This morning, TrackingPoint released a short presser trumpeting the appointment of a new CEO. The company had been headed by Jason Schauble, former Remington Defense employee who now is the man in charge at SilencerCo, but that relationship abruptly evaporated in the weeks leading up to SHOT Show last year. Now, with a new man in charge, TrackingPoint is trumpeting its company growth — but also hinting at some possible issues behind the scenes.
From the official press release:
Today TrackingPoint announced financial growth numbers for fiscal year 2014 ending December 31. TrackingPoint is the provider of Precision-Guided Firearms. Precision-Guided Firearms are based on fighter-jet technology, enabling shooters and hunters to make shots that were previously only possible for elite marksmen. Year-on-year unit growth was 281% and year on year bookings dollars grew 107%. The company believes it is the fastest growing gun company in the world. According to IBISWorld, a premier market research group, the gun industry grew at only a 3.2% rate from 2009-2014.
The company is also announcing an internal restructuring to ensure and accelerate future growth. “We have made a very large investment in Research and Development over the last 3 years. Our core technology is now foundationally mature, putting us in a position to lower operating costs,” said Bruno. “We are now situated to continue changing the way we hunt, shoot, and defend.”
Couched within the triumphant announcement was that phrase: “internal restructuring.” The company posted record profits last year, but the common perception is that the market is reaching saturation with the smart guns. When your product costs as much as a car, there’s a rather small market of people who have the disposable cash to make a purchase like that and it might be the case that the market has reached its limit.
In a call minutes before publication of this article, newly crowned TrackingPoint CEO Frank Bruno confirmed that while sales this past year had been spectacular the coming year probably won’t be as good. He advised that we should expect “more modest growth” rather than the explosive up-and-right action that TrackingPoint has seen in the last year. As for designing products for a lower price range market, Mr. Bruno indicated that there were no plans to do additional partnerships with firearms manufacturers (such as they did with the now-cancelled Remington 20/20) and no plans to shift focus away from their existing product line and price point.
While the commercial market has been the primary adopter of the gun, sources familiar with the company and its operations have told us in the past that the real target was originally the military market. The decision to hire Jason Schauble as CEO was primarily for his military contacts, and when those contacts failed to provide the sales necessary to keep the company afloat in a short enough time frame he was asked to leave. Mr. Bruno (new CEO) stated that even though the military hasn’t adopted the weapons system just yet, they will continue to focus on producing guns for the civilian market while working with military partners to try and meet their needs. Hiring Mr. Bruno seems like a tacit agreement among TrackingPoint’s owners that government sales aren’t a reality in the short term, given his extensive background in commercial sales yet lack of experience or contacts on the military side.
Sources familiar with the company and its operations have told us that while the company looks good on paper, the “internal restructuring” in the press release was a code word for “massive layoffs.” Our sources are saying that most of the marketing, sales, and engineering staff have been laid off in an effort to streamline the company for the coming year — roughly 50% of the employed workforce. When we attempted to email our marketing contact within the company, we were informed that he was “no longer with the brand” — a statement that seems to confirm the suspicions.
TrackingPoint CEO Frank Bruno confirmed that there had been some layoffs, but would not confirm any specific numbers. He told me that the majority of the layoffs had been in the Research and Development department, which seemed a little odd for a technology focused company. However, as he said, “the heavy lifting is done — the technology is mature. All that is left are the details,” and that work doesn’t require the same large R&D department. With $45 million already sunk into the development of the Precision Guided Firearm system, he doesn’t believe that there’s a need to keep throwing money at a project that is more or less complete.
There’s no doubt that the transition from a scrappy little start-up to a full-fledged manufacturer is a rough road, and some layoffs are to be expected. The real question is how well the new CEO steers his company through the next couple months, and if they can remain profitable with their current products and price point.