Vista Outdoor, one of the Minnesota’s newest public companies, is probably not a familiar name. But outdoors enthusiasts are likely to know its brands — from Federal Ammunition to Bell bicycle helmets, CamelBak water carriers and Camp Chef outdoor cooking gear.
It has been almost five years since the company made up of sporting brands such as Federal Ammunition spun off from Alliant Technology Systems as part of that company’s merger with Orbital Sciences Corp.
Since then, the company beefed up its consumer-product portfolio by acquiring well-known brands across the outdoors spectrum such as Blackburn bike accessories and Giro helmets. It also shed its Savage Arms and Stevens firearms brands.
“The whole vision then was to bring the world outside,” said CEO Chris Metz, well known in Minnesota for leading Arctic Cat before it was sold to Textron in March 2017.
In the process, though, the company, which was relatively debt-free at the spinoff, added more than $1 billion in long-term debt through acquisitions made before Metz was hired in October 2017. One of Metz’s priorities since joining Vista was to shrink that balance — and the company has, to $562 million.
It is one move in a five-point turnaround plan to both improve the bottom line and move the company’s stagnant share price out of the cellar.
One cost savings was the headquarters move from Utah to Anoka, to the underused distribution center of Federal Ammunition, a brand with a deep roots locally. Vista subleased its Utah space.
Another was to move away from a centralized management approach of brands that needed to be more nimble in the marketplace, said Metz, who also had stints in private equity at Sun Capital Partners and at Black & Decker.
While the tight hold may have helped to transform the company from a hunting and shooting sports company to an outdoor accessories and equipment business, many of the well-known brands had lost their shine as their leadership left after the acquisitions, he said.
“When I walked in 2 ½ years after the spin I had an organization that was in a tenuous spot. It had been centralized, so we had taken some of the entrepreneurial spirit out of some of these smaller- to medium-sized brands,” Metz said.
The company is now two years into the three-year turnaround plan that calls for elevating the brands again, with Vista leveraged to deliver corporate functions that benefit when scaled, he said. That includes hiring brand managers and building back up each of their support staffs. It also means building centers of excellence for functions such as human resources and e-commerce support and the ongoing effort to reduce its long-term debt.
“Our mission of getting the world outside has not changed,” Metz said. “A lot has changed within Vista to create a house of terrific brands that are supported by a corporate center and couple of centers of excellence that are being built.”
The goal now is for Vista to return to organic growth, instead of big-acquisition mode. The last part of Metz’s plan is to make some “tuck-in” acquisitions to broaden its portfolio.
The company’s shooting-sports division, which includes Federal Ammunition and eight other ammunition and component makers, accounts for more than 50% of Vista’s revenue. The 30 or so other outdoors brands make up the rest.
Besides the firearms sales, the company also sold its Bolle eyewear business. Metz told analysts on a recent earnings call that he sees other avenues to reduce long-term debt as well, and it could include more asset sales.
As for moving the company, it came with no government incentives. It just made sense.
The Tax Foundation, an independent tax-policy nonprofit, lists the top and bottom 10 states for State Business Tax Climate. Utah generally ranks in the top 10 and Minnesota in the bottom, but state taxes weren’t the only factors Vista considered in its move.
“Minnesota was the right choice for our headquarters since we already had a base of dedicated, hardworking employees in the state,” said Fred Ferguson, vice president of public affairs for Vista Outdoor. “The region is home to many corporate headquarters and a strong education system. These factors develop and attract a very talented workforce, which are central to business success. Minnesota is also filled with outdoor enthusiasts and outdoor experiences that are core to everything we stand for at Vista Outdoor. The tax situation is complex, but overall taxes were not a significant factor in our decision.”
The brands across Vista have shown signs that they are benefiting from the centers of excellence approaches.
Greg Williamson, CamelBak’s president since July 2018 who also had worked with Metz at Arctic Cat, said his unit had been through “many different takes” on what its relationship with the corporate structure should be. But now resources are back in the hands of business units.
“How we manage the team here and install that [founder’s mentality] culture is up to me and my leadership team,” he said. “Chris expects ‘go do what’s right for your business.’ ”
The biggest challenge in Metz’s plan might be the return to organic revenue growth. The company reported better-than-expected second-quarter results on Nov. 7, and Vista’s stock closed that day at $9.05, up 31%. But its overall sales were down 19% and organic sales down 7% from the same quarter a year ago. And Vista now has had quarterly revenue declines in its last 11 quarters.
Still, there’s confidence in Metz’s leadership.
“Metz has significant experience in turnaround situations with much of his career in private equity. We think his private equity and primarily his experience at Arctic Cat may be telling for the future of Vista,” wrote Mark Smith, an analyst for Lake Street Capital Markets in Minneapolis in a research report this summer.
Metz has had to weather some storms. For example, while the process to shed the firearms properties was underway, REI stopped carrying Vista’s other brands after the Parkland, Fla., school shooting. The retailer has since returned some to its shelves.
Now, the company is facing headwinds in ammunition after Walmart had announced earlier this year it would stop selling some calibers of ammunition. In addition, its outdoor-products segment faces challenges from tariffs. As a result, the company is saying annual revenue for fiscal 2020 will be in the range of $1.75 billion to $1.85 billion, with a projected annual sales decrease of 12 to 16%.
Federal Ammunition is hoping to offset some of the Walmart business through direct-to-consumer sales. Its new e-commerce site was one of 16 launched by Vista this year under new centralized technology. It also recently launched a Custom Shop where consumers can order premium hand-loaded cartridges for individualized needs.
Federal also has lost sales through some outdoor retailers that have filed for bankruptcy. However, after layoffs in early 2017 employment at the plant is back up to 1,400.
The sprawling Federal Ammunition compound in Anoka has four different factories totaling more than 700,000 square feet and contains a mix of new and old technologies and processes. Some of the methods used to produce shotgun shells are proven, decades-old technology, but it’s also imported modern processes and equipment to load handgun shells from its plant in Lewiston, Idaho.
The Federal plant uses recycled lead from car batteries, recycles its own brass and plastic, and installed a state-of-the-art water-treatment plant five years ago.
“For an ammunition company we are cutting edge for sustainability,” said Federal’s president, Jason Vanderbrink.
Federal also maintains its deep ties to the community. The excise taxes from the sale of its ammunition, $86 million last year, is used for all manner of conservation efforts that benefit more than hunters. Since 1987, it also has employed dozens of workers from Rise, a Spring Lake Park-based nonprofit that supports people with disabilities.
“The good things of what Vista has brought to the table is the brands really get to separate themselves,” Vanderbrink said. “You go to corporate for resources, obviously; there are some shared services where you need to use Vista’s scale. But at the end of the day we live and breathe our own DNA, our own brand, and Vista is there to support us through all of it.”