Vista Outdoor presented earnings yesterday for the quarter ending in September and they’re feeling economic pressures like everybody else. The Camp Chef parent is well diversified, so they’re in a better position than others in the outdoor cooking space, but they’re feeling the heat from higher costs.
Higher Input Costs
Despite raising prices, mostly targeted at their higher price point products, over the past two quarters they estimate they’ve absorbed $90 million in higher supply chain, freight, tariff and other input costs. They also forecast seeing another $90 million in additional cost over the next two quarters for a total of $180 million over 12 months.
Freight Relief Coming
Despite the additional freight costs recently, Vista Outdoor is starting to see them coming down. They’re forecasting that freight costs will turn into a bit of a tailwind. Unfortunately, they’re not predicting benefits un their next fiscal year, which begins in April 2023.
Grill Inventory Levels High
Much like we heard all through the summer, Vista Outdoor is still experiencing high inventory levels.
Outdoor cooking, as you’ve seen from some of the competitors like Traeger and Weber, our Camp Chef business continues to be challenged with a glut of inventory in the marketplace. And overall, there just continues to be an overhang of inventory that our retailers are working through. So that is largely the same as the last quarter and hasn’t changed much.Chris Metz, Vista Outdoor CEO
Outside of commenting on high inventory levels, there wasn’t much grill specific discussion. There was no mention of the recent release of the Woodwind Pro and any new products.
Debt Levels Ok
Unlike Weber, which is having problems with leverage, Vista Outdoor is still within their debt targets. They’re at 1.7 times, which is within their target of 1 to 2 times. As they’re outgoing CFO noted on the call though, their capital allocation strategy has shifted. Instead of focusing on M&A they’re putting their free cashflow to debt paydown.