Q4 2022 Vista Outdoor Inc Earnings Call
<unk> a record year with sales topping $3 billion, coupled with record fourth quarter sales of over 800 million.
<unk>, 36% year over year, and marking the seventh consecutive quarter of record results in <unk>.
22, both reportable segments grew strong double digits.
EBITDA margins continued to expand reaching 23 six with adjusted margins of 24, three and we posted record EPS of $8 and adjusted EPS of $8 29.
We also invested in organic growth completed five acquisitions repurchased 5% of our outstanding shares and maintained a debt leverage ratio of zero nine times lower than our stated stated target of 1% to two times. Furthermore, these metrics exceeded the long term targets we discussed.
And committed to in our last year's Investor Day.
These outstanding results are a testament to the tremendous efforts of our teams.
When I walked in the door over four years ago. There was a lot to be done to return this company to growth and profitability fast forward to today and we've just completed our second record year of performance. Our team has put in the time and effort and made tough decisions to best position Vista outdoor to capture the lifestyle shifts we're seeing.
In outdoor recreation.
We now have a diversified portfolio of 39 highly coveted brands 10 of which are power brands with revenues exceeding $100 million each with seven in outdoor products and three in sporting products in FY 'twenty. Two we added five new brands with strong growth potential and leaders in their respective <unk>.
Faces leading brands like this do not get created overnight.
We are well positioned to deliver another year of profitability profitable growth in fiscal 'twenty, three and beyond as consumer demand remains strong and participation levels remain high.
The results delivered by our portfolio of businesses, both legacy and new demonstrate that our operating model enhances the performance of outdoor brands, regardless of where they fall in the growth and maturity curve.
We intend to translate this underlying momentum into greater value for shareholders going forward.
As many of you know many times past performance serves as the best indicator for future performance.
As such I would like to reflect a bit on what we've accomplished over the past 12 months to give you a glimpse of what's in store for this coming fiscal year.
Our value creation strategy has built the foundation for the future success, both companies that will allow them to deliver long term value for their shareholders for years to come.
Our first strategic pillar at Vista outdoor was to build the right team as well as the right culture and again the results speak for themselves each of our business units is now led by a team of experienced operators, who know how to win in all market conditions. Those leaders will continue to deliver for outdoor products and.
Sporting products post separation.
Our second strategic pillar has been organic growth, we've been successful over the years and growing our brands by focusing on three areas one product innovation to marketing and three E. Commerce I am pleased to share with you that over the past 12 months, we've organically grown our entire business by over.
20% the investments we've made in these areas will continue to pay dividends for outdoor products and supporting products for years to come.
The third pillar of our value creation strategy has been building our centers of excellence focusing on e-commerce supply chain and M&A.
The returns on these investments have been substantial a few notable achievements over the past 12 months.
Our E Comm center of excellence helped our direct to consumer business grow by 23% year over year, and our social followers grew to over 8 million followers.
Our supply chain center of excellence rallied to help our businesses through the headwinds created by Covid and the general logistics challenges faced by all companies.
Here are a few examples we increased container shipments, 35% despite bottlenecks at ports around the world by leveraging total visitor volume to secure both capacity and competitive costs.
We added two new multi brand distribution centers in the west coast, and south central regions to expand capacity and reduce lead times to customers and.
And we have tripled the number of E bikes imported since our quiet cat acquisition less than 12 months ago.
Our M&A center of excellence enabled us to identify complete due diligence close and fully integrate five new businesses in the past 12 months and all of them have exceeded our base projections.
In fact mergers and acquisitions the oldest trade brand for the deal maker community recognized our acquisition of foresight sports is the gold standard in the middle market category, finding this transaction to be the top deal and the consumer goods category.
Given the focus of these investments we believe that the centers of excellence will be better positioned to support the success of our outdoor products business post separation.
