SPRINGFIELD, Mass.,
Nov. 13, 2019 /PRNewswire/
-- American Outdoor Brands Corporation (NASDAQ Global
Select: AOBC), one of the world's leading providers of firearms and
quality products for the shooting, hunting, and rugged outdoor
enthusiast, today announced that its Board of Directors has
unanimously approved proceeding with a plan to spin-off its outdoor
products and accessories business as a tax-free stock dividend to
its stockholders. The proposed transaction, which is expected
to be completed in the second half of calendar 2020, would create
two independent publicly traded companies: Smith & Wesson Brands, Inc. (which would encompass the
firearm business) and American Outdoor Brands, Inc. (which would
encompass the outdoor products and accessories business).
The purpose of the spin-off is to enable the management team of
each company to focus on its specific strategies, including (1)
structuring its business to take advantage of growth opportunities
in its specific markets; (2) tailoring its business operation and
financial model to its specific long-term strategies; and, (3)
aligning its external financial resources, such as stock, access to
markets, credit, and insurance factors, with its particular type of
business.
Barry M. Monheit, Chairman of the
Board, said, "There have been significant changes in the political
climate as well as the economic, investing, and insurance markets
since we embarked upon what we believe have been our very
successful diversification efforts. We believe that separating
into two independent public companies will allow each company to
better align its strategic objectives with its capital allocation
priorities. We also believe that this action will give the
investment community clearer insight into the value creation
potential in each of these independent companies, ultimately
driving enhanced stockholder value. From the standpoint of our
stockholders, at the time of the spin-off, the AOBC stockholders
will own 100% of each company, thereby maintaining their pre-spin
interest in both companies, and will thereafter have the ability to
make distinct investment decisions tailored to their particular
investment profile."
Compelling Strategic Rationale
As AOBC implemented its strategic growth and diversification
plan, its Board of Directors explored opportunities to drive
enhanced performance and stockholder value. Following a strategic
review of AOBC's growth prospects, enterprise value, end-markets,
customers, financial market considerations, credit and insurance
factors, and business operations in the current market, the Board
concluded that separating AOBC's firearms and outdoor products and
accessories businesses would create two industry-leading companies,
with attributes that best position each company for long-term
success, including the following:
- Distinct Focus: Each company will benefit from a
distinct strategic and management focus on its specific operational
and growth priorities.
- Differentiated Investment Theses: Each company will
offer differentiated and compelling investment opportunities based
on its particular operating and financial model, allowing it to
more closely align with its natural investor type.
- Optimized Balance Sheet and Capital Allocation
Priorities: Each company will operate with a capital structure
and capital deployment strategy tailored to its specific business
model and growth strategies.
- Incremental Stockholder Value: Each company will benefit
from the investment community's ability to value its businesses
independently and drive incremental stockholder value.
James Debney, President and CEO,
said, "Since joining AOBC ten years ago, I have had the honor of
leading our firearms business, its dedicated and talented
employees, and one of the most iconic brands in America through a
very exciting period. I am proud to say that, during that time, we
greatly expanded the breadth and depth of our Smith &
Wesson®, M&P®, Performance
Center®, and Thompson/Center Arms™ product offerings that
consumers and professionals rely on for their self-protection and
sporting needs. Our innovation set a new company precedent and
included the creation of entirely new product platforms, as well as
market leading and game-changing products, such as the popular
M&P Shield® family of firearms for personal
protection. In addition, we proudly and vigorously advocated
the Second Amendment rights of our loyal and law-abiding
customers. At the same time, we also successfully established
and grew an entirely new and diverse outdoor products and
accessories business with tremendous potential. Both
businesses have built strong management teams that have helped
deliver our collective achievements.
