Smith & Wesson Brands, Inc. · NASDAQ:SWBI
Smith & Wesson Brands — Investor Presentation (January 2016)
45 slides from Smith & Wesson Brands's investor presentation, Jan 19, 2016
Slide 1: January 2016 Investor Presentation
JANUARY 2016 INVESTOR PRESENTATION 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: Smith & Wesson Overview
SMITH & WESSON OVERVIEW The firearms division consists of products and services manufactured and sold from our Massachusetts, Maine, and Connecticut facilities, which includes revolvers, pistols, rifles, handcuffs, and related products sold through a distribution chain and directly to consumers and
Slide 4: The #1 Firearm Brand in America
THE #1 FIREARM 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 is a Smith & Wesson Endorser brand to M&P® So
Slide 5: Ways to U.S. Sporting Goods Market
6 BIG BOX RETAILERS 2 BUYING GROUPS 4 WAYS TO U.S. SPORTING GOODS MARKET Diverse path to market = Enhanced insight into retail environment 14 DISTRIBUTORS ( Inventory ) 61% of Consumer Channel Sales (TTM) Note: Additional non big-box, direct retail relationships not included DIRECT DIRECT se Buying
Slide 6: Adjusted NICS Checks CY08-CY15
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. CY08 - CY15 ADJUSTED NICS CHECKS CYQ1 CYQ2 CYQ3 CYQ4
Slide 7: Total NICS Firearms Background Checks
Source: FBI Total NICS Firearms Background Checks COMPONENTS OF NICS CY07 - CY15 NICS HG Checks NICS Permit Checks NICS LG Checks
Slide 8: Financial Guidance
FINANCIAL GUIDANCE Note: Guidance for revenue, GAAP earnings per share, non-GAAP earnings per share, tax rate, and share count reflects information as of January 4, 2016. The Company is not updating any of this guidance to the present date nor does its inclusion constitute a reiteration or modificat
Slide 9: Vision, Mission and Strategy
To be the leading provider of quality products for the shooting and 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 consumer and profe
Slide 10: Potential Future Structure
POTENTIAL FUTURE STRUCTURE New Division 1 : Develop, market, and sell outdoor products Shared Services Division: Provides admin services such as finance, HR, legal, IT, and logistics to all divisions Holding Corp Structure Visionary Target Condition 3-5 Years Manufacturing Services Division: Provide
Slide 11: Potential Future Structure
POTENTIAL FUTURE STRUCTURE New Division 1 : Develop, market, and sell outdoor products Shared Services Division: Provides admin services such as finance, HR, legal, IT, and logistics to all divisions Holding Corp Structure Visionary Target Condition 3-5 Years Manufacturing Services Division: Provide
Slide 12: Strategic Corporate Growth Objectives
Develop innovative products Take market share Grow our brands Enhance and add strategic partnerships Expand organically and inorganically into adjacent and complementary markets STRATEGIC CORPORATE GROWTH OBJECTIVES
Slide 13: 1. Develop Innovative Products
1. DEVELOP INNOVATIVE PRODUCTS From Mission Statement: Understand the needs and desires of customers (both consumer and professional) Focus on filling gaps in product portfolio Enhance existing products – new generations Based on researching consumer trends (pull not push) New products at 2016 SHOT®
Slide 14: New Products: Smith & Wesson
Introducing the Smith & Wesson SW22 Victory™ target pistol, the newest addition to the Smith & Wesson line of pistols. The SW22 Victory is a fully featured .22LR pistol with a convertible design suitable for multiple sporting applications. It comes standard with adjustable fiber optic sights and a m
Slide 15: New Products: M&P
M&P®15-22 SPORT™ Introducing the next generation M&P 15-22 modern sporting rifle. The M&P 15-22 SPORT is chambered in .22 LR and features a variety of product enhancements, including a new M&P Slim Handguard with Magpul® M-LOK™ system, which allow for a wide range of customization options for a vari
