Vista Outdoor Inc.

Good day and welcome to the Vista Outdoor Incorporated fourth quarter and full fiscal year 2021 earnings call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Kelly Reisdorf. Please go ahead, ma'am.

Good morning and thank you for joining us for our fourth quarter and full fiscal year 2021 earnings call. With me this morning is Chris Metz, Vista Outdoor Chief Executive Officer, Sudhanshu Priyadarshi, Senior Vice President and Chief Financial Officer, and Rick Kern, President of our Belgero Business Unit. Before we begin, I'd like to remind everyone that during today's call, we will be making several forward-looking statements, and we make these statements under the safe harbor provisions of the Private Securities Litigation Reform Act. These forward-looking statements reflect our best estimates and assumptions based on our understanding of information known to us today. These forward-looking statements are subject to the risks and uncertainties that face Vista Outdoor and the industries in which we operate. We encourage you to review today's press release and Vista Outdoor's SEC filings for more information on these risk factors and uncertainties. Please also note that we have posted presentation materials on our website at vistaoutdoor.com, which supplement our comments this morning and include a reconciliation of non-GAAP financial measures. With that said, I'll turn the call over to you, Chris.

Thank you, Kelly. Good morning, everyone, and thank you for joining our fourth quarter and fiscal year 2021 earnings call. The Vista Outdoor team finished the most profitable year in the company's history, capped off with a record-breaking fourth quarter. We have not been immune to the impacts of the pandemic, and I would like to extend my sincere gratitude to all those associated with Vista Outdoor. Our employees and their families, customers, suppliers, and everyone who is committed to our success have stepped up in major ways this year. Our team rose to the occasion, and as a result, we reported more than $2.2 billion in sales, representing 40% sales growth for the fourth quarter and 27% sales growth for the full year. We also set a few new financial records in our company. First, We ended the year with an all-time high adjusted EBITDA margin of 15.5%. Second, we ended the year by delivering an all-time high of $3.66 in adjusted earnings per share for the full year. And lastly, we generated a total of $318 million in free cash flow, or 92% of adjusted EBITDA, as a result of improving our balance sheet and free cash flow conversions. Completing a tremendous year, we enter fiscal year 2022 stronger, more resilient, and more profitable than we have ever been. Our culture, which is a measuring stick for the way we work and the way we act, is stronger than ever. I'm proud that we were recognized by Forbes as one of the best employers in 2021, as voted anonymously by our employees. We're also a more sustainable company. Sustainability is a core tenet of VISTA's strategy, and we were excited to share our first ES&G Impact Report this past fiscal year. The report outlines our VISTA vision, which is focused on delivering improved outcomes in key areas, such as improvements in recycling, packaging, energy management, diversity and inclusion, and corporate social responsibility. Sudhanshu will cover in a moment our financial results in more detail. But first, I will review the key drivers that supported our outstanding results. First, we entered the year with a solid foundation, the result of a multi-year disciplined business transformation. The actions we took in our prior fiscal years to right-size the portfolio, reduce debt, build out our centers of excellence, attract talented leaders, and change the culture to be more disciplined and nimble, pay dividends when the market conditions turned, favorably. Second, we executed a disciplined strategy in a dynamic year. Our team never wavered in our approach to managing the company. We stuck to our game plan even when circumstances presented new and unprecedented challenges. This was especially true in the early days of the pandemic when the strain on supply chain retail and the broader economy created the most uncertainty, and it was hard to know what the future held. That said, the pandemic accelerated many of the customer-consumer trends that were already in motion and we believe will help fuel our continued success in FY22 and beyond. For example, there were 8.4 million new entrants into the shooting sports in 2020. This pace has not slowed in 2021. Hunting licenses grew 8% in 2020, bringing in over a million new hunters. In fact, 38.9 million hunters is the highest level on record, going back to 1958. This trend in 2020 is a reversal from the prior decade-long decline in hunting participation and points to people embracing the field-to-table movement. Domestic bike sales climbed 65% in 2020, and electric bike sales were up 145%, despite shortages at many bike shops. Domestic golf rounds were up 45% for the month of March and up 24% for the first quarter. The Outdoor Industry Association reported overall participation growing amongst women and people who are younger, urban, and more ethnically diverse. And for Vista, demand continued to accelerate as we moved through the year, resulting in the highest year-over-year sales growth in our Q4 of fiscal 2021, with our outdoor product segment growing 47% year-over-year. We believe we outperform many of our peers as we remain focused on execution and our commitment to the following. One, organic growth. We will continue to be disciplined stewards of capital and invest our strong free cash flow back into our brands through investments in new product innovation, R&D, e-commerce, and enhancements in digital and best-in-class marketing. Two, our centers of excellence. We leveraged our shared resources to identify and capture operational efficiencies across our supply chain and build our omnichannel strategy and online presence, which allows us to better control our brand messaging and consumer experience while delivering stronger returns. Three, our commitment to discipline capital allocation. During my three and a half years with the company, we have reduced debt by