Smith & Wesson Brands, Inc. · NASDAQ:SWBI
Smith & Wesson Brands — Investor Presentation (January 2007)
35 slides from Smith & Wesson Brands's investor presentation, Jan 29, 2007
Slide 1: Smith & Wesson Investor Presentation January 2007
Michael Golden, President/CEO John Kelly, CFO January 2007
Slide 2: Forward-Looking Statements
Smith & Wesson Holding Corporation Certain statements contained in this presentation may be deemed to be forward-looking statements under federal securities laws, and the Company intends that such forward-looking statements be subject to the safe-harbor created thereby. Such forward-looking statemen
Slide 3: Company Profile
155-year old American firearms company Largest U.S. manufacturer of handguns & handcuffs 2006 market share: #1 in revolvers - FY2006 sales growth: 14% #3 in pistols - FY2006 sales growth: 69% New growth fueled by expansion into $1.1B long gun market 80% larger than handgun market Acquired Thompson/C
Slide 4: Investment Highlights
Investment Highlights Highly valuable Smith & Wesson brand Large market opportunity in safety, security, protection and sport Leading market position in the handgun market Recently entered all long-gun market segments (rifles, shotguns) Experienced management team with proven track record Strong fin
Slide 5: S&W: 87% Brand Awareness
S&W: 87% Brand Awareness Source: American Sports Data - Nov, 2004 A company-sponsored, 2004 survey asked consumers about their future purchase intent: Product / Service S&W Rank Current Status Revolvers #1 Served Pistols #1 Served Tactical Rifles #1 Served: March 2006 Shotguns #3 Introduced: Jan 200
Slide 6: Our Vision
Our Vision Security Protection Sport Safety The most recognizable company in the global business of Safety...Security...Protection...Sport
Slide 7: Growth Strategy
Growth Strategy Use "Safety-Security-Protection-Sport" platform to enter new markets while continuing to drive growth in our core firearms businesses Innovative Products Law Enforcement Military/Federal Gov't International Sporting Goods Homeland Security Criminal Investigation Law Enforcement Defen
Slide 8: Smith & Wesson - Handguns Revolvers/Pistols
Smith & Wesson - Handguns Revolvers/Pistols
Slide 9: Revolver / Pistol Market
S&W MARKET REVOLVERS 54.3 129 S&W MARKET PISTOLS 46 453 $136MM $52MM* $490MM S&W 2006 (Includes Walther Products) Market 2005 2005 (CALENDAR) U.S. DOMESTIC NON-MILITARY MARKET - 2006 (FISCAL) S&W SALES $61MM 45% SOURCE: BATF 2005 Excise Tax Study & Smith & Wesson Management Estimates 11% Revolver /
Slide 10: Smith & Wesson Handgun Sales
Smith & Wesson Handgun Sales -0.03 0.01 0.13 0.1 0.14 0.22 0.24 0.44 0.48 0.43 (Year over Year Growth %) Q1-05 Q2-05 Q3-05 Q4-05 Q1-06 Q2-06 Q3-06 Q4-06 Q1-07 Q2-07
Slide 11: Smith & Wesson - Long Guns Rifles/Shotguns
Smith & Wesson - Long Guns Rifles/Shotguns
Slide 12: Entering New Markets: Long Guns
Entering New Markets: Long Guns SOURCE: BATF 2005 Excise Tax Study and Smith & Wesson Management Estimates Based on 2005 vs. 2006 data from top 3 distributors. The long gun market is 80% larger than the handgun market 2005 U.S. DOMESTIC NON-MILITARY MARKET RIFLES SHOTGUNS TACTICAL RIFLES BLACK POWDE
Slide 13: Why the Long Gun Market?