Slide 16: Performance Center New Products
Performance Center® M&P® SHIELD™ Ported The acclaimed Smith & Wesson Performance Center is now offering the highly popular M&P Shield pistol, in both 9mm and .40 S&W, with a factory ported barrel and slide. Engineered by the hands of some of the most skilled Master Gunsmiths in the world, the new M&
Slide 17: New Products: Thompson/Center Arms
New Striker Fired .50 caliber Muzzleloaders w/ Armornite® Precision Barrel 10293/ MSRP - $599 10291/ MSRP - $499 10292/ MSRP - $549 .50 CALIBER - 209 IGNITION MUZZLELOADERS New Entry Level Priced Bolt Action Rifle 10 Calibers Blued/Composite Precision Trigger 3-Position Safety 5-Round Rotary Magazin
Slide 18: New SKUs for 2016 SHOT Show
SMITH & WESSON OVERVIEW 121 new SKU’s scheduled for launch during the 2016 SHOT SHOW Product development focus on innovation and productivity remain incredibly strong Recent expansions within Engineering team have more than doubled new product introductions Accessories Division New Products 2016 new
Slide 19: 2016 New Products
SMITH & WESSON OVERVIEW 2016 New Products
Slide 20: 2016 New Products
SMITH & WESSON OVERVIEW 13 NEW PRODUCTS! TECHNICAL INNOVATION! QUALITY AND PERFORMANCE COMBINED! 2016 New Products
Slide 21: 2016 New Products
SMITH & WESSON OVERVIEW 2016 New Products
Slide 22: 2. Take Market Share
2. TAKE MARKET SHARE Analysis applies to all divisions This is the firearms example Size of bubbles indicate relative size of the markets Similar analysis would be done in Accessories S&W IS MARKET LEADER S&W IN MARKET, BUT NOT LEADER S&W IS NOT IN THE MARKET
Slide 23: 3. Grow Our Brands
3. GROW OUR BRANDS Our research indicates: Increasing consumer Awareness, Purchase Intent/Relevance, and Purchase Conversion leads to increased sales Successful marketing communications drives greater brand awareness Compelling products and messages drive purchase intent and relevance Brand awarenes
Slide 24: 4. Enhance Strategic Partnerships
Example 1: U.S. Army Modular Handgun System Replacement Teamed with General Dynamics, a large company with deep experience in government contracting and arms manufacturing Final RFP issued 8/28/15 Proposals due 1/28/16 We will submit next-generation M&P pistol that will also serve the consumer marke
Slide 25: 5. Expand Organically and Inorganically
Organic: Expand breadth of product portfolio and strive towards our goal of being the leading manufacturer in each major product category Firearms 5. EXPAND ORGANICALLY AND INORGANICALLY Inorganic: Seek companies that are strong in product categories where S&W is weak or non-existent, such as bolt a
Slide 26: Success Story: Accessories Acquisition
SUCCESS STORY: ACCESSORIES ACQUISITION DECEMBER 2014: Purchase of industry-leading provider of hunting and shooting accessories provides a broad, established platform for organic and inorganic growth of newly created accessories division Strategic Benefits: Financial Highlights: Strong brand portfol
Slide 27: Firearm Accessories Market Opportunity
Approximately 15 million people applied to purchase a gun in 2013 Cumulative amount for 2000 – 2013 is 127 million Retailers estimate that ~25% of gun purchases are made by first-time owners Consumers spend almost as much on gun accessories as part of a first gun purchase as they do on the firearm i
Slide 28: Investment Summary
INVESTMENT SUMMARY Leading position in the U.S. firearm market Iconic brand with customer driven product portfolio Focus strategically on new product opportunities New high growth, high margin accessories division Focus on high growth opportunities in the outdoor space Strong financial performance:
Slide 29: Thank You - Questions?
