Smith & Wesson Brands, Inc. · NASDAQ:SWBI
Smith & Wesson Brands — American Outdoor Brands Corporaton — SHOT Show 2017
57 slides from Smith & Wesson Brands's conference presentation, Jan 17, 2017
Slide 1: Investor Presentation SHOT Show 2017
NASDAQ: AOBC Investor Presentation SHOT Show 2017 © 2017 American Outdoor Brands Corp. All Rights Reserved. Exhibit 99.1
Slide 2: Safe Harbor
Safe Harbor 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 statements include but are not
Slide 3: Holding Company Rebranding
We have changed our holding company name to better reflect our expanding strategic focus on the growing markets for shooting, hunting, and rugged outdoor enthusiasts. Our firearms business will continue to operate as Smith & Wesson Corp., a subsidiary of American Outdoor Brands Corp. NASDAQ (AOBC).
Slide 4: Vision, Mission, Strategy
Lorem ipsum dolor sit amet consectetur etiam semper sit amet To be the leading provider of quality products for the shooting, hunting, and outdoor enthusiast To leverage our employees’ capabilities and experiences to design, produce, and market high quality, innovative firearms, accessories, and out
Slide 5: A Leading American Outdoor Brand Portfolio
ye AMERICAN A LEADING A—XOUTDOOR BRAND PORTFOLIO a G Dey @ t Sez € E Smith&Wesson: Saith& Wesson ‘Twos ve Grimson Qrrace ACCESSORIES BOG-POD yap yuaaaeer «SLU aTal Horas wen ® OLDTIMER = SCHRADE. Miptony Anche Henig: © Wistar eer aver 8) Smith & Wesson
Slide 6: Divisional structure and segments
Provides leadership and establishes the strategic direction of the Company Electro-Optics Division Develop, market, and sell electro-optics products Accessories Division Develop, market, and sell accessories Firearms Division Develop, market, and sell firearms Manufacturing Services Division Provide
Slide 7: Growth Strategy: Consumer
Growth Strategy: Consumer We will build our business around the consumer we already know, based on an existing relationship, which is built on brand trust. Core Consumer Activities Hunting Shooting Fishing Camping Paddling Hiking Archery Enter market segments that match our core consumer’s passions
Slide 8: Growth Strategy: Retailer
Growth Strategy: Retailer STRATEGIC RETAILERS BUYING GROUPS DISTRIBUTORS Approximately 2/3 of Consumer Channel Sales (TTM) Note: Additional non big-box, direct retail relationships not included DIRECT DIRECT se Buying Groups: 700 Member Retailers 12,000+ independent retailers INTERNET se DIRECT 2-ST
Slide 9: Acquisition Strategy
Acquisition Strategy: Focus on companies that have achieved success through talented management teams, trusted brands, and market leadership. Then: PRESERVE THE ELEMENTS OF SUCCESS: Talent Brand Sales & Marketing New Product Development Operations Management MOVE DISTRACTIONS TO SHARED SERVICES: Hum
Slide 10: Adjusted NICS – CY Dec. 2016
Adjusted NICS – CY Dec. 2016 Handguns Down 29.7% - Long Guns Down 8.9% (Y/Y)
Slide 11: Adjusted NICS – FY Dec. 2016
-~ Adjusted NICS -— FY Dec. 2016 2,500,000 2,000,000 1,500,000 1,000,000 FYQL FYQ2 FYQ3 FYQ4 [se | ay Rees [Senter [Waren [ower] Tana [Fema [ ween [foe a] [02-101 | "602.353 [687.262 |" 726.572 | eet.ea1 | 961.575 |1,091,34¢ | 715.300 | eea.oae [961.408 | 731,955 [9 w2se2) [on [-e [rigors [ Trost as
Slide 12: Adjusted NICS Up 7.5% On Average Over Years
Adjusted NICS Up 7.5% On Average Over 10 Years* *CY07 – CY16 Source: NSSF, Smith & Wesson, and https://www.fbi.gov/about-us/cjis/nics
Slide 13: NICS Permit Checks
NICS Permit Checks Source: https://www.fbi.gov/about-us/cjis/nics
Slide 14: Firearms Segment