As we have previously stated and it's shown each year our centers of excellence create a real competitive advantage and will continue to enable our outdoor products brands to achieve levels of greatness that would be unattainable to them as standalone businesses.
Lastly, our value pricing strategy has been balanced capital deployment, maintaining our balance sheet strength and generating the cash flow necessary to provide financial flexibility for value creation.
Our efforts to date have resulted in a dramatically improved balance sheet.
In FY 'twenty two alone our acquisitions contributed over $400 million in revenue and $100 million of EBITDA.
We bought back 3 million shares reducing our outstanding shares by 5%, all while creating a balance sheet with 0.9 times leverage and we have ample dry powder to continue to grow.
Post separation, our outdoor products and sporting products businesses will each begin their time as independent companies larger more profitable and with stronger balance sheets because of our successful balanced capital allocation strategy.
We believe that allowing each of our segments to pursue a tailored capital allocation philosophy going forward will be critical to their success as independent companies and their value proposition for shareholders outdoor products will focus is capital deployment on growth to drive long term shareholder value, while supporting products with <unk>.
Returning capital to shareholders.
We expect that the separation process will cause minimal disruption to our business units and create only modest dis synergies and corporate overhead.
Now, let's move on to some of the FY 'twenty two accomplishments of our outdoor products and supporting product segments looking first at the outdoor product segment.
Sales rose in outdoor products, 15% to a record $345 million in Q4 and fiscal year sales for outdoor products increased 18% to a record $1 3 billion year over year, driven by double digit growth in outdoor recreation action sports and outdoor accessories are.
Our hydration pack and drink wear brand camelback saw Q4 sales climbed double digits, marking the brand's fifth straight quarter of double digit sales growth and a record fourth quarter.
Camelback ended the year up over 30%, while posting its best margin in company history, driven by strong demand across its product line.
<unk> International sales were also up over 30% last year and now represent over 30% of <unk> overall revenue.
Our action sports brands Bella Zero Likewise finished the year strong with FY 'twenty two sales growth year over year.
<unk> business delivered record sales in Q4 and bikes euro rolled out three new major helmet releases and expanded its flat pedal shoe line to tap into growing mountain bike and urban riding trends, including E bikes were.
We're expanding bells euros manufacturing footprint in the U S. In Portugal, we expect these new facilities to help each supply chain issues and get products to customers faster around the globe.
<unk> Camelback Bellagio has launched a major sustainability initiative in the quarter, which will substantially reduce its carbon footprint fueling brand awareness and affinity.
In the first year of ownership of our E bike brand quiet cat, we doubled sales. Additionally, quiet cat achieved a major channel win just recently in Q4 by gaining entry into Lowe's, where customers will be able to purchase E bikes online and in stores starting in our fiscal Q1.
For camp chef, our outdoor cooking brands March marked its second best month, and its 31 year history, helping drive this performance camp chef became a tick tock sensation growing its followers nearly 125000 in its first year.
Our golf businesses continue to thrive in the fourth quarter, driven by strong new product introductions and surging golf trends over the past few years, there have been over 6 million golfers, who played on a course for the first time.
This growth was 30% stronger than the last major surge, which was sparked by Tigers dominant run at $19 99 in 2000.
Foresight sports again exceeded our expectations in Q4 in terms of revenue and bottom line growth. Despite the fact that sales were somewhat impacted by supply chain constraints in the global chip market.
We anticipate continued chip challenges, but remain confident that our supply chain team will procure what we need to meet our plans.
For Bushnell golf, the launch pro which is bush sales branded launch monitor powered by foresight sports is now available at major golf retailers. The launch pro enabled consumer entry into the personal launch monitor category at a lower price point, coupled with an exclusive subscription service which drives.
Penetration and market expansion, while also creating recurring revenue the product has been so popular that we can keep it in stock.
Our outdoor accessories business unit, which includes stone glacier and our hunting brands grew in the low single digits in Q4, marking its eighth consecutive quarter of year over year growth in.
