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Smith & Wesson Holding's CEO Discusses F1Q 2013 Results - Earnings Call Transcript

Overall, in the first quarter we demonstrated that we have the key components in place to deliver on opportunities for future profitable growth. These components include a strong portfolio of products that consumers desire, an operations team and suppliers that can deliver excellent performance, and an organization that has an ongoing commitment to lowering our costs and increasing our efficiency. Based on our continued focus on firearms, our successful results for the first quarter and our current outlook for the business, we are increasing our full-year fiscal 2013 guidance.

With that, I'll ask Jeff to review the financial results.

Jeff Buchanan

Thanks, James. Please note that this is only a discussion of our continuing operations. Therefore, when I refer to net income, this is only net income from our continuing operations. And when I reference EPS, I'm referring to earnings per diluted share from continuing operations. For the results of our discontinued operations, the sale of which was completed this quarter, please refer to our 10-Q which field this afternoon.

Revenue for the quarter was a record $136 million. This is an increase of $44.3 million or 48.3% over the prior year. We exceeded our revenue expectations by bringing forward capacity increases and working with our suppliers.

Our gross margins were 37.7%, nearly nine full percentage points higher than the first quarter of fiscal 2012. Gross margin was helped by a favorable production mix that included increased volumes of our strategically important M&P line, resulting in our corresponding improvement in manufacturing absorption. We also saw some one-time benefits in manufacturing and purchasing variances, including euro exchange rate benefits. Even without those one-time benefits, however, we have solid margin gains as a result of our focus on cost-saving efforts and manufacturing efficiencies. Therefore, we now expect that our gross margins will be above 34% for the rest of the year.

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