Previously, Vista Outdoor was on a path to split their business into two publicly traded companies at the end of the month. Today, they announced a curve ball in those plans, with a sale of their Sporting Products division.
Impact on Outdoor Products
Vista Outdoor has entered into a definitive agreement to sell their Sporting Products division to a leading Czech industrial group for $1.91 billion. They are going to split the company as previously discussed, but now just the Outdoor Products division (recently named Revelyst) will be a public company.
The change in plans won’t have much impact on Outdoor Products, because they planned to sell the business later, but it will have some. The net cash proceeds from the sale and debt paydown on Sporting Products will remain with the Outdoor Products business.
The timeline of the split has also been extended, given the sale. The split will happen essentially at the time of the sale, which is estimated to be in calendar year 2024.
Lowered Outdoor Products Guidance
Not only did Vista Outdoor announce the sale today, they also lowered guidance for their businesses. The new Outdoor Products sales projection for fiscal year 2024 has been lowered by $100 million to $1.275 billion – $1.325 billion.
The adjusted EBITDA margin has also deteriorated in their new guidance. It went from 12%-13% in their last earnings call, to an updated margin of 7.75%-8.25%.
They didn’t call out Camp Chef specifically within the division, but the reasons that were given for the lower guidance were the same that we’ve been hearing for the grill category. Revenue was lowered on inventory levels at retailers remaining higher than anticipated, leading to less channel purchased an decreased sell-through.
They also called out that the lower revenue was due to interest rate and other short-term factors impacting the consumer. On the income side, they are seeing higher promotional activity than anticipated, which they project will continue.
Leadership Update
The final update given about the Outdoor Products division was a leadership update. The current Vista Outdoor CFO, Andy Keegan, will remain with the Outdoor Products division after the split.