In March which now wrapped up a 12 month, 25th anniversary marketing campaign for its hunting laser range finder, a category that pushed out created.
Now, let's move on to supporting product segment.
Sales for this segment were up 56% to a record 464 million and up 55% to $1 $7 billion for Q4 and fiscal 'twenty two respectively year over year.
This sustained success in sporting products is another data point that demonstrates how the new ammo consumer is different today compared with prior surges, we've seen continued and steady demand for ammunition, even if firearm indicators have slowed for example, as of the fiscal year end, we had a backlog of over $3 billion as.
As we've said before traditional firearms related indicators are not necessarily correlated with ammo, which is a consumable.
For example, we are seeing more sustained participation from legacy users as well as the 14 million New first time firearms owners and the current surge in ammo demand.
Channel inventories remain low for most calibers apart from small rifle ammunition products like those produced at the Lake City Army ammunition plant.
Purposely we're less reliant on Lake city small rifle ammunition sales due to the Remington acquisition and our strategic shift into product mixes that are more stable and more profitable such as hunting personal defense and shot shell ammunition.
Primers are critical ingredients to all ammunition has always been a strength of ours, however, with industry, leading technology and much needed capacity, we have leveraged the strength. Our team has done a terrific job in partnering with several OEM companies on long term contracts that lock in reliable orders.
At competitive pricing for many years to come.
Lastly, as federal celebrates its 100th anniversary the teams culture of innovation and impact is as strong as ever our connection with consumers is equally strong.
In a recent national study by Southwick Associates, one of the nation's most reputable outdoor market and consumer research firms Vista outdoors brands were named the top brands in every single ammunition category for the first time ever.
Abroad, I commend our team for stepping up to support the resistance in Ukraine. Our team made a $50000 contribution to the humanitarian effort and donated 1 million rounds of needed ammunition for the Ukrainian troops. Additionally, our Ukraine T shirt promotion, which can be found on our website has sold over 40.
<unk> thousand T shirt, so far generating over $100000 in profits of which 100% will be donated to help the refugees.
Courage each of you to go online at Www Dot federal premium Dot com and purchased one for yourself.
A process that we've always had a strong culture of leading from the front and I'm proud of the entire team for doing their part.
Now I will turn it over to Sudan to you to discuss our financials in more detail. So don't you.
Thank you, Chris and Hello, everyone as Chris mentioned, we have announced an exciting new chapter for the company and we look forward to continuing to drive long term value for shareholders as two independent public companies.
One of the primary benefits of the separation as Chris noted will be each company's ability to tailor that capital allocation philosophy to meet the need of that respective businesses and our strategic goals.
As we work through the separation process, we will finalize the initial capital structure of each company.
We expect to engage in discussions in due course with Tyler bondholders.
Adding any need for liability management.
Pecked to our outstanding notes in connection with the separation.
Now, let's turn to our financial results.
My comments today will focus on.
On our adjusted results with competition to the prior year period unless noted otherwise.
Both as reported and adjusted results are included in our earnings release and slides accompanying our earnings call.
These can be found on our website.
Looking at our web slides on slide 13, we posted a record year for sales EBIT, EBITDA and EPS with EBITDA margins, expanding 878 basis points to 24%.
Q4 sales increased 36% to a record $809 million, the first quarter to exceed 800 million, reflecting growth of 56% and 15% in our sporting products and outdoor product segment, respectively.
This double digit growth driven by strong consumer demand acquisitions, new product innovation and pricing.
For FY 'twenty Q sales grew 37% to over 3 billion topping.
FY 'twenty one growth of 27%.
Q4, gross margin expanded 500 basis point to 35, 6%.
<unk> gross margin expanded over 800 basis points to 36, 5%.
These improvements were driven by higher sales from both organic and acquisitive growth.
Favorable pricing volume and mix and operating leverage.
Partially offset by higher logistics and input costs.
As well as higher commodity costs in our sporting product segment.
