million, or $0.26 per diluted share, compared with income from continuing operations of $26.5 million, or $0.40 per diluted share, for the first quarter of 2014.
  • Non-GAAP Adjusted EBITDAS from continuing operations for the first quarter was $33.6 million, compared with $55.2 million for the first quarter last year.
  • Operating cash generated for the first quarter was $10.8 million. Internal capital spending totaled $14.6 million, and the company used an additional $24.1 million of cash to acquire the assets of its principal injection molding supplier.
  • Cash and cash equivalents as of July 31, 2014 were $83.5 million, up from $68.9 million at April 30, 2014.

Jeffrey D. Buchanan, Smith & Wesson Holding Corporation Executive Vice President and Chief Financial Officer, stated, “We continued to add flexibility to our balance sheet in the first quarter by raising $75.0 million in proceeds through the issuance of our new 5.000% Senior Notes due 2018. We also leveraged our strong cash position to generate value for our stockholders by completing all share repurchases authorized by our Board of Directors under our share repurchase program.  During the quarter, we repurchased $30.0 million of our common stock. Since December 2012, we have repurchased a total of 14.4 million shares of our common stock for $165.0 million, representing a total reduction in shares outstanding of 21.7%.”

James Debney, Smith & Wesson Holding Corporation President and Chief Executive Officer, stated, “Our results for the first quarter met our expectations and reflected continued execution on our strategy.  We launched our new M&P®22 Compact, a tactical rimfire pistol that delivers the popular features of our M&P centerfire pistol in a smaller scale version.  We also joined forces with Crimson Trace® to introduce enhanced, integrated laser sighting systems for our popular line of M&P BODYGUARD® handguns.  Operationally, we completed the acquisition of the assets of our principal injection molding supplier, an action that strengthened our business and contributed favorably to gross margin and net income in the quarter.”

Debney continued, “We believe that the current environment reflects high inventories industry-wide resulting from channel replenishment that occurred following an earlier surge in consumer buying.  That environment, combined with typical seasonality that slows consumer buying activity during the summer, is causing us to lower our financial outlook for fiscal 2015.   We expect that these conditions will have the largest impact on our second fiscal quarter, especially on sales of our modern sporting rifles, and that we will return to a more normalized environment in the second half of our current fiscal year.  We believe that our operational and financial strength and flexibility will benefit us in the short term, and we remain focused on our strategy to take handgun market share.  We expect the industry will continue to deliver growth over the long term.”

Financial Outlook

The company expects net sales for the second quarter of fiscal 2015 to be between $100.0 million and $110.0 million and GAAP earnings per diluted share from continuing operations of between $0.04 and $0.08.

Fiscal 2015 net sales are anticipated to be between $530.0 million and $540.0 million. The company anticipates GAAP earnings per diluted share from continuing operations of between $0.89 and $0.94 for fiscal 2015.  The company believes that results within this range would generate a cash balance at the end of fiscal 2015 in excess of $125.0 million.

Steve Johnson

Founder and Dictator-In-Chief of TFB. A passionate gun owner, a shooting enthusiast and totally tacti-uncool. Favorite first date location: any gun range. Steve can be contacted here.


  • Drew

    S&W has been the top seller of AR-15 since 2012, and with everyone and their dog buying a M&P15 sport, they’re not going to keep on buying once they’ve all got their rifles.

    Rifles are long-term investments, even for those who buy new rifles, they last a long time and thus aren’t bought again until the next generation or whatever political panic

    • KestrelBike

      Yup. I just don’t *need* anything anymore since I spent my happy-funds already, and the rest of the money is budgeted elsewhere.

      Now, if magically the NFA went away and a CZ EVO popped up on the civilian market, wellllll.

      • Mystick

        That’s why we have the wonder of second mortgages…

  • USMC03Vet

    It might be market saturation too. I mean everybody and their dog makes an AR variant now days.I wish this included AK platforms. Prices still increasing and they are now in the high priced AR range too.

    Next year’s elections we will see another massive gun run and if a Democrat is elected, oh boy, good luck finding anything in 2016.

    • Tim Pearce

      The name “Spike’s Tactical” makes a little more sense, now. 😉

  • Ratcraft

    Nice, price drop coming soon.

  • sianmink

    Basically sales went from OMG WE CAN’T KEEP ANYTHING IN STOCK to somewhat elevated. Everyone knew it wouldn’t last forever.

    • KestrelBike

      Yes but will .22lr ever bounce back??

      • ChuckyTee

        havent had a problem finding 22lr in the last 2 months. No issues here

        • Zachary marrs

          Im still limited to 2 50 round boxes per person or 1 bulk pack

      • sianmink

        Already has in the south and northeast. .22 magnum though, good luck.