THANK YOU G QUESTIONS? @ smith &wesson
Slide 30: Financial Review
FINANCIAL REVIEW @ smith &wesson
Slide 31: Revenue - Annual
REVENUE - ANNUAL 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 January 4, 2016. The Company is not updating any of this guidan
Slide 32: Earnings Per Share - Annual
EARNINGS PER SHARE - ANNUAL Note: Guidance for revenue, GAAP earnings per share, non-GAAP earnings per share, tax rate and share count reflects information as of January 4, 2016. The Company is not updating any of this guidance to the present date nor does its inclusion constitute a reiteration or m
Slide 33: Balance Sheet & Cash Flow
BALANCE SHEET & CASH FLOW CONDENSED BALANCE SHEET CONDENSED CASH FLOWS For the period ending: (U.S.$ Thousands) For the three months ended: (U.S.$ Thousands) Oct. 31, 2015 April 30, 2015 Oct. 31, 2015 Oct. 31, 2014 Cash and equivalents $ 54,064 $ 42,222 Net cash provided by operating activities $ 22
Slide 34: Key Finance Activities
KEY FINANCE ACTIVITIES Optimizing capital efficiency, lowering the average weighted 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
Slide 35: Appendices
APPENDICES @ smith &wesson
Slide 36: Experienced Leadership
JAMES DEBNEY PRESIDENT & CHIEF EXECUTIVE OFFICER JEFFREY D. BUCHANAN EXECUTIVE VICE PRESIDENT, CHIEF FINANCIAL OFFICER & CHIEF ADMINISTRATIVE OFFICER EXPERIENCED LEADERSHIP 20+ years: multinational consumer and business-to-business environments, including President of Presto Products Co., a $500 mil
Slide 37: Market Participants
MARKET PARTICIPANTS SEMI AUTOMATIC PISTOLS RIMFIRE SEMI AUTOMATIC PISTOLS REVOLVERS CENTERFIRE MSR RIMFIRE MSR BOLT ACTION BLACK POWDER RIFLES Smith & Wesson Smith & Wesson Smith & Wesson Smith & Wesson Smith & Wesson Smith & Wesson Smith & Wesson Beretta Ruger Ruger Colt Colt Browning CVA Glock Sig
Slide 38: Industry Indicators
INDUSTRY INDICATORS NICS WWW.FBI.GOV 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 WWW.NSSF.ORG Adjusted NICS serves as a proxy for consumer sales since Sm
Slide 39: GAAP to Non-GAAP Reconciliation
GAAP to NON-GAAP RECONCILIATION In this investor presentation, certain non-GAAP financial measures, including “non-GAAP earnings per share” and “Adjusted EBITDAS” as well as gross margin, operating expenses, operating income, and earnings per share from continuing operations excluding certain costs,
Slide 40: GAAP to Non-GAAP Reconciliation
GAAP to NON-GAAP RECONCILIATION $ % of Sales $ % of Sales $ % of Sales $ % of Sales GAAP gross profit 56,215 $ 39.2% 34,840 $ 32.1% 115,085 $ 39.5% 83,958 $ 34.9% Discontinued operations — — — — 52 0.0% — — Non-GAAP gross profit 56,215 $ 39.2% 34,840 $ 32.1% 115,137 $ 39.6% 83,958 $ 34.9% GAAP opera
Slide 41: GAAP to Non-GAAP Reconciliation
GAAP to NON-GAAP RECONCILIATION October 31, 2015 October 31, 2014 GAAP net income 12,466 $ 5,050 $ Interest expense 2,323 2,914 Income tax expense 7,015 2,819 Depreciation and amortization 9,818 6,485 Stock-based compensation expense 1,702 1,220 TCA accessories transition costs 70 — Discontinued ope
Slide 42: GAAP to Non-GAAP Reconciliation
GAAP to NON-GAAP RECONCILIATION GAAP earnings per share - diluted 0.25 $ 1.18 $ 1.49 $ 0.90 $ 1.21 $ 1.26 $ Fair value inventory step-up and backlog expense — — — 0.08 — — Amortization of acquired intangible assets — — — 0.07 0.19 0.19 Acquisition-related costs — — 0.01 0.04 — — SEC settlement costs
Slide 43: Free Cash Flow
FREE CASH FLOW October 31, 2015 October 31, 2014 October 31, 2015 October 31, 2014 Net cash provided by/(used in) operating activities 6,136 $ (14,208) $ 22,761 $ (3,428) $ Net cash used in investing activities (7,075) (5,214) (14,164) (43,910) Payments for the net assets of Tri-Town Precision Plast
Slide 44: tik PERFORMANCE CENTER* PORTE
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Slide 45: Investor Relations Contact
NASD: SWHC www.smith-wesson.com Liz Sharp, VP Investor Relations (413) 747-6284
Smith & Wesson Holding — Investor Presentation (January 2016) on 6ix