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8-K - FORM 8-K - SMITH & WESSON BRANDS, INC. | c22816e8vk.htm |
Exhibit 99.1
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Final Transcript
Sep 27, 2011 / 09:00PM GMT, SWHC Smith & Wesson Announces CEO Transition Conference Call
CORPORATE PARTICIPANTS
Elizabeth Sharp
Smith & Wesson Holding Corp VP, IR
Smith & Wesson Holding Corp VP, IR
Michael Golden
Smith & Wesson Holding Corp Co-Vice Chairman of the Board
Smith & Wesson Holding Corp Co-Vice Chairman of the Board
James Debney
Smith & Wesson Holding Corp President and CEO
Smith & Wesson Holding Corp President and CEO
Jeffrey Buchanan
Smith & Wesson Holding Corp Eexecutive VP, Chief Financial Officer
Smith & Wesson Holding Corp Eexecutive VP, Chief Financial Officer
CONFERENCE CALL PARTICIPANTS
Reed Anderson
D.A. Davidson & Co. Analyst
D.A. Davidson & Co. Analyst
Cai von Rumohr
Cowen and Company Analyst
Cowen and Company Analyst
Bret Jordan
Avondale Partners Analyst
Avondale Partners Analyst
PRESENTATION
Operator
Good day, ladies and gentlemen, and welcome to Smith & Wesson Holdings Corp. Earnings
Conference Call. My name is Carma and Ill be your coordinator for today. At this time, all
participants are in a listen-only mode.
(Operator Instructions)
Later we will conduct a question-and-answer session. I would now like to turn the call over to your
host for today, Ms. Elizabeth Sharp, VP of Investor Relations. Please proceed.
Elizabeth Sharp Smith & Wesson Holding Corp VP, IR
Thank you and good afternoon. Before we begin the formal part of our presentation, let me tell
you that what were about to say, as well as any questions we may answer, could contain
predictions, estimates, and other forward-looking statements. Our use of words like anticipate,
project, estimate, expect, forecast, and other similar expressions is intended to identify those
forward-looking statements. Any forward-looking statements that we might make represent our current
judgment on what the future holds. As such, those statements are subject to a variety of risks and
uncertainties. Important risk factors and other considerations that could cause our actual results
to be materially different are described in our securities filings, including our Forms F-3, 8-K,
10-K, and 10-Q. I encourage you to review those documents.
A replay of this call can be found on our website later today at Smith-Wesson.com. This conference
call contains time-sensitive information that is accurate only as of the time hereof. If any
portion of this presentation is re-broadcast, re-transmitted or re-distributed at a later date, we
will not be reviewing or updating the material content herein. Our actual results could differ
materially from these statements.
On our call today we have Michael Golden, Co-Vice Chairman of the Board of Directors; James Debney,
our newly appointed President and CEO and Jeffrey Buchanan, our Executive VP and Chief Financial
Officer. With that, Ill turn the call over to Mike.
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Final Transcript
Sep 27, 2011 / 09:00PM GMT, SWHC Smith & Wesson Announces CEO Transition Conference Call
Michael Golden Smith & Wesson Holding Corp Co-Vice Chairman of the Board
Thank you, Liz, and thank you everyone for joining us. James Debney arrived at Smith & Wesson
just under 2 years ago. He immediately demonstrated the leadership skills and an understanding of
our Firearms business that quickly made him a prime CEO candidate in our succession planning
process. Over the following 2 years, he focused our Firearms organization on very well-defined
goals, which have delivered results.
The current strength in the consumer firearms market, combined with our robust product lineup, has
translated to a Firearms division that contributes over 90% of our total revenue. The growth and
success of this division combined with James demonstrated abilities make it clear that our
organization is ready for its next evolution in leadership. Earlier today we announced James
promotion to President and CEO of Smith & Wesson and member of the Board of Directors, effective
immediately. I have been named to the position of Co-Vice Chairman of our Board of Directors, a
role that I am honored to accept.
I want to congratulate James on this well-earned promotion. I also want to say that I am very
excited about the change we are announcing today, both for James and the opportunity this presents
for him, as well as for me in my new role on the Board of Directors. I look forward to continuing
to be a resource to James and to our organization. So without further delay, congratulations,
James, and Ill turn the call over to you.
