Spin-offs in works at Vista Outdoor; Lonoke-based Remington part of its ammo firm

Vista Outdoor, the parent company of Lonoke-based Remington Ammunition, said Thursday it's spinning off its ammo and outdoor brands into two separate companies, a move expected to be completed sometime in 2023.

Chris Metz will remain chief executive officer of the combined company and will become CEO of the yet to be named outdoor products company upon separation. Jason Vanderbrink, the current leader of the sporting products segment, will become the CEO of the ammunition spin-off.

Vista Outdoor's board of directors unanimously approved the move to break the company's two main segments into separate, publicly traded companies through a tax-free spin-off. The company expects to provide more details on the plan at its investor day on May 23.

The separated outdoor products segment will include CamelBak, Bell, Giro, Camp Chef, Bushnell, Bushnell Golf, Foresight Sports, Stone Glacier and QuietKat brands. The sporting products spin-off will focus on ammunition though brands including Federal, Remington, CCI, Speer, Estate Cartridge and HEVI-Shot.

Minnesota-based Vista Outdoor formed in 2015 and now is made up of 39 outdoor brands, including, bicycles, camping gear, golf and skiing equipment, optics and ammunition makers. It purchased Remington Ammunition out of bankruptcy in late 2020 and employs more than 1,000 workers at its Arkansas plant.

Remington began production at the Lonoke facility in 1969. The operation includes 750,000 square feet of manufacturing space on 1,200 acres.

During a conference call Thursday with analysts, Metz discussed the separation plans as well as the company's fourth quarter and year-end earnings.

"Each company will have a single strategic focus with resources to support a specific operational needs and growth drivers," Metz said. "Additionally, each company will have tailored and discrete capital allocation priorities that are better suited to support its distinctive business model and long-term goals."

Vista Outdoor's Chief Financial Officer Sudhanshu Priyadarshi will become the outdoor products CFO when the separation is complete. Outdoor products will be based in Bozeman, Mont., when the company separates. Vanderbrink, the president of the sporting products segment, will become CEO of the new company on separation. It will remain based in Anoka, Minn.

Shares of Vista Outdoor closed at $39.65, up $1.53 or 4% in trading Thursday on the Nasdaq. Shares have traded as low as $31.83 and as high as $52.69 over the past year.

For its fiscal 2022 fourth quarter ended March 31, Vista Outdoor reported net income of $112.8 million, or $1.93 per share, compared with $67 million, or $1.11 per share, for the same period a year ago. A consensus of seven analysts predicted earnings per share of $1.80, according to Yahoo Finance.

Revenue for the fourth quarter stood at $808.6 million compared with $596.5 million for the same quarter for fiscal 2021. A consensus of six analysts had predicted revenue of $706.9 million.

The outdoor products segment, which includes Remington Ammunition and other ammo brands, posted revenue of $464 million, up 56% when compared with the year-ago quarter. Revenue was up 15% to $345 million in the outdoor products segment.

During the conference call, in response to analysts' questions, Vanderbrink said demand for ammunition is still strong and consistent, brought on by both longtime gun owners and the estimated 14 million new shooters who have entered the market in the past few years.

"So all of this expansion of new users fits really well into our brand because they're consuming it," Vanderbrink said of the new shooters. "They're not hoarding it, and they're very focused on shooting, which obviously helps on the margin side as well."

Metz said the company still has an estimated $3 billion in backlogged ammunition orders.

For the year, Vista Outdoor reported net income was $473.2 million or $8 per share compared with $266 million or $4.44 per share for fiscal 2021. Revenue was $3.04 billion for fiscal 2022 compared with $2.23 billion for the previous year.

The company said its first quarter in fiscal 2023 should see sales of $770 million to $790 million. For all of 2023, Vista Outdoor expects sales of $3.15 billion to $3.25 billion.