Smith & Wesson Brands, Inc. · NASDAQ:SWBI
Smith & Wesson Brands — Investor Presentation (December 2005)
33 slides from Smith & Wesson Brands's investor presentation, Dec 9, 2005
Slide 1: Smith & Wesson
Smith & Wesson Mike Golden, President, CEO John Kelly, CFO December 2005
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: Investment Highlights
Investment Highlights Leadership Team in Place A New Market Approach...Safety, Security, Protection, Sport A Strong, Untapped Legacy Brand Innovative New Products Growth Opportunities in Core Business Diversification into New Markets Significant Productivity Enhancement Opportunities Positive Legisl
Slide 4: Experienced Leadership Team
Experienced Leadership Team... Mike Golden, President, CEO John Kelly, CFO Tom Taylor, VP Marketing Ken Chandler, VP Operations Leland Nichols, VP Sales Barbara Hunnicutt, VP Licensing Ann Makkiya, Corporate Counsel Bill Lachenmeyer, VP Human Resources MSPhotoEd.3 MSPhotoEd.3 MSPhotoEd.3 MSPhotoEd.3
Slide 5: Company Background
Company Background 153 Year Old American Company Headquarters: Springfield, Massachusetts 736 Employees Two Manufacturing Facilities (Union-Free): Springfield, Massachusetts Revolvers, Pistols Houlton, Maine Handcuffs, Pistols 5
Slide 6: Company Background
Company Background Largest U.S. Manufacturer of Handguns Largest U.S. Exporter of Handguns Largest U.S. Manufacturer of Handcuffs # 1 in U.S. Revolver Market Share # 3 in U.S. Pistol Market Share A Legacy Brand With 87% Brand Awareness With the General Public (Not Just Firearm Enthusiasts) Source: F
Slide 7: S&W: 87% Brand Awareness
S&W: 87% Brand Awareness Extremely high in our served markets, and in markets we do not serve today: Source: American Sports Data - Nov, 2004 A company-sponsored, 2004 survey asked consumers about their purchase intent for the following products & services. S&W ranked as follows: Revolvers #1 (serve
Slide 8: A New Market Approach
A New Market Approach Smith & Wesson Yesterday: Selling Handguns in the U.S. Sporting Goods Channel Smith & Wesson Today: A Global Leader in Safety...Security...Protection...Sport GOAL 8
Slide 9: New Market Possibilities
New Market Possibilities Existing Handgun Business Brand Development Innovative New Products Sporting Goods Law Enforcement Military/Federal Government International Long Guns Training/Ranges Less Lethal Ammunition Firearms Accessories Security Systems Criminal Investigation Homeland Defense Product
Slide 10: U.S. Domestic Non-Military Handgun Market
S&W MARKET REVOLVERS 54.3 149 S&W MARKET PISTOLS 46 483 $138MM REVOLVERS PISTOLS $47MM $467MM S&W 2005 (Includes Walther Products) Market 2004 2004 U.S. DOMESTIC NON-MILITARY MARKET - 2005 S&W SALES $52MM 38% SOURCE: BATF 2004 Excise Tax Study & Smith & Wesson Management Estimates 10% Revolver / Pis
Slide 11: Innovative New Products
Innovative New Products Revolvers 500 460 XVR 460 XVR S&W 1911 Family Pistols Scandium 11 Military & Police Pistol Series
Slide 12: Introducing the Smith & Wesson Military & Police Pistol
Introducing the Smith & Wesson Military & Police Pistol 12 First units shipped December 5, 2005 Engineered with input from over a dozen LE and military organizations Unique features incorporate versatility, enhanced durability and safety. World class product introduction, regarded as the most profes
Slide 13: Channel Management Strategy
Channel Management Strategy Local Law Enforcement Sporting Goods International Federal Law Enforcement & Military
Slide 14: Handgun Growth Strategy: Sporting Goods Channel
Handgun Growth Strategy Sales Leadership in Place Eoin B. Stafford, Director of Sporting Goods Sales - Formerly H&K Expanded Smith & Wesson Employee Sales Force (+16) Elimination of manufacturer's reps Demand creation: Product "pull" vs. "push" Increased focus on high margin segments Engraving, Comm
Slide 15: Handgun Growth Strategy: Military/Federal Government Channel
Handgun Growth Strategy Leadership in Place Ernest Langdon, Director of Federal Law Enforcement/Military Sales Formerly Operations Manager, Law Enforcement Sales with Beretta Tactical training provider to law enforcement and military Multiple national and world titles in competitive shooting sport L
Slide 16: Handgun Growth Strategy: Law Enforcement Channel
Handgun Growth Strategy Leadership in Place Bryan James, Dir. Law Enforcement Sales - formerly Glock Expanded Sales Organization Two additional top sales executives hired from Glock Increased from 5 to 8 Regional Sales Managers Launched M&P Pistol Designed specifically to penetrate police/military m
Slide 17: Handgun Growth Strategy: International Channel