James Debney Smith & Wesson Holding Corp President and CEO
Thank you, Mike. On behalf of the Board of Directors and me personally, we would like to thank
you for your leadership and your contributions over the years. I deeply appreciate the opportunity
to take the helm, and Im honored to carry forward the history of growth and respect for the brand
that you have fostered during your tenure.
I am very excited about this new opportunity for a number of reasons. First, Ive gained a great
deal of knowledge of our organization over the past 2 years, and I have tremendous confidence in
our people, our products, our technology, and our valued customers. Second, I believe this new role
will give me the opportunity to further demonstrate my ability to develop strategies to grow the
top line, while working throughout the organization to implement efficiencies that deliver
profitability. That remains my overriding goal.
While it is premature to try to provide a large amount of detail on my plans for our strategy at
this stage, I can comment on just a few things. First, I do not plan to back-fill my prior position
of Firearms Division President. I believe that my experience, capabilities, and the team at Smith &
Wesson will allow me to adequately manage these responsibilities while performing in the CEO role.
Beyond that, I do want to share with you just some of my key philosophies, and these are just some
of the basics that I will focus on as I review and develop our company-wide strategy. Number 1,
growing and protecting the core of our business; number 2, driving efficiencies and cost control;
3, delighting customers and consumers; 4, creating shareholder value. I believe these are 4 solid
basic principles for any healthy business, and I look forward to working with our entire team to
delivering each of these areas.
In closing, my personal thanks to Mike and the Board of Directors for putting their trust in me.
Im excited about the opportunities at hand, and I intend to justify that trust as we take Smith &
Wesson to the next level.
With that Ill turn the call over to Jeff Buchanan for a final comment.
Jeffrey Buchanan Smith & Wesson Holding Corp Eexecutive VP, Chief Financial Officer
Thanks, James. Just 1 comment as it relates to the current quarter. As a part of the
Management transition that we announced today, we are purchasing the balance of the employment
agreement that was in place with Mike. The entire expense related to the change will occur within
the second quarter, and therefore will impact our earnings between $0.01 and $0.02 per share. With
that, will now take any questions from our analysts.
QUESTION AND ANSWER
Operator
(Operator Instructions)
Reed Anderson from DA Davidson.
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Final Transcript
Sep 27, 2011 / 09:00PM GMT, SWHC Smith & Wesson Announces CEO Transition Conference Call
Reed Anderson D.A. Davidson & Co. Analyst
Congratulations, James, and you Mike, too. No real questions, but as long as Ive you live, a
couple of thoughts, and maybe some additional comments if you had any.
You said, James, youre not going to back-fill or kind of replace your old position. Im just
curious, youve had a lot of success on the new product side, and the Firearms business has
remained very strong. Are there other areas youre looking to add strategically? Are there any
other selective areas where you want to kind of beef things up on the firearms side?
James Debney Smith & Wesson Holding Corp President and CEO
I would say at the moment its really too early to say, but certainly no current plans.
Reed Anderson D.A. Davidson & Co. Analyst
And then the other question I have any particular, from a timing standpoint, any reason the
announcement is now, today? Obviously its something that I think we all expected, that James would
be a prime candidate for this job. So I think that makes sense. But just from a timing standpoint,
Mike, is there anything special about today, or this time of year, or is it just the way things
worked out?
Michael Golden Smith & Wesson Holding Corp Co-Vice Chairman of the Board
Well, we had a Board meeting yesterday, Reed, and thats where this whole thing came together.
But as I said, James has been on board for 2 years. Hes clearly demonstrated the ability to move
to the next level. If you look at our Company, about 90% of our revenues are coming from Firearms
today, and its clear thats the growth driver for our business. So it just all came together and
makes sense. We all felt the timing was right. Im pretty excited about it and I know James is, and
he should be.
Reed Anderson D.A. Davidson & Co. Analyst
Sounds great. Well, best of luck. Thank you.
Michael Golden Smith & Wesson Holding Corp Co-Vice Chairman of the Board
Thank you.
Operator
Cai von Rumohr from Cowen and Company.
