Smith & Wesson: Export reform helps, but not a lot

06/21/18 7:30 AM | by

Top executives for Smith & Wesson downplayed the impact of proposed export reform rules on earnings this week, telling investors eased regulations will pay off, though not by much.

The new rules — which industry experts forecast will boost sales internationally — will eliminate expensive licensing fees currently barring many gun dealers from competing overseas. In the case of Smith & Wesson parent company American Outdoor Brands, the reforms would undo a regulatory hurtle forcing gun makers with more than $1 million worth of firearms to export first seek congressional approval.

Chief Financial Officer Jeffrey Buchanan told investors Wednesday he “wouldn’t count it as a big mover for anything.”

“I mean, it hasn’t caused a problem for us before. Sometimes it makes you a little bit less competitive in your ability to react quickly versus a competitor that is out of the country,” he said. “Of course, it so happens that a lot of our competitors … are in the United States. So, a lot of them have the same restrictions as we do.”

U.S. gun manufacturers shipped 343,456 firearms overseas in 2015 — the most recent year for which data is available. Records from the Bureau of Alcohol, Tobacco, Firearms and Explosives indicate the total declined nearly 21 percent over 2014 — a 20-year high for the industry.

James Debney, American Outdoor Brands’ chief executive officer, appeared more optimistic about the effect on the company’s exports in a conference call with investors Wednesday.

“I mean certainly we’re removed on administrative burden,” he said. “We can be more nimble and more timely in our delivery. So I would say in the long-term that have to be favorable as we better service our partners on a global basis.”

The gun maker’s “challenging” fiscal year came to an end April 30 with overall net sales down nearly 33 percent to just under $607 million — and the next 12 months look worse, Debney said.

“We don’t see that as a long term dynamic. We think the market will return to growth,” he said. “But when you do come out of periods of very robust buying, and we’ve certainly seen that over the last few years, you can expect a correction. And that can take up to two years.”

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