Vista Outdoor’s Q4 Sales Expand 40 Percent

Vista Outdoor Inc. reported sales grew 40 percent in the fourth quarter ended March 31. In its two segments, sales of Outdoor Products were up 47 percent while Shooting Sports gained 37 percent.

Vista Outdoor’s brands include Federal Premium, CamelBak, Bushnell, Camp Chef, Primos, Blackhawk, Bell, and Giro.

“Strength in our underlying business fundamentals, disciplined strategy execution and favorable consumer trends fueled our outstanding Fiscal Year 2021 results,” said Vista Outdoor Chief Executive Officer Chris Metz. “We delivered all-time record results for earnings per share, EBIT, and free cash flow as a result of our successful multi-year effort to strengthen our operations and improve profitability. The demand and order rate for all of our businesses continued to increase each quarter most recently resulting in fourth-quarter sales growth of 40 percent. The integration of the Remington and HEVI-Shot acquisitions remains ahead of schedule and on track to be accretive to earnings in under 12 months. Our Outdoor Products segment delivered their best year on record. As we look back on the past twelve months, I would like to extend my sincere, heartfelt gratitude to our amazing employees and pass along my thanks for the hard, dedicated work they have shown. This past year’s performance is a tribute to our team’s excellence as they managed the expanded business and served customers exceptionally well throughout the global COVID-19 pandemic.

“Looking ahead, 2021 promises to be a year where people continue to recreate and enjoy the outdoors. We enter this year with our highest level of cash flow, our lowest level of debt in years, a powerhouse of outdoor brands, an expanded addressable market, record numbers of passionate advocates for our products, and an expanded commitment to preserve and protect our planet as we bring people outside,” concluded Metz.

Fourth Quarter Ended March 31, 2021

• Sales increased 40 percent to $597 million, compared with the prior-year quarter, driven by strong demand across both Outdoor Products and Shooting Sports segments;
• Gross profit increased to $182 million, compared with $85 million in the prior-year quarter. Gross margin increased more than 1,000 bps compared with the prior-year quarter, driven by volume, favorable pricing and mix, operating leverage, and strong growth in e-commerce channels;
• Operating expenses were $102 million, compared with $232 million in the prior-year quarter, primarily due to goodwill and indefinite-lived intangible asset impairment charge of $156 million in the prior-year quarter;
• Earnings before interest and taxes (EBIT) was $74 million, compared with $(147) million in the prior-year quarter. Adjusted EBIT was $81 million, compared with the prior-year quarter; and
• Diluted earnings per share (EPS) rose to $1.11, compared with $(2.44) in the prior-year quarter. Adjusted EPS was $1.02, compared to $0.11 in the prior fiscal year period. The prior fiscal year’s fourth quarter EPS included the aforementioned asset impairment charge.

Fourth Quarter ended March 31, 2021 | Operating Segment Results

Shooting Sports

• Sales increased 37 percent to $403 million compared with the prior-year quarter, primarily driven by strong demand for commercial ammunition and hunting and shooting accessories. The fourth quarter represented the first full quarter of ownership of the Remington acquisition of ammunition operations, brand and certain IP;
• Gross profit increased to $123 million, compared with $54 million in the prior-year quarter. Gross margin improved to 31 percent, up from 18 percent compared with the prior-year quarter, primarily driven by volume and pricing improvement, favorable mix and operating leverage; and
• EBIT improved to $82 million, compared with $22 million in the prior-year quarter.

Outdoor Products

• Sales increased 47 percent to $193 million compared with the prior-year quarter, primarily due to strong consumer demand across all brands;
• Gross profit increased 86 percent to $59 million, compared with the prior-year quarter. Gross margin improved by 651 bps to 31 percent compared with the prior-year quarter driven by operating leverage and growth in e-commerce channels, partially offset by increased distribution and freight cost; and
• EBIT increased to $25 million, compared with $4 million in the prior-year quarter.