EBITDA in Q4 increased 86% to $181 million translating to an EBITDA margin of over 22% expanding 600 basis points.
The increase was driven by strong double digit sales growth.
Gross margin expansion and operating leverage.
Actually offset by higher supply chain costs.
For FY 'twenty to EBITDA rose to a record $739 million and EBITDA margin expanded 878 basis points to over 24%.
Q4, EPS increased 100% to $2 <unk> and full year EPS rose, 27% to a record $8 in 2019, mainly driven by higher sales gross margin expansion operating leverage and a lower share com.
Partially offset by a higher effective income tax rate in the correct here.
Turning to slide 14, our balance sheet remains strong.
Net debt increased year over year to $647 million due to the acquisitions up for tight sports.
Greeting to our net debt leverage ratio less than one times.
We also have ample liquidity.
On slide 15, we have laid out our capital allocation priorities.
Our strong balance sheet and free cash flow.
292 million enabled us to invest in organic growth acquire leading high growth outdoor brand.
<unk> hundred 13 million or 5% of our outstanding stock.
And.
Our net debt to adjusted EBITDA below our three year target.
While we generated strong free cash flow, we ended the year with a lower EBITDA conversion ratio as compared to our three year target of 50% to 60%.
This was largely driven by higher inventory as a result of supply chain disruption.
We experienced longer lead time translating to a higher volume of inventory in transit as well as the strategic purchasing to ensure we have supply to meet heightened demand.
Turning to our segment results beginning on slide 16.
Both segments delivered double digit sales growth and profitability expansion in Q4 and the fiscal year.
I will touch on a few highlights within outdoor products.
Sales rose, 15% in Q4, and 18% in FY 'twenty, two driven by strong consumer demand for our brand as well as growth from acquisitions.
Gross profit rose, 16% in Q4, and 24% in FY 'twenty two.
Q4, and FY 'twenty, two gross margin increased to 31%, respectively, driven primarily by acquisition volume and operating efficiencies.
Actually offset by higher logistics and input costs as well as sales channel mix.
Q4, EBITDA was $49 million down, 2%, primarily due to acquisitions with increased SG&A expenses as well as higher selling and marketing expenses driven by a return to trade shows and other customer facing events.
For FY 'twenty, two EBITDA increased 17% to 207 million EBITDA margin remained relatively unchanged at 16%.
Turning to supporting product beginning on slide 17.
Sales increased 56% in Q4 and 55% in the fiscal year, driven by a strong demand in commercial ammunition favorable pricing and mix as well as acquisition continuing to scale.
Bloomington and heavy stock sales in Q4 increased nearly 200% driven primarily by favorable volume.
Gross margin for Q4 rose to 39% driven largely by higher volume favorable pricing and operating leverage partially offset by rising commodities and other input costs.
Gross margin for the fiscal year expanded to 41%.
EBITDA in Q4 increased 117% $257 million EBITDA margin expanded to 34%.
For fiscal 'twenty, EBITDA increased to $626 million and margin rose to 36%.
Let's turn to slide 19 for our fiscal year 2023 outlook.
For the full fiscal year, we expect sales increasing to 315 billion to $3, two 5 billion up 5% year over year compared to the midpoint.
Sporting product sales growth in the mid single digit range and outdoor product sales growth in the high single digit range.
Adjusted EBITDA margin between 25% and 21, 5%.
Adjusted EPS between $7 and $7 75.
And free cash flow between 300 million to $350 million.
Furthermore for Q1, we expect the following.
Sales of $770 million to $790 million adjusted EBITDA in the range of 22% to 22, 5% and adjusted EPS of $1 85 to $1 95.
Thank you everyone either non pass it back to Chris for closing comments.
Thank you should answer you again, I would like to congratulate and thank our team on a strong fourth quarter and record breaking year.
The trends in outdoor recreation remains strong and we began fiscal 'twenty three with positive momentum from our balance sheet for our leverage ratio to our powerhouse portfolio of brands, where we continue to innovate and take market share.