I believe the Board's decision to spin-off our outdoor products
and accessories business will allow each company and its leadership
to focus on its unique business characteristics and opportunities
and to better drive long-term value for its
stakeholders. Accordingly, I have made the exciting but
difficult decision to request that I lead the outdoor products and
accessories company as CEO upon completion of the spin-off, and the
Board has agreed with my request. Since we established this
business five years ago, I have been enthusiastic about its
potential for both organic and inorganic growth. We have
successfully acquired and integrated several respected consumer
brands and grown the outdoor products and accessories business so
that it has become a meaningful percentage of AOBC's overall
revenue. I sought this leadership role because of my passion
for the business and my belief that it makes the best use of my
knowledge and skill set. The spin-off will allow me to
dedicate 100% of my energy to growing outdoor products and
accessories and help it achieve its appropriate valuation. I look
forward to continue building on our strong brand portfolio,
innovating new products, and expanding our addressable markets.
Turning to the firearms company, upon completion of the
spin-off, the Board of Directors, with my enthusiastic agreement as
a Board member, has selected Mark
Smith to serve as CEO of Smith & Wesson Brands, Inc., a role for which he is well
qualified. For the past ten years, we have benefited from
Mark's leadership of our firearm manufacturing operations. In his
current role as President of AOBC's Manufacturing Services
Division, he has demonstrated his knowledge and ability to
successfully navigate a fluctuating business environment, while
remaining focused on the importance of new product launches in
driving market share and growth. His extensive knowledge of
our company and customers, his deep respect for our industry, his
unwavering support of the Second Amendment, and his enthusiasm for
this leadership opportunity, make him the ideal person to lead
Smith & Wesson Brands, Inc. and
its highly respected firearm brands into the future."
A Diverse Outdoor Products & Accessories Company:
American Outdoor Brands, Inc.
Based in Boone County,
Missouri, American Outdoor Brands, Inc. will be a
growth-oriented provider of outdoor products and accessories for
rugged outdoor enthusiasts. The business is currently an
industry-leading provider of shooting, reloading, gunsmithing, and
gun cleaning supplies; specialty tools and cutlery; fishing
accessories; survival products; and electro-optics products. It
produces innovative, top quality products under brands it owns as
well as licensed brands. Brands it owns include Caldwell®; Crimson
Trace®; Wheeler®; Tipton®; Frankford
Arsenal®; Lockdown®; BOG®;
Hooyman®; Schrade®; Old Timer®;
Uncle Henry®; Imperial®; BUBBA®;
UST®; and LaserLyte®. Brands that it will
license include Smith & Wesson® Accessories;
M&P® Accessories; Thompson/Center Arms™ Accessories; and
Performance Center® Accessories, all of which will be
owned by Smith & Wesson Brands,
Inc. and will be exclusively licensed to American Outdoor Brands,
Inc. after the spin-off. The company's financial profile is
expected to yield growth and profitability that will facilitate the
prioritization of investments and capital allocation focused on
both organic and inorganic growth. Assuming a spin-off in eight to
ten months, American Outdoor Brands, Inc. is expected to generate
revenue between $200 million and
$210 million and adjusted EBITDAS
between $25 million and $30 million in its first 12 months as an
independent company.
James Debney will become CEO of
American Outdoor Brands, Inc. upon successful completion of the
spin-off of that company. Debney joined Smith & Wesson in
November 2009 as President of the
Firearms Division, and, in 2011, was promoted to President, CEO,
and Board Member of its parent company, AOBC. Under Debney's
leadership, AOBC grew its market-leading firearm business, while
developing and successfully executing a diversification strategy to
expand into the outdoor products and accessories
business. Debney oversaw the acquisition of a number of
well-known consumer brands that, when combined with organic growth,
helped the new division to deliver 25% of AOBC's total fiscal 2019
revenue. Debney has over 25 years of leadership and management
experience in multi-factory, multinational organizations that
address both consumer and business-to-business environments. He
previously served as President of Presto Products Company, a
$500 million former plastic products
business unit of Alcoa Consumer Products.
