Smith & Wesson Brands, Inc. · NASDAQ:SWBI
Smith & Wesson Brands — Investor Presentation (December 2006)
28 slides from Smith & Wesson Brands's investor presentation, Dec 18, 2006
Slide 1: Michael Golden, President/CEO; John Kelly, CFO
Michael Golden, President/CEO John Kelly, CFO November/December 2006 HIGHLY CONFIDENTIAL
Slide 2: Information Regarding Disclosures
Information Regarding Disclosures Although Smith & Wesson its Securities (or to the extent applicable, the Common (as such term is defined in Reg D) who are able to evaluate the own examination of the Company and the terms of the The acquisition of the Securities, if offered, should be considered on
Slide 3: Forward-Looking Statements
Smith & Wesson Holding Corporation operating The detailed Such forward-looking statements include statements Such factors include the demand for the Certain statements contained in this presentation may be deemed to be forward-looking statements under federal securities laws, and the Company intends
Slide 4: Offering Summary
Offering Summary (a) Smith & Wesson Holding Corp. SWHC (NASDAQ) Convertible Notes $80MM December 15, 2006 To partially fund the acquisition of Thompson/Center Arms Cowen and Company Merriman Curhan Ford & Co. Issuer: Ticker (Exchange): Security: Amount: Closing: Use of Proceeds: Placement Agents: Ba
Slide 5: Company Profile
Company Profile FY2006 sales growth: 14% FY2006 sales growth: 69% #1 in revolvers — #3 in pistols — 60% larger than handgun market Springfield, MA; Houlton, ME — — 854 Employees Two non-union, U.S. factories — NASDAQ: SWHC Market Cap ~$550MM 154 year old American company Largest U.S. manufacturer of
Slide 6: Investment Highlights
Investment Highlights Accretive in next fiscal year (Y/E 4/30/08) Provides hunting and long gun manufacturing expertise Highly valuable Smith & Wesson brand Large market opportunity in safety, security, protection and sport Leading market position in the handgun market Experienced management team wi
Slide 7: Acquisition Overview
Acquisition Overview $65MM Sales $13MM EBITDA 39% Gross Margin 100% acquisition of Thompson/Center Arms for $102 million in cash Expected public announcement on December 18; expected closing in early January 2007 Thompson/Center Arms calendar year 2005 highlights — — — Expected earnings accretion of
Slide 8: Thompson/Center Arms
Thompson/Center Arms 41-year old long gun company headquartered in Rochester, NH Leading player in black powder and interchangeable firearms systems markets Robust new product pipeline for 2007 including bolt action rifle Approximately 500 non-union employees 160,000 sq. ft. facility (owned) Provide
Slide 9: Thompson/Center Arms Products
Interchangeable Firearm Systems Black Powder Accessories Firearms Powder Rimfire Rifles Thompson/Center Arms Black
Slide 10: Smith & Wesson Overview
Smith & Wesson Overview
Slide 11: Years of Innovation
154 Years of Innovation Elite/1000 Shotguns — M&P Tactical Rifle M&P Pistol Series 2007 460 XVR 2006 500 Magnum 2006 2005 AirLite-Scandium 2003 S&W 40 Caliber 44 Magnum 2001 1990 357 Magnum 1955 44 Special 38 Special 1935 1908 Model 3-Breaktop 1899 Model 1-22 Rimfire 1870 1857
Slide 12: Safety...Security...Protection...Sport
Sport Safety...Security...Protection...Sport S afety Protection Our Vision The most recognizable company in the global business of Security
Slide 13: S&W: 87% Brand Awareness
S&W: 87% Brand Awareness A company-sponsored, 2004 survey asked consumers about their future purchase intent: Current Status Served Served Served (March 2006) Will enter January 2007 Will enter with TCA Not served Not served S&W Rank #1 #1 #1 #3 #3 #3 #4 Product / Service Revolvers Pistols Tactical
Slide 14: Growth Strategy
Growth Strategy platform Use “Safety-Security-Protection-Sport” to enter new markets while continuing to drive growth in our core businesses Drive Growth in Handgun Market Innovative Products Law Enforcement Military/Federal Gov’t International Sporting Goods · • • • • Diversify into New Markets Lon
Slide 15: Our Current Markets
Our Current Markets Y/Y Growth Q2 FY07 +52% Q2 FY07 +40% Q2 FY07 +148% Targets Firearms Distributors 2800 Independent U.S. Military Federal Agencies and Homeland Security State & Municipal Law Enforcement Agencies Dealers Big Box Retailers Channel Direct Sales Force Washington D.C. presence & lobbyi
Slide 16: Strong Year Over Year Growth
Strong Year Over Year Growth 52% Q2-07 37% Q1-07 32% Q4-06 24% Q3-06 Sporting Goods Sales Growth Y/Y Transition to Direct Sales Force in Q2 8% Q2-06 (Percent Growth) 60.0% 50.0 40.0 30.0 20.0 10.0 0.0 44% Q2-07 54% Q1-07 44% Q4-06 24% Q3-06 Firearms Sales Growth Y/Y Transition to Direct Sales Force
Slide 17: Addressing New Growth Opportunities
Addressing New Growth Opportunities Defense License Homeland Security Acquire Law Enforcement & Criminal Investigation Manufacture Safety...Security...Protection...Sport Long Guns Outsource Market Opportunities: Opportunities for Entry:
Slide 18: Entering New Markets: Long Guns
Entering New Markets: Long Guns 2005 U.S. DOMESTIC NON-MILITARY MARKET Shotguns $354MM (32%) The long gun market is 60% larger than the handgun market Rifles $506MM (46%) · Tactical Rifles (14%) $152MM (7%) $1.1 Billion Black Powder $80MM BATF 2005 Excise Tax Study and Smith & Wesson Management Esti
Slide 19: Why the Long Gun Market?
