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Vista Outdoor Inc. (VSTO)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 FY24 consolidated sales were $694.0M, down 6.4% YoY, with adjusted EPS at $1.02 versus $1.05 a year ago; sequentially, sales rose modestly vs Q3 ($682.3M) and adjusted EPS improved to $1.02 from $0.80, while gross margin held ~flat at 31.8% .
  • Revelyst returned to organic growth for the first time in nine quarters with Q4 sales of $332.1M (+1.4% YoY) and adjusted EBITDA margin up 590 bps YoY to 8.8%; The Kinetic Group posted $362.0M sales (-12.5% YoY) and 27.7% adjusted EBITDA margin .
  • Strong cash generation: Q4 cash from operations was $160.6M and adjusted free cash flow was $161.1M; total debt fell $115M sequentially to $720M; net debt leverage at 1.5x .
  • FY25 guidance reflects powder/copper cost headwinds and conservative consumer assumptions: sales $2.665–$2.775B, adjusted EBITDA $410–$490M, EPS $3.60–$4.50, FCF $240–$320M; Revelyst targeted to double standalone adjusted EBITDA in FY25, backed by GEAR Up savings of $25–$30M and lower promotions .
  • Transaction catalyst: management remains confident in CFIUS clearance and intends to capitalize Revelyst with $250M and distribute excess cash to shareholders at closing via special dividend or buyback; board continues to recommend voting for the CSG deal .

What Went Well and What Went Wrong

What Went Well

  • Revelyst inflected back to organic growth with improved profitability: Q4 sales $332.1M (+1.4% YoY), adjusted EBITDA $29.1M (+209.5% YoY), adjusted EBITDA margin 8.8% (+590 bps YoY) .
  • Cash generation and de-leveraging: Q4 cash from operations $160.6M; adjusted FCF $161.1M; total debt reduced to $720M and net debt leverage 1.5x .
  • Clear cost-transformation path (GEAR Up) and portfolio optimization: management reiterated $100M run-rate savings by FY27 and disclosed the sale of RCBS, with confidence to double Revelyst standalone adjusted EBITDA in FY25 (“we remain confident our actions will realize $25 to $30 million of run-rate cost savings in Fiscal Year 2025…supporting the potential to double standalone Adjusted EBITDA year-over-year”) .

What Went Wrong

  • Kinetic Group top-line and margins pressured: Q4 sales down 12.5% YoY to $362.0M, gross profit down 20.7% due to lower volume/price and inflationary inputs; operating margin decreased 422 bps YoY to 25.9% .
  • Material cost headwinds: global powder shortage and rising copper costs expected to pressure FY25 top and bottom line; price actions are ongoing but not fully offsetting input inflation .
  • Promotional environment and channel caution weighed on Revelyst (earlier quarters): Q3 Revelyst sales $317.0M (-10% YoY) with adjusted EBITDA margin 4.6% amid higher promotions to clear high-priced inventory; specialty channels remained burdened, though improving .

Financial Results

Consolidated Performance (oldest → newest)

MetricQ2 FY24Q3 FY24Q4 FY24
Sales ($USD Millions)$676.8 $682.3 $693.7
Gross Profit ($USD Millions)$208.9 $202.9 $220.5
Gross Margin (%)30.9% 29.7% 31.8%
Operating Income ($USD Millions)$75.8 $(180.0) $62.5
Operating Margin (%)11.2% (26.4)% 9.0%
Adjusted EBITDA ($USD Millions)$116.1 $93.5 $109.2
Adjusted EBITDA Margin (%)17.2% 13.7% 15.7%
Diluted EPS (GAAP) ($)$0.76 $(2.55) $0.69
Adjusted EPS ($)$0.96 $0.80 $1.02

Segment Breakdown (oldest → newest)

Segment MetricQ2 FY24Q3 FY24Q4 FY24
Revelyst/Outdoor Products Sales ($USD Millions)$327.3 $317.0 $332.1
Revelyst Adjusted EBITDA ($USD Millions)$30.3 $14.7 $29.1
Revelyst Adjusted EBITDA Margin (%)9.3% 4.6% 8.8%
Kinetic Group/Sporting Products Sales ($USD Millions)$349.5 $365.0 $361.6
Kinetic Adjusted EBITDA ($USD Millions)$98.8 $101.8 $100.3
Kinetic Adjusted EBITDA Margin (%)28.3% 27.9% 27.7%

KPIs (oldest → newest)

KPIQ2 FY24Q3 FY24Q4 FY24
Cash from Operations ($USD Millions)$107.5 YTD $240.3 YTD $160.6 (quarter)
Adjusted Free Cash Flow ($USD Millions)$115.7 YTD $270.4 YTD $161.1 (quarter)
Total Debt ($USD Millions)$945.0 $835.0 $720.0
Net Debt ($USD Millions)$905.0 $778.0 $659.7
Net Debt Leverage (x)1.8x 1.7x 1.5x
Inventory ($USD Millions)$690.0 $654.8 $610.0

