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A lot of people 'rediscovered the outdoors' during Covid: Vista Outdoor CEO

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Chris Metz, Vista Outdoor CEO, talks company's explosive growth during the pandemic and its acquisition of Foresight Sports.

Video Transcript

[MUSIC PLAYING]

ZACK GUZMAN: Welcome back to Yahoo Finance Live. As we've seen in the pandemic, some of us had to get out a bit more. And that gave a big boost to some companies that are levered to the great outdoors, including Vista Outdoor, the parent company some names you might know well if you're a hiker, including Camp Chef, CamelBak, and Bushnell. The stock's more than doubled over the last year. And now, it's pushing into some higher margin spaces, like golf.

And for more on the growth that they've seen in the pandemic, and are planning to see beyond it, happy to bring on the CEO of Vista Outdoor. Chris Metz joins us now. And Chris, just full disclosure, a lot of this came from my own Camp Chef purchase, because I got into smoking meats earlier in the pandemic. So that's kind of why I wanted to chat with you.

But I guess we can start with the growth that you've seen in some of those brands leverage to the outdoors, and whether or not maybe some of that's come off a bit as we all start to get back to normal.

CHRIS METZ: Good question. I mean, one of the silver linings of COVID is that people rediscovered the outdoors either for the first time, or for the first time in a while. So just about every segment within the outdoor category saw a bit of tailwind, if you will. But certain categories outperformed. And certainly, cooking and golf are two of those categories. And certainly, cooking plays into our Camp Chef brand, and the camping trend that is going on.

We had over 100 million North American households that camped. 60% of people camped for the first, time and expect to camp again as we go forward. And a lot of these are younger, and people of different races and colors. So it's really a kind of a nonpartisan participation, if you will, which is super exciting as we look at the stickiness going forward.

ZACK GUZMAN: Yeah, the other interesting thing here too is, is the acquisition earlier for Foresight Sports, one of those golf levered companies with golf technology to really help those who need help out there, maybe me included, in perfecting their game, and setting up indoor kind of virtual golfing as well. But $474 million is a lot of money to spend. Talk to me about why you put the money to work there, and what you're expecting to see with that brand.

CHRIS METZ: Well, hey, Zack. So first of all, because it is Yahoo Finance, and we've got a lot of financial stock followers, people should know that this is high growth category. So you know, Foresights growing north to 20-25% a year, delivering super high margins, kind of that 45-50% EBITDA margins. And we were able to jump into this business for you know, nine to ten times EBITDA, so terrific purchase for us.

And we've been working with the founders for over a year and a half. And they saw the value that we saw in the combination of taking a leading brand like Bushnell, and leaders in the entire outdoor space with over 40 brands in Vista Outdoor, and combining the two. So we take Foresight's leadership technology with the best pros out there. And you can spend can spend $15,000 $20,000, $30,000 on a full in-home simulator with a launch monitor.

And for the first time, we're going to take that technology, and bring it down to less than $5,000 purchase price for homeowners and consumers, so really leveraging the high end, and the entry price point. So we couldn't be more excited. And given the fact that we use a high speed camera based technology, we're really one of the only ones that can perform as well outdoors as indoors.

So as people watch the Ryder Cup this week, they look to the driving range, I can guarantee they're going to see Foresight as the leading launch monitor on those driving ranges, as all the Ryder Cup participants look to gather that data, and see how they're performing that morning, or that afternoon.

- Yeah, golf is one of those sports where we have seen huge growth during the pandemic. When you talk about this acquisition for Foresight Sports, some of these other new ventures you've tapped into, how much of that is a play to diversify away from your business with guns and ammunition? How are you looking at the business mix right now?

CHRIS METZ: Well, first of all, we don't participate in guns. And so we don't sell guns. But we are the largest participant and manufacturer in the world of ammunition. And ammunition plays right into this outdoor trend. So people are rediscovering hunting, whether it be duck hunting, or upland bird hunting, or big game hunting in the fall. And we are the leaders in producing trap and skeet for youth and club sports in high schools. And then lastly, we're the leaders in military and law enforcement police precincts across the country.

