Vista Outdoor said its earnings on an adjusted basis doubled in the fiscal fourth quarter ended March 31, as sales rose 36%. Sales increased 56 percent in the sporting goods segment due to sstrong demand, increased volume from the acquisition of Remington and favorable pricing and mix. Sales in the Outdoor Products segment increased by 15%, by double-digit growth in all outdoor recreation.
For the full year, sales reached $3.04 billion, up 37%, with adjusted EPS climbing 127% to $8.29.
“The fourth quarter marked our seventh consecutive quarter of record financial results,” said Chris Metz, president and chief executive officer. “Once again, our results were supported by outstanding performance across our portfolio of iconic brands, including the seven new brands acquired over the past 24 months. Upstart innovators QuietKat and Foresight Sports have benefited from our business model that empowers founders while leveraging shared resources to realize benefits out of reach on their own. Federal, which celebrated its 100th anniversary a few weeks ago, continued to perform well across all calibers, sales channels and with more diverse and active end consumers. The results of our portfolio of activities, old and new, demonstrate our ability to improve the performance of outdoor brands, regardless of their position in the growth and maturity curve. Looking ahead, Vista Outdoor remains well positioned to continue to capitalize on today’s positive consumer trends. Underlying demand in outdoor recreation remains strong, despite the current macroeconomic headwinds, and we enter fiscal 2023 with positive momentum, from our balance sheet to our debt ratio to our strong brand portfolio. .
“Today we also announced a very important strategic step for Vista Outdoor which we believe will create significant value for our shareholders and our brands. After a thorough evaluation of our business and value creation opportunities, our Board of Directors “Administration has approved a plan to separate our Outdoor Products and Sporting Goods segments into two independent, publicly traded companies. We are confident that we have built two strong businesses that are well positioned for continued growth and success as as independent businesses. We are very excited to enter this new chapter of growth for the company and remain committed to continuing to deliver value to our shareholders in the short and long term.”
For the three months ended March 31, 2022 compared to the three months ended March 31, 2021:
- Sales reached a record $809 million, up 36%, driven by strong demand in the athletic and outdoor product segments, as well as acquisitions, new product innovation and the pricing structure.
- Gross profit increased to $287 million, up 58%, primarily due to higher sales, favorable pricing and mix, and operating leverage.
- Operating expenses were $135 million, up 32%, primarily due to acquisitions and increased sales and marketing expenses to support higher sales, including the return of events customers such as trade shows. Operating leverage improved by 43 basis points to 16.6%.
- Earnings before interest and taxes (EBIT) increased to $153 million from $74 million in the prior year quarter. EBIT margins increased by nearly 700 basis points to 18.9%. Adjusted EBIT was $160 million, up 99%. Adjusted EBIT margins increased by more than 600 basis points to 19.8%.
- Diluted earnings per share (EPS) increased to $1.93 from $1.11 in the year-ago quarter. Adjusted EPS increased to $2.04 from $1.02 in the prior year quarter primarily due to higher sales, gross margin expansion and operating leverage, partially offset through higher taxes.
For the quarter ended March 31, 2022, segment results compared to the quarter ended March 31, 2021:
- Sales increased to $464 million, up 56%, driven by strong demand, increased volume following the Remington acquisition and favorable pricing and mix.
- Gross profit reached $183 million, up 98%. Margin expansion was driven by improved pricing, volume and mix as well as operating leverage resulting from increased volume and operational efficiencies, partially offset by higher costs inputs.
- EBIT increased by 128% to $151 million.
- Sales rose 15% to $345 million, driven by double-digit growth in outdoor recreation, including growth in action sports and outdoor accessories.
- Gross profit increased to $106 million, up 16%, primarily due to the acquisitions of Foresight Sports and QuietKat, partially offset by higher logistics and input costs.
- EBIT was $37 million, down 11%, due to higher logistics and input costs as well as higher sales and marketing expenses reflecting a return to travel and attendance at events, including trade shows, compared to the same period last year.
For the twelve months ended March 31, 2022 compared to the twelve months ended March 31, 2021:
- Sales increased 37% to more than $3 billion, driven by strong consumer demand in both segments and acquisitions.
- Gross margin increased 75% to $1.1 billion due to higher prices, volume and mix, partially offset by higher logistics and input costs.
- Operating expenses increased by 29%, mainly due to acquisitions, while operating leverage improved by 101 basis points to 15%, mainly due to operational efficiencies.
- EBIT increased 127% to $646 million and EBIT margin increased 842 basis points to 21.2%. The adjusted EBIT margin increased by 933 basis points to almost 22%.
- EPS increased to $8.00 from $4.44 in the prior year. Adjusted EPS was $8.29, up 127% from $3.66 in the prior year.
- Cash flow from operating activities was $318 million, compared to $345 million in the prior year. Free cash flow generation was $292 million.
For the twelve months ended March 31, 2022, segment results compared to the twelve months ended March 31, 2021:
- Sales increased 55% to $1.7 billion, driven by the acquisitions of Remington and HEVI-Shot, strong consumer demand and favorable pricing and mix.
- Gross profit increased 128% to $712 million, primarily due to higher pricing, volume and mix, as well as operating leverage from efficiencies.
- EBIT increased by 170% to $600 million.
- Sales increased 18% to $1.3 billion, primarily due to strong consumer demand and acquisitions, reflecting double-digit growth in outdoor recreation, action sports and accessories outdoors.
- Gross profit increased 24% to $399 million, largely due to acquisitions as well as organic growth, partially offset by higher logistics and input costs.
- EBIT increased by 19% to $164 million.
Outlook for FY2023
“After two consecutive years of record performance, we continue to see strong demand across our diverse portfolio of leading brands, in part due to lifestyle changes to spend more quality time outdoors,” Sudhanshu said. Priyadarshi, Chief Financial Officer. “Our guidance for fiscal 2023 reflects these favorable consumer trends while factoring in headwinds from inflation and supply chain dislocation that we expect to continue for the foreseeable future. That said, we We are in a strong financial position with a solid balance sheet and net debt leverage ratio below 1.0x after five acquisitions in FY22 as well as ample liquidity Vista Outdoor is well positioned to continue to drive growth and long-term shareholder value.
Vista Outdoor Sets Fiscal Year 2023 Financial Guidance
The company expects:
- Sales in the $3,150-3,250 million range, up 5% mid-term (excluding future acquisitions)
- Adjusted EBITDA range from 20.5% to 21.5%
- Adjusted earnings per share (EPS) in the range of $7.00 to $7.75
- Free cash flow in the range of $300 million to $350 million
- Effective tax rate of approximately 24%
- Interest charges between $25 and $30 million
- Growth in R&D expenditure of around 35 to 40%
- Capital expenditure as a percentage of sales 1-2%
For the first quarter of FY23, the company expects:
- Sales between $770 million and $790 million, up 17.7% at midterm
- Adjusted EBITDA range from 22% to 22.5%
- Adjusted EPS between $1.85 and $1.95
Please see the tables in the press release for a reconciliation of non-GAAP operating expenses, EBIT, taxes, net income, earnings per share and free cash flow to comparable GAAP measures.
In fiscal 2022, the company repurchased 2,980,681 shares for a total of $113 million, or an average share price of $37.97.