Smith & Wesson Brands, Inc. · NASDAQ:SWBI
Smith & Wesson Brands — Investor Presentation (June 2007)
30 slides from Smith & Wesson Brands's investor presentation, Jun 18, 2007
Slide 1: Smith & Wesson
Smith & Wesson Michael Golden, President/CEO John Kelly, CFO June 2007
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 • Highly valuable Smith & Wesson brand • Large market opportunity in safety, security, protection and sport • Leading market position in the handgun market • Recently entered all long-gun market segments (rifles, shotguns) • Experienced management team with proven track record
Slide 4: Company Profile
Company Profile • 155-year old American firearms company • Largest U.S. manufacturer of handguns & handcuffs • 2006 market share: – #1 in revolvers — FY2007 sales growth: 4.3% – #3 in pistols — FY2007 sales growth: 59.7% • New growth fueled by: – Taking share in $625M core handgun market – Expansion
Slide 5: Experienced Management Team
Experienced Management Team • Michael Golden, President/CEO – 30 Yrs: Kohler, Stanley Works, Black and Decker, Procter & Gamble • John Kelly, CFO – 22 Yrs: Smith & Wesson • Leland Nichols, President, Smith & Wesson Firearms – 22 Yrs: Kohler, Stanley Works, Black and Decker • Gregg Ritz, President, S
Slide 6: S&W: 87% Brand Awareness
S&W: 87% Brand Awareness A company-sponsored, 2004 survey asked consumers about their future purchase intent: Product / Service S&W Rank Current Status Revolvers #1 Served Pistols #1 Served Tactical Rifles #1 Served: March 2006 Shotguns #3 Served: June 2007 Hunting Rifles #3 Planned launch: Mid-2007
Slide 7: Our Vision
Our Vision The most recognizable company in the global business of Safety...Security...Protection...Sport
Slide 8: Growth Strategy
Growth Strategy Use “Safety-Security-Protection-Sport” platform to enter new markets while continuing to drive growth in our core firearms businesses Drive Growth in Handgun Market • Innovative Products • Law Enforcement • Military/Federal Gov’t • International • Sporting Goods Diversify into New Ma
Slide 9: Handguns Revolvers/Pistols
Smith & Wesson — Handguns Revolvers/Pistols
Slide 10: Revolver / Pistol Market: $626MM
Revolver / Pistol Market: $626MM 2005 (CALENDAR) U.S. 2006 (FISCAL) S&W SALES DOMESTIC NON-MILITARY MARKET – Revolvers Pistols $490MM $136MM $61MM 45% $52MM* 11% S&W 2006 ( Includes Walther Market 2005 Products) *Does not include $10MM in Sigma Pistol Sales to U.S. Gov’t for Afghan Military SOURCE:
Slide 11: Firearms Sales (Year over Year Growth %)
Smith & Wesson Firearms Sales (Year over Year Growth %) 60% 53% 50% 48% 46% 44% 43% 40% 30% 24% 22% 20% 14% 13% 10% 10% 1% 0% - -3% - -10% Q1-05 Q2-05 Q3-05 Q4-05 Q1-06 Q2-06 Q3-06 Q4-06 Q1-07 Q2-07 Q3-07 Q4-07
Slide 12: Channel Management Strategy
Channel Management Strategy Sporting Goods Local LE
Slide 13: Strategy: Sporting Goods Channel
Strategy: Sporting Goods Channel • Growth in FY 2007: +35.2% • Sales Force Conversion: 30 U.S. Sales Employees • New Product Support: – M&P Pistol Family – M&P15 Tactical Rifle Series – “Classics” Series – Shotguns • Consumer “Pull” Promotions & Marketing – Shooting for Hawaii – NASCAR – Unrivaled e
Slide 14: Retail Focus
Smith & Wesson Retail Focus • Retail Impact Program – In-Store Merchandising – Focused brand message – Enhanced product presentation
Slide 15: Sporting Goods Sales Growth
Sporting Goods Sales Growth FY ($ In Millions)
Slide 16: Strategy: Military/Federal Government
Strategy: Military/Federal Government • Growth in FY 2007: $10.7MM vs $11MM in 2006. – Won: Four orders / 75K Units – US Gov’t to Afghanistan Military • Regular Visits to Washington by CEO, COO, Lobby Firm – Increasing visibility on industry issues, potential orders – Quality products, made in Ameri