An Iconic Firearms Company: Smith & Wesson Brands, Inc.
Headquartered in Springfield,
Massachusetts, Smith & Wesson
Brands, Inc. will continue its iconic firearm business with
a 167-year history of delivering market leading, personal
protection and sport-related firearms for consumers and
professionals. This business's industry-leading handgun, long
gun, and suppressor products are marketed under the Smith &
Wesson®, M&P®, Performance
Center®, Thompson/Center Arms™, and Gemtech®
brands. The company's financial profile is expected to yield
strong cash flows, a granular focus on organic growth, and
profitability with a plan to eventually return capital to
stockholders in the form of dividends and stock repurchases.
Assuming a spin-off in eight to ten months, Smith &
Wesson Brands, Inc. is expected to
generate revenue between $450 million
and $500 million and adjusted EBITDAS
between $90 million and $105 million in its first 12 months as an
independent company.
Upon successful completion of the spin-off, Mark Smith will become CEO of Smith &
Wesson Brands, Inc. Smith is
currently the President of the Manufacturing Services Division of
AOBC and supports all of its businesses. During his tenure,
the company achieved significant growth while optimizing its
manufacturing footprint and achieving record level gross margins.
In addition to his ten years of operations and leadership
experience in the firearms industry, he has over 20 years of
operations and supply chain management experience in leadership
roles across multiple industries, from Fortune 500 to diversified
international corporations.
Transition Leadership and CFO Succession
James Debney, President and CEO,
and Jeffrey D. Buchanan, Chief
Financial Officer, will continue to lead AOBC until the completion
of the separation and spin-off of the outdoor products and
accessories business in the second half of calendar 2020. Buchanan
will serve as the lead executive on coordinating and executing the
separation of the two businesses.
Upon the successful completion of the spin-off, Buchanan plans
to retire after 15 years of service to AOBC, including six years as
a member of the Board of Directors prior to becoming our CFO.
President and CEO, James Debney,
said, "Jeff has had an immeasurable impact on AOBC and his ongoing
leadership throughout the proposed spin-off process will be
instrumental in ensuring a smooth transaction and placing each
company in an optimal position to unlock greater stockholder
value. I have greatly enjoyed working with Jeff over the
years. On behalf of the leadership team, I wish him the best in his
well-deserved retirement."
Commenting on his planned retirement, Buchanan said, "I am
grateful to have spent 15 years in this iconic company and exciting
industry. I have had the honor of working with many talented
individuals at AOBC who have the experience, the passion, and the
drive to lead these companies forward into their very exciting,
respective futures. I greatly value my experiences with them, and I
look forward to tracking their future successes."
Upon Buchanan's retirement, Deana L.
McPherson will assume the role of Chief Financial Officer of
Smith & Wesson Brands, Inc., and
H. Andrew Fulmer will serve as Chief
Financial Officer of American Outdoor Brands, Inc.
- Deana L. McPherson, CPA, CGMA,
joined AOBC in June 2007 as Corporate
Controller, was later promoted to Vice President of Finance and
Corporate Controller, and became Chief Accounting Officer in 2017.
Her extensive finance and treasury experience with AOBC includes
responsibility for financial reporting and oversight of the
company's audit, tax, and banking matters. McPherson has played a
key role in AOBC's longstanding relationship with its lenders, and
her work has been instrumental in managing AOBC's syndicated bank
credit facility.
- H. Andrew Fulmer, CPA, joined
AOBC in September 2010 as Assistant
Controller, was later promoted to Director of Financial Planning
& Analysis, and became Vice President, Financial Planning &
Analysis in 2016. His extensive financial experience with AOBC is
coupled with his key role in developing and executing the company's
long-term acquisition strategy, particularly for the outdoor
products and accessories business. In addition to leading AOBC's
strategic planning process, he developed the company's procedures
for acquisition-related financial modeling, due diligence, internal
controls, and integration of acquired businesses.
