On the Vista Outdoor first-quarter analyst call, Eric Nyman, co-CEO of Vista and CEO of the Revelyst outdoor products business, insisted Revelyst is on the road to recovery, forecasting sales trends would steadily improve in the coming quarters and reaffirmed Vista’s target to double Revelyst’s standalone adjusted EBITDA in FY25.

Nyman said sales shortfalls in the fiscal first quarter, which ended June 30, as warned in pre-released guidance on July 22, were primarily due to the delayed launch of a new Bushnell product and supply chain issues.

Nyman added that Revelyst’s “Gear Up transformation” contributed cost savings of $5 million in the first quarter and was on a path to deliver savings of $25 million to $30 million in FY25 and $100 million on an annual run rate by FY27.

“I am energized by the roadmap we have in front of us at Revelyst,” said Nyman. “Teams across our business are executing on our transformation to the GEAR Up program and our value-creating dragon flywheel to unlock growth and margin expansion through game-changing innovation, exceptional licensing partnerships and enhanced direct-to-consumer and international channel strategy and digital-first thinking to create engaging content and gaming opportunities. We are relentless in our pursuit of excellence, and that drives my belief in our strategy and confidence in our financial targets and our ability to double our standalone adjusted EBITDA in fiscal year 2025.”

Nyman’s confidence in Revelyst’s progress comes as several companies with equity stakes in Vista Outdoor, including Gamco Asset Management, Gates Capital Management and TIG Advisors, had issued statements in recent weeks opposing a deal to sell The Kinetic Group, Vista’s ammunition business, to the Czechoslovak Group (CSG), in large part due to doubts about Revelyst’s prospects as a standalone, publicly held company.

On July 30, Vista adjourned its shareholder vote on the sale of The Kinetic Group to pursue a more extensive review of additional “strategic alternatives,“ including selling its Revelyst business and selling the company outright to MNC Capital.

On the call, Nyman said Vista had already engaged with MNC “to see if they can deliver superior value“ in an offer to acquire the company and also “reached out to several parties“ about a sale of the Revelyst business.

CSG also remains committed to acquiring The Kinetic Group and is now exploring the acquisition of Revelyst with potential partners.

“The Board continues to recommend Vista Outdoor stockholders vote in favor of the proposal to adopt the merger agreement with CSG,“ said Nyman. “We look forward to evaluating all strategic alternatives that would maximize value for stockholders, and we remain as focused as ever on delivering high-quality, innovative products for our consumers around the world.“

Results for the fiscal first quarter ended June 30 were in line with updated guidance given on July 22 when Vista forecasted first-quarter results that were generally in line with expectations although the Revelyst business came in below expectations and The Kinetic Group topped expectations. At the time, Vista reiterated its guidance for its fiscal year ended March 2025.

Vista’s Companywide Q1 Sales Decline 7.1 Percent
Companywide sales in the quarter declined 7.1 percent to $644 million driven primarily by lower volume at The Kinetic Group and Revelyst, partially offset by increased government sales at Revelyst and increased price at The Kinetic Group.

Gross profit decreased 6.9 percent to $211 million due to decreased volume and increased inflationary costs, including for copper and powder at The Kinetic Group and lower volume at Revelyst, partially offset by increased price at The Kinetic Group.

Operating expenses slid 3.3 percent driven primarily by a gain on divestiture of RCBS and Fiber Energy Products, lower transition costs for prior acquisitions and cost savings from Revelyst’s GEAR Up program, partially offset by increased SG&A costs at The Kinetic Group, increased planned separation costs, an asset impairment related to the sale of Fiber Energy and GEAR Up restructuring costs.

Operating income declined 12.1 percent to $81 million, while adjusted operating income was down 13.1 percent to $86 million.

Net income decreased to $57.1 million, or 97 cents a share, from $58.1 million, or 99 cents, a year ago. Adjusted EPS declined to $1.01, or down 6.5 percent, compared with $1.08 in the prior fiscal year.

Adjusted EBITDA declined 11.3 percent to $110 million, with the Adjusted EBITDA margin decreased 80 basis points to 17.1 percent.

Revelyst’s Q1 Sales Slump 13.6 Percent
Sales at the Revelyst segment declined 13.6 percent to $274 million, reportedly driven by:

  • Pre-order delivery timing delays, unfavorable product mix toward lower price point channels and lower royalty revenues within Revelyst Adventure Sports (Fox Racing, Bell, Giro, CamelBak, QuietKat, and Blackburn);
  • Lower wholesale volume and order timing within Revelyst Outdoor Performance (Simms, Bushnell, Blackhawk, Stone Glacier, Camp Chef, and Primos); and
  • Lower volume from new product introductions in the prior year for Bushnell Golf and order timing within Revelyst Precision Sports Technology (Foresight Sports, Bushnell Golf, and Pinseeker).

The decline was partially offset by increased government sales at Outdoor Performance and growth at Foresight, which was driven by new product introductions at Revelyst Precision Sports Technology.

