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Lonoke's plant on overdrive on ammo

by John Magsam | July 30, 2021 at 2:05 a.m.

The CEO of Vista Outdoor, the parent company of Remington Ammunition, said in a Thursday interview that the Lonoke ammunition plant continues to push out ammunition day and night, and will hire more workers to meet unprecedented demand even as the state faces a new covid-19 surge.

On Thursday afternoon Gov. Asa Hutchinson announced during a news conference at the state Capitol that he was reinstating Arkansas' public health emergency. He also said he asked the White House to send a surge response team to Arkansas to help assess hospital capacity in the state.

The state's count of covid-19 cases was up by 2,843 on Thursday, the highest one-day new case total since Jan. 15.

Vista Outdoor Chief Executive Officer Chris Metz said efforts are underway at the Lonoke plant to educate workers and encourage them to become fully vaccinated against covid-19. He said there are protocols at the plant to keep workers as safe as possible in light of the increase in covid-19 cases statewide brought on by the delta variant of the virus.

Remington's Lonoke facility now employs a little more than 1,000 people and is still looking for hundreds more workers. That's an increase of more than 200 workers since February and more than double November's count of around 450. Metz's comments came after Vista Outdoor reported a record-first quarter for fiscal 2021, in part on the strength of the company's ammunition sales.

The plant has implemented a social-distancing protocol, which includes staggered break times so rooms don't get too crowded, and a full-time nurse is tracking all local, state and federal guidelines to make sure the company is following protocol and best practices. There will be a covid-19 vaccination drive at the plant later in the week, the second the company has held.

CDC rankings have Arkansas behind only Louisiana and Florida in new cases per capita over a rolling seven-day period.

"It does worry us," Metz said.

Vista Outdoor formed in 2015 and is made up of more than 35 outdoor brands, including, bicycles, camping gear, golf and skiing equipment, optics and ammunition makers. It has 14 other manufacturing operations in the U.S. and Puerto Rico. It purchased Remington's ammunition operations and other assets from the company when Remington Outdoor Co. declared bankruptcy last year.

On Thursday, Vista Outdoor reported that its fiscal first quarter ending June 27 saw net income of $102.7 million, or $1.71 per share compared with $40.4 million or 69 cents a share for the comparable period a year ago. Revenue was $662.9 million for the quarter, up 38% from $479.1 million for the year-ago period.

The company reported that sales in the shooting sports category were up 39% to $463 million, driven by 39% growth in ammunition sales, and 37% growth in hunting and shooting.

During the conference call, Metz said demand remains strong in the ammunition segment as shortages around the United States continue. He said the company is working constantly across all of its ammunition operations and still has billions of dollars in back orders.

Metz stressed that this cycle of heightened ammunition demand and shortages has been longer lasting than in years past, in part because of an estimated 10 million first-time gun buyers who entered the market over the past year or so.

Annual background checks of firearms buyers are on track to break records yet again for 2021 with about 22.2 million through June, compared with about 19.2 million for the same period last year. In 2020, records were shattered, with 39.69 million total background checks, a 40% increase over 2019's previous record. While the FBI background-check figures don't represent the number of guns sold, they are generally used as indicators of firearms demand.

Metz said ammunition is making its way to retailers and is showing up for sale in some stores and online, but supply is not close to meeting demand or establishing sustainable retail inventory.

"I don't think we have one customer that I can think of that is real happy with their inventory position," Metz said.

When asked by analysts about when the demand for ammunition might subside Metz said he didn't expect it anytime soon.

"We don't see it going backwards, but we see it certainly slowing down to a more reasonable level at some point in time. We don't know when that point in time is."

Chief Financial Officer Sudhanshu Priyadarshi credited much of the growth in the ammunition segment to the quicker than anticipated integration of Remington into Vista Outdoor's portfolio of ammunition-makers. In addition to Remington, Vista Outdoor's ammunition brands include Federal, Speer, CCI and HEVI-Shot.

The company predicted sales between $710 million and $730 million for the second quarter compared with $575 million for the second quarter of fiscal 2021. Earnings per share are expected to be in the $1.70 to $1.80 range, compared with $1.10 earnings per share for the same quarter last year.

Vista Outdoor shares closed at $41.22, up $2.18 or more than 5% in trading Thursday on the New York Stock Exchange. Shares have traded as low as $15.75 and as high as $47.62 over the past year.

In mid-October, Vista Outdoor, based in Minnesota, closed on its acquisition of Remington's ammunition production facility, along with the Remington brand and trademarks. Vista Outdoor paid $81.4 million for the assets as part of Remington's bankruptcy proceedings.

In July, Remington Outdoor Co., the nation's oldest gun-maker, declared bankruptcy in U.S. Bankruptcy Court for the Northern District of Alabama, its second bankruptcy in two years. The private company was founded in 1816. Remington began production at the Lonoke facility in 1969. The operation includes 750,000 square feet of manufacturing space on 1,200 acres.

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