Smith & Wesson Brands, Inc. reported on Thursday after the cash close that its quarterly firearm revenue doubled, compared to the same quarter last year, as the virus pandemic, social unrest/violent crime, and crashed economy fuelled unprecedented demand for guns and ammo by first-time buyers.
The Springfield, Mass. based gun company's firearm segment reported a record $230 million in gross sales for the quarter ending in July, a massive 141% increase compared with the quarter a year ago. Net income soared to $55 million over the period, or 97 cents per diluted share, compared to $1.7 million in 2Q19, or about 3 cents per diluted share.
Chief Executive Officer Mark Smith credited the jump in quarterly sales to the increase in first-time gun owners, along with the company's ability to quickly scale up and handle the rise in demand over the three months.
"Today, I am pleased to report record-breaking first-quarter financial results for Smith & Wesson Brands, Inc.," Smith wrote in the quarterly report.
He said, "Our record revenue and unit sales during the quarter demonstrates our ability to rapidly respond to increased demand through our flexible manufacturing model and our state-of-the-art distribution facility, delivering outstanding products that resonate with the firearms consumer."
Smith continued, "With the successful spin-off of our Outdoor Products & Accessories segment last week, we have now returned to our heritage as a pure-play firearms company, with a focus on organic growth and returning excess capital to our stockholders. As such, our Board of Directors has authorized the company to declare a regular, quarterly cash dividend of $0.05 per share. Our first quarterly dividend will be payable on October 1, 2020, to shareholders of record as of the market close on September 17, 2020."
During an earnings call with analysts, the CEO said, "the current increase in consumer demand for firearms is, in many ways, unparalleled."
Smith & Wesson shares have surged 421% since the start of lockdowns in mid-March.
Smith nor the quarterly report specifically mentions social unrest as a driving force behind the company's sales. As readers know, gun and ammo manufacturers have been riding a massive wave of consumer fear that has led to one of the most massive gun demand spikes in years.
Handguns, particularly the M&P9 SHIELD EZ semiautomatic pistol has been a popular weapon sold to first-time buyers over the last six months. We noted on several occasions that surging demand for pistols has led to a 9mm shortage.
The latest FBI background check data shows 3.1 million checks were logged in August, with total checks this year at a record high of 28.4 million.
Smith said the fastest-growing groups of new weapon purchases are African-Americans and women.
At least 5 million Americans, for the first time, bought a gun(s) this year as a socio-economic 'bomb' explodes across major US cities.