Smith & Wesson Brands, Inc. · NASDAQ:SWBI
Smith & Wesson Brands — Investor Presentation (February 2014)
30 slides from Smith & Wesson Brands's investor presentation, Feb 6, 2014
Slide 1: February 2014 Smith & Wesson Investor Presentation
February 2014 Smith & Wesson Investor Presentation
Slide 2: Safe Harbor
2 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 n
Slide 3: Business Highlights
3 Business Highlights U.S. market leader in firearms with 161 years of rich history Iconic brand with 92% aided awareness* Smith & Wesson(r) Brand = revolver Innovative product portfolio serving broad user groups Revolvers, polymer pistols, metal pistols, concealed carry pistols and revolvers, bolt
Slide 4: Vision / Mission
4 Vision / Mission Our Vision: The leading firearms manufacturer Our Mission: To allow our employees to design, produce, and market high-quality, innovative firearms that meet the needs and desires of our consumer and professional customers
Slide 5: Focus, Simplify, Execute
5 Focus, Simplify, Execute Strategy for growth - underpinned by a focus on firearms Consumer and professional markets Family of brands: Smith & Wesson(r) M&P(r) Thompson/Center Arms(tm) Performance Center(r) M&P as a brand and product platform: Polymer pistols Operations: Ready to adapt to changing
Slide 6: Experienced Leadership Team
6 Experienced Leadership Team James Debney, President & CEO 20+ years: multinational consumer and business-to- business environments including President of Presto Products Co., a $500 million business unit of Alcoa Consumer Products Jeffrey Buchanan, EVP & CFO 25+ years: private and public company e
Slide 7: Experienced Management Team
7 Experienced Management Team Mario Pasantes _______________ Sr. VP, Marketing and International Sales Alcoa, Inc. Coca-Cola Pillsbury Mark Smith _______________ VP, Manufacturing and Supply Chain Management Alvarez & Marsal Ecolab Robert Cicero ________________ VP, General Counsel, Chief Compliance
Slide 8: Q2 Fiscal 2014 Highlights
8 Q2 Fiscal 2014 Highlights (October 31, 2013 - From Continuing Operations) Quarterly sales of $139.3M, +2.0% Y/Y Excluding Walther, sales grew 9.2% Handgun sales, including M&P pistols, grew by 27.4% Gross profit margin 41.6% versus 35.5% one year ago Operating income 20.7% versus 19.5% one year ag
Slide 9: Bond Issuance, Buyback and New Capital Structure
9 June 2013 $100M Bond Issuance Company issued $100M of new 5.875% Senior Notes due 2017 Dec 2012-Dec 2013 $120M Buyback Completed $15M Additional Authorized August 2013 $75M New Line of Credit Company completed a new revolving line of credit New Capital Structure Company used about 50% of the proce
Slide 10: Financial Results and Guidance
10 Financial Results and Guidance (Fiscal Year Ended April 30 - From Continuing Operations) Actual and Estimated Fiscal Year April 30 Sales (in Millions) Q3FY14: Sales $140.0M - $145.0M GAAP Diluted EPS $0.28 - $0.30 Incorporates $1.5M in expected non-recurring, ERP related costs Fully diluted weigh
Slide 11: Industry Indicators
11 Industry Indicators NICS NICS background checks are conducted at the point of sale, tracked by the FBI, and reported monthly. NSSF adjusts the total to eliminate permit-related checks and other "noise" Adjusted NICS serves as a proxy for consumer sales since Smith & Wesson sells only to federally
Slide 12: Adjusted NICS Through December 2013
12 Source National Shooting Sports Foundation (NSSF) Adjusted NICS. NSSF adjusts FBI NICS data to eliminate background checks associated with permit applications and checks on active CCW permit databases. NSSF adjusted NICS data provides a more accurate picture of market conditions. (CHART) Adjusted
Slide 13: Industry: Growth in Handguns, Long Guns, Permit Checks
Industry: Growth in Handguns, Long Guns, Permit Checks NICS Checks By Type '06 - '13 ° RO SAE Sk Ge Se a a a ae eS eT — Permit —Handgun_—tong Gun Linear (Permit) —tinear (Handgun) __— Linear (Long Gun)
Slide 14: Industry Shipments of Handguns and Long Guns
Industry Shipments of Handguns and Long Guns Q1-Q3 CY2013 (in Millions) Total Handguns & Long Guns Total Handguns Total Long Guns* 14 (CHART) (CHART) (CHART) + 23% (YTD) + 43% (YTD) + 33% (YTD) *Source: Federal Excise Tax collections on manufacturing sales value as translated sales by National Shoot
Slide 15: 2011 U.S. Consumer Firearms Market
2011 U.S. Consumer Firearms Market* 2011 U.S. Consumer Firearms Market* 15 *According to 2011 reports by the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives ("ATF"), the U.S. firearm manufacturing industry has grown at a compound annual growth rate in units of 12% from 2006 through 2011. SW
Slide 16: Consumer Market - U.S.