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Consolidated Sales ($B)FY24 vs FY25FY24: $2.725–$2.825 FY25: $2.665–$2.775 Lower midpoint YoY
Kinetic Sales ($B)FY24 vs FY25FY24: $1.450–$1.500 FY25: $1.425–$1.475 Lower midpoint YoY
Revelyst Sales ($B)FY24 vs FY25FY24: $1.275–$1.325 FY25: $1.240–$1.300 Lower midpoint YoY
Adjusted EBITDA ($M)FY24 vs FY25FY24: margin 15.5–16.25% FY25: $410–$490 Nominal EBITDA guided; margins implied lower vs FY24 midpoint
Kinetic EBITDA ($M)FY24 vs FY25FY24: margin 26.5–27.5% FY25: $350–$400 Nominal guided; margin not explicitly provided
Revelyst EBITDA ($M)FY24 vs FY25FY24: margin 7.75–8.25% FY25: $130–$160 Target to double standalone EBITDA
EPS (GAAP) ($)FY24 vs FY25FY24: $0.00–$0.40; Adj. EPS $3.65–$4.05 FY25: $3.60–$4.50 Raised vs FY24 GAAP; comparable to FY24 adjusted
Cash from Ops ($M)FY24 vs FY25FY24: $256–$308 FY25: $280–$362 Raised
Adjusted Free Cash Flow ($M)FY24 vs FY25FY24: $265–$315 FY25: $240–$320 Maintained range; lower low end
Effective Tax Rate (%)FY24 vs FY25FY24: (63.0)%; adj ~19.5% FY25: ~25% Higher vs FY24 adj
Interest Expense ($M)FY24 vs FY25FY24: $55–$65 FY25: $30–$40 Lower (favorable)
Capex (% of Sales)FY24 vs FY25~1.5% ~1.5% Maintained

Earnings Call Themes & Trends

TopicQ2 FY24 (Prev.)Q3 FY24 (Prev.)Q4 FY24 (Current)Trend
GEAR Up transformationAnnounced; $100M run-rate by FY27; $25–30M FY25 savings Progressing; expected to lift margins; doubling Revelyst standalone EBITDA targeted Executing (DC consolidation, leadership hires); confident in $25–30M savings FY25; mid-teens margin long-term Improving execution
Promotional environmentElevated to clear high-priced inventory; margins pressured in Q3 Higher promos drove Q3 margins down; expecting reduction in Q4 Promotions down vs Q3; margins up; DTC growth aiding mix Normalizing
Supply chain/powder & copperInput cost inflation; powder constraints flagged Copper/propellant challenges to persist Global powder shortage; copper inflation; targeted price increases (May 1; broader hike expected) Persistent headwind
DTC growthBuilding momentum; holiday DTC up 9% YoY Q3 DTC up 15% YoY; Adventure Sports DTC +40% Q4 DTC up ~5% YoY; Precision Sports Technology DTC +16% Positive
Channel inventory/retailer cautiousnessCautious ordering; normalization in ammo channels Specialty burdened; mass improving; POS mixed Inventories healthier; specialty still working through burden; smaller JIT orders Gradually improving
Portfolio optimizationConsidering divestitures; focus on power brands –RCBS divestiture completed May 1; strategic review ongoing; additional divestitures possible Active
CSG/CFIUS transactionDeal announced; regulatory steps laid out CFIUS review underway; stockholder vote expected Q2 CY24 Confidence in clearance; special distribution or buyback post close; adjourned vote to June 14, 2024 Advancing

Management Commentary

  • “Revelyst finished the fourth quarter strong… adjusted EBITDA margin of 8.8%, tripling adjusted EBITDA versus the prior year period.”
  • “We have some challenges ahead related to higher commodity input costs, including powder and copper, but pricing actions taken to offset the increased production costs have not impacted open orders.”
  • “Our Fiscal Year 2025 guidance reflects headwinds that include a global powder shortage… We expect to double our Revelyst standalone adjusted EBITDA during the year primarily driven by the GEAR Up transformation program…”

Q&A Highlights

  • Revelyst sales outlook: Precision Sports expected to lead growth; Adventure Sports constrained by specialty inventory hangover early in FY25, improving through the year .
  • Margin plan for Revelyst FY25: $25–$30M GEAR Up savings to hit in-year; margins improve progressively as savings ramp and promotions normalize .
  • Kinetic pricing vs inflation: Targeted price increase effective May 1; broader increases likely to offset copper; guide assumes no price hikes, conservatism on margin .
  • Corporate costs and standalone Revelyst: standalone corporate costs ~mid‑$50M; guidance implies efficiency and lower implied corporate burden vs prior combined levels .
  • Portfolio actions: RCBS sale closed; additional divestitures under evaluation to strengthen balance sheet and focus capital .
  • Fiber Energy fire: insured loss; assessing rebuild options; limited FY25 revenue expected from the business .

Estimates Context

  • Wall Street consensus from S&P Global (Capital IQ) was unavailable for VSTO at the time of this analysis due to a mapping issue in the SPGI database; therefore, we did not include vs-consensus comparisons or beats/misses. Management indicated Q4 sales were in line with expectations and profitability was above expectations .

Key Takeaways for Investors

  • Revelyst’s margin trajectory is improving and supported by tangible cost actions (GEAR Up); watch delivery of $25–$30M savings in FY25 and progression toward low-teens margins in 2H FY25 .
  • Kinetic’s margin durability remains solid in the high‑20s despite input inflation; monitor execution of price increases and powder availability to sustain EBITDA within guided range .
  • Cash generation and de‑leveraging are strong; with net debt leverage at 1.5x and interest expense guided down to $30–$40M in FY25, shareholder returns post-transaction could be meaningful .
  • FY25 top-line guidance is conservative on consumer and channel dynamics; upside could emerge from stronger Precision Sports Technology launches and DTC growth .
  • Transaction path is a key stock catalyst: clearance and closing would likely unlock special distribution/buyback and a cleaner Revelyst equity story .
  • Portfolio optimization continues (RCBS divested; more candidates under review), which can streamline operations and fund growth in core brands .
  • Near-term risks: commodity inflation (powder, copper), specialty channel inventory, and absence of consensus estimate context; focus on sequential margin improvement at Revelyst and pricing power at Kinetic .