Vista Outdoor Inc. (NYSE:VSTO) Q2 2023 Earnings Conference Call November 3, 2022 9:00 AM ET

Company Participants

Shelly Hubbard – Vice President of Investor Relations

Chris Metz – Chief Executive Officer

Jason Vanderbrink – President, Sporting Products

Sudhanshu Priyadarshi – Senior Vice President and Chief Financial Officer

Conference Call Participants

Scott Stember – MKM Partners

Eric Wold – B. Riley Securities

Anna Glaessgen – Jefferies

Matt Koranda – ROTH Capital

Mark Smith – Lake Street Capital Markets

Jim Chartier – Monness Crespi Hardt

Operator

Hello, and welcome to today’s Second Quarter Fiscal Year 2023 Vista Outdoor Earnings Conference Call. My name is Elliot, and I’ll be coordinating your call today. [Operator Instructions]

I would now like to hand over to our host, Shelly Hubbard, Vice President of Investor Relations. The floor is yours. Please go ahead.

Shelly Hubbard

Thank you, operator, and good morning to everyone joining us for our second quarter fiscal year 2023 earnings call. With me this morning is Chris Metz, Vista Outdoor’s 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 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 investors.vistaoutdoor.com, which supplement our comments this morning and include a reconciliation of non-GAAP financial measures.

Chris, I’ll turn it over to you.

Chris Metz

Thank you, Shelly. Good morning, everyone, and welcome. We posted another solid quarter despite the external challenges we’ve been navigating over the last year. Quarter two sales increased to $782 million, with direct-to-consumer sales up approximately 65%. Adjusted EBITDA margins of 21% remains strong as we absorb higher input costs, including freight and labor from rising inflation.

Lastly, we recorded $1.71 in EPS, which was down 29%, driven by higher operating costs, largely due to inflation as well as higher interest expense. For additional context, our prior year period was a record second quarter in sales, EBITDA and EPS. We estimate that we have absorbed $90 million in higher supply chain, freight, tariff and other input costs in the first two quarters of FY2023 as compared to the same period last year.