Vista Outdoor Inc. reported sales rose 29 percent in the second quarter ended September 27. Outdoor Products delivered 35 percent organic growth, and Shooting Sports gained 26 percent. E-commerce revenues doubled.
“We delivered outstanding results in the second quarter,” said Vista Outdoor CEO, Chris Metz. “Our focus on the great outdoors, together with the strength of our business model, product offerings, and execution drove positive results across the company. The difficult work we’ve done over the past three years to improve profitability and efficiency and expand our e-commerce capabilities turned our increased revenue into higher margins and a dramatically improved level of free cash flow. With our leverage ratio down to 1.4x in the quarter, we could again look to acquisitions as a further lever of growth. Last month we completed an acquisition of the iconic Remington brand. We are thrilled with this highly synergistic acquisition, which adds Remington’s Arkansas ammunition manufacturing facility and ownership of the legendary Remington brand in ammunition and accessories categories to our world-class portfolio.”
“My sincere thanks and appreciation go out to our entire team of outstanding employees for their hard work and resilience. None of these results could have been possible without their extraordinary efforts to serve our customers with dedication and passion in the midst of the challenges presented by the COVID-19 pandemic,” Metz added.
For the second quarter ended September 27, 2020:
- Sales increased 29 percent to $575 million, compared with the prior-year quarter. Wall Street’s consensus estimate had been $506.39 million.
- Gross profit rose 79 percent to $162 million, compared with the prior-year quarter. Gross profit margin improved by 786 bps compared with the prior-year quarter;
- Operating expenses were 15 percent of sales and improved by 483 bps when compared with the prior-year quarter;
- Adjusted operating expenses were 15 percent of sales, and improved by 356 bps when compared with the prior-year quarter;
- Earnings before interest and taxes (EBIT) increased to $75 million from $1 million in the prior-year quarter;
- Adjusted EBIT increased to $78 million, from $10 million in the prior-year quarter;
- Interest expense decreased 54 percent to $6 million compared with the prior-year quarter. Adjusted interest expense decreased 37 percent;
- Fully Diluted Earnings per Share (EPS) was $1.34 compared with $(0.21) in the prior-year quarter. Adjusted EPS was $1.10 compared with $0.00 in the prior-year quarter. Wall Street’s consensus estimate had been 64 cents;
- Cash flow provided by operating activities was positive $198 million compared with a use of cash of $(8) million in the prior-year period. Free cash flow generation was positive $190 million, compared with the use of cash of $(23) million in the prior-year.
For the second quarter ended September 27, 2020, operating segment results:
- Sales increased 26 percent to $380 million, compared with the prior-year quarter driven by continued strong consumer demand as a result of the resurgence in outdoor recreation activities and demand for personal protection.
- Gross profit increased 110 percent to $105 million, compared with the prior-year quarter. Margin acceleration is due to the result of improvements resulting from cost savings initiatives, mix, price, and favorable commodity costs.
- EBIT increased 340 percent to $70 million, compared with the prior-year quarter. EBIT Margin improved by 1320 bps to 18.5 percent from 5.3 percent in the prior-year quarter.
- Sales increased 35 percent to $195 million, compared with the prior-year quarter, driven by strong consumer demand as a result of the resurgence in outdoor recreation activities and increases in sales in our e-commerce channels across all brands. Strong demand was somewhat offset by continued COVID-19 supply chain disruptions primarily related to our Hydration business unit.
- Gross profit increased 39 percent to $57 million, compared with the prior-year quarter, due to improvements in mix and increases in the e-commerce channel across all brands. Gross profit margin was 29 percent, up 83 bps from the prior-year quarter.
- EBIT increased 156 percent to $26 million, compared with the prior-year quarter. EBIT Margin improved by over 600 bps to 13.5 percent from 7.1 percent in the prior-year quarter.
Outlook For Fiscal Year 2021 Third Quarter
“Our focus on e-commerce was well-timed and well-executed as this channel grew more than 100 percent during the quarter,” said Sudhanshu Priyadarshi, Vista Outdoor Chief Financial Officer. “E-commerce at 22 percent of YTD sales contributed to the healthy upswing on the EBIT margin to 13.5 percent as well as superior growth in YTD free cash flow to $190 million. With the balance sheet now in excellent shape, we can move to deploy our capital to further fund our future growth including innovation and select tuck-in acquisitions, like Remington.”
Based on results to date, the current market environment and typical seasonality, Vista Outdoor’s outlook for third-quarter Fiscal Year 2021, which includes Remington, is as follows:
- Sales in a range of $510 million to $530 million;
- Earnings per share in a range of $0.55 to $0.65; and
- FY21 guidance does not include the impact of additional future strategic acquisitions, divestitures, investments, business combinations, or other significant transactions.
Photo courtesy Vista Outdoor