Firearms Segment Our Firearms Segment consists of our Firearms Division and our Manufacturing Services Division. Our Firearms Division manufactures products from our Massachusetts, Maine, and Connecticut facilities. These include revolvers, pistols, rifles, handcuffs, and related products sold throu
Slide 15: Overview Firearms Division
Overview Firearms Division Smith & Wesson® - The #1 Firearms Brand in America Leads all firearm manufacturers in total aided brand awareness Leads in critical attribute ratings: Reliability, durability, and accuracy Most owned and considered revolver brand in the market: 1 of every 2 revolvers owned
Slide 16: Firearms – Our Vision
Firearms – Our Vision “Our Vision Is To Be The Leading Firearms Manufacturer” Our mission is to continue to enhance our position as one of the world’s leading firearms manufacturers by designing, producing and marketing high quality innovative firearms and related products that meet the needs and de
Slide 17: A Trusted Name: M&P
A Trusted Name M&P® is a trusted consumer brand with a strong family of products (e.g. M&P Shield® pistols) New Platform Like our first M&P launched 10 years ago, the M&P M2.0™ pistol is a new platform Future Expansion Multiple new product additions and line extensions in 2017 New for SHOT SHOW 2017
Slide 18: Smith & Wesson's New .22
“ Smith & Wesson’s NEW .22 CRUSHES the COMPETITION “ “ …..Great features and fine shooting make it one of the most dependable, easily modified, accurate, and shooter-friendly semiautomatic .22 pistols the author has every fired.” “ the 39oz SW22 is well balanced and points naturally. It has an excel
Slide 19: M&P10 6.5 Creedmoor
M&P10 6.5 CREEDMOOR No round is hotter right now than the 6.5 Creedmoor and when we let the artists from the Performance Center loose, they created the ultimate version – the M&P10 6.5 Creedmoor rifle. With a precision, two-stage match trigger, and a 15-inch free-float Troy® Alpha Rail® with M-LOK®
Slide 20: Se SS
Se SS @CCMPASS
Slide 21: Overview Manufacturing Services Division
Overview Manufacturing Services Division Provide Competitive Advantage Continue to provide unique competitive advantage to Firearms and other divisions through close internal collaboration (S&OP) and access to world class manufacturing and supply chain operations Access New Markets Meaningful revenu
Slide 22: $100 Million external B2B sales goal
$100 Million We will expand organically with new and existing customer base and markets. Additionally, we will enter new markets through inorganic growth. Achieve external B2B industrial sales exceeding $100MM within 5 years Profitability We constantly strive for efficiency and cost control to maint
Slide 23: Targeted Growth Manufacturing Services Division Target Markets
Targeted Growth Manufacturing Services Division Target Markets
Slide 24: Outdoor Products & Accessories Segment
Outdoor Products & Accessories Segment $194.5 million in sales, + 57.5% Y/Y 83% of total sales 42% gross margin Q2 FISCAL 2017 $39.1 million in sales, 97.7% Y/Y ($18.6 million relates to acquisitions in Q2) 17% of total company sales 40.5% gross margin (Excluding fair value inventory step-up and bac
Slide 25: Overview Accessories Division
Overview Accessories Division Established in 2014 with our acquisition of Battenfeld Technologies, Inc., our Accessories Division is an Industry leading manufacturer of shooting, reloading, gunsmithing, gun cleaning, cutlery, camping, and survival gear that are sold to consumers under a variety of w
Slide 26: Accessories Division Model
Accessories Division Model: Design/Source/Distribute Product Innovation Design/manufacturing process diversity Highly efficient “component level sourcing” Comprehensive distribution network Long term relationship with key industry accounts Efficient advertising and marketing approach
