EX-99.1 2 d296046dex991.htm EX-99.1

EXHIBIT 99.1

James Debney, President & CEO Jeffrey Buchanan, EVP & CFO February, 2012

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 limited to statements regarding the Company's markets and strategies, the Company's vision and mission, anticipated sales, gross profit margin, and operating expenses for the Company, the opportunity for growth of the Company, the demand for the Company's products and services, the Company's future products or product development, the Company's focus and objectives, and the Company's financial and operational goals for the current fiscal year and future periods. The Company cautions that these statements are qualified by important factors that could cause actual results to differ materially from those reflected by such forward-looking statements. Such factors include the demand for the Company's products, the Company's growth opportunities, the ability of the Company to obtain operational enhancements, the success of new products, the success of the planned divestiture of the Company's Security Solutions business, and other risks detailed from time to time in the Company's reports filed with the SEC. 2

Business Highlights U.S. Market Leader for Firearms: Handguns, Modern Sporting Rifles (MSR)159 years of rich historyIconic brand with 93% aided awarenessSmith & Wesson(r) Brand = RevolverInnovative product portfolio serving broad user groupsRevolver, Polymer Pistol, Metal Pistol, Pocket Pistol, Bolt Action, Black Powder, Modern Sporting RifleDiverse sales sources: Consumer: Sporting GoodsProfessional: International, Law Enforcement, Government, MilitaryHealthy balance sheetSolid, experienced management teamStrong strategic direction 3

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 4

Focus, Simplify, Execute Strategy - Focus on FirearmsSale of Security Solutions - Perimeter Security Business (formerly USR)U.S. Consumer - leverage professional marketsFamily of brands:Smith & Wesson(r)Walther(r)Thompson/Center ArmsM&P(tm)M&P(tm) - Brand and product platform: Pistols and modern sporting riflesOperations: Consolidate and expand capacity - some production lines have reached record levelsDeliver new products that meet needs of user groups 5

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 ProductsJeffrey Buchanan, EVP & CFO25+ years: private and public company experience in financial management and law: CFO for publicly traded, global manufacturing company, law firm partner, public company board member 6

Experienced Management Team MarioPasantesSr. VP Marketing and Global Professional SalesAlcoa, Inc.Coca-ColaPillsburyInternational Market DevelopmentStrong Global BrandsStrategyCustomer Development Mark SmithVP Manufacturing and Supply Chain ManagementAlvarez & MarsalEcolabMulti-Site OpsCapacity ExpansionMPS/MRP SystemsS&OP MgmtInventory MgmtLean Six Sigma Ginger ChandlerVP New Product DevelopmentMorton Int'l.YOMOBreed TechnologiesDesign EngineerProduct DevelopmentManufacturing MgmtToyota Production SysClients: Alcoa, Dell,Meridian, Whirlpool Mike BrownVP Sporting Goods SalesCamfour, Inc.KPMGMultiple Leadership Roles inHunting & ShootingSports IndustriesSales StrategyTeam Development 7

Q2 FY12 Highlights (Oct 31, 2011) Double digit sales growth, a leader in expanding key firearm categoriesTotal net sales +10.5% YOYPolymer pistol unit sales + 40% YOYModern sporting rifle unit sales +64% YOYOverall unit growth +27% vs. market growth of +12.6% (Adjusted NICS) Announced plan to divest Security Solutions business (Discontinued Ops)Neared completion on Thompson/Center Arms consolidation (Completed November 2011)Shipped our M&P(tm) firearms to numerous police agenciesShipped 1st order to Belgium Federal PoliceLargest single contract to date for our M&P polymer pistolsVenture Recall: Doing right by our customers - Standing by our productsDefended our proprietary muzzleloader technologyAfter Q2, paid down $30 million of debt (December 2011) 8

SWHC: Financial Highlights (From Continuing Operations) Fiscal Year April 30 Sales (in Millions) Q2FY12 Actual:Sales $92.3M (+10.5%)Backlog $149.9MGross Profit Margin 26.7%Op. Expense $21.2MWorking capital $84.3MCash $49.2MQ3FY12 Guidance:Sales $92.0M - $96.0MGross Profit Margin Approx. 30.0%Op. Expense Approx. $22.0MFull Fiscal 2012 Guidance:Sales $385.0M - $395.0M (+13.0%-15.0%)Gross Margins Approaching 30%Op. Expense 21.0%-22.0% *FY2012 EstimateNote: All financial information and guidance reflects information that we provided on December 8, 2011. We are not updatingthis information to the present date nor does its inclusion constitute a reiteration or modification of this information. 9 $296 $335 $358 $342 $385 - 395 2008 2009 2010 2011 2012(E)*

