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Vista Outdoor Inc. (VSTO)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 FY2025 revenue was $644.2M, down 7.1% YoY; diluted EPS was $0.97 and adjusted EPS $1.01; adjusted EBITDA was $110.1M with a 17.1% margin, reflecting resilience despite segment softness .
  • The Kinetic Group delivered strong profitability (adjusted EBITDA $111.2M, 30.0% margin) while Revelyst faced delays and channel headwinds (sales down 13.6%, adjusted EBITDA $15.6M, margin 5.7%), offset by GEAR Up savings of $5M .
  • Management reaffirmed FY2025 guidance for total sales ($2.665B–$2.775B) and adjusted EBITDA ($410M–$490M); GAAP EPS guidance was modestly lowered to $3.56–$4.46 while adjusted EPS remained $3.60–$4.50 .
  • Cash provided by operating activities was $53.8M and adjusted free cash flow $69.8M; net debt fell to $579.0M and net leverage to 1.3x, supported by inventory reductions at Revelyst .
  • Strategic alternatives review and transaction process remain active (CSG proposal and engagement with MNC), creating a potential corporate action catalyst alongside operational improvements .

What Went Well and What Went Wrong

What Went Well

  • The Kinetic Group profitability remained robust: “sales were $370 million with an adjusted EBITDA margin of 30% and adjusted EBITDA of $111 million,” benefiting from price actions and strong mix heading into hunting season .
  • GEAR Up transformation is delivering: $5M realized savings in Q1 with a clear path to $25–$30M in FY2025 and $100M run-rate savings by FY2027, supporting sequential margin improvement at Revelyst .
  • Strong free cash flow and deleveraging: adjusted free cash flow of $69.8M, net debt down to $579.0M, net leverage at 1.3x, aided by ~$100M YoY inventory reduction at Revelyst .

What Went Wrong

  • Revelyst sales and EBITDA declined due to product launch delays, specialty channel softness, and unfavorable mix; sales down 13.6% to $274M, adjusted EBITDA down 35.2% to $15.6M .
  • Bushnell Golf product launch was delayed by a late-stage software issue, pushing ~$13M of shipments into Q2 and potentially Q3, highlighting execution risk in NPI cadence .
  • Persistent input cost headwinds and global powder shortages constrained The Kinetic Group’s top and bottom line outlook for the remainder of FY2025 .

Financial Results

MetricQ3 FY2024Q4 FY2024Q1 FY2025
Revenue ($USD Millions)$682.3 $693.7 $644.2
Diluted EPS ($USD)$(2.55) $0.69 $0.97
Adjusted EPS ($USD)$0.80 $1.02 $1.01
Gross Margin %29.7% 31.8% 32.8%
Operating Income Margin %10.0% (Adj.) 9.0% (GAAP) 12.6% (GAAP) / 13.3% (Adj.)
Adjusted EBITDA ($USD Millions)$93.5 $109.2 $110.1
Adjusted EBITDA Margin %13.7% 15.7% 17.1%

Segment performance across recent quarters:

Segment MetricQ3 FY2024Q4 FY2024Q1 FY2025
The Kinetic Group Sales ($USD Millions)$365 $362 $370
The Kinetic Group Adjusted EBITDA ($USD Millions)$101.8 $100.3 $111.2
The Kinetic Group Adjusted EBITDA Margin %27.9% 27.7% 30.0%
Revelyst Sales ($USD Millions)$317 $332 $274
Revelyst Adjusted EBITDA ($USD Millions)$14.7 $29.1 $15.6
Revelyst Adjusted EBITDA Margin %4.6% 8.8% 5.7%

KPIs (Q1 FY2025):

KPIQ1 FY2025
Cash Provided by Operating Activities ($USD Millions)$53.8
Adjusted Free Cash Flow ($USD Millions)$69.8
Total Debt Outstanding ($USD Millions)$635.0
Net Debt ($USD Millions)$579.0
Net Debt Leverage Ratio (x)1.3x
Net Inventories ($USD Millions)$619.5