Looking ahead, we are confident that our outdoor products and supporting products businesses are positioned for continued growth and success as independent companies. We're very excited about the next chapter on May 23, we will be hosting an investor day in New York, We have a wonderful event planned and hope that you can join US more details will follow soon with that.
We'll take your questions.
Ladies and gentlemen, if you wanted to ask a question. Please press star followed by one on your telephone keypad.
Your question first off on the Baidu than asking your question. Please ensure your line is on mute.
Okay.
Okay.
Brian <unk> from William Blair.
Brian Your line is open.
Yes, hi, good morning, and congrats on another great quarter.
Correctly, Ron it sounds like Youre seeing demand right.
Alright, Chris.
<unk> seen demand in outdoor participation really hold up well here, which I think is a topic investors are keenly focused on.
The guide this morning ups backup back to you, but can you talk a little bit more about what youre seeing in the market that gives you confidence that that is.
<unk> participation will hold up.
Yeah, So Ryan we sit in a variety of different ways.
First and most obviously with our retail partners, we continue to see.
POS set a level that is consistent with what we had thought it would be.
We've got our own.
Direct communications with consumers through our DTC channels, and our D to C business as evidenced by being up over 24% this past year continuing to accelerate each quarter. It.
It gives us another healthy indicator and probably the most.
Important thing is just the general participation, we see whether it be participating in the fields for hunting, whether it would be participating in.
Bikes off road, whether it be participating in outdoor cooking.
Have you there is just.
Any number of areas that we look at that we're super excited about and you take off which is at its biggest surge since the tighter days and Thats just really on course.
The fastest growing segment of golf is really off course, where our foresight and Bushnell golf launch pro really play nicely. So when you look at the bifurcation of that golf market, it's really.
Its really transitioning into both on course off course, which we're very very well suited to serve so every area that we look at we're very excited and certainly on the ammunition side, which we've talked about a lot that continues to persist in a very very positive way. Unlike <unk>.
Markets, where we saw surges or what have you.
We believe that the structural changes in People's lifestyles, and habits that they picked up or are sustainable as we move forward.
Okay. Thank.
Thank you.
Alright, I know, you'll give us I think a lot more detail as they work through the separation, but just at a high level can you talk a little bit more about what the sales profile look like for each of these businesses over a longer term period, and then also what the cash flow maybe it looks like for for each business going forward.
Sure and Ryan and others I would strongly encourage you to attend our Investor Conference Investor Day in two weeks, because that's really an opportunity for us to kind of lean into a lot more detail that we just don't have time to do it in a shortened truncated session. This morning, but as you start to think of our busy.
This is today and where we finished on a last 12 months basis, you've got a shooting sports business.
At outdoor products business that are that are $1 billion 7 billion. Three if you will as we start to go forward. We have the capacity to continue to run the plays that we've run. So you should expect us to continue to lean into smart acquisitions that will build the outdoor products business into a bigger.
<unk> platform by the time, we separate so I would expect both businesses to be in that $1 $5 to $2 billion in and kind of revenue by the time we.
Look to spin.
Both businesses when you think about our cash flow and you think about a growth rate as we've talked about our capital allocation. Our sporting products business is going to be a lower growth business based upon the accelerated growth that <unk> seen over the past couple of years, but it's in one of the healthiest category. So I would kind of think of that business is kind of load.
Yes, it's low single digits, maybe mid single digits growth for the foreseeable future.
And I look at the outdoor products business as a high growth business and in terms of cash flow listen our ammunition R. R.
Floating products platform is.
As a cash flow machine and they will continue to do that when you think of.
Our outdoor products business consistent with the conversion of cash flow that we've communicated about 50% to 60% that will be a long term.
Projections for our business so as we look to separate the companies.
Both companies are viable platforms to be able to drive into the <unk>.
