Vista Outdoor delivered its sixth consecutive quarter of record-breaking financial results, elevated by a continuing surge in ammunition demand and healthy double-digit gains across its Outdoor Recreation and Action Sports brands. CamelBak, Giro, QuietKat, Bushnell Golf, Foresight Sports, Federal, and Remington all delivered outsized growth for Vista in the period.
The company again raised its fiscal year 2022 guidance and announced a new $200 million share repurchase program. By segment, Sporting Products and Outdoor Products revenues grew 60 percent and 17 percent, respectively.
“The level of consumer demand remains unprecedented across our portfolio of brands, and the 2021 holiday season was strong,” said Chris Metz, CEO, on a conference call with analysts.
Metz also said the strong profitability came “as we continue to successfully navigate industry-wide supply chain and inflationary challenges.”
Q3 Sales Jump 38 Percent
In the third quarter ended December 26, sales grew 38.3 percent to $794.7 million, exceeding Wall Street’s consensus estimate of $746.8 million.
Net earnings rose to $118.1 million, or $2.00 a share, from $78.9 million, or $1.31, a year ago. On an adjusted basis, earnings doubled to $124.2 million, or $2.10, from $62.1 million, or $1.03, a year ago and ahead of Wall Street’s consensus estimate of $1.92.
Gross profit margin improved 702 basis points to 35 percent. Operating expenses were 15 percent of sales, gaining leverage of 98 basis points. Adjusted operating expenses were 15 percent of sales, gaining leverage of 107 basis points.
Adjusted EBIT increased 127 percent to $166 million, with adjusted EBIT margins increasing 818 basis points to 21 percent. Interest expense increased 19 percent to $7 million.
Segment Realignment
During the quarter, Vista realigned its reportable segments to reflect how its businesses are managed to improve visibility into segments. The business units that rely predominately on third-party manufacturing are now within the Outdoor Products segment. As a result of these changes, Vista’s Hunting and Shooting operating segment is now included in its Outdoor Products reportable segment and renamed Outdoor Accessories.
The Outdoor Products segment now includes five sub-segments: Sports Protection (Bell, Giro), Cycling (QuietKat), Outdoor Cooking (Camp Chef, Fiber Energy), Hydration (CamelBak), Golf (Bushnell Golf, Foresight Sports), and Outdoor Accessories (Bushnell Optics, Primos, RCBS, BlackHawk!, Eagle).
Its Ammunition operating segment is now presented in its reportable segment, renamed Sporting Products. The segment includes Federal, Remington, CCI, Speer, and HEVI-Shot.
Sporting Products Sales Surge 60 Percent
Sales in the quarter in the Sporting Products segment rose 60 percent to $460 million, driven by both organic growth, including Remington, and growth from its HEVI-Shot acquisition in the prior year. The growth benefited from broad-based demand across all calibers of ammunition, low channel inventories, and Remington’s continued ramp-up.
Gross profit increased 123 percent to $178 million. Gross margin expanded to 39 percent from 28 percent, driven by volume, pricing actions, and operating efficiencies partially offset by rising input costs. EBIT jumped 184 percent to $150 million.
Highlighting some product progress, Metz noted that the FBI recently awarded Federal and Sphere contracts for its four categories of handgun ammunition.
On the consumer side, Federal’s Punch 22 LR was recently honored with NRA’s Women’s Gear of the Year award. Federal’s recently-launched 30 Super Carry handgun cartridge and High Over All gauge are seeing strong demand. Remington’s first product launch since being acquired by Vista, Core-Lokt Tipped, has “been a huge success” and offers “yet another signal that Big Green Ammo is back,” said Metz. Federal’s Terminal Ascent also continues to garner awards.
“We believe our ammunition business is far stronger and more resilient than it was five years ago,” said Metz. “This business continues to benefit from strong consumer demand and trends that we see continuing for the foreseeable future. This is supported by nearly 14 million new diverse entrants into the sport, including a high percentage of people of color and women. These new enthusiasts are contributing to high participation rates at shooting ranges and youth shooting leagues, as well as increased sales of hunting licenses, which continue to grow to the highest levels in over 60 years. This available data indicates that influx of new entrants into hunting and shooting sports has produced a new pool of enthusiasts that we expect to be repeat customers for consumable ammunition products for years to come,” Metz continued.
Metz also said channel inventories “remain quite low,” and sales and profits in the ammunition segment continue to benefit from its mix shift
“into more stable and more profitable hunting and shotshell ammunition.”
Strategic pricing actions were implemented to offset rising material labor and transportation costs. Metz also said investments in its ammunition segment continued to drive innovation, enhance DTC and e-commerce selling, support incremental capacity expansion, and efficiency improvement.