Slide 27: Accessories Division Strategy
Lorem ipsum dolor sit amet consectetur etiam semper sit amet Accessories Division Strategy Build the Business for Healthy Financial Performance Innovation Throughout the Organization Highly Capable Workforce Integrate/Optimize A combination of organic and inorganic growth Develop innovative products
Slide 28: Accessories Division – New for SHOT2017
Accessories Division – New for SHOT2017
Slide 29: BTI Tools & UST – New for SHOT2017
Accessories Division BTI Tools & UST – New for SHOT2017 BTI Tools New Products Over 100 new items across 5 brands Schrade® = 31 OldTimer® = 6 Uncle Henry® = 5 Imperial™ = 25 S&W® = 26 M&P® = 8 UST™ New Products Over 60 items launching in 2017 in Key Gear® and UST Brands © 2017 American Outdoor Brand
Slide 30: Electro-Optics Division
Electro-Optics Division In August of 2016, we established our Electro-Optics Division with the acquisition of Crimson Trace, a key supplier and the undisputed leader in laser sighting and tactical lighting systems. Founded 22 years ago, Crimson Trace has generated a ten-year compound annual growth r
Slide 31: Crimson Trace Highlights
Acquired by SWHC in August, 2016 Launched LiNQ™, the World’s First Wirelessly Activated Laser / Light System Awarded National Rifle Association (NRA) 2017 Golden Bullseye Award for Accessory of the Year Launched LASERGUARD® PRO Compact Light / Laser System for Polymer Frame Handguns Crimson Trace Cl
Slide 32: Electro-Optics Growth Strategy
Organic: Continue growing laser sight market and increasing laser attachment rate “Standard Equipment” for Personal Defense Firearms OEM Sales Strategy Innovative products and technologies that serve real-life needs LiNQ™ wireless activation system Laserguard® Pro™ New Platforms & Line Extensions Op
Slide 33: New for SHOT 2017
New for SHOT 2017 Wirelessly Activated Laser / Light System for MSR Simple, secure technology extends Crimson Trace’s hallmark instinctive activation design to popular MSR platforms. Compact, rugged 150-lumen tactical light combined with red or green aiming laser. Designed for popular concealed carr
Slide 34: Electro-Optics Growth Strategy
Organic: Continue growing laser sight market and increasing laser attachment rate “Standard Equipment” for Personal Defense Firearms OEM Sales Strategy Innovative products and technologies that serve real-life needs LiNQ® wireless activation system Laserguard® Pro™ New Platforms & Line Extensions Op
Slide 35: Outdoor Recreation Division
Outdoor Recreation Division Opportunity to build rich, diverse product and brand platform across rugged outdoor enthusiast markets Backpacks & Bags Camp Cooking Tents Camping Electronics Health & Safety Camp Furniture Sleeping Gear Hiking-Assist Gear Hydration Backpacking packs, day packs Stoves, co
Slide 36: Shared Services Organization
Internal Service Provider to All Divisions for: Human Resources Accounting & Finance Information Systems Program Management Legal & Compliance Environmental Health & Safety Lorem ipsum dolor sit amet consectetur etiam semper sit amet Administrative Synergies & Efficiencies End-to-end services employ
Slide 37: Positioning Our Company For Future Growth
Positioning Our Company For Future Growth Our objective is to leverage our focused, multi-divisional structure to drive both organic and inorganic growth as well as value creation With strong leadership teams operating each division, we can unlock further value, while we explore acquisitions that ha
Slide 38: Financial Review
Financial Review © 2017 American Outdoor Brands Corp. All Rights Reserved.
