Vista Outdoor Inc.

good morning and welcome to today's first quarter fiscal year 2023 vista earnings conference call my name is candice and i will be your moderator for today's call all lines have been placed on mute during the presentation portion of the call with an opportunity for question and answer at the end if you would like to ask a question please press start followed by one on your telephone keypad i would now like to pass the conference over to our host shelly hubbard to begin

Thank you, Operator, and good morning to everyone joining us for our first quarter fiscal year 2023 earnings call. With me this morning is Chris Metz, VISTA Outdoor Chief Executive Officer, Jason Vanderbrink, President, Sporting Products, and Sudhanshu Priyadarshi, Senior Vice President and Chief Financial Officer. 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 the information known to us today. These forward-looking statements are subject to the risks and uncertainties that face this outdoor in the industries in which we operate. We encourage you to review today's press release and Vista Outdoors SEC filings for more information on these risk factors and uncertainties. Please note that we have posted presentation materials on our website at investors.vistaoutdoors.com, which supplement our comments this morning and include a reconciliation of non-GAAP financial measures. Chris, I'll turn it over to you.

Thank you, Shelly. Good morning, everyone, and welcome. Today I will cover five key topics which address why we are confident about our future despite current macroeconomic headwinds. These include our strong quarter one earnings performance, our planned acquisitions of Fox Racing and Sims Fishing, trends we are seeing across the marketplace in our businesses, strong growth from product innovations, and lastly, an update on our planned separation. Let's start with our first quarter performance. Fiscal 2023 is off to a great start with a strong Q1. We out-executed our plan and long-term targets and invested free cash flow in future returns while maintaining a strong balance sheet with ample liquidity and doing so in a challenging macroeconomic environment. We believe this outdoor is well-positioned to deliver continued growth in fiscal 2023 despite the economic headwinds. Our strategy and execution have positioned us to capture the lifestyle shifts we are seeing in outdoor recreation. Although sales are not as elevated as during the COVID bump, we are highly encouraged by the continued participation in outdoor activity in the post-pandemic environment. I've always led with the mantra that we control our own destiny. As you can see on slide four, we've created a company with 39 coveted brands and soon to be 41. as we continue to expand our addressable market through strategic acquisitions, such as the most recent planned acquisitions of Fox Racing and Sims Fishing. As a result, we will have amassed 12 power brands, generating more than $100 million in annual revenue. We're also maintaining our leading number one, number two category positions across multiple brands, as you can see on slide five. Moving to slide six, both Fox Racing and Sims Fishing are iconic brands with cult-like following in their categories. Fox Racing, a global brand in performance motocross, mountain bike, and lifestyle gear, is on a path that is expected to generate $350 million in revenue this calendar year. Sims Fishing, a premium fishing brand and leading manufacturer of waders, outerwear, footwear, and technical apparel, is expected to generate $110 million in annual revenue this calendar year. Before we dive into the quarter's results, I want to leave you with three key messages today as shown on slide seven. One, we are committed to unlocking value for our shareholders. Two, we will continue to grow and leverage our $1,200 million plus businesses, building number one and number two share positions in the market. And three, We're on track and continue to deliver growth and profitability. Our first quarter results and full year guidance are a testament to this commitment. Now, moving to slide eight. In Q1, we posted our second best sales record ever of 803 million, up 21% over the prior year, driven by continued shifts in outdoor lifestyles and recreation, the strength of our brand portfolio, new product innovation, and execution excellence. Sporting product segment revenue grew 40% year-over-year, driven by higher volume, better mix, and pricing. Revenue in the outdoor product segment was down slightly from Q1 last year in a more challenging demand environment, as expected, declining 2%, driven largely by outdoor accessories. This was partially offset by growth in our outdoor recreation operating segment. Let me give you a bit more color on trends we are seeing. During Q1, demand was beginning to soften at opening price points due to the lack of stimulus money this year and higher inflation. However, we believe this is short term as underlying participation rates remain elevated. At higher price points, we continue to see strong demand and participation rates remain steady. Within outdoor recreation, golf posted exceptional growth and sales at Camelback also increased, primarily driven by new products. Our outdoor cooking platform was impacted by high comps from sell-in last year, as retailers were replenishing low inventory to keep up with elevated demand. This year, brick-and-mortar retailers are in an overstocked