Why the Long Gun Market? $1.1 Billion Market: 80% larger than handguns Consumers already perceive S&W as a leader Highly fragmented and void of sophisticated marketing S&W entered long gun market March 2006 M&P15 Tactical Rifle Sales & orders exceeded 10% of market in first year Law enforcement agen
Slide 14: Thompson/Center Arms Company Overview
Thompson/Center Arms Company Overview 41-year old long gun company in Rochester, NH Leading player in black powder and interchangeable firearms systems markets - 52% market share in black powder Robust new product pipeline for 2007 Launched first bolt action rifle January 2007 - ICON Acquisition Ben
Slide 15: Channel Management Strategy
Sporting Goods Channel Management Strategy Fed Gov't/Military Local LE International
Slide 16: Our Current Markets
Our Current Markets Q2 FY07 +148% Q2 FY07 +40% Q2 FY07 +52% State & Municipal Law Enforcement Agencies Direct Sales Force Law Enforcement - - U.S. Military - - Federal Agencies - - Homeland Security Washington D.C. presence & lobbying effort Federal Government - - Firearms Distributors 2,800 Indepen
Slide 17: Strategy: Sporting Goods Channel
Strategy: Sporting Goods Channel Growth in FY 2006: +19.4% (Q2: +52.4%) Engraving/Performance Center & Commemoratives: +250% Sales Force Conversion: 30 U.S. Sales Employees New Product Support: M&P Pistol Family M&P15 Tactical Rifle Series "Classics" Series Shotguns Consumer "Pull" Promotions & Mark
Slide 18: Sporting Goods Sales Growth
Sporting Goods Sales Growth Q1-06 Q2-06 Q3-06 Q4-06 Q1-07 Q2-07 24 23 29 39 41 35 8% 8% 24% 32% 37% FY ($ In Millions) 52%
Slide 19: Strategy: Military/Federal Government
Strategy: Military/Federal Government Growth in FY 2006: $11MM vs $0 in 2005. (1H FY 2007: 237%) Won: Four orders / 75K Units - US Gov't to Afghanistan Military Regular Visits to Washington by CEO, COO, Lobby Firm Increasing visibility on industry issues, potential orders Quality products, made in A
Slide 20: Strategy: Law Enforcement
Strategy: Law Enforcement Growth in Q2 FY 2007: 148% 146 LE Departments committed to M&P Pistol 78% Win Rate - Represents 19,000 officers 131 departments currently testing Smith & Wesson originally owned 98% of LE: today 10% Market Size: 17,000 Departments and 800,000 Officers Goal: Re-take leadersh
Slide 21: Strategy: International
Strategy: International Growth in FY 2006: 61.1% Established & expanding sales channel and revenue base Upgrading sales agents to enhance contacts in police/military Europe, Latin America, Asia, Middle East New Product Support: M&P9: Domestic & international markets Lobbying focus: Shorten Federal e
Slide 22: Addressing New Growth Opportunities
Addressing New Growth Opportunities Safety...Security...Protection...Sport Opportunities for Entry: License Acquire Manufacture Outsource Homeland Security Defense Law Enforcement & Criminal Investigation Long Guns Market Opportunities:
Slide 23: Building the Brand: Licensing
Building the Brand: Licensing Upgrading Retail Licensee Portfolio: Wilsons Leather, Gun Safes, Gun Cleaning Products, Hats/T- shirts, Automotive Establishing licensees in professional markets where Smith & Wesson can do business beyond licensing: Explosive-detection equipment New Possibilities: Safe
Slide 24: Enhancing Productivity
Enhancing Productivity Achievements through Dec. '06: - Turns improvement +11% - On time delivery improved from 60% to 85% - Machine uptime improved from 60% to 85% - Guns/day output +57% vs '05 +138% vs '04 - Productivity ratio + 10% vs prior year Blending craftsmanship with technology: - Implement
Slide 25: Experienced Management Team
Michael Golden, President/CEO 30 Yrs: Kohler, Stanley Works, Black and Decker, Procter & Gamble John Kelly, CFO 22 Yrs: Smith & Wesson Leland Nichols, President, Smith & Wesson Firearms 22 Yrs: Kohler, Stanley Works, Black and Decker Tom Taylor, VP Marketing 24 Yrs: Coca Cola, Frito-Lay Tom Fimmen,
Slide 26: Financial Overview
Financial Overview
Slide 27: Quarterly Income Statement Summary
Quarterly Income Statement Summary Sales: +43% Net Income: +312% Sales: +46% Net Income: +84% (a) 2005 Six Months Ended Oct. 31 Results include $3.1MM environmental reserve reduction ($1.9MM after tax, $0.05 per share) (a) Growth:
Slide 28: Annual Income Statement Summary
Annual Income Statement Summary Sales: +5% Net Income: +527% Sales: +27% Net Income: +67% FY 2007 Pre-acquisition EPS guidance of $0.36 Sales: +27% Net Income: +72% Growth:
Slide 29: Pro Forma Balance Sheet Summary
Pro Forma Balance Sheet Summary
Slide 30: Acquisition Accounting
Acquisition Accounting Under recent accounting pronouncements related to purchase accounting, certain intangible assets, sales backlog and inventory must be valued at "fair value" in accordance with the accounting pronouncements and amortized over their estimated useful lives. As a result, the amoun
Slide 31: Updated FY07 Annual Guidance
Updated FY07 Annual Guidance (US$ in millions, except per share data) SWHC Standalone FY07 Thompson/ Center Arms January - April 2007 Non-cash Purchase Accounting Adjustments Pro Forma for Acquisition FY07 Net Product Sales $200.0 $18.6 - $218.6 Net Income 15.0 0.9 $(4.4) 11.5 EBITDA 33.9 2.7 - 36.6
Slide 32: Updated FY08 Annual Guidance
(US$ in millions, except per share data) SWHC Standalone FY08 Pro Forma for Acquisition FY08 Net Product Sales $250.0 $320.0 Net Income 22.0 27.0 EBITDA 47.5 62.2 Earnings per Diluted Share: $0.52 $0.60 Updated FY08 Annual Guidance
Slide 33: Appendix: EBITDA Reconciliation
Appendix: EBITDA Reconciliation
Slide 34: Investment Highlights
Investment Highlights Highly valuable Smith & Wesson brand Large market opportunity in safety, security, protection and sport Leading market position in the handgun market Recently entered all long-gun market segments (rifles, shotguns) Experienced management team with proven track record Strong fin
Slide 35: Smith & Wesson
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