Investment theses that each of them have and in particular.
Outdoor products is going to have a.
Our balance sheet and our capital structure to continue to support that growth.
Okay, that's great to hear I'll look forward to hearing more in a couple of weeks.
Thank you Ryan.
Okay.
Our next question is from Erik <unk> from B Riley Caris, Dave Eric. Please go ahead.
Thank you good morning, because John too.
Two questions on the <unk>.
Shooting sports segment I guess one.
<unk>.
You talked about can you post spin off that would be kind of a.
Low to maybe mid single digit revenue grower I guess, where are you right now in terms of maximum production capacity now that you've had.
Some time with Remington I guess, maybe asking another way.
Revenues in that segment have been essentially flattish.
Over the past three quarters, and going up a little bit quarter to quarter, I guess, what would it take to take that.
Notably higher from here.
Well so let's.
And the way we look at the Remington business, it's been a highly highly accretive acquisition.
And we don't talk specifically about where were at as it relates to capacity, but the job that Jason and team have done to get it to that.
$400 million run rate on an annual basis.
And.
Yes kind of north of 20% EBITDA margins.
The ability to get out.
Perform.
What I just suggested is twofold. One participation continues at a level that may exceed what we've seen and that's a possibility in two Jason and team continue to find capacity smart capacity expansion opportunities and there are opportunities there what they discover.
Every week and that facility is ways to make it more akin to our other two big facilities that we've been working on for 100 years.
And theres opportunities to further that that would help drive the top line and drive the bottom line simultaneously.
Perfect and then.
With evidence that some calibers in parts of the chain are kind of right.
Inventory improvements out there in retail I guess, what are you seeing in terms of reorder rates point of sales and the demand. So those caliber where inventories are improving are you seeing sales reorder velocity.
The stronger potentially getting stronger and kind of what does that tell you in terms of being able to continue to push price.
On any inflationary pressures.
Yes, so Eric we've got Jason here, and we'll let Jason take that one.
Hey, good morning, Eric as far as calibers that Hasnt changed number the last two quarters. The calibers are still small rifle as Chris had mentioned in his opening remarks and nine millimeter what is different about our company today versus five years ago was we're much less reliant on small rifle. So we see the market going forward and much much more favorable.
Two were Remington and federal CCI, and Speer, where there.
Strength star versus a small rifle reliability that we had previous surge. So we're very excited with what we see as far as Pos.
Plays into our strengths much better we think than some others.
Got it thank you.
Thanks, Eric.
Our next question comes from Matthew Koranda from Roth Capital. Your line is open now.
Hey, guys good morning.
Just wanted to start off with the.
The spin process.
I wanted to get your preliminary thoughts on sort of the split of corporate expense and the allocation between the two segments I think it'll be helpful for everybody else, we start kind of trying to.
Build out their standalone models, and then on the spend as well.
I guess the right way to ask this is like you move some of the HUD shoot accessories into the outdoor products segment and there were some probably some synergies between that and the ammo segment. So any dis synergies that we should be taking into account what the spin.
So Matt let me answer the first question on Hunt shoot accessories, and then <unk> can talk to you a little bit about.
The corporate cost.
Avenue, So hunt shoot accessories has always been squarely in the outdoor products segment, and we changed that for us.
12 months and realize that.
It's much more akin to an outdoor products.
From a variety of reasons from our innovation from a sourcing from the way we manage the business to everything else Theres, just so much synergies with our outdoor products business and Thats why it went back and the synergies that we.
<unk> were with the sporting products side is more on the go to market side and what we will have a strong transition service agreement in place.
To continue to manage that so it's not a concern not a worry of ours you won't see any change to the way, we run and operate those businesses.
Thanks, Chris Matt as you know, we run both brand and supporting products and outdoor product.
<unk> business they have their own business P&L they have their respective functions.
As such we don't see a material increase in corporate costs, there will be some minimal synergy Chris talked about but we're thinking that will be $10 million to $15 million range.