Now, because of our leadership position, there really aren't too many acquisitions left for us to look at. We purchased two in HEVI-Shot and Remington this past year. And given the fact that we're about one times levered, and generating over 80% of our earnings into free cash flow, we've got the balance sheet to expand into outdoor products.

So you know, Foresight is the first of what we expect to be many that play right into our business unit platform. So we've looked at over 100 acquisition candidates. We're continuing to look at those. And you're going to see us smartly deploy our capital, staying within that one to two times levered arena, and still acquiring multiple outdoor companies each and every year as we go forward. That's the plan.

- And Chris, you've set yourself up there. A lot of people are going to be asking, well, what are these acquisition targets you're looking at? Talk to me about the portfolio that you see, and where you think you would like to fill some of the holes?

CHRIS METZ: Well, so first of all, Zack-- I was talking to Zack a little bit, and he's a big fan of Camp Chef. So you know, he purchased a Camp Chef grill during the pandemic. And outdoor cooking is just booming. And it's a little bit like Foresight, where it's got large growth potential. You know, we were the leaders first and foremost in back-country cooking. We brought that to the backyard, and we've created a cult like following all the way to the very top, with guys like Guy Fieri.

So Guy Fieri has become you know, a close, close friend of our firm, because he started Johnny Garlic's with really nothing in his pocket and Camp Chef in his kitchen, and has developed a worldwide huge, huge brand. And has continued to be a friend of Camp Chef. And he got into it, and he sees the innovation, as a lot of other people do. We're the first to bring kind of wood cooking, and fuel, or propane gas cooking together into a single platform.

So whether you want a pizza oven, whether you want to go low and slow smoke, whether you want to go high sear, whether you want to go flat cooking. So we're going to expand in the outdoor cooking. We've got leadership positions in skiing and bicycling. You'll see us look into these categories. And you'll see us look into a host of other categories that we think play naturally to our core competencies and strengths.

ZACK GUZMAN: Yeah, and I mean, I enjoyed Camp Chef as well. Good to be in I guess company with Guy Fieri there, and appreciating the way that it works. But I mean, I liked it as a grill. But then I was looking closer at you guys. So when you acquired the brand back in what, 2016, and relative to what we've seen in the strength of the Traeger IPO, the Weber IPO, the shares have come down a bit I guess since then. But still, a lot of enthusiasm for those brands levered to smoking and cooking meats.

And I wonder, how much it's grown since then. I think back then, it was what, about $11.5 million in EBITDA in 2016. You talk about what Traeger has been able to do, more than doubling their adjusted EBITDA from 2019 to 2020. I mean, what's the growth like at Camp Chef right now. And potentially, if you saw the enthusiasm in the IPOs, I know you don't like spinning off brands, but isolating that one particularly, what are the thoughts?

CHRIS METZ: Well, Zack, there certainly is a lot of potential in the Camp Chef brand. In fact, since we've purchased it, because it's part of Vista, people won't see it quite as isolated as a Traeger, or as a Weber that recently went public. But in our ownership in five years, we've grown the top line four-fold, four-fold. And that's what we can do when we leverage what we call better together, because of who we are at Vista.

So the fact that we go to market with 40 outdoor brands, we're the largest supplier to the likes of you know, Academy and Sportsman's warehouse, and Bass Pro, and Cabela's, and the like, we're able to really gather synergies with our brands. And really help small to medium sized brands like a Camp Chef break out. And we think we can do the same with Foresight, and frankly, a lot of other brands.

So we provide a nice home for brands that are looking for an alternative to selling to a financial buyer that may not be a long term holder, or an alternative to going to public, where you're very isolated in your subject to the public markets without a big corporate parent like Vista. So we really allow entrepreneurs to come into Vista, keep that founder's mentality, but take advantage of all the power and the might that we can bring to it.

So it's a great formula. I think the Wall Street and investors are going to see a lot more from Vista as we go forward here, and smartly utilize our cash flow.