more than $1 billion while closing on two acquisitions. We must maintain a strong balance sheet to ensure we have the financial resources to continue to invest and accelerate organic and inorganic growth at all points of the market demand cycle. Our long-term leverage ratio target is one to two times, which takes into account an M&A strategy that focuses on value creation. We continue to seek out complementary synergistic businesses that we can take to the next level in terms of sales and profitability. And four, our commitment to ES&G. We are committed to managing business operations in support of environmental, social, and governance progress. We believe the best approach to sustaining long-term value and better outcomes for our planet is through operational efficiencies, community engagement, and a culture based on doing well so that we can do good. Our combined scale, resources, and expertise allow us to invest for future growth and achieve a level of excellence that would be out of reach for our individual brands, while also building a culture that is decisive, fast-acting, and nimble. We believe that our brands and their market positions are a key and lasting competitive advantage for Vista Outdoor. We have many number one and number two brands in their respective markets, and we are getting better at leveraging this advantage to capture greater market share. I'd like to spend a few minutes highlighting our fiscal 21 brand wins, opportunities and challenges. Overall, we did what we said we were going to do. From sales growth and margin expansion to strong free cash flow generation and impact, the effectiveness of our strategic transformation is clear. So let me start first with shooting sports. The ammunition team delivered incredible results for the fourth quarter and the entirety of fiscal 2021. Our sales and operation teams across every location deserve great credit as they worked overtime to keep pace with demand, integrating new facilities and enhanced safety protocols following COVID restrictions. The Remington and Heaviside integrations remain ahead of schedule. The strength of our commercial market has continued into calendar 2021. In fact, demand has increased each quarter of the fiscal year resulting in the highest current backlog in our company's history. Low channel inventories combined with heightened consumer demand continues to pressure supply. Our new and existing facilities are working 24-7 so that we can deliver more product to the marketplace and reduce our growing sales backlog. Leveraging our commercial strengths, our team has secured major contracts with leading law enforcement and military agencies during the fiscal year. The FBI awarded Federal the five-year 556 service round. This is a notable accomplishment as the FBI has some of the strictest performance requirements in the world and creates a halo effect for the rest of our products. The U.S. Army awarded Federal a significant order for the AA-40, Frangible Ammunition, which is a military-grade training ammunition round utilizing our Catalyst lead-free primer. The Department of Homeland Security awarded Spear a $112 million contract, the largest in company history for 9mm service ammunition. Federal and Spear were awarded a major duty and training contract in Australia, and the Nordic Police awarded Spear the 9mm duty contract, while Federal continues to hold the .223 and .308 duty rifle contract. Our Hunt-Shoot team delivered double-digit sales growth for the year and quarter, strengthened by consumer trends, a much larger base of users, dynamic new products, and the optics repositioning strategy. This repositioning strategy has created better margins and higher sales. Huntshoot also delivers some fantastic new products. The tactical team successfully launched the upgraded T-Series holster, which drove record sales for the month of March and a great year overall. And the Bushnell Prime 1700 laser, push Bushnell back into the number one market share position in the hunting laser range finder market. Hunt shoot operations are also becoming more sustainable, supporting our ESG vision while also leading to greater efficiencies and cost reductions. The organization, which covers multiple facilities in multiple states, has developed an operating plan to increase production efficiencies and better manage energy utilization and water consumption as an effort to better control cost while also reducing indirect greenhouse gas emissions. Now let's turn to our outdoor products segment. Camelback delivered an impressive fourth quarter of double-digit growth, driven by the drinkware line and a rebound in its international business, which increased over 100% compared with the prior year quarter. When it comes to sustainable new product development, Camelback is leading the industry. Just recently, the team launched Repurpose, which is a sustainability initiative designed to reduce climate and environmental impacts through improved product design, sourcing, and operational efficiencies. Goff, our Bushnell Goff business, also had an incredible year, extending our status as the number one laser range finders in Goff with the introduction of the Tor V5 and the Tor V5 Shift. Successful as those launches were, The highlight of the year came with the introduction of Wingman, the industry's first GPS-enabled speaker. With this introduction, Wingman exceeded all expectations, and inside of 12 months, captured better than 8% of the total EMD market and becoming the top-selling GPS product in the industry. In our Camp Chef business, our Camp Chef team continues to knock the ball out of the park. FY21 was another year of double-digit sales growth, driven by strong D2C growth and even more new product innovation. The Woodwind Wi-Fi Pellet Grill has exceeded expectations in the market and now comes in three different sizes. The Wi-Fi-enabled products are producing valuable consumer data and insights through the integration with the Camp Chef app, which is helping us fine-tune digital marketing and product development moving forward. For an update on our Bell and Gero business unit, I've asked our President and General Manager, Rick Kern, of Bell and Giro to provide comments on the quarter and the full year. Rick?