What normally people would expect.
It will be a very very very minimal dis synergy in terms of corporate cost allocation to book business. That's obviously a lot of details to work out what we'll go through each business unit, but overall, we don't see much of dis synergy from this transaction.
Add that one of the hallmarks of our company over the last number of years as we've really tried to invest our money in areas that grow the topline and expand our margins.
With that means a very lean corporate overhead where we're at.
Going to continue to drive a lean corporate overhead so when we talk about potential dis synergies, we're going to keep those to a minimum.
Okay Sir.
And then just on the outlook for fiscal 'twenty, three specifically curious about the sporting products side of the business in the mid single digit outlook that you provided.
Curious if you could help us maybe understand the growth cadence that you see for the year there and then also pricing.
What's embedded in that outlook whats been actions, so far and are there any.
The commercial price increases that you foresee on the horizon.
So it was putting product we've talked about that we will grow mid single digit for the year.
But you will see Remington started ramping up last year as.
But moving toward the ear in the quarter and we also guided Q1, so you definitely will see more growth.
In Q1, putting product, but the dollar wise.
It won't change a lot in terms of by quarter mix.
Slightly improved maintained on there in terms of.
As Chris mentioned capacity utilization, but net net you will see a very.
Flattish kind of quarterly run rate.
Putting product, we don't breakdown pricing and volume, but we talked about we have a $3 billion.
<unk> backlog.
You have the pricing power and depending on <unk>.
Paul commodity moves we will pass through to continue to deliver.
Deliver that kind of margin in.
And Matt when you think of your modeling I mean, you think about an ammunition business is running at.
At full capacity, which you look at in terms of fourth quarter run rate. It is somewhat indicative of what it's going to look like in the next number of quarters absent any potential seasonality, but.
I think it's an easier business, if you will to model in.
We continue to see an environment, where we're able to.
Take the inflationary input costs.
Pass those along in terms of price increases and we're always very very judicial about that because.
We don't want to pass on any more than that and we need to.
Yeah.
Okay very helpful I'll jump back in queue guys. Thank you.
Okay.
Our next question is from Mark Smith from Lake Street capital markets.
Your line is open now.
Hey, guys first question for me I, just wanted to dig in a little bit and of the $3 billion.
AMOLED backlog.
We'd like to see that quantified, but can you talk about the ability for any of those orders canceled or just have solid backlog goes.
Yeah.
Yes, so mark I mean listen the.
The backlog is solid.
However.
Like any order.
Our customer decides that.
They don't want to fulfill it they can pull that order rate. So in today's environment. If we have the ability to ship $3 billion of ammo, which shipped $3 billion of ammo.
The shelves are still light the customer demand is high we see consumption continuing to be at all time high. So this is one of many leading indicators that it's a very very healthy business and it's got a very bright future as we look to our fiscal year here.
But again, that's not to say that.
That can over time.
I would expect over time that as we as we fill the demand that.
That will revert to a more normal level, but we're pretty excited about where that is right now and it's been stable for a long period of time now.
Great.
As we look at and supporting products ammunition side of the business.
Fantastic EBITDA margin here in the quarter and the year.
Can you talk about what's built into your guidance.
EBITDA margins on that business for fiscal 'twenty, three and maybe discuss any inflationary headwinds that youre seeing right now in that business.
Okay.
So this is the partnership so we don't breakdown guidance by by segment, but as we talked about last quarter, you should take Q4 as well.
Our run rate and again, depending on what the capacity, but the commodity and there could be some movement, but Q4 as a run rate is a good starting point.
Perfect.
And then does that fit as well as we look at outdoor products.
EBIT margin has been flat or we haven't seen the move higher in that business should should we expect that to kind of maintain that this 16% or so EBITDA margin.
Yes, we put out our product business.
Because it's mostly source business some quarter may look different but for the full year, we did 16% and because <unk> contribution and all the work our central.