16 Consumer Market - U.S. NSSF Survey, 2011 (10,000 Respondents) 90% of survey respondents who own a handgun own multiple firearms; the average number of firearms owned by those respondents was 8.1 NSSF Survey, April 2013 (8,300 Respondents) Of those who have been sport shooting in 2012, 20% were ne
Slide 17: Pistols Driving Growth in Handguns
17 Pistols Driving Growth in Handguns Pistols now represent over 85% of units sold Pistols now represent over 85% of units sold Pistols now represent over 85% of units sold Source: BATF and U.S. Intl Trade Commission, includes U.S. manufacture plus imports, excludes exports
Slide 18: Industry: Pistols vs. Revolvers
18 Industry: Pistols vs. Revolvers Pistols and revolvers have different attributes, but pistols are preferred by both professionals and consumers Pistol advantages versus revolvers: Ergonomics/comfort High tech/cutting edge Modern shape Trigger pull Capacity Safety features Revolver advantages versu
Slide 19: Major Focus: M&P Pistol Growth
19 Major Focus: M&P Pistol Growth Current Situation: Pistols are more than 85% of handguns sold Compact/slim and full-size polymer pistols are increasing in popularity M&P polymer pistols are highly sought after by professionals and consumers - especially M&P Shield Our Focus: Grow M&P pistol market
Slide 20: Retail associate incentive rewards program
Key element in our go-to-market strategy Retail associate incentive rewards program Intuitive graphic interface, easy to use & register sales Points never expire, and are transportable Extensive catalog of products & experiences, including select S&W, M&P, and T/C(r) firearms Two-way dialogue opport
Slide 21: M&P Advertising: Communicating Directly with the Consumer
M&P Advertising: Communicating Directly with the Consumer 21 Welcome To The Closest Bond Yet Between Hand and Gun Numerous Features. Not One You'll Have To Think About
Slide 22: M&P - Proven Performance
22 M&P - Proven Performance M&P - Proven Performance Strong & Marketable Differences
Slide 23: The M&P Shield
23 The M&P Shield Designed to meet the demand for personal protection and concealed carry, the M&P Shield features: Powerful 9mm or .40 S&W calibers Lightweight, slim one-inch profile for comfortable carry Compact overall length of 6.1" M&P proven ergonomic design Thumb safety Includes two magazines
Slide 24: SHOT Show 2014: New Performance Center and ProSeries Products
24 SHOT Show(r) 2014: New Performance Center(r) and ProSeries Products M929 - A 9mm competition revolver inspired by renowned, multi-record holder Jerry Miculek M686 - A classic, time-tested .357 Magnum enhanced with popular self-defense features M629 - A purpose built hunting package based on the r
Slide 25: SHOT Show 2014: New M&P Products
25 SHOT Show(r) 2014: New M&P Products M&P BODYGUARD(r) 380 - A sub-compact .380 ACP pistol enhanced with M&P style features M&P15-22 (Multi-color) - Popular M&P15-22 rifle now in four new camouflage finishes M&P10 - Multi-purpose M&P10 rifle now available with 20 round magazine capacity M&P15 300 W
Slide 26: SHOT Show 2014: New Smith & Wesson Models
26 SHOT Show(r) 2014: New Smith & Wesson Models Model 69 Combat Magnum - Smith & Wesson's first L-Frame revolver in historic .44 Magnum Model 66 Combat Magnum - Collectible Combat Magnum revolver returns to the product lineup Governor(r) - Multi-caliber revolver now offered in popular matte silver f
Slide 27: SWHC: Firearms Growth Drivers - California Microstamping
Confidential, not for redistribution 27 SWHC: Firearms Growth Drivers Impact of California Microstamping Regulations In California, all new handguns must be approved and placed on a Roster, and all existing handguns must be recertified annually Recently, California began requiring all new pistols pl
Slide 28: Professional Market - Firearms Growth Drivers
28 Professional Market Law Enforcement / Federal Government International - large orders, e.g., Belgium, Australia, Canada, Puerto Rico United States Army Modular Handgun System (M-9 pistol) replacement: Attended 1st industry day Dec. 2013 - Second industry day planned Feb. 2014 Smith & Wesson will
Slide 29: Our Strategic Direction
29 Our Strategic Direction Grow sales and increase profitability Optimize manufacturing capacity Add flexible capacity, internally and externally Focus on M&P pistols and conceal carry products Financial model Quarterly gross margins in the range of 37% - 41% Quarterly operating margins in the range
Slide 30: February 2014 Smith & Wesson
February 2014 Smith & Wesson Investor Presentation
Smith & Wesson Holding — Investor Presentation (February 2014) on 6ix