Handgun Growth Strategy Leadership in Place: Amaro Goncalves, Dir. International Sales - formerly Colt Launched M&P Pistol Designed specifically to penetrate police/military markets Lobbying underway Shorten Federal export approval timeline Raise $1,000,000 Congressional approval level Established &
Slide 18: New Market Opportunities & Options
Outsource License Manufacture Long Guns Training Ranges Ammunition Security Systems Criminal Investigation Homeland Defense Products/Services Less Lethal Shotguns Hunting Rifles Tactical Rifles Options: Decline Opportunity Acquire Safety...Security...Protection...Sport New Market Opportunities & Opt
Slide 19: U.S. Domestic Non-Military Market: Rifles & Shotguns
2004 (CALENDAR) U.S. DOMESTIC NON-MILITARY MARKET - RIFLES & SHOTGUNS SOURCE: BATF 2004 Excise Tax Study and Smith & Wesson Management Estimates Former Beretta/Benelli Product Manager, Steve Skrubis leading S&W's entry into Long Gun Market Long Gun Market: $1B 19 RIFLES SHOTGUNS TACTICAL RIFLES 642
Slide 20: The Brand: Licensing Opportunities
The Brand: Licensing Opportunities FY 2005 Licensing Revenue: $1.8M Hearing & Eye Protection, Knives, Safes, Soft Air Guns, etc. Target: Grow Licensing Revenue 3-5X by 2009 Recent Licensees: Sentry Safe, Radiator Specialty (gun cleaning products) New Possibilities: Monitored Security Systems, Ammuni
Slide 21: The Brand: Re-Inventing a Legacy
The Brand: Re-Inventing a Legacy Inconsistent Message to a Limited Audience "Loud" and Visible Brand With a Consistent Message to a Diverse Audience GOAL 21
Slide 22: U.S. Domestic Non-Military Market and S&W Sales
S&W MARKET REVOLVERS 54.3 149 S&W MARKET PISTOLS 46 483 $138MM REVOLVERS PISTOLS $47MM $467MM S&W 2005 (Includes Walther Products) Market 2004 2004 (CALENDAR) U.S. DOMESTIC NON-MILITARY MARKET -2005 (FISCAL) S&W SALES $52MM 38% SOURCE: BATF 2004 Excise Tax Study & Smith & Wesson Management Estimates
Slide 23: Media Blitz
Media Blitz 36 magazine covers in 11 months Unprecedented in industry Outpacing all major competitors M&P - 22 Editorial features issued or committed 23 Visibility in core magazines, TV and radio as well as non-industry publications. Over 102 million total impressions. Wall Street Journal Front Page
Slide 24: Marketing Initiatives: NASCAR and Customer Affinity Programs
NASCAR Customer Affinity Programs: Marketing Initiatives 24
Slide 25: Operations / Manufacturing
Operations / Manufacturing Strong Team Supporting: Pistol Process Line New Product Development Initial Focus: Stabilize Operations Repeatable & predictable machinery Consistent Output Current Focus: Implementing Smith & Wesson Operating System Based on Toyota Production System Problem-Solving Proces
Slide 26: Driving Gross Margin Improvement
Driving Gross Margin Improvement Production Rates up Significantly Revolvers - 755 per day vs. 526 per day in December 2004 Pistols - 550 per day vs. 244 per day in December 2004 Objectives for FY 2006 include: Sales Growth Margin Expansion On Time Delivery 26 Dec- Oct Revolvers Guns Per Day 44% Pis
Slide 27: Legislative & Litigation Trends
2001 2002 2003 2004 2005 Industry Municipal Cases Pending or on Appeal 32 26 20 13 4 Product Liability Cases Pending Against S&W 10 8 5 4 2 Legislative & Litigation Trends 32 26 20 13 4 10 5 4 2 8 Cases 27 Protection of Lawful Commerce in Arms Act Signed into law October, 2005
Slide 28: Income Statement Summary
Income Statement Summary *In millions except for per share data 27
Slide 29: Income Statement Summary: Quarter Ended October 31, 2005
Income Statement Summary *In millions except for per share data 28 Quarter Ended October 31, 2005 Note: Quarter ended October 31, 2004 included $4.1 million in insurance refunds and reserve adjustments, or $2.2 million after-tax, or $.06 per share
Slide 30: Income Statement Summary: Six Months Ended October 31, 2005
Income Statement Summary 29 Six Months Ended October 31, 2005 *In millions except for per share data Note: Six months ended October 31, 2004 included $4.1 million in insurance refunds and reserve adjustments, or $2.2 million after-tax, or $.06 per share
Slide 31: Balance Sheet Summary
Balance Sheet Summary *In Millions 30
Slide 32: 2006 Guidance
2006 Guidance 2005 Actual Net Product Sales: +13 - 15 % $124.0m Income: $6.9 - $7.5M* $5.2 M* Earnings Per Fully Diluted Share: $0.19- $0.20* $.14* *Guidance takes into account expected adjustments to reflect the early adoption of Statement of Financial Accounting Standard No. 123R, Share-Based Paym
Slide 33: Investment Highlights
Investment Highlights Leadership Team in Place A New Market Approach...Safety, Security, Protection, Sport A Strong, Untapped Legacy Brand Innovative New Products Growth Opportunities in Core Business Diversification into New Markets Significant Productivity Enhancement Opportunities Positive Legisl
Smith & Wesson Holding — Investor Presentation (December 2005) on 6ix