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Markswomen
At Smith & Wesson, we’re proud to share our success, and we’re proud to be part of something that matters.
Letter from the CEO
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Financial Highlights
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Sharp Shooter Julie Golob
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Giving Guns A Shot
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Armed and Fabulous
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Gross Income Statements
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Future Targets
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“ As fiscal 2014 progressed, orders for our firearms
FINAL
continued to outstrip our ability to meet the demand for most of our products. ”
ROUN
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Boss P. James Debney President & Chief Executive Officer, Director
For Smith & Wesson®, fiscal 2014 was a year highlighted by significant financial and operational achievements. At its core, our successful year was driven by solid marketing, innovative new products, disciplined manufacturing execution, and strict financial management. Executing a clearly defined strategic plan, we focused on growing our core firearm business, delivering truly exceptional, high-quality products, and increasing our production capacity to gain market share within an expanding market - all with the ultimate goal of increasing stockholder value. We are pleased to report that the Smith & Wesson teamdelivered on all fronts, allowing us to accelerate our growthand significantly improve our operating margin and net income.
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Our achievements aligned directly with our growth strategy, which is underpinned by a focus on our core firearm business and specifically growth in our polymer pistols. Our M&P® brand continues to be well accepted by consumers, and our M&P polymer pistols remain at the center of our growth strategy. As fiscal 2014 progressed, orders for our firearms continued to outstrip our ability to meet the demand for most of our products, including our M&P polymer pistols, M&P Shield™, BODYGUARD® 380, revolvers, and M&P modern sporting rifles. Performance gains over the year were driven by this strong consumer demand for our products, paired with our ability to significantly increase our M&P manufacturing capacity.
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Total company net sales from continuing operations were $587.5 million compared with $412.0 million for the prior fiscal year, an increase of 42.6%. Gross profit margin was 37.2% compared with 31.1% for the prior fiscal year. Operating expenses were $85.6 million for fiscal 2014, or 14.6% of net sales, compared with operating expenses of $83.1 million, or 20.2% of sales, for fiscal 2012. Income from continuing operations was $81.4 million, or $1.22 per diluted share, compared with income from continuing operations of $26.4 million, or $0.40 per diluted share, a year ago. Our growing cash position allowed us to acquire 2.1 million shares of our c ommon stock for $20.0 million. We also purchased $6.4 million of our outstanding 9.5% Senior Notes for $7.0 million in cash. We ended fiscal 2014 with $100.5 million in cash on hand.
$100.5 million Cash On Hand
$81.4 million ($1.22 per diluted share)
Continuing Operations
37.2% Gross Profit Margin $587.5 million Net Sales
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SHARP
Shooter
Julie Golob Awarded the NRA Action Pistol Distinguished Badge
Smith & Wesson Corp. is pleased to announce that seven-year Smith & Wesson Shooting Team Captain Julie Golob has recently been awarded the National Rifle Association (NRA) Action Pistol Distinguished Badge, one of the NRA’s most prestigious shooting awards.
“ The shooting sports have been a great teacher and the confidence it bestows is one of those universal benefits that we can all use. ”
A member of Smith & Wesson’s elite shooting team since 2006, Golob is one of just four women who have earned this coveted award designed to recognize excellence in the area of competitive shooting.
Julie Golob Team Smith & Wesson Captain
A three-time NRA Action Pistol Women’s Champion, Golob’s fierce determination and remarkable skill set has made her a familiar face in the winner’s circle at many of the sport’s premiere events. Throughout her noteworthy career, Golob has established an NRA Action Pistol Women’s National record on the Moving Target course of fire as well as being named a four time Military and Women’s Shoot Off Champion.
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GIVING GUNS A
Shot Julianna Crowder, president of A Girl & A Gun Women’s Shooting League, announced that legendary American firearms maker Smith & Wesson has returned to be the presenting sponsor of the organization’s first annual national conference taking place in March of 2014. A Girl & A Gun Women’s Shooting League is a ladies-only organization established by women shooters for women shooters for the pistol, rifle and shotgun sports.
Founded in February of 2011 in Austin, Texas, A Girl & A Gun today has more than 750 members and 20 clubs in seven states, making it the fastest growing women’s shooting organization.
