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Vista Outdoor Inc. (VSTO)·Q2 2025 Earnings Summary
Executive Summary
- Q2 FY2025 results were in-line with internal expectations: Sales $666M, Operating Income $66M (9.9% margin), Adjusted EBITDA $111M (16.7% margin), Diluted EPS $0.71, Adjusted EPS $1.03; Board emphasized pending separations (Kinetic to CSG; Revelyst to SVP) and ISS support for the Kinetic deal .
- Revelyst exceeded expectations with sequential profitability improvement: Sales $315M, Operating Income $21M (6.6% margin), Adjusted EBITDA $38M (12.1% margin) as GEAR Up realized $11.6M cost savings in H1; inventory reduced $87M YoY and $22M sequentially .
- The Kinetic Group remained best-in-class on margins but faced input cost headwinds: Sales $351M, Operating Income $87M (24.8%), Adjusted EBITDA $94M (26.7%) amid higher copper and powder costs; secured VA and Federal Reserve Bank contracts .
- Balance sheet strengthened: Net debt fell $26M QoQ to $553M (1.3x net leverage); cash from operations YTD $81M and adjusted free cash flow $111M .
- Guidance withdrawn due to pending transactions; no Q2 earnings call held. Near-term stock reaction likely tied to deal milestones, approvals, and separation timing rather than fundamentals .
What Went Well and What Went Wrong
What Went Well
- Revelyst delivered sequential profitability improvement; Adjusted EBITDA more than doubled QoQ to $38M (12.1% margin) as GEAR Up cost savings accelerated ($11.6M realized H1; $25–$30M FY target). “We reaffirm our commitment to double Revelyst standalone adjusted EBITDA” — CFO Andrew Keegan .
- Kinetic maintained premium margins despite headwinds: Adjusted EBITDA margin 26.7%; won key contracts (Veterans Affairs and Federal Reserve Bank) and highlighted strong product portfolio and brand strength .
- Cash generation and deleveraging: YTD operating cash flow $81M and adjusted free cash flow $111M; net debt reduced to $553M and net leverage to 1.3x .
What Went Wrong
- Consolidated profitability compressed YoY: Operating income down 13.3% to $66M; diluted EPS down 6.6% to $0.71; adjusted operating income margin declined to 13.2% .
- Kinetic gross profit fell 1.8% due to higher input costs (copper and powder), and operating margin declined 163 bps YoY to 24.8% .
- Guidance visibility removed with withdrawal of FY2025 guidance; no Q2 earnings call due to pending asset sales, limiting real-time commentary/clarifications for investors .
Financial Results
Segment breakdown
KPIs
Guidance Changes
Earnings Call Themes & Trends
Note: Company did not hold a Q2 FY2025 call due to pending deals .
Management Commentary
- “Vista Outdoor FY2025 Q2 Financial Results In-Line With Expectations: Sales of $666 Million; Operating Income of $66 Million… Adj. EBITDA of $111 Million…” — Press release headline summary .
- Eric Nyman (Revelyst Co-CEO): “GEAR Up initiatives have now delivered $11.6 million of realized cost savings through the first half of Fiscal Year 2025… we expect… $25 to $30 million… positioning us well for the future.” .
- Jason Vanderbrink (Kinetic Co-CEO): “Our Adjusted EBITDA margin outpaces the competition at 26.7 percent… We were recently awarded key contracts from Veterans Affairs and the Federal Reserve Bank…” .
- Andrew Keegan (CFO): “We saw Revelyst inventory decrease $87 million year-over-year and $22 million sequentially… year to date cash provided by operating activities of $81 million and adjusted free cash flow of $111 million… net debt leverage ratio was 1.3x.” .
- On guidance: “Given the recently announced sale of both The Kinetic Group and Revelyst… we have elected to withdraw our full year Fiscal Year 2025 guidance.” .
Q&A Highlights
Q2 FY2025: No call conducted . Key Q1 FY2025 Q&A themes:
- Revelyst EBITDA bridge: GEAR Up savings ($25–$30M) plus April 2023 restructuring (~$10M), lower freight and reduced promotions to reach doubling target .
- Gross margin trajectory: Expect improvement starting Q2 and sequentially thereafter as volumes recover and GEAR Up benefits flow through .
- Specialty channel dynamics: Inventory overhang improving gradually; stronger mass/D2C performance; share gains cited in helmets, sportswear, launch monitors .
- Product shipment issues: Bushnell GPS launch delay due to software; order processing frictions resolved; $13M of orders shifted from Q1 to Q2 .
- Kinetic margins/pricing: Elevated commodities/powder; targeted price increases, broader hikes likely but market acceptance is a consideration .
Estimates Context
- Wall Street consensus (S&P Global Capital IQ) for VSTO Q2 FY2025 and Q1 FY2025 was unavailable via our SPGI mapping during this review; as a result, beat/miss vs consensus cannot be determined. Management indicated Q2 performance was “in-line with expectations” in the press release .
- If consensus becomes available, key comparisons should focus on consolidated Revenue, Diluted EPS, and segment EBITDA margins (Kinetic and Revelyst).
Key Takeaways for Investors
- Transaction-driven catalysts: Guidance withdrawn; near-term stock performance likely tied to CSG/Revelyst deal approvals, timing, and any competing proposals (ISS support for Kinetic sale is positive) .
- Revelyst turnaround gaining traction: Sequential EBITDA expansion, inventory down materially, and GEAR Up savings accelerating toward $25–$30M FY target — watch for sustained mid-teens margin path over time .
- Kinetic margins remain strong but are sensitive to copper/powder costs; pricing/mix actions and government contracts support resilience, yet input inflation is a persistent risk .
- Balance sheet improving: Net debt reduced to $553M and leverage to 1.3x; ongoing cash generation supports deleveraging into deal close windows .
- Operational execution: Q1 shipment delays addressed; continued focus on distribution footprint consolidation and cost controls should underpin FY profitability .
- Trading implications: With no Q2 call and guidance withdrawn, updates via 8-Ks/transaction filings will be the main narrative drivers; monitor regulatory approvals, special meeting outcomes, and any revised consideration disclosures .
- Medium-term thesis: Post-separation, Revelyst strategic focus and GEAR Up efficiencies could unlock margin expansion and growth in DTC/digital gaming; Kinetic under new ownership may continue premium margin leadership.
Sources: Q2 FY2025 earnings press release and 8-K ; Q1 FY2025 8-K and call ; Q4 FY2024 8-K and call .