      • They are. You can buy them online. I checked out Luckygunner.com just yesterday and they seem to have a lot of stock (although limited selection).

      • Smokey_the_Bear

        Every time I go to Scheels (my local shooting/everything else store) I see a big 4′ by 4′ area with glass in the front of it, and a sign that says “22LR”. What’s on the other side of the glass…NOTHING! I can’t even remember the last time a saw 22LR ammo just sitting there. I live in South Dakota, fyi.

        • dan

          Sioux falls or Rapid? Last time I was in rapid before their remodel I seen some didnt even bother looking after

      • quraina

        My local Gander Mountain now has 22LR more days than not. Different brands and types from week to week. Remington Bucket’O’Bullets 1400rds $75.75 with tax, 1 per customer visit. CCI Std Velocity $5/50rds b4 tax, 5 per customer visit. Our other two big retailers haven’t had any stock for many months, and one has actually taken the 22LR shelf labels off the display. Online, you can often find the specific brand and type 22LR you want, but not necessarily at a good price. Currently I don’t see any sources for Wolf 22LR at all at ammoseek.

    • It was just crazy. The gun stores near me were empty. Completely empty, with the exception of a few bolt action rifles in obscure hunting calibers.

  • barry

    Well, I can see how the AR market died down. Everyone that wanted one purchased it already. And unless you are a frequent or serious shooter, there’s no point in 3-4 AR15’s. I’m sure the lack of 22lr didn’t help either. I wanted to pick up an M&P 15-22 but really can’t easily find 22lr still.

    • CJS3

      I can find 22lr alright, just not at a price I’m willing to pay. Almost everyone I know that has the S&W AR, has a 22. Most of them aren’t willing to pay $50 a brick for ammo either. I always had the impression that 22lr caliber ARs were S&W’s top sellers. Maybe the ammo situation has had an effect.

  • Kyle

    The factors above make since for the decrease in sales but also I would add decreasing the quality of the M&P 15 sport by replacing the 1 in 8 twist 5R melonite treated barrel that has many reports of moa or sub moa accuracy with even wolf steel cased anno with a 1 in 9 twist chrome lined barrel that is 1.5 moa plus from what I have seen.

    • Drew

      Except S&W has seen even more sales and profit since the change.

      • floppyscience

        Yep. They changed the barrels in 2012, before Sandy Hook.

  • Mr T

    Sporing rifle, or sporting rifle?

  • Mark N.

    The panic buying of ARs after Newtown must play a large factor. Lots of people massively overpaid, and even manufacturers inflated their prices. Now the buyers are tapped out of discretionary funds and the panic has abated, so inevitably sales will have collapsed for that particular firearm. I would surmise that the only strong market right now is California, largely because of legislation that will eliminate single shot conversions of nonroster firearms and the microstamping law that has decreased the available models by over 20% since May. Add in the Peruta decision that may open up CCW for those areas where getting one is a near impossibility, handgun sales remain brisk. And S&W has a huge selection available here.

  • Rod Tidwell

    Now I know why my favorite shop, Tanners in Bucks County, PA, has stacks of M&P 15 Sports for $550.

  • Aaron E

    Knew it had to slow down sometime. The good thing is that prices are starting to return to “normal”. Hopefully these companies did some good strategic financial planning so the downturn doesn’t cause too much of a ripple effect.
    It would be nice to see the profits made over the last few years broaden the concepts and quality of future firearms, along with availability. Remington had a big expansion, Benelli moved and expanded, Ruger added a new plant, Henry Arms expanded, and several of the ammunition makers expanded as well.
    With decreased demand I hope they don’t just shut down the expansion, but instead turn that profit into ever-increasingly better products.

  • Geoffry K

    Cost was a factor in my choice of AR-15. $600 for DPMS or $1100+ for Colt.

    • shootbrownelk

      Right Geoffry, I can’t see almost double the money for the Colt. Their QC and fit & finish has gone downhill rapidly. They also lost a Government contract. Maybe they’ll try putting out a quality product worth the insane price tag. They were the BEST at one time, not anymore. There are plenty of AR’s out there that are better than a Colt.

      • Bob

        I brought a Colt Accurized A-3 a few years back and it is a superbly accurate and flawlessly functioning firearm. I also have a Bushmaster Varminter that is 20 years old that is also superbly accurate and also functions flawlessly. The difference between the two is that Bushmaster put a kicking 2 stage trigger in their model while the pricey Colt came with crap trigger, then again I’m not real happy with the trigger on my Sig 516 either.
        Not that I plan to buy anymore AR-15’s in the near future, but if I do I will seriously look at Bushmaster.