Representing its fourth consecutive quarter of record performance on strength across its Outdoor Products and Shooting Sports segments, Vista Outdoor reported sales grew 38.4 percent in the first quarter ended June 27 and predicted sales would climb approximately 25 percent in the second quarter.
Sales in the latest period reached $663 million against $479.1 million a year ago. When it reported fourth-quarter results in May, Vista projected sales in a range of $600 million to $620 million in the first quarter.
Net earnings surged 154 percent to $102.7 million, or $1.71, from $40.5 million, or 69 cents. Adjusted EPS came to $1.74 compared with 51 cents a year ago. Earnings were double company projections in the range of 80 to 90 cents.
Gross profit improved by 1,025 basis points. Operating expenses were 15 percent of sales and improved by 139 basis points. Adjusted operating expenses were 15 percent of sales and improved by 163 basis points.
Earnings before interest and taxes (EBIT) increased to $144 million from $48 million. Adjusted EBIT increased to $146 million, from $48 million.
In the Shooting Sports segment, sales rose 39 percent to $463 million, driven by 39 percent growth in ammunition and 37 percent growth in its hunting and shooting category. Gross profit increased 115 percent to $181 million. Margin acceleration was the result of operating leverage, mix and price. EBIT in the Shooting Sports segment increased 160 percent to $142 million. EBIT margin improved by 1,426 basis points to 31 percent from 16 percent.
In the Outdoor Products segment, sales were up 38 percent to $200 million, driven by strong double-digit growth across all categories. Gross profit increased 48 percent to $61 million due to higher volume and higher-margin product mix, partially offset by higher logistics costs. Gross margin was 30.3 percent, up 212 basis points. EBIT increased 125 percent to $26 million. EBIT margin improved by 505 basis points to 13 percent from 8 percent.
On a conference call with analysts, Chris Metz, CEO, said the sales gains in both segments were driven by innovation and heightened demand for all products. E-commerce posted another quarter of double-digit sales growth of 19 percent year-over-year, on top of the previous year’s 40 percent growth rate, despite physical doors reopening.
The 24 percent EBIT margin was due to the strong growth and operational changes made over the past few years as part of its strategic transformation efforts. Said Metz, “Our business is running more effectively and efficiently than ever, generating tremendous leverage.”
He also noted that Vista maintained a strong balance sheet with over $200 million in cash and an unchanged leverage ratio of 0.7 times despite adding four acquisitions in the past nine months, including the acquisitions in the latest quarter of e-bike maker QuietKat and women’s hunt apparel brand, Venor, in the quarter. Metz said of the two acquisitions, “We see great potential in both brands and look forward to seeing them flourish.”
Metz said consumer trends seen across its portfolio of brands and participation reports “demonstrate that outdoor resurgence of 2020 has not slowed.”
He cited the latest study by People For Bikes that shows the total year to date 2021 bike market continues to accelerate, outperforming even last year and growing by 12 percent compared to January through May 2020.
The RV industry posted another record month in June, with RV sales up 25 percent compared with the prior year and nearly 39 percent versus 2019. Southwick Associates released data in May 2021 showing that ammunition demand is not slowing, with two-thirds of ammunition consumers saying current inventory was lower than preferred and that over 80 percent would like to add more.
Campgrounds Of America’s June research report predicted that 53 million Americans would camp in 2021. Metz noted that participation at national and state parks are “surging,” with national parks in Utah ahead 15 percent and state parks in Minnesota up 60 percent. Metz also cited the benefit of the Olympic Games in Tokyo, where many of Vista’s brands are used by competing athletes.
He expects demand for ammunition to have a longer run in this cycle than in past demand surges. Metz said, “The influx of over 10 million new gun owners into shooting sports has fundamentally changed demand dynamics. Mix is no longer a good leading indicator of demand for ammunition in forecasting our business. We have instead shifted our focus to the unprecedented level of ammunition consumption, low retailing consumer inventories and our multibillion-dollar order backlog, all of which indicate that demand is very strong and will be for the foreseeable future.”
Metz said Vista Outdoor increased R&D investment by 17 percent to accelerate the pipeline of gear in high demand as more consumers are recreating outdoors.