Slide 17: Strategy: Law Enforcement
Strategy: Law Enforcement • Smith & Wesson originally owned 98% of LE: today 10% – Market Size: 17,000 Departments and 800,000 Officers – Goal: Re-take leadership with M&P Pistols & Rifles • Designed with and for Law Enforcement • Growth in FY 2007: 126% – 80% Win Rate – Represents 19,000 officers –
Slide 18: Strategy: International
Strategy: International • Established & expanding sales channel and revenue base – Upgrading sales agents to enhance contacts in police/military • Europe, Latin America, Asia, Middle East • New Product Support: – M&P9: Domestic & international markets • Lobbying focus: – Shorten Federal export appro
Slide 19: Long Guns Rifles/Shotguns
Smith & Wesson — Long Guns Rifles/Shotguns
Slide 20: Entering New Markets: Long Guns
Entering New Markets: Long Guns The long gun market is 80% larger than the handgun market 2005 U.S. DOMESTIC NON-MILITARY MARKET Bolt Action Rifles Shotguns $506mm (46%) $354MM (32%) $1.1 Billion Tactical Rifles $152MM (14%) Black Powder Rifles $80MM (7%)
Slide 21: Why the Long Gun Market?
Why the Long Gun Market? • $ 1.1 Billion Market: 80% larger than handguns • Consumers already perceive S&W as a leader • Highly fragmented and void of sophisticated marketing • Solidly executing on long gun entry plan: – Entered long gun market March 2006: M&P15 Tactical Rifle • Sales/orders exceed
Slide 22: Thompson/Center Arms
Thompson/Center Arms • Company Overview – 41-year old long gun company in Rochester, NH – Leading player in black powder and interchangeable firearms systems markets – 52% market share in black powder – Robust new product pipeline for 2007 • Launched first bolt action rifle January 2007 — ICON • Acq
Slide 23: Building the Brand: Licensing
Building the Brand: Licensing • Upgrading Retail Licensee Portfolio: – Wilsons Leather, Gun Safes, Gun Cleaning Products, Hats/T-shirts, Automotive Future: Long Gun Accessories • Establishing licensees in professional markets where Smith & Wesson can do business beyond licensing: – Explosive-detecti
Slide 24: Enhancing Productivity
Enhancing Productivity • Achievements through FY 07: — Turns improvement +32% — Machine uptime improved to 85% — Guns/day output +57% vs ’05 +22% vs ’06 — Productivity ratio + 7% vs prior year • Blending craftsmanship with technology: — Implementing Smith & Wesson Operating System — Investing in Equ
Slide 25: Financial Overview
Financial Overview
Slide 26: Quarterly Income Statement Summary
Quarterly Income Statement Summary Three Months Ended April 30, Year Ended April 30, (US$ in millions, except per share data) 2006 2007 2006 2007 Sales $51.9 $82.6 $157.9 $234.8 Gross Profit 18.2 26.6(a) 49.6 76.3(a) Gross Margin 34.8% 32.1% 31.0% 32.3% Operating Income $6.6 $9.6 $14.5 $24.4 Net Inc
Slide 27: Annual Income Statement Summary
Annual Income Statement Summary Year Ended April 30, (US$ in millions, except per share data) 2004 2005 2006 2007 Sales $ 117.9 $ 124.0 $ 157.9 $ 234.8 Gross Profit 39.1 40.9 49.6 76.3 Gross Margin 32.7% 32.5% 31.0% 32.3% Operating Income $ 4.8 $ 11.2 $ 14.5 $ 24.4 Operating Margin 4.0% 8.9% 9.9% 10
Slide 28: FY08 Annual Guidance
FY08 Annual Guidance (US$ in millions, except per share data) Net Product Sales $330.0 Net Income 28.0 Earnings per Diluted Share: $0.62
Slide 29: Investment Highlights
Investment Highlights • Highly valuable Smith & Wesson brand • Large market opportunity in safety, security, protection and sport • Leading market position in the handgun market • Recently entered all long-gun market segments (rifles, shotguns) • Experienced management team with proven track record
Slide 30: @resn by
@resn by Smith &Wesson’ Smith&Wesson Prt
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