Cai von Rumohr Cowen and Company Analyst
Yes. Im going to start with actually a little technical question. So the $0.01 to $0.02 hit
is for what again? And I assume it will be SG&A in the current quarter?
Jeffrey Buchanan Smith & Wesson Holding Corp Eexecutive VP, Chief Financial Officer
Thats correct, Cai. This is Jeff. Its for the buyout of Mikes severance and employment
agreement. It also the options granted to James as part of his new role. It will all occur by
Q2. We are filing 8-Ks tomorrow afternoon that will have the detail on those items.
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Final Transcript
Sep 27, 2011 / 09:00PM GMT, SWHC Smith & Wesson Announces CEO Transition Conference Call
Cai von Rumohr Cowen and Company Analyst
Okay. And then, James, let me join in congratulations.
James Debney Smith & Wesson Holding Corp President and CEO
Thank you.
Cai von Rumohr Cowen and Company Analyst
In looking at the operations USR, the security business has basically been kind of troubled
from the time it was purchased. Whats your thought in terms of the options for that business?
James Debney Smith & Wesson Holding Corp President and CEO
Really, were still where we were on the last earnings call, and thats the focus on returning
Smith & Wesson Security Solutions back to a break-even position in the second half of this fiscal
year. Obviously in my new role, I know a lot about firearms, but now I have to take a much broader
view. I know it will be I know somewhat the perimeter security business, but Ill be working
closely with Barry Willingham and his team to learn an awful lot more about that as we move forward
in the near term.
Cai von Rumohr Cowen and Company Analyst
Is there any kind of strategic imperative? Like if we dont think this thing can be making
money in 12 months, were going to investigate other alternatives, or because this is sort of a
business that it diversifies the portfolio, but certainly it doesnt really fit with the
Firearms business.
James Debney Smith & Wesson Holding Corp President and CEO
Really, as far I just have to re-emphasize our focus on profitability. Thats a key metric
for us going forward, 1 that well use to base future decisions on.
Cai von Rumohr Cowen and Company Analyst
Okay. And you laid out your philosophies. Could you tell us any sort of things where you think
you might focus a bit differently than has been done to date, or where you would distinguish a bit
in terms of differences?
James Debney Smith & Wesson Holding Corp President and CEO
Really, again, Im not trying to dodge the question, but again, I think its premature to say.
Unfortunately, my comments will come back and have a firearms bias to them, and thats not
appropriate now in my new role. So Im going to have to have a little bit of time to, as I said
before, work with Barry and his team and learn much more about perimeter security to provide that
balanced view of Smith & Wesson as a whole.
Cai von Rumohr Cowen and Company Analyst
Terrific. Thank you very much, and congratulations.
James Debney Smith & Wesson Holding Corp President and CEO
Thank you. Thanks for joining us.
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Final Transcript
Sep 27, 2011 / 09:00PM GMT, SWHC Smith & Wesson Announces CEO Transition Conference Call
Operator
Bret Jordan from Avondale Partners.
Bret
Jordan Avondale Partners Analyst
Yes, just a quick detail on the contract buyout. What was the gross amount, and what was the
remaining time on the contract?
Jeffrey Buchanan Smith & Wesson Holding Corp Eexecutive VP, Chief Financial Officer
Again, all those are going to be filed tomorrow with respect to the 8-K. Thats why Im just
giving you a range right now. So, Bret, the range is a $0.01 to $0.02 EPS impact. If you have any
questions after you read the 8-Ks tomorrow afternoon, feel free to call Liz or myself.
Bret Jordan Avondale Partners Analyst
Okay, thanks.
Jeffrey Buchanan Smith & Wesson Holding Corp Eexecutive VP, Chief Financial Officer
Sure.
Operator
(Operator Instructions)
We have no questions at this time.
James Debney Smith & Wesson Holding Corp President and CEO
Thank you, Operator, and thanks very much everyone for joining us. Look forward to speaking
with you again soon.
Operator
This now concludes the call, ladies and gentlemen. You may now disconnect. Have a wonderful
day.
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Final Transcript
Sep 27, 2011 / 09:00PM GMT, SWHC Smith & Wesson Announces CEO Transition Conference Call
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