“New products cement brand loyalty, attract new customers and drive organic sales growth, leading to higher profitability and returns to shareholders,” said Metz. “This cycle is a fundamental part of our business model is why we continue to grow our R&D investment at a faster rate.”
Elaborating on the performance of business units, Metz cited the return of the “Big Green” as a highlight on its ammunition business with the strong response putting the Remington ammo business ahead of schedule. Vista acquired the Remington ammunition business out of bankruptcy proceedings last year.
He added, “Combined with strong sales for our legacy ammunition brands, I am pleased with the overall positioning of our ammunition platform and around the clock production of our dedicated teams in this heightened demand market.”
The ammunition business also launched a category-first loyalty program that has grown membership by 400 percent since the first week. It also plans to launch a subscription program in fall 2021.
Federal and CCI brands “continue to thrive with recent contract wins and retailer awards showing that the brands are in high demand across many categories,” said Metz.
In the Outdoor Products segment, all brands grew double-digits year over year.
The Giro brand is expected to receive a major boost from the Olympics with the brand being represented by 33 athletes across 16 different countries across road racing, mountain bike racing, track racing, time trial and triathlon. Giro is also generating brand awareness in sales through the Flashpoint MVMNT program. Vista’s action sports brands, including Bell, Giro and Blackburn, will sell to Public Lands, the new outdoor concept from Dick’s Sporting Goods.
Camelbak’s sales grew over 80 percent year over year and benefited from standing out as one of the top sports and outdoor deals. The Tritan Renew water bottle, which is made from 50 percent recycled materials, drove strong retail sales while the Eddy+ kids bottle was s the number two selling style for the Amazon water bottle category.
Camelbak’s Multibev and the Mule Pack models were both recognized by Outside Magazine. The Podium bike and sports bottle franchise continues to set records with sales up triple digits over the prior year quarter. Camelbak’s Horizon drinkware line, new for 2020, is up over 500 percent, driven by an increase in key retail listings, strong marketing focus, and a new customization feature on Dick’s Sporting Goods’ website.
Camp Chef is benefiting from not only strong outdoor trends, but innovation. Newer items received well include the Sidekick Sear, the portable Everest camp stove and the brand’s fire pits.
Vishak Sankaran, president, Hunt, Shoot & Tactical Accessories, said the hunting and shooting accessories business continues to thrive with sales growth of 37 percent year over year. The gains were driven by triple-digit sales growth for RCBS reloading and Gold Tip arrows.
The Bushnell rangefinder category was up triple-digits year over year, supported by strong market demand for the Prime 1300 and the newly-introduced Prime 1800. The Bushnell new Fusion X rangefinder binoculars has been strong market demand, said Sankaran.
Bushnell is also finding success in the trail camera category with the CelluCORE 20 and CelluCORE 30. The Bushnell Outdoorsman Bluetoooth speaker has also seen strong media coverage.
The Bushnell golf line continues to benefit from a significant hike in golf play amid the pandemic that helped support an “incredible” reception to the Phantom 2 Golf GPS handheld that started shipping in June, said Sankaran. Delivery sold out on Bushnell.com in a few hours. A new Ion Edge watch will be introduced in August. The revamped Bushnell golf mobile app earned a four-star plus rating and over 20,000 downloads in its first few weeks.
Bushnell Golf entered the golf simulation market through an exclusive domestic partnership with Foresight Sports, the specialist in golf launch monitor technology. The Launch Pro simulation product will launch this Fall. The Edge Disc Golf Laser Rangefinder has also been well received in the marketplace.
Metz said Vista’s team is scrambling to offset widespread supply chain disruption to meet healthy demand. He added, “Consumer demand for our product has not slowed during the summer. In fact, it’s accelerated. Simply put, we cannot meet the current level of consumer demand. We’re fortunate to have a world-class supply chain, Center of Excellence, supporting our businesses. It has been a collaborative, all-hands-on-deck moment for our company, pooling resources and leveraging our scale to overcome many of the challenges. And despite the headwinds, we got more than our fair share and delivered a strong quarter, and our outlook is bright.”
For the second quarter, sales are expected in the range of $710 million to $730 million, compared with $575 million in the prior-year quarter. EPS is projected in a range of $1.70 to $1.80, compared with $1.10 of adjusted EPS in the prior year quarter.
Photo courtesy Vista Outdoor