Gross profit at the Revelyst segment decreased 14.2 percent in $81.4 million, with gross margin decreasing 21 basis points to 29.7 percent due to the lower sales, partially offset by lower freight costs at Adventure Sports, lower discounting at Outdoor Performance and favorable product mix at Precision Sports Technology.

Adjusted EBITDA decreased 35.2 percent to $16 million, with adjusted EBITDA margin sliding 190 basis points to 5.7 percent due to lower gross profit at all three Revelyst segments, partially offset by decreased SG&A costs related to Gear Up initiatives.

Revelyst Gaining Market Share in Tough Market
Nyman said many of Revelyst’s brands have gained market share. He said, “Despite challenges related to market softness, order timing and divestitures, we remain focused on growth gains, no matter the market conditions, and are poised to revolutionize our future through innovative brand-led and consumer-led product offerings.”

In the Adventure Sports segment, Nyman said Revelyst is capturing market share across several categories, including helmets, mountain bike protection and bike hydration in a declining market environment. He said, “Newness is gaining traction with our customers,” noting that Fox Racing’s V3 RS and Pure View models were sold out. He said, “We intend to further capitalize on these trends with upcoming product launches.”

In Revelyst’s Outdoor Performance segment, Simms continues to grow its market share with its dominant position in waders and fishing sportswear. The launch of the Camp Chef Gridiron drove 8 percent growth in the flat-top grill category, “outpacing the market in a category that has been a bright spot within the broader outdoor cooking market,“ said Nyman.

In Revelyst’s Precision Sports Technology segment, Foresight has had multiple consecutive quarters of growth from the Quad Max and Falcon product launches. The delayed launch of the Phantom 3 GPS drove Bushnell Golf sales lower than anticipated in the quarter, though this product is still expected to capture additional sales for the rest of FY25. A product collaboration between Foresight and Bushnell Golf will come out this fall, which Nyman forecasted “will change the way golfers capture and utilize information from launch monitors and laser range finders.”

In licensing, Nyman announced that Camp Chef would be forming Vista’s “biggest partnership“ with celebrity chef and restauranteur Guy Fieri to develop several co-branded cooking equipment pieces.

The Kinetic Group’s Q1 Sales Slide 1.6 Percent
Sales at The Kinetic Group, which includes the Federal, Remington, CCI, Hevi-Shot, and Speer ammunition brands, were down 1.6 percent to $370 million in the quarter due to lower shipments across nearly all categories, partially offset by increased price.

Gross profit declined 1.6 percent to $130 million driven primarily by decreased volume and increased input costs primarily for copper and powder, partially offset by increased price.

Operating income decreased 3.8 percent to $104 million due to lower gross profit and increased selling, general and administrative costs. Operating income margin decreased 62 basis points to 28.2 percent.

Adjusted EBITDA decreased 3.2 percent to $111 million. Adjusted EBITDA margin decreased 49 basis points to 30.0 percent.

On the call, Jason Vanderbrink, co-CEO of Vista and CEO of The Kinetic Group, said earnings were better than expected in the quarter. “Our team has stayed focused while facing economic headwinds and inflationary pressures with rising commodity prices and successfully navigating a global powder shortage. As history has shown us several times, if the market starts to slow, we expect to gain market share due to vendor consolidation as our customers and consumers generally will purchase the brands they trust.”

Vanderbrink said that as hunting season approaches, The Kinetic Group’s finished goods inventory is “well-positioned to fill consumer demand in all hunting loads in every category.“

Hevi-Shot is expected to continue since Vista acquired the business, while Remington Core-Lockt’s “inventory and demand are in the best shape it has been in several years.” He added, “Our seasonal build program has produced many calibers that the consumer has not been able to purchase in many years, which also brings higher margins with it. We continue to try to meet the demand we have seen with the CCI uppercut product, which has exceeded our forecast when we introduced this game-changing product.“

Vanderbrink noted that June NICS data surpassed over one million background checks for the 59th straight month to support a “healthy and higher baseline of shooting and hunting participants.“

He added that while the market remains “volatile,” including the global powder shortage, increasing input costs for copper and powder, and competitive market pricing, he expects The Kinetic Group to continue gaining share. Vanderbrink said, “With a diverse customer base and multi-brand strategy, The Kinetic Group is poised to continue to be the leader in ammunition technology, and we are planning to release the most exciting product we have ever developed in our history in our third quarter.  I have full confidence that with the best team in the ammunition business, we will continue to perform at the highest level.”

Outlook
Vista reaffirmed its FY25 guidance and expects:

  • Sales in the range of $2.665 billion to $2.775 billion.
    • The Kinetic Group Sales are expected to be approximately $1.425 billion to $1.475 billion, and
    • Revelyst Sales are expected to be roughly $1.240 billion to $1.300 billion.
  • Adjusted EBITDA in the range of $410 million to $490 million
    • The Kinetic Group’s adjusted EBITDA is expected to be approximately $350 million to $400 million, and
    • Revelyst adjusted EBITDA is expected to be roughly $130 million to $160 million.
  • EPS in the range of $3.56 to $4.46; Adjusted EPS in the range of $3.60 to $4.50.

Image courtesy Simms