*National Shooting Sports Foundation (NSSF) adjusts FBI NICS data to eliminate background checks associated with permit applications and checks on active CCW permit databases, in order to provide a more accurate picture of market conditions. Adjusted NICS Checks* NICS: Strength in Consumer Firearms Market (CHART) CY11 CY10 CY09 Jan 2012: 920,840 10

Strong Industry Sales Indications Through Q3 CY11 Wholesale projected sales based on excise tax collections. YTD Q3 2011 excise tax collections exceeded prior YTD Q3 2010. Category growth of over 30% in the past 5 years. Source: Federal Excise Tax collections, Wholesale Value*Long guns include all rifles, shotguns and muzzle loaders 11 (CHART) (CHART) (CHART) (in Millions) 9-MO YTD 9-MO YTD - - - - - - - - - - - - - - - - - -

Industry: Pistols Driving Handgun Growth U.S. handgun growth has been driven by pistols, which now represent 80% of units sold. Source: BATF annual firearms mfg and export report. USITC import data. 12

Industry: Pistols vs. Revolvers Pistols & revolvers have different attributes, but pistols win on self-defense and have attracted younger consumers into the handgun market. Pistol advantages versus revolvers:CapacityRate of fire High tech/cutting edgeModern shapeTrigger pullSafety featuresRevolver advantages versus pistols:Slightly better for beginners Easy maintenance Reliability Source: 12/10 Strategic Platform and Extendibility Study 13

SWHC Firearms Growth Drivers Consumer Market - U.S.Focus on Concealed Carry, Personal Protection, RecreationExpand Market Share: Polymer Pistol Unit Growth (M&P(tm), BODYGUARD(r), The Sigma Series(r)) Robust New Product Pipeline is RequiredLeverage Positive Halo Effect from Professional MarketsProfessional MarketLaw Enforcement - ongoing sidearm and rifle replacements, upgradesFederal Government - agencies can purchase M&P Pistol on ATF Contract Military - M9 pistol replacement & M4 bolt carrier assembly opportunitiesInternational - large orders, e.g. Belgium 14

Major Focus: M&P(tm) Pistol Growth Current Situation:Pistol category is 80% of handgunsCompact and full-size polymer pistols are increasing in popularityM&P(tm) products well received by retail and consumerOur Focus:Grow M&P(tm) Pistol market share:Increased consumer advertisingIncreasing capacity to satisfy growing ordersMake it easier for dealers to support the M&P(tm) platform:Strong merchandising and store programsArmorer's Training and On-The-Hip Program 15

M&P - Proven Performance M&P - Proven Performance Strong & Marketable Differences 16

Demonstrated Track Record of New Products 2006 2007 2008 2009 2010 2011 2012 WaltherPPS S&W M&P 15 S&W M&P Pistols WaltherPK380 S&W M&P15-22 WaltherPPQ S&W M&P15 Sport S&WBG380 S&WBG 38 S&W M&P15 Whisper S&WM&P 22 Thompson/Center Venture S&WGovernor T/C Dimension 17

New Models for the M&P(tm) Platform New and exciting entries for polymer pistol categoryConcealed Carry and Personal ProtectionConsumer and ProfessionalAdditional calibers and models for the M&P Modern Sporting Rifle platform:TacticalHuntingWill only announce new product introductions when ready - capable and right timing 18

Our Strategic Direction: Focus on Firearms Grow sales and increase profitabilityExpand manufacturing capacity intelligentlyFocus on M&P pistol platformReduce expenses on a company-wide basisFocus on improving gross marginsMaintain robust new product pipelineLaunch new products strategicallyLeverage existing product portfolio Objective: Deliver Enhanced Value 19

Financial Model: Goals Sales: 100%CGS: 70%Margin: 30%Opex: 22% Operating Margin: 8% 20 Sales: 100%CGS: 67%Margin: 33%Opex: 18% Operating Margin: 15% Sales: 100%CGS: 65%Margin: 35%Opex: 17% Operating Margin: 18% Guidance for Current FYIn One to Two YearsIn Three to Five Years Note: Current FY reflects information that we provided on December 8, 2011. We are not updatingthis information to the present date nor does its inclusion constitute a reiteration or modification of this information.

Question & Answers For Investor Information contact Liz Sharp, lsharp@smith-wesson.com, (480) 949-9700