Smith & Wesson returns as Presenting Sponsor for A Girl & A Gun
The league is designed to take beginners to whatever skill level they wish to achieve, and provide experienced shooters with more opportunities.
“ The sense of control, of being in charge of me. ”
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Smith & Wesson is proud to be a presenting sponsor of the NRA Women’s Network. The National Rifle Association has re-launched its NRA Women channel online, aiming to capitalize on the growing number of women who want to be “armed and fabulous.”
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The website spotlights women who shoot competitively, for self-defense and those who work to defend the Second Amendment.
NRA Women features the Women’s Leadership Forum, a lifestyle section that includes “Girls & Guns Night Out”, and “Range Ready” providing tips and tactics. The NRA has made gun safety a priority, and includes women in that endeavor. Refuse To Be A Victim® seminars are conducted all over the country, and the site lists schedules and information.
“ The shooting industry has seen a surge of interest
over the past five years, especially among women. ”
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THE COLD HARD
Facts In late calendar 2012 and early calendar 2013, orders again increased rapidly in what appears to be in response to fears of renewed legislative activity surrounding restrictions on the sale or makeup of firearms. In addition, it appears that sales for all our products have recently increased because of our ability to increase production capacity to service orders from increased consumer demand caused by increased social acceptance of firearms. We also believe the variety of products we offer and the attractive price points we maintain contributes to our likely increasing market share.
Net Sales 2014 Handguns . . . . . . . . . . . . . . . . . . . . . . . . $324,627 Long Guns . . . . . . . . . . . . . . . . . . . . . . . . 179,187 Walther . . . . . . . . . . . . . . . . . . . . . . . . . . . .41,646 Other Products & Services . . . . . . . . . . . 42,054 Total Net Sales . . . . . . . . . . . . . . . . . .$587,514
2013 $238,438 102,414 32,316 38,829 $411,997
$ Change
% Change
% Change 2012
$ 86,189 76,773 9,330 3,225 $175,517
36.1% 75.0% 28.9% 8.3% 42.6%
$190,649 77,206 38,011 36,367 $342,233
We estimate that we have a 17% share of the U.S. consumer market for handguns. Cost of Sales and Gross Profit 2014 Cost of sales . . . . . . . . . . . . . . . . . . . $369,111 % of net sales . . . . . . . . . . . . . . 62.8% Gross profit . . . . . . . . . . . . . . . . . . . . $218,403 % of net sales . . . . . . . . . . . . . . 37.2%
Operating Expenses
2014
Research and development . . . . . . . $ 4,751 Selling and marketing . . . . . . . . . . . 30,020 General and administrative . . . . . . 50,798 Total operating expenses . . . . . . $85,569 % of net sales . . . . . . . . . . . . . . . . . . . .14.6% .
2013 $284,008 68.9% $127,989 31.1%
$ Change
% Change % Change 2012
$85,103
30.0%
$90,414
70.6%
$ Change 2013 $ 4,543 $ 208 31,317 (1,297) 47,213 3,585 $83,073 $ 2,496 20.2%
$237,545 69.4% $104,688 30.6%
% Change % Change 2012
4.6% -4.1% 7.6% 3.0%
$ 4,363 34,580 47,954 $86,897 25.4%
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We plan to continue to offer products that leverage the over 160 year old “Smith & Wesson� brand and capitalize on the goodwill developed through our historic American tradition by expanding consumer awarenessof products we produce, especially M&P branded products .
Directors
Officers
Barry M. Monheit
P. James Debney President and Chief Executive Officer
Robert L. Scott Michael F. Golden
Michael J. Brown Vice President, U.S. Sales
Robert H. Brust
Robert J. Cicero Vice President, Chief Compliance Officer, General Counsel, and Secretary
Mitchell A. Saltz I. Marie Wadecki
g r e a ts T
Jeffrey D. Buchanan Executive Vice President, Chief Financial Officer, and Treasurer
P. James Debney
John B. Furman
T U F
E R U
Mario Pasantes Senior Vice President, Marketing and International Sales Mark P. Smith VP Manufacturing and Supply Chain Management
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