Vista Outdoor reported a 24 percent sales increase to $684.3 million for its second quarter, ended Oct. 2, but they were up by 5 percent organically excluding acquisitions including that of Camp Chef, which closed during the quarter.
In the outdoor products segment, sales jumped by 51 percent to $321 million for the parent company of Camelbak and other brands, but organic growth was limited to just one percent. Hydration, eyewear, tactical products and shooting accessories were all positive, but optics declined.
The segment's gross profit increased by 45 percent to $84 million, but it declined by 10 percent organically due to higher promotional activity, which may persist in the second half to counter a soft retail environment.
In the shooting sports segment, sales increased by 7 percent to $364 million during the quarter, with good results in both ammunition and firearms. They were boosted by higher sales outside the U.S.
Across the group, the gross margin remained flat at 27.1 percent. Net earnings more than doubled to $73.2 million from $32.7 million in the year-ago period, largely because of a $30 million gain from a legal settlement of claims that Vista had brought against Bushnell's former owners.
The recent retail bankruptcies in the U.S. had some impact on Vista's results, notably due to reduced demand for Bushnell golf rangefinders. There should be no impact on its business from the merger of Bass Pro and Cabela's, following positive meetings with the group's management. Commenting on the recent elections, Vista's management felt that the Republicans' control of the presidency and the legislature will effectively dispel threats to gun rights.
On the other hand, Vista's management sees challenges in its efforts to improve international distribution for its brands while extending them to adjacent product lines and cross-selling to key accounts. Thus, the company's organic growth is expected to remain in the 4 to 6 percent range annually, in line with market trends. Ebitda should improve by between 14 and 16 percent per year, but the group is still expected to deliver annual increases in Ebitda of 16 to 18 percent in the longer term.