Guidance Changes

MetricPeriodPrevious Guidance (Q4 FY2024)Current Guidance (Q1 FY2025)Change
Total Sales ($USD Billions)FY2025$2.665–$2.775 $2.665–$2.775 Maintained
The Kinetic Group Sales ($USD Billions)FY2025$1.425–$1.475 $1.425–$1.475 Maintained
Revelyst Sales ($USD Billions)FY2025$1.240–$1.300 $1.240–$1.300 Maintained
Adjusted EBITDA ($USD Millions)FY2025$410–$490 $410–$490 Maintained
The Kinetic Group Adjusted EBITDA ($USD Millions)FY2025$350–$400 $350–$400 Maintained
Revelyst Adjusted EBITDA ($USD Millions)FY2025$130–$160 $130–$160 Maintained
EPS (GAAP, $USD)FY2025$3.60–$4.50 $3.56–$4.46 Lowered
Adjusted EPS (Non-GAAP, $USD)FY2025$3.60–$4.50 $3.60–$4.50 Maintained
Cash Provided by Operating Activities ($USD Millions)FY2025$280–$362 $262–$343 Lowered
Adjusted Free Cash Flow ($USD Millions)FY2025$240–$320 $240–$320 Maintained
Effective Tax Rate (%)FY2025~25% ~25% Maintained
Interest Expense ($USD Millions)FY2025$30–$40 $30–$40 Maintained
Capex (% of Sales)FY2025~1.5% ~1.5% Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 FY2024, Q4 FY2024)Current Period (Q1 FY2025)Trend
GEAR Up cost savingsProgram underway; target $100M run-rate by FY2027; momentum building $5M realized in Q1; path to $25–$30M FY2025; sequential margin improvement expected Improving
Supply chain & NPI executionInventory reduction progress; operational focus Bushnell Golf launch delayed due to software issue; ~$13M shipments pushed to Q2/Q3; fixes implemented Mixed (execution risk being addressed)
Channel dynamicsSpecialty pressured; mass/D2C relatively stronger; consumer conservative Specialty still pressured with green shoots; mass/D2C performing better; Amazon and DTC gains Gradual improvement outside specialty
Input costs & powder availabilityHigher commodity costs; powder constraints noted Continued headwinds: global powder shortage and copper/powder costs pressuring Kinetic outlook Persistent headwind
Government/Defense salesPositive contracts; SOCOM/Navy wins for Kinetic; Revelyst opportunities Kinetic pursues profitable performance ammo contracts; Revelyst sees growth opportunity via Eagle/BLACKHAWK Stable to improving
Strategic transactionsCSG sale process, guidance reaffirmed; MNC engagement noted Strategic alternatives review active; engagement with MNC; board recommends vote on CSG proposal Ongoing, catalyst potential

Management Commentary

  • “The Kinetic Group delivered above expected earnings for the first quarter — sales were $370 million with an adjusted EBITDA margin of 30% and adjusted EBITDA of $111 million” .
  • “We are making tremendous progress with our GEAR Up program, which contributed $5 million in realized cost savings in the first quarter. We see a clear path to $25 million to $30 million in cost savings in fiscal year 2025” .
  • “Our Board has commenced a review of strategic alternatives… engagement with MNC… continued consideration of the separation of Revelyst and The Kinetic Group through a spin-off” .
  • “We will release the most exciting product we have ever developed in our history in our third quarter,” underscoring upcoming innovation catalysts for Kinetic .

Q&A Highlights

  • Path to doubling Revelyst EBITDA: management outlined GEAR Up savings ($25–$30M), April 2023 restructuring ($~10M), freight improvements, and lower promotions as key drivers; sequential improvement expected .
  • Gross margin trajectory: Revelyst gross margin to improve starting Q2 with sales recovery and distribution/supply-chain benefits from GEAR Up .
  • Shipment delays: ~$13M orders shifted due to warehouse processing issues and Bushnell software fix; remediation underway; some spillover could reach Q3 .
  • Kinetic margin outlook and pricing: near-term cost pressure from powder and commodities; price increases harder to push in current market; inventory health across channels is solid .
  • Free cash flow seasonality: Q2 expected to be lightest due to inventory build and AR seasonality; stronger cash flow anticipated in back half .

Estimates Context

  • We attempted to retrieve Wall Street consensus estimates via S&P Global, but consensus data was unavailable for VSTO at retrieval due to a Capital IQ mapping issue. As a result, we cannot provide a definitive beat/miss versus consensus for Q1 FY2025. We recommend re-checking S&P Global once mapping is resolved [GetEstimates error].

Key Takeaways for Investors

  • Kinetic’s profitability and 30% adjusted EBITDA margin underpin consolidated stability amid input cost headwinds; near-term growth catalysts include new product launches into hunting season and potential Q3 innovation .
  • Revelyst’s turnaround hinges on execution of GEAR Up and product cadence; early $5M savings and expected sequential EBITDA improvement support the goal to double standalone EBITDA in FY2025 .
  • Cash generation and deleveraging remain strengths: adjusted FCF $69.8M, net leverage 1.3x, aided by inventory reduction; balance sheet flexibility supports transformation and optionality .
  • Guidance intact (except modest GAAP EPS and operating cash flow lowers), signaling management confidence despite powder/copper pressures and specialty channel softness .
  • Execution risks to watch: NPI/software quality control and warehouse processing (now addressed), plus specialty channel recovery pace; monitor Q2 sequential improvements as a proof point .
  • Corporate action overhang/catalyst: strategic alternatives review, ongoing CSG transaction process, and MNC engagement could drive valuation and timeline uncertainty/opportunity .
  • Government/Defense contracts and brand strength provide diversified demand anchors across cycles for both segments .