Vista Outdoor’s purchase of Remington’s ammunition assets from a bankruptcy auction in October was welcome news to employees at Remington’s ammunition plant in Lonoke, Ark.
Nick Sachse has worked for Remington for 28 years and is currently director of product management. He estimates that during his tenure there have been six owners of Remington.
This fall’s sale to Anoka-based Vista excites him because it is the first of those owners whose primary business is ammunition and whose whole business participates in the outdoors industry.
“I don’t know who could have purchased us that would have been more reassuring to furloughed employees,” Sachse said.
Vista owns Federal and other ammunition brands and a portfolio of other outdoor brands such as Camp Chef outdoor cooking equipment, Bell and Giro bicycle helmets and CamelBak hydration products.
It added Remington assets in October for $81.4 million. The deal included the Remington brand, trademarks and accessories business and the main ammunition-production facility in Lonoke. Remington’s other assets, including its firearms division, were acquired by other bidders.
The Lonoke plant typically employs 700 to 800 people, and during peak production has had more than 1,000 employees. But during the disruptions caused by the bankruptcies in 2018 and earlier this year, employment had dipped below 400.
Vista is now bringing back at least 300 more employees, including employees who had previously been furloughed or laid off.
The town of Lonoke has about 4,250 residents, and the Remington plant, built in 1969, is one of the town’s major employers and a source of community pride. Sachse said many Remington employees have more than 30 years of experience and families in the area who have had multiple generations working at the plant.
Remington was majority-owned by DuPont de Nemours & Co. from 1933 through 1993, but has had a series of mostly private-equity owners since. Remington was eventually driven into bankruptcy by several factors, chief among them a high debt load and product lawsuits.
Vista acted quickly in the bankruptcy auction and had an advantage in the due-diligence process since it had ammunition experts to vet the deal.
Being ready for quick turnarounds on opportunities was a big goal of Chris Metz when he became Vista’s chief executive in 2017.
The company’s debt at that time was $1.2 billion, and he set out to pare that down. By the end of the company’s second quarter, which ended Sept. 30, the debt was down to under $350 million.
“We couldn’t have done the deal without paying down our debt first,” Metz said.
Acquiring the brand name and trademarks gives workers in Lonoke confidence that brands will remain distinct, as Vista has promised.
“Remington is going to stay Remington, different and unique from Federal,” Sachse said. “There is a single goal to be the best ammunition supplier in the world.”
New strategic ownership brings with it advantages giving Remington more marketing, supply chain, sales force, and distribution help from Vista and access to its manufacturing and business practices. The Remington ammunition brand will also be integrated quickly on Vista’s new e-commerce platform.
“Given the strategic fit with Vista’s other ammunition and hunting and accessory brands, we anticipate there could be meaningful cost and revenue synergies as the Remington business stabilizes and can benefit from Vista’s scale, manufacturing and distribution infrastructure, and emerging centers of excellence,” Ryan Sundby, an analyst at William Blair, wrote in a note to investors.
Sachse, an engineer by training who spent most of his career in new product development, is also excited about more support for Remington’s new product pipeline. “New-product development to appeal to the new hunter or shooter is the key to sustained growth, Sachse said.
Metz said workers in Lonoke will get competitive wages and the overall benefit plan that Vista offers its employees. A successful integration also opens more career development opportunity for both Vista and Remington employees.
“You’ll see more innovation from Remington in the next 10-12 months than you’ve seen in a long time,” Metz said.
There is currently a shortage for ammunition as millions of new people have registered to purchase guns this year who have a renewed interest in hunting, shooting sports or personal protection brought on in part by the coronavirus pandemic that has people searching for more outdoor recreation activities. The NSSF, the trade association for the firearm industry, estimates there are more than 6 million new gun owners in 2020.
Metz said that Vista’s ammunition plants in Anoka and Lewiston, Idaho, are operating at full steam while it tries to fill a year’s worth of ammunition back orders worth $1 billion.
While Remington ammunition is expected to contribute $200 million in annual sales for Vista, analysts covering the company note that back in 2014 Remington had revenue of $405 million and profit margins greater than they are expected to deliver in the next year. Metz has said he expects Remington to be accretive to Vista’s earnings within the first year of ownership.
Vista shares have performed better than all Minnesota public companies in 2020. But when Pfizer, Moderna or another pharmaceutical company announces a positive coronavirus vaccine milestone, Vista and other outdoor company stocks take a hit.
Metz looks at the reality that a vaccine will not be widely available for a long time. In the meantime, Vista has the opportunity to connect more new customers with their renewed interest in the outdoors through all their outdoor brands.
“All the data we’ve seen says that this is a long-term trend,” Metz said.
Patrick Kennedy • 612-673-7926