Smith & Wesson management spoke at the recent Cowen and Co. Aerospace/Defense Conference about key growth initiatives following a fiscal second quarter that saw top and bottom lines fall considerably on declining gun sales and a significant write-down related to the decreasing value of the company’s Perimeter Security division. For 2011, the company will continue to focus on product launches, new channel ventures and bolstering the value of its current business to return to profit.
First and foremost, management pointed to a positive reaction from buyers at the 2011 SHOT Show of the company’s newest flagship product – The Governor. The Governor, which incorporates a .410 shotgun shell in a revolver, is a home protection firearms that management said was “a hit at the show,” rivaling the reaction of show attendees to the company’s 2010 launch of the Bodyguard line, Smith & Wesson’s first venture in the concealed carry category.
Management also expanded on several upcoming opportunities within the military, including the soon-to-expire contract with Beretta for the MP handgun and the recently-expired contract with Colt for the M4, which is the standard issue rifle of the US military. President and CEO Mike Golden said Smith & Wesson plans to submit products in hopes of landing each of those contracts. When asked what the value of the contracts might be, Golden estimated between $100 million and $130 million for the M4 and was unsure about the M9.
Golden also spoke with great enthusiasm about the Universal Safety Response business, which was acquired in 2008. He said SWHC plans to build its presence within the Perimeter Security business and has research opportunities with Homeland Security.
Among other notables, Golden pointed to the consolidation of its Rochester, NH-based Thompson/Center Arms operation into its Springfield, MA headquarter, saying the move produced about $6.7 million in tax incentives.
When asked about the potential for acquisitions, Golden said the company could possible look to add an access control business, but “nothing is imminent right now.”