Fiscal Year ended March 31, 2021

• Sales increased 27 percent to $2.23 billion compared with the prior fiscal year. Strong consumer demand across both segments drove record growth;
• Gross profit rose 76 percent to $633 million from the prior fiscal year. Gross margin expanded 801 bps to 28 percent largely driven by volume, pricing improvement, and growth in e-commerce channels;
• Operating expenses declined to $360 million, compared with $491 million in the prior fiscal year. The decrease was primarily due to goodwill and indefinite-lived intangibles asset impairment charges of $156 million recognized in the prior fiscal year. Adjusted operating expenses were $354 million compared with $314 million in the prior fiscal year;
• EBIT increased to $285 million, compared with $(132) million from the prior fiscal year. Adjusted EBIT was $280 million, compared with $46 million from the prior fiscal year;
• Interest expense was $26 million, compared with $39 million in the prior fiscal year. Adjusted interest expense was $24 million, down 30 percent, compared to $35 million in the prior fiscal year, due to an overall lower average interest rate and lower debt balance;
• EPS increased to $4.44, compared with $(2.68) in the prior fiscal year. Adjusted EPS was $3.66, compared with $0.24 in the prior fiscal year, due to higher sales, gross margin expansion, operating leverage, and a lower tax rate, slightly offset by higher weighted average shares outstanding; and
• Cash flow provided by operating activities was $345 million, compared to $77 million in the prior fiscal year. Free cash flow generation was $318 million, compared to $59 million in the prior fiscal year, due to overall improved cash management activities and networking capital efficiencies.

Fiscal Year Ended March 31, 2021 | Operating Segment Results

Shooting Sports

• Sales increased 28 percent to $1.52 billion compared with the prior fiscal year, primarily due to strong consumer demand as a result of the resurgence in outdoor recreation activities, demand for personal protection and higher sales in our e-commerce channels across all brands;
• Remington and HEVI-Shot acquisitions during the fiscal year contributed to higher sales growth;
• Gross profit increased to $427 million, compared with $211 million in the prior fiscal year. Gross margin rose 1,037 bps to 28 percent primarily driven by volume, pricing improvement, mix, and operating leverage, offset by increased commodity costs; and
• EBIT increased to $279 million, compared with $80 million in the prior fiscal year.

Outdoor Products

• Sales increased 25 percent to $707 million from the prior fiscal year primarily due to strong consumer demand as a result of the resurgence in outdoor recreation activities and higher sales in our e-commerce channels across all brands. Strong demand was somewhat offset by continued supply chain disruptions primarily related to our Hydration business unit;
• Gross profit improved by 38 percent to $207 million from the prior fiscal year. Gross margin increased by 289 bps to 29 percent compared with the prior fiscal year driven by volume, operating leverage, and growth in e-commerce channels;
• EBIT improved to $82 million, compared with $30 million in the prior fiscal year; and
• The company will provide additional information in its Form 10-K, which will be filed later this month.

Outlook for First Quarter Fiscal Year 2022
“The strength of Vista Outdoor’s brands, its innovative product offerings and e-commerce growth of 40 percent delivered strong sales growth in the fourth quarter, and the work done as part of our strategic transformation continued to deliver dramatically improved margins, enabling Vista Outdoor to drive more profit per dollar of sales than ever before,” said Sudhanshu Priyadarshi, CFO, Vista Outdoor. “Our continued success has enabled us to accelerate the building of our innovation pipeline and brand leadership, invest in our centers of excellence and generate growth through thoughtful acquisitions. We will continue to be disciplined in our approach to valuation and target selection to ensure we deliver shareholder value through our M&A strategy. We are also pleased to announce that our Board of Directors has approved a two-year share repurchase program for up to $100 million of the company’s common stock, which adds another tool to our capital deployment toolkit that we expect to use primarily to offset dilution.”

Outlook For First Quarter Fiscal Year 2022

• Sales in a range of $600 million to $620 million, compared with $479 million in the prior-year quarter; and
• Earnings Per Share (EPS) in a range of $0.80 to $0.90, compared with $0.51 of adjusted EPS in the prior-year quarter.

Vista Outdoor Provided The Following Assumptions For Full-Year Fiscal Year 2022

• The tax rate is expected to be in the low 20 percent range;
• Interest expense is expected to be in line with the prior-year adjusted interest expense;
• Capital expenditures are expected to be approximately 15 percent higher than FY21; and
• R&D expenses are expected to be approximately 25 percent higher than FY21;

Photo courtesy Vista Outdoor