position, particularly at lower-priced and medium-priced point grills. We're beginning to see a normalization within the domestic commercial market. ammunition market, and we're seeing consumer demand and consumption settling to an elevated run rate that is higher than prior post-peak levels. Our outlook for ammo remains positive. The ranks of new shooters are increasing both in quantity and diversity. Recent growth has not been politically driven, but culturally driven by new entrants who are participating more frequently and consuming more ammunition than legacy shooters. We expect demand to remain solid through midterm elections, as we are confident this event won't have a large impact on demand. Overall, we expect to see lower price point categories continue to be affected more by inflation, as reduced stimulus and higher prices have led to lower spend in areas such as hunting and shooting accessories, bike helmets in the mass channel, and grills at opening price points. Across several of our brands, retail customers in our categories bought heavily last year in both Q1 and Q2, creating extremely tough comps, particularly in outdoor accessories. Similarly, certain large retailers have been reducing or halting new purchases across all categories, which is affecting our buyers open to buy, even in categories where sell-through of our products remains strong. I'll also note that last year in Q1, Amazon's Prime Day was in June, whereas this year it shifted to Q2 in July. Our latest acquisitions, including Foresight, Stone Glacier, and Quiet Cat, are all performing very well, as planned, despite the economic headwinds. We believe this reflects two dynamics. First, they're selling to higher-end, more affluent consumers, less affected by inflation. And second, they're participating in higher growth categories, which is a key reason we acquired these businesses, as well as our planned acquisitions of Fox Racing and Sims Fishing. We expect these acquisitions to partially offset the slowing of legacy products from historic highs, demonstrating that having a diversified portfolio affords the flexibility to be strategic in the current operating environment. Q1 was also a strong quarter on the bottom line. Adjusted EBITDA margin for the total company expanded 83 basis points to 25.2%, our second highest margin rate ever. and diluted EPS was the second best in company history at $2.31. Moving to slide nine, this quarter exemplified the value creation strategy we laid out at our investor day in May as we delivered strong revenue growth, profitability expansion, traction from new product innovation, and capital allocation excellence inclusive of M&A. Looking at market traction on slide 10, Our investments in new product innovations are driving growth. Examples this quarter included CamelBak drinkware, which was up more than 100% year-on-year. This quarter, CamelBak introduced the ChillBak cooler series, leading to strong media coverage and market uptake. With the ChillBak, we have entered the soft cooler space with best-in-class insulation and an integrated hydration reservoir only CamelBak can provide. Additionally, we have launched our new fusion reservoir line with key features such as lightweight, easy to fill, easy to clean as well as a universal fit. The fusion reservoir continues to cement our leadership position in hydration reservoirs. For the sixth consecutive quarter, Camelback posted sales growth led by D2C, which increased strong double digits from the prior year. Camp Chef stoves were up 30% year over year. Lifestyle shifts are embracing camping. There were 93 million active camping households in 2021, with 9 million first-time camping households added during the year. Camp Chef launched the new Apex Grill in July, which exceeded expectations. The Apex Grill sold out during the first week. In fact, the Apex Grill was featured in a 4th of July profile in the Wall Street Journal covering the best grills on the market. While the Apex changes the grilling game, there's yet another game-changing launch planned for October 1st. Keep an eye on Camp Chef as they are leading the pack on innovation. Sales at Foresight with their lineup of launch monitors, including the all-new GC3 personal launch monitor, surged in the quarter, driven by strong consumer demand and the ability to procure a larger chip supply. Callaway and Topgolf recently named Foresight as their exclusive launch monitor partner. because our technology delivers shot data with the highest level of quality, accuracy, and reliability. Giro Snow is up more than 500% compared with the prior year, driven by strong consumer demand, new product innovation, and favorable supply chain factors. Bushnell's strong growth reflected in part the continued success of our Cellu-420 trail cameras. Trail cameras drove more than 100% growth year over year, In addition, we're excited to be launching two new line extensions, one with dual SIM capability and the other with an adjustable integrated solar panel. Bell Power Sports are up double digits in a category where we are building on momentum with one of the most exciting brands in the space, Fox Racing. This success was driven by supply chain efficiencies that led to stronger order fulfillment and consumer demand driven by new products such as the Bell Moto 10 and strong performances by sponsored athletes, showcasing our gear in traditional and social media outlets. Now moving to slide 