Smith & Wesson Brands, Inc. · NASDAQ:SWBI
Smith & Wesson Brands — American Outdoor Brands — Investor Presentation (March 2017)
56 slides from Smith & Wesson Brands's investor presentation, Mar 14, 2017
Slide 1: Investor Presentation March 2017
NASDAQ: AOBC Investor Presentation March 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 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). Holding
Slide 4: Vision, Mission, Strategy
To be the leading provider of quality products for the shooting, hunting, and rugged outdoor enthusiast To leverage our employees’ capabilities and experiences to design, produce, and market high quality, innovative firearms, accessories, and outdoor products that meet the needs and desires of our c
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 shared services
Provides leadership and establishes the strategic direction of the Company Electro-Optics Develop, market, and sell electro-optics products Accessories Develop, market, and sell accessories Firearms Develop, market, and sell firearms Manufacturing Services Provide manufacturing services to internal
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 Calendar Year February 2017
Adjusted NICS CY February 2017 Handguns (15.4)% Long Guns (9.9)% (Y/Y ) Source: NSSF The 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 conditi
Slide 11: Adjusted NICS Fiscal Year February 2017
FYQ1 FYQ2 FYQ3 FYQ4 Adjusted NICS FY February 2017 Source: NSSF The 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. August and Octob
Slide 12: Adjusted NICS Increased Average 7.5% Annually
Adjusted NICS Increased An Average of 7.5% Annually Over 10 Years* *CY07 – CY17 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
Firearms 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 through a dis
Slide 15: Overview Firearms Business
Overview Firearms Business 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 exce
Slide 19: M&P10 6.5 Creedmoor and New Products
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: ee ©CCMPAS S
ee ©CCMPAS S
Slide 21: Overview Manufacturing Services Business
Overview Manufacturing Services Business 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 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 Target Markets
Targeted Growth Manufacturing Services Target Markets
Slide 24: Outdoor Products & Accessories
Outdoor Products & Accessories $194.5 million in sales, + 57.5% Y/Y 83% of total sales 42% gross margin Q2 FISCAL 2017 $36.5 million in sales, 126.2% Y/Y ($19.6 million relates to acquisitions in Q3) 16% of total company sales 49.1% gross margin (Excluding fair value inventory step-up and backlog ex
Slide 25: Overview Accessories Business
Overview Accessories Business 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 Business Model: Design/Source/Distribute
Accessories Business 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 Business Strategy
Lorem ipsum dolor sit amet consectetur etiam semper sit amet Accessories Business 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 Business New for 2017 SHOT Show
Accessories Business New for 2017 SHOT Show
Slide 29: BTI Tools & UST – New for 2017 SHOT Show
Accessories Business BTI Tools & UST – New for 2017 SHOT Show 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
Slide 30: Electro-Optics Business
Electro-Optics Business 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: Outdoor Recreation Business
Outdoor Recreation Business 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 35: 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 36: 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 37: Financial Review
Financial Review © 2017 American Outdoor Brands Corp. All Rights Reserved.
Slide 38: 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 March 2, 2017. The Company is not updating any of this guidance t
Slide 39: Annual 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 March 2, 2017. The Company is not updating any of this guidance to the present date nor does its inclusion constitute a reiteration or modification of this informatio
Slide 40: Quarterly Revenue
U.S.$ Millions $211 $234 +11% +126% +1% Quarterly Revenue $131
Slide 41: Quarterly Margins
GROSS MARGIN OPERATING PROFIT MARGIN ADJUSTED EBITDAS MARGIN = Represents non-GAAP: See Appendices for GAAP to non-GAAP reconciliations. Quarterly Margins
Slide 42: Profitability
NET INCOME = Represents non-GAAP: See Appendices for GAAP to non-GAAP reconciliations. DILUTED EPS NA NA NA NA U.S.$ Millions Profitability
Slide 43: Condensed Income Statement
CONDENSED INCOME STATEMENT For three months ended For the nine months ended January 31, 2017 January 31, 2016 January 31, 2017 January 31, 2016 (U.S.$ Thousands, except per share data) Net sales $233,523 $210,786 $674,002 $501,791 Cost of sales 134,212 124,128 389,517 300,048 Gross profit 99,311 86,
Slide 44: Condensed Balance Sheet and Cash Flows
CONDENSED BALANCE SHEET CONDENSED CASH FLOWS For the period ending: (U.S.$ Thousands) For the nine months ended: (U.S.$ Thousands) January 31, 2017 April 30, 2016 January 31, 2017 January 31, 2016 Cash and cash equivalents $ 54,253 $ 191,279 Net cash provided by operating activities $ 109,524 $ 73,7
Slide 45: Capital efficiency and share repurchase highlights
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 46: Financial Guidance
Note: Guidance for revenue, GAAP earnings per share, non-GAAP earnings per share, tax rate, and share count reflects information as of March 2, 2017. The Company is not updating any of this guidance to the present date nor does its inclusion constitute a reiteration or modification of this informati
Slide 47: Appendices
Appendices © 2017 American Outdoor Brands Corp. All Rights Reserved.
Slide 48: 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 49: 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 50: Income Statement
Income Statement January 31, 2017 January 31, 2016 January 31, 2017 January 31, 2016 Net sales $ 233,523 $ 210,786 $ 674,002 $ 501,791 Cost of sales 134,212 124,128 389,517 300,048 Gross profit 99,311 86,658 284,485 201,743 Operating expenses: Research and development 2,764 2,521 7,614 7,612 Selling
Slide 51: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation $ % of Sales $ % of Sales $ % of Sales $ % of Sales GAAP gross profit 99,311 $ 42.5% 86,658 $ 41.1% 284,485 $ 42.2% 201,743 $ 40.2% Fair value inventory step-up and backlog expense 777 0.3% — — 4,601 0.7% — — Discontinued operations — — — — — — 52 0.0% Non-GAAP gross
Slide 52: GAAP to Non-GAAP Reconciliation Adjusted EBITDAS
GAAP to Non-GAAP Reconciliation Adjusted EBITDAS January 31, 2017 January 31, 2016 GAAP net income 32,453 $ 31,434 $ Interest expense 1,854 2,140 Income tax expense 15,809 16,630 Depreciation and amortization 12,974 9,555 Stock-based compensation expense 2,465 1,639 Fair value inventory step-up and
Slide 53: GAAP to Non-GAAP Reconciliation EPS
GAAP to Non-GAAP Reconciliation EPS Net sales (in thousands) 200,000 $ 220,000 $ 874,000 $ 894,000 $ GAAP income per share - diluted 0.26 $ 0.36 $ 2.01 $ 2.11 $ Acquisition-related costs — — 0.07 0.07 Amortization of acquired intangible assets 0.09 0.09 0.31 0.31 Corporate rebranding expense — — 0.0
Slide 54: Free Cash Flow
Free Cash Flow January 31, 2017 January 31, 2016 January 31, 2017 January 31, 2016 Net cash provided by operating activities 48,150 $ 50,982 $ 109,524 $ 73,743 $ Net cash used in investing activities (41,032) (4,678) (237,702) (18,842) Acquisition of businesses, net of cash acquired 33,010 — 211,069
Slide 55: Non-GAAP financial measures
Lorem ipsum dolor sit amet consectetur etiam semper sit amet In this presentation, 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 56: 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
American Outdoor Brands — Investor Presentation (March 2017) on 6ix