Slide 39: Annual Revenue
Annual Revenue U.S.$ Millions Note: Excludes Walther sales – an agreement which ended in Fiscal 2013 Note: Guidance for revenue, GAAP earnings per share, non-GAAP earnings per share, tax rate and share count reflects information as of December 1, 2016. The Company is not updating any of this guidanc
Slide 40: Earnings Per Share
Note: Guidance for revenue, GAAP earnings per share, non-GAAP earnings per share, tax rate and share count reflects information as of December 1, 2016. The Company is not updating any of this guidance to the present date nor does its inclusion constitute a reiteration or modification of this informa
Slide 41: Quarterly Revenue
U.S.$ Millions $143 $234 +63% +98% +58% Quarterly Revenue
Slide 42: Quarterly Margins
GROSS MARGIN OPERATING PROFIT MARGIN ADJUSTED EBITDAS MARGIN = Represents non-GAAP: See Appendices for GAAP to non-GAAP reconciliations. Quarterly Margins
Slide 43: Profitability
NET INCOME = Represents non-GAAP: See Appendices for GAAP to non-GAAP reconciliations. DILUTED EPS NA NA NA NA U.S.$ Millions Profitability
Slide 44: Income Statement
CONDENSED INCOME STATEMENT For three months ended For the six months ended October 31, 2016 October 31, 2015 October 31, 2016 October 31, 2015 (U.S.$ Thousands, except per share data) Net sales $233,528 $143,242 $440,479 $291,005 Cost of sales 135,923 87,027 255,305 175,920 Gross profit 97,605 56,21
Slide 45: Condensed Balance Sheet and Cash Flows
CONDENSED BALANCE SHEET CONDENSED CASH FLOWS For the period ending: (U.S.$ Thousands) For the six months ended: (U.S.$ Thousands) October 31, 2016 April 30, 2016 October 31, 2016 October 31, 2015 Cash and cash equivalents $ 73,896 $ 191,279 Net cash provided by operating activities $ 61,374 $ 22,761
Slide 46: Capital Efficiency and Share Repurchases
Optimizing capital efficiency, lowering the weighted average cost of capital, and strengthening the balance sheet to support future growth initiatives Issued $75M of 5.000% Senior Notes due 2018 Expanded credit facility from $75M to $125M Borrowed $100M toward the acquisition of BTI (the company’s n
Slide 47: Financial Guidance
Note: Guidance for revenue, GAAP earnings per share, non-GAAP earnings per share, tax rate, and share count reflects information as of December 1, 2016. The Company is not updating any of this guidance to the present date nor does its inclusion constitute a reiteration or modification of this inform
Slide 48: Appendices
Appendices © 2017 American Outdoor Brands Corp. All Rights Reserved.
Slide 49: Experienced Leadership
Experienced Leadership JAMES DEBNEY PRESIDENT & CHIEF EXECUTIVE OFFICER JEFFREY D. BUCHANAN EXECUTIVE VICE PRESIDENT, CHIEF FINANCIAL OFFICER, CHIEF ADMINISTRATIVE OFFICER & TREASURER 20+ years: multinational consumer and business-to-business environments, including President of Presto Products Co.,
Slide 50: Experienced Leadership
Experienced Leadership Matt Buckingham President, Firearms Firearms industry professional with 12+ years in firearms operations management and executive leadership, including serving as President of Brownell’s, Inc., a recognized industry leader in firearms parts and accessories. Mark Smith Presiden
Slide 51: Income Statement
Income Statement > ‘CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) Forthe Three Months Ended ‘Gctober34,2016 _ _October31,2015 _ __Oetober31,2016 ___October 31,2015 {lnthousands, except per share data) 143,242 $ 440,479 S 733528 $ S 291,005 5,923 97,605 695, 451 x 12527 12536 21,721 21,754
Slide 52: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation
Slide 53: GAAP to Non-GAAP Reconciliation Adjusted EBITDAS
GAAP to Non-GAAP Reconciliation Adjusted EBITDAS
Slide 54: GAAP to Non-GAAP Reconciliation EPS
GAAP to Non-GAAP Reconciliation EPS
Slide 55: Free Cash Flow
~~ Free cash jided by operat es Free Cash Flow ing activities activities net of cash acquired vable (In thousands) (Unaudited) ‘Gxtober 31, 2016 $ 20,764 (185,555) (22) $ 13246 OetobecSi 2015 —Oxteber 83,2016 Oxtober 33,2015 a 5,1 $ 61,374 S 22,761 (7,075) (196,670) (14,164) - 178,055 - 20 43) rm g
Slide 56: Non-GAAP financial measures notes
Lorem ipsum dolor sit amet consectetur etiam semper sit amet In this press release, certain non-GAAP financial measures, including “non-GAAP net income,” “Adjusted EBITDAS,” and “free cash flow” are presented. From time-to-time, the company considers and uses these supplemental measures of operating
Slide 57: Investor Relations contact
Elizabeth Sharp Vice President – Investor Relations 2100 Roosevelt Avenue Springfield, MA 01104 Phone: 413 747 6284 Email: [email protected] www.aob.com