Excellent.
Operator, Doug in supply chain, we expect that margin to improve this year. So you Shouldnt look back Q4 number you should look at more full year and foresight mixed will increase we expect that EBITDA per order product to improve yes, let me, let me add on to that because I know some of you may look at the fourth quarter in <unk>.
Our products and that margin compression.
It's hardware public company, we report every quarter and you want to take a 90 day period and extrapolate that into what the next number of quarters are going to be in the fourth quarter, perhaps of our products business was a was a tougher quarter from a margin standpoint because of it.
A number of factors.
So as you go forward here.
You should think of our outdoor products business is every one of our brands, we expect to grow in fiscal year 2023, and we expect in total that our margins will expand year over year.
Perfect.
I'm going to squeeze in one more here.
And it might be early for this question, but as you think about.
Post spin any shared services warehousing.
Things like that that we would expect between the two separate companies.
Mark.
The beautiful nature of the way, we have historically run our two.
Reporting segments as they are pretty stand alone right. So our sporting products business distributes manufacturers out of its own facilities distributes out of its own warehouses and the same is true for the outdoor products in <unk> <unk>.
Total outdoor products has warehouses, where we share multiple brands and what have you.
But thats why there is going to be little in the way of dis synergies and frankly little in the way of of transition service agreements and it's also why the centers of excellence that have added a tremendous amount of value to the outdoor product side and not as much to the sporting product side will continue to reside in the outdoor.
<unk> reporting segment.
Okay, Alright, thank you guys.
Thanks Mark.
Okay.
As a reminder, please press star followed by one on your telephone keypad. If you have a question.
Our next question comes from Jim Chartier from My next question.
Hot and cold.
Jim Your line is open now.
Great. Good morning, Thanks for taking my question.
First I was wondering if you could kind of talk about any research you've done on.
Some of the newer firearms owners over the last two years.
And how they're behaving water consumption looks like relative to legacy firearms owners.
Assuming that the same way businesses longer term owners.
Or is there some kind of a maturity curve that typically happens thanks.
Okay.
Hey, Jim This is Jason good morning.
We do a lot of research aspire to understand the new users and we have marketing campaigns in place just to focus on those new users because there is such a more diverse.
User than we had seen historically so consumption they use ammo they don't Florida ammo.
So we love the new demographic.
The purchasing that they do.
A lot of them are hunting, which plays very very well into our brands. So everything that we see with.
Chris referenced 14 million new users. We think there is another $2 million in 2022, so far on top of the $14 million.
So all of this expansion of new users fits really well into our brand because they're consuming it theyre not hoarding it and they're very focused on shooting, which obviously it helps on the margin side as well.
Great and then.
On the outdoor products.
Separation.
Curious as to your ability to kind of maintain the current pace of acquisitions for outdoor products without the cash flow from the ammo business.
Previously forecast, 5% annual contribution from acquisitions, which would imply kind of 10% plus.
For for outdoor products as a standalone.
So any color there would be great. Thanks.
Yes, so Tim.
At the board level, where we've thought through how we unlock further value.
This was a critical discussion point and we came to the conclusion that we can continue to drive in the new format that outdoor products growth.
And keep in mind that we're going to go down the path here of separating these companies as expeditiously and as efficiently as we can but there's a lot of work that needs to be done and Thats why we said calendar year 'twenty three so between now and when we actually do separate youre.
Likely to see more acquisitions youre likely to see more bulk on our outdoor products side youre likely to see a bigger platform that's capable of generating.
More free cash flow to continue that pace and this is critically important because we've proven with our M&A as centers of excellence capability that we can be really really good stewards of capital and integrate companies.
And make them better than they were prior to acquisition. So it's an important part of the investment thesis that we believe we're going to continue to be able to accelerate.
Great. Thank you.
Thank you Jim.
Thank you for joining today's call you may now disconnect your lines.
Yeah.
Okay.
Okay.