Vista Outdoor Inc. will continue to acquire both firearms accessory brands and human-powered outdoor recreation brands to grow its Outdoor Products segment, the company's VP of Investor Relations, Michael Pici, told The B.O.S.S. Report last week.
Pici said Vista Outdoor, which shelled out $450 million in July to acquire CamelBak Products LLC and stand-up paddleboard maker Jimmy Styks, is not targeting any particular mix of revenues between shooting and non-shooting sports, although the latter is a much larger opportunity.
“We don't focus on a particular segment because you miss opportunities and end up overpaying,” he said. “We are focused on opportunities that will generate the most shareholder value. If some of those happen to be in shooting sports, that's where we will go.”
Vista has estimated the total outdoor recreation business generates revenue of about $65 billion a year, but that $50 billion of that lies outside of firearms and ammunition.
“The overall perspective from Vista Outdoor is that a lot more opportunity lies there,” Pici said. “How it falls out between the two segments remains to be seen.”
Low Interest In Apparel, No Appetite For Team Sports
While equipment companies like Amer Sports, Black Diamond Inc., Jarden Corp. and Remington Outdoor Company have put a big emphasis on expanding into apparel to enhance growth and margins, VSTO is unlikely to follow suit. While its Blackhawk holster and accessories brand does offer men's and women's apparel, VSTO is likely to focus on its strength, which is hardgoods.
“It's a very challenging industry, with very high inventory requirements,” Pici said of apparel. “We don't see it in the short term or the long term. The one area we won't get into is team sports. You won't see us get into soccer, baseball or the Riddell helmet business.”
VSTO derived about three quarters of its $2.3 billion in 2014 sales from its Shoots Sports segment, which earns about 90 percent, of its revenue from ammunition sales and 10 percent from the manufacture and distribution of rifles. The company does not make handguns.
The Outdoor Products segment generated the remainder of the company's 2014 revenue, or about $760 million. That number will climb significantly this year and next as $160 million-plus revenues from CamelBak and Jimmy Styks flow onto its income statement.
Prior to the acquisitions, the Outdoor Products segment derived the majority of its revenue from the optics company Bushnell, which generated annual sales of about $600 million a year when it was acquired by Alliant Techsystems Inc. in late 2013 as the foundation of a new Sporting Group that was spun of via an IPO in January as Vista Outdoor.
The segment's other brands include the Bollé (sunglasses), Cébé (ski helmets, goggles and sunglasses), Serengeti (sunglasses), Tasco (optics), Bee Stinger (bow accessories) and Gold Tip (arrows and archery accessories).
As reported by The B.O.S.S Report July 31, CamelBak's gross margins hover above 40 percent, or more than twice those of VSTO's Outdoor Products segment and 1.5 times its Shooting Sports segment.
Diamonds In The Rough
VSTO does not break out shooting versus non-shooting revenues within the segment, so it's difficult to know what's driving the most growth, but Pici said some of its fastest growth is coming from – you guessed it – golf.
“Golf as an industry has some challenges, but it's a very strong growing part of our portfolio. New product introductions are driving that like the Bushnell Tour X Jolt rangefinder. Ninety-seven percent of the PGA tour uses that. The Jolt is targeting a specific niche within golf industry. That's strong for us.”
Another hot brand is Gold Tip, a maker of arrows that is benefiting from a renewed interest in target shooting competitions.
“There has been a little bit of shift in that market,” said Pici. “We are now seeing archery offered as an after school activity again. I know it sounds trite – but Hunger Games has put archery back on the map again. Gold Tip is really a jewel that was underserved as part of Bushnell but is a really well run business.”
Ammunition reloading equipment from RCBS and trail cameras from Bushnell and Primos also hot growth categories.
It's too early to tell if camouflage hydration vests from CamelBak will start appearing at Cabela's, Bass Pro, Sportsman's Warehouse, or Dick's Sporting Goods.
