(This story was updated on 10/19/2023 and 10/27/2023.)
Vista Outdoor, the parent company of 41 brands that design, manufacture and market sporting and outdoor products, today announced it is selling its sporting products business to Czechoslovak Group for $1.91 billion.
The all-cash transaction is subject to customary closing conditions. Vista’s sporting products segment is geared toward hunting and shooting sports with brands including Remington, Estate Cartridge, and Alliant Powder. These brands specialize in making and selling ammo.
The sell off is part of Vista’s plan to split the company into separate entities, with the outdoor products segment, recently rebranded as Revelyst, becoming a standalone public company when the sale closes. Revelyst’s portfolio of brands includes Fox, Bell, Giro, CamelBak, Camp Chef, Bushnell, and Simms Fishing.
Andy Keegan, current vice president and interim CFO of Vista Outdoor, plans to join Revelyst as CFO. Eric Nyman will continue as CEO of outdoor products and become the CEO of Revelyst when the transaction closes.
“This is an important strategic step for our company in creating value through separating our Outdoor Products and Sporting Products segments,” said Gary McArthur, interim CEO of Vista Outdoor, in a release.
(Read Vista Outdoor’s investor presentation about the sale of the sporting products and hunting division.)
The transaction is expected to close this year, subject to approval of stockholders, receipt of necessary regulatory approvals, and other customary closing conditions.
The transaction values the sporting products business at an enterprise value of $1.91 billion, approximately 5x enterprise value to the segment’s fiscal year 2024 EBITDA, including estimated standalone costs.
To make the transaction happen, Vista Outdoor will separate its outdoor products business from its sporting products business, and CSG will merge one of its subsidiaries with Vista Outdoor (holding only the sporting products business), with current public stockholders of Vista Outdoor receiving shares of Revelyst and approximately $750 million in cash.
Earnings Preview – Outdoor Market Tough
As part of the announcement, Vista provided a preview of its earnings results for the second quarter of fiscal year 2024. The company will announce its full second-quarter earnings results on Nov. 2.
For the outdoor segment, in the three months ended Sept. 24 versus the prior year period, sales are expected to decrease to a range of $325 million to $330 million. The decline is driven by “decreased buying across all business units as channel partners continue to be cautious with purchasing due to inventory levels and consumers are pressured by high interest rates and other factors,” according to the company.
Operating income is expected to be in the range of $11 million to $15 million as retailers continue promotional pricing to move through inventory resulting in lower sales and bottom-line pressure, the company said.
For the sporting products segment, sales are expected to be between $347 million and $352 million, with operating income in the range of $91 million to $95 million.
For fiscal year 2024, Vista is lowering its guidance for both business units combined due to “an increasingly challenging economic environment for consumers with higher interest rates expected for longer, and other short-term factors.”
Total company sales for the year, including sporting goods and outdoor, are expected to be $2.7 billion to $2.8 billion. That’s down from the outlook it posted in July, expecting sales in the range of $2.85 billion to $2.95 billion for the year.
Sporting products sales are expected to be $1.45 billion to $1.5 billion and outdoor products sales $1.275 billion to $1.325 billion. In July, the company said it expected sales for FY24 to be approximately $1.475 billion to $1.525 billion for sporting products and $1.375 billion to $1.425 billion for outdoor products.
The company buying the sporting products segment, CSG, is an industrial technology holding company, operating within five business segments, including defense, aerospace, ammunition, mobility and business.
CSG is 100% owned and led by Michal Strnad. CSG employs more than 10,000 people worldwide and it owns and manages a diverse portfolio of industrial and trade companies across the defense and civil sectors.