Credit Facility & Planned Capital Structures
After the spin-off, the capital allocation policy at both
companies is expected to remain disciplined with a focus on the
highest return opportunities for each respective business.
All five of AOBC's current banks remain committed to the
business and have approved a term sheet consenting to the spin-off
under the parameters of an amendment to the existing revolving
credit facility subject to revised terms and specific financial
conditions on the date of the spin-off. Under the revised terms,
the credit facility, which has a maturity date of October 2021, would become secured upon the
spin-off and remain an obligation of Smith & Wesson Brands, Inc. Prior to the completion
of the spin-off, AOBC intends to call its Senior Notes, repay its
existing bank term loan, and consolidate both of those credit
facilities into the lower interest rate revolving line of credit.
The modification of the credit facility allowing for the spin-off
is expected to be finalized by the end of November.
Although the capital and banking structure of the spin-off
company (American Outdoor Brands, Inc.) has not yet been finalized
and specific terms remain to be determined, it is expected to be
well capitalized following the spin-off with zero debt and
sufficient liquidity and flexibility to pursue future growth
opportunities.
Transaction Details and Next Steps
The transaction is currently targeted to be completed in the
second half of calendar 2020, subject to final approval by AOBC's
Board of Directors, customary regulatory approvals, and tax and
legal considerations. Throughout the separation process, AOBC
management will remain committed to the business and all key
stakeholders, including customers, employees, and stockholders.
AOBC plans to announce further details on the composition of the
respective Boards of Directors ahead of the completion of the
transaction.
Investor roadshows will be scheduled for both companies during
the first half of calendar 2020.
Cowen is serving as financial advisor to American Outdoor Brands
Corporation; Greenberg Traurig, LLP is serving as legal counsel;
and Ernst & Young is serving as accounting and tax advisor.
Conference Call and Webcast
AOBC will host a conference call and audio webcast to discuss
the transaction Thursday, November 14,
2019. Speakers on the conference call will include
James Debney, President and Chief
Executive Officer, and Jeffrey D.
Buchanan, Executive Vice President, Chief Financial Officer,
and Chief Administrative Officer. The conference call may include
forward-looking statements. The conference call and webcast will
begin at 8:30 a.m. Eastern Time
(5:30 a.m. Pacific Time). Those
interested in listening to the conference call via telephone may
call directly at 844-309-6568 and reference conference
identification number 4167112. No RSVP is necessary. The
conference call audio webcast can also be accessed live on the
company's website at www.aob.com, under the Investor Relations
section.
Second Quarter Fiscal 2020 Guidance Update
AOBC also reaffirmed its financial guidance for its second
quarter fiscal 2020 results, the period ending October 31, 2019. AOBC plans to announce its
financial results for that quarter on December 5, 2019, followed by a conference call
and webcast to discuss those results. Details on accessing
that call will be published in advance.
About American Outdoor Brands Corporation
American Outdoor Brands Corporation (NASDAQ Global Select: AOBC)
is a provider of quality products for shooting, hunting, and rugged
outdoor enthusiasts in the global consumer and professional
markets. AOBC reports two segments: Firearms and Outdoor
Products & Accessories. Firearms manufactures handgun,
long gun, and suppressor products sold under the iconic Smith &
Wesson®, M&P®, Thompson/Center Arms™, and Gemtech®
brands, as well as provides forging, machining, and precision
plastic injection molding services. Outdoor Products &
Accessories is an industry-leading provider of shooting, reloading,
gunsmithing, gun cleaning supplies, specialty tools and cutlery,
fishing accessories, survival gear, and electro-optics products.