Outdoor Products Sales Expand 17 Percent
Sales in the Outdoor Products segment increased 17 percent to $335 million, driven by double-digit growth in Outdoor Recreation, led by golf and CamelBak; Action Sports, led by QuietKat; and outdoor accessories.
Gross profit in the Outdoor Products segment increased 25 percent to $105 million primarily due to the acquisition of higher-margin brands, including Foresight Sports and QuietKat, and organic growth, partially offset by higher logistics and input costs and sales channel mix.
In the fiscal first quarter, the segment added the QuietKat e-bike brand and Venor, a hunt-inspired female apparel brand. In the latest quarter, additions included golf-simulator maker Foresight Sports, Fiber Energy Products, the manufacturer of wood grilling pellets, and Stone Glacier, a hunting gear brand.
Gross margins in the Outdoor Products segment improved to 31 percent from 29 percent. EBIT increased 10 percent to $42 million, primarily driven by the acquisition of Foresight Sports, partially offset by investments in selling and marketing expenses to support an increase in sales, including the return to external customer events such as trade shows. EBIT margin remained unchanged at 13 percent.
Highlighting progress across brands, Metz noted that CamelBak marked its fourth consecutive quarter with growth of over 30 percent, driven by demand for bike products, hydration packs and custom bottle designs. Its collaboration with the water purification brand, LifeStraw.
QuietKat, acquired last May, reported another record quarter and significantly expanded its U.S. distribution. QuietKat partnered to open a larger and more strategically located shared-distribution center in Arkansas with other Vista brands to support its growth.
Camp Chef’s spring launch of its Apex Grill is helping to expand “the brand’s leadership position,” offering cooks a choice for wood pellet or propane fuel cooking on a single platform. Fiber Energy added the capacity to support Camp Chef’s growth with pellet capacity limited.
In Action Sports, strong gains came from Giro’s snow business due to product availability, early season snowfall and product innovation, including its Contour RS Goggle and Grid MIPS Ski Helmet.
At Bell, a video featuring motocross racer Eli Tomac received the highest ratings for a video released from the brand.
The bike accessory brand, Blackbird, expanded its shelf space with new categories in Walmart and expanded with more retail doors.
Golf Sales Triple In Third Quarter
In golf, sales grew triple-digits, led by strong results from its Foresight acquisition and double-digit growth from Bushnell Golf.
The third quarter marked the first full quarter with Foresight, which over-delivered, posting strong double-digit top and bottom-line growth.
Foresight’s growth was driven by its GC3 launch monitor seeing healthy early results. Foresight is also launching upgraded FSX Play software to support trends in off-course simulation play.
Vishak Sankaran, president, golf & hunt/shoot at Vista, said on the call, “Our combined hardware and software ecosystem is unique in the industry and gives us access to a large and dynamic installed user base and recurring revenue stream.”
Bushnell’s Golf Launch Pro, powered by Foresight, sold out multiple times in Q3 pre-sale orders. Said Sankaran, “The launch flow enabled us to expand launch monitor technology to a broader consumer demographic.” International sales for the golf segment grew double-digits in Q3.
Sankaran said that the Foresight acquisition expands Vista’s TAM (total addressable market) in golf to reach the emerging categories of launch monitors and golf simulation. The acquisition also leaves Vista better positioned to capitalize on increased interest in golf coming out of the pandemic.
Golf rounds played in the U.S. rose 5 percent in 2021 and 13 percent in 2020, driven in part by heightened off-course interest and engagement. One-third of the participants, or 12.4 million, were off-course golfers with a younger and more diverse demographic. Said Sankaran, “The off-course experience is sticky and bringing new demographics to the golf course.”
Full-Year Guidance Raised
Vista’s updated guidance for the current fiscal year ending in March includes:
- Sales are expected in the range of $2.97 billion to $3 billion, representing 35 percent growth and exceeding 3-year targets. Previously, guidance called for sales in the range of $2.9 billion to $2.95 billion, or 30 percent growth.
- Adjusted EBITDA margin is projected in the range of 24 percent to 24.5 percent, surpassing 3-year targets.
- Diluted GAAP EPS is now expected in the range of 7.82 to $7.92. Previously, EPS guidance reflected the broader range of $7.62 to $7.92
- Adjusted EPS is now expected in the range of $8.00 to $8.10, representing approximately 120 percent growth, compared with $3.66 in FY21. Previously, adjusted EPS was expected in a range of $7.70 to $8.00, representing over 110 percent growth.
Photo courtesy Tatiana Whitlock, Director of Training, A Girl & A Gun Women’s Shooting League