Why the Long Gun Market? Sales & orders exceeded 10% of market in first year Capacity constrained Law enforcement agencies committed to date: 44 M&P15 Tactical Rifle • • • S&W has announced entry into shotguns in 2007 $1.1 Billion Market: 60% larger than handguns Consumers already perceive S&W as a
Slide 20: Experienced Management Team
Experienced Management Team Previous Experience 30 yrs business experience with Kohler, Stanley Works, Black and Decker, and Procter & Gamble 22 yrs accounting and finance experience with Smith & Wesson 22 yrs business experience with Kohler, Stanley Works and Black & Decker 24 yrs sales and marketi
Slide 21: Financial Overview
Financial Overview Smith &Wesson’
Slide 22: Quarterly Income Statement Summary
Quarterly Income Statement Summary 2006 $98.4 32.7 32.9% $11.2 6.2 $0.15 (a) Six Months Ended Oct. 31, 2005 $67.4 20.1 29.3% $6.1 3.4 $0.09 2006 $50.8 16.1 31.2% $5.3 2.9 $0.07 Three Months Ended Oct. 31, 2005 $35.5 10.5 29.3% $1.2 0.7 $0.02 (US$ in millions, except per share data) Sales Gross Profi
Slide 23: Pro Forma Balance Sheet Summary
Pro Forma Balance Sheet Summary Pro Forma 0.7 45.8 231.5 129.7 181.7 49.8 231.5 50.6 for Acquisition and Offering $ $ $ $ $ As of Oct. 31, 2006 0.7 31.6 104.7 19.7 54.9 49.8 104.7 26.8 $ $ $ $ $ (US$ in millions) Cash & Cash Equivalents Accounts Receivable Total Assets Total Debt Total Liabilities E
Slide 24: Acquisition Accounting
Acquisition Accounting in accordance with the accounting pronouncements and amortized over to inventory and Under recent accounting pronouncements related to purchase accounting, certain intangible assets, sales backlog and inventory must be valued at “fair value” their estimated useful lives. As a
Slide 25: Updated FY07 Annual Guidance Pro Forma for Acquisition
Updated FY07 Annual Guidance Pro Forma for Acquisition FY07 $218.6 11.5 36.6 $0.27 Non-cash Purchase Accounting Adjustments - $(4.4) — $(0.10) Thompson/ Center Arms January — April 2007 $18.6 0.9 2.7 $0.01 SWHC Standalone FY07 $200.0 15.0 33.9 $0.36 (US$ in millions, except per share data) Net Produ
Slide 26: Updated FY08 Annual Guidance Pro Forma for Acquisition
Updated FY08 Annual Guidance Pro Forma for Acquisition FY08 $320.0 27.0 62.2 $0.60 SWHC Standalone FY08 $250.0 22.0 47.5 $0.52 (US$ in millions, except per share data) Net Product Sales Net Income EBITDA Earnings per Diluted Share:
Slide 27: Investment Highlights
Investment Highlights Accretive in next fiscal year (Y/E 4/30/08) Provides hunting and long gun manufacturing expertise Highly valuable Smith & Wesson brand Large market opportunity in safety, security, protection and sport Leading market position in the handgun market Experienced management team wi
Slide 28: Appendix: EBITDA Reconciliation
Appendix: EBITDA Reconciliation Smith & Wesson (US$ in millions) Net Income Income Taxes Interest Expense Depreciation FAS 123R Amortization of Acquisition Related Intangibles EBITDA Thompson/Center Arms (US$ in millions) Net Income Income Taxes Interest Expense Depreciation Management Fee to Thomps
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