This segment produces innovative, top quality products under
the brands Caldwell®;
Crimson Trace®; Wheeler®; Tipton®; Frankford
Arsenal®; Lockdown®; BOG®;
Hooyman®; Smith & Wesson® Accessories;
M&P® Accessories; Thompson/Center Arms™ Accessories; Performance
Center® Accessories; Schrade®; Old
Timer®; Uncle Henry®; Imperial®;
BUBBA®; UST®; and
LaserLyte®. For more information on American
Outdoor Brands Corporation, call (844) 363-5386 or log on to
www.aob.com.
Safe Harbor Statement
Certain statements contained in this press release may be deemed
to be forward-looking statements under federal securities laws, and
we intend that such forward-looking statements be subject to the
safe-harbor created thereby. Such forward-looking statements
include, among others, the purpose, methodology, effects, timing,
and tax-free nature of the spin-off; the belief that the spin-off
will allow each company to better align its strategic objectives
with its capital allocation priorities; the belief that the
spin-off will give the investment community clearer insight into
the value creation potential in each of these independent
companies, ultimately driving enhanced stockholder value; the
conclusion that separating AOBC's firearms and outdoor products and
accessories businesses would create two industry-leading companies,
with attributes that best position each for long-term success for
the reasons articulated; the belief that AOBC has successfully
established and grew an entirely new and diverse outdoor products
and accessories business with tremendous potential; the belief that
the spin-off will allow each company and its leadership to focus on
its unique business characteristics and opportunities and better
drive long-term value for its stakeholders; the belief in the
qualifications of the anticipated CEOs and CFOs of each company;
the currently anticipated revenue and EBITDA of each company for
the first 12 months following the spin-off; the belief that the
financial profile of the outdoor products and accessories company
is expected to yield growth and profitability that will facilitate
the prioritization of investments and capital allocation focused on
both organic and inorganic growth, the belief that the financial
profile of the firearm company is expected to yield strong cash
flows, a granular focus on organic growth and profitability with a
plan to eventually return capital to stockholders in the form of
dividends and stock repurchases; the belief that the capital
allocation policy of both companies is expected to remain
disciplined with a focus on the highest return opportunities for
each company; the plan for AOBC to call its Senior Notes, repay its
existing bank term loan, and consolidate both of those facilities
into a lower interest rate revolving line of credit; the expected
timing of the modification of the credit facility allowing for the
spin-off; the belief that the outdoor products and accessories
company will be well capitalized following the spin-off with zero
debt and sufficient liquidity and flexibility to pursue future
growth opportunities; and the belief that AOBC management will
remain committed to the business and all key stakeholders,
including customers, employees, and stockholders, throughout the
separation process. We caution that these statements are
qualified by important risks, uncertainties, and other factors
that could cause actual results to differ materially from those
reflected by such forward-looking statements. Such factors
include, among others, economic, social, political, legislative,
and regulatory factors; the potential for increased regulation of
firearms and firearm-related products; actions of social activists
that could have an adverse effect on our business; the impact of
lawsuits; the demand for our products; the state of the U.S.
economy in general and the firearm industry in particular; general
economic conditions and consumer spending patterns; our competitive
environment; the supply, availability, and costs of raw
materials and components; the impact of protectionist tariffs and
trade wars; speculation surrounding fears of terrorism and crime;
our anticipated growth and growth opportunities; our ability to
increase demand for our products in various markets, including
consumer, law enforcement, and military channels, domestically and
internationally; our penetration rates in new and existing markets;
our strategies; our ability to maintain and enhance brand
recognition and reputation; risks associated with the establishment
of our new 630,000 square foot Logistics & Customer Services
facility in Missouri; our ability
to introduce new products; the success of new products; our ability
to expand our markets; our ability to integrate acquired businesses
in a successful manner; the general growth of our outdoor products
and accessories business; the potential for cancellation of orders
from our backlog; and other risks detailed from time to time in our
reports filed with the SEC, including our Annual Report on Form
10-K for the fiscal year ended April 30,
2019.
Contact: Liz Sharp, VP Investor Relations
American Outdoor Brands Corporation
(413) 747-6284
lsharp@aob.com
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