11. As lifestyles began to shift in early 2020, we committed to leverage our above-trend cash flow and invest in the future to drive organic growth, make strategic acquisitions, and repurchase shares, and to do so while maintaining a low leverage ratio. The innovations I've just described the result of this commitment to excellence in capital allocation now i'd like to turn your attention to the value creation framework on slide 12 that we first shared with you in calendar 2021 we have several pillars to deploy and in q1 we leaned into acquisitions as the right opportunities became apparent with fox racing this legendary brand will bring us into one of the most passionate sporting bases we address with motocross and mountain biking With SIMS Fishing, we believe we can create a fishing platform that delivers long-term growth and value for all stakeholders. With each of these planned acquisitions, we are continuing the successful implementation of our strategy to use accretive acquisitions to expand leadership positions across categories while enhancing our ability to capitalize on long-term growth opportunities in outdoor recreation. While we reported a strong first quarter, we acknowledge that we are operating in a much more challenging environment with rising inflation and interest rates as well as eroding consumer sentiment. We recognize these dynamics, and we are taking actions to mitigate risks. We are mindful of the potential impacts on our businesses and have incorporated expectations into our guidance with the visibility known to us at this time. With several levers we can pull, including managing inventory, controlling costs, and optimizing our product offerings, to name a few, as shown on slide 13. Managing a diversified portfolio is a competitive advantage and allows us to absorb fluctuations in brand performance across our portfolio. We have the right teams in place with decades of experience in our industry to help us navigate the future, and we've built a nimble organization with a lean cost structure, enabling us the flexibility to pivot quickly. To summarize the first quarter, the theme that's driven our performance for the past two years remains firmly in place. Our results continue to reflect the strength of our management team and our brands, our talented workforce, cash flow generation, innovative new products, strategic execution, and strong outdoor sports and recreation markets. Moving on to the separation that we announced nearly 90 days ago, Today, we are just as confident about unlocking value, and our strategic rationale holds true, despite the current environment. We remain on track to spin off the outdoor product segment in calendar year 2023. To do so, there are three gating items to complete the spin shown on slide 14, including preparing the Form 10 registration statement for a confidential filing with the SEC. obtaining regulatory approval of the Form 10 by the SEC, along with other regulatory approvals, and final approval by our Board of Directors. Both companies will offer differentiated and compelling investment opportunity based on each company's respective business models. Each will also have a tailored capital structure and capital allocation strategy to support their distinctive business models and long-term goals. With both companies nearing 2 billion in pro forma annual sales, each will be one of the largest businesses in their space. Outdoor Products also offers a well-diversified brand portfolio that is positioned to capture consumer demand across a variety of outdoor and lifestyle activities. As I previously mentioned, we expect the separation to further unlock shareholder value. Before I hand it over to Jason Vanderbrink, who will discuss sporting products in more detail, I'd like to reiterate a few important thoughts. The start to fiscal 23 was both successful and transformative with the separation announcement and planned acquisitions of Fox Racing and Sims Fishing. We stayed the course on execution and financial performance. We understand the negative macroeconomic pressures are real. We're experiencing a slowing demand and lower price points across our brands. We're seeing pressures at key customers, including Target and Walmart, We're seeing the secular downdraft in backyard grilling, and ammo demand appears to be normalizing. Despite macroeconomic headwinds that all companies are facing, our fundamentals and competitive advantages are stronger than ever. We continue to remain confident about our long-term opportunities to grow as ammo demand is normalizing at new highs. Our new product innovation machine is replacing opening price points and driving affinity for our brands. Past acquisitions are growing the top and bottom line faster while enhancing our talent, diversifying our portfolio, and increasing our TAM. And we expect Fox Racing and Sims Fishing to do the same. Our diversified portfolio of leading brands provides us with size and scale to thrive now and into the future. And our execution is driving industry-leading financial performance as supported by our healthy balance sheet, strong free cash flow generation, and ample liquidity. Today's environment is unprecedented, and the impacts of inflation, supply chain constraints, and a tight labor market are not unique to Vista Outdoor. We believe we can continue to weather these challenges, unlock value, and win versus the competition. With that, I'll hand it over to Jason. Jason?