Anoka-based Vista Outdoor has fired CEO Chris Metz ahead of a planned spinoff of its ammunition business.
The Vista board of directors cited a lack of confidence in Metz, who will receive a severance package, and appointed board member Gary McArthur as interim CEO effective immediately.
The news came with the company's third-quarter results, and McArthur said in a conference call with analysts that Metz's departure was not because of financial reporting or internal controls.
Vista's third-quarter profit was 45% lower than in the same period a year ago.
The company, which owns 41 outdoors brands, still plans to spin off its ammunition businesses this year. The Sporting Products group includes Federal Ammunition in Anoka. In the original plan, Metz was going to continue to lead the Outdoors Products group of brands for Vista and move that company headquarters to Montana.
The ammunition business was going to stay based in Minnesota.
The board and Metz have negotiated a resignation agreement that specifies severance equal to one year's salary, which is $1.1 million. He also remains eligible for performance-based financial bonuses for this fiscal year. Certain portions of his equity compensation will be accelerated as well.
Metz will remain a non-executive employee until the end of the fiscal year March 31 and be available as a consultant for three additional months.
"It has been an honor to lead Vista Outdoor for the last six years," Metz said in a statement announcing his resignation. "Vista Outdoor has an excellent team of dedicated employees who will continue to drive the company's future success.
McArthur has been a Vista board member since 2018. He was chief financial officer of the engineering firm CH2M Hill and before that, Harris Corp., a communication and information technology company.
"I look forward to serving as interim CEO at this pivotal time in Vista Outdoor's history," McArthur said in a statement. "The entire board, including myself, has been deeply involved in the oversight and execution of our strategy, and I am confident we will continue to capitalize on our strong momentum."
In the two-company plan, Vista Outdoor will keep the portfolio of outdoors brands, including Bell, Camp Chef, CamelBak, Foresight Sports and Simms Fishing Products.
Vista's Sporting Products group, which also include Remington and CCI ammunition, will encompass the second company. The group's president, Jason Vanderbrink, is still expected to become CEO of the as-of-yet unnamed company, a Vista spokesman said..
"Vista Outdoor has a clear strategic path and we remain on track to complete the separation of our Outdoor and Sporting Products segments in calendar year 2023," board chair Michael Callahan said in a statement. "We remain confident that the separation will create two market-leading companies."
Under Metz, Vista made a number of acquisitions, including eight within the past two years. These included some of Vista's largest deals: $590 million in 2022 for Fox Racing, a maker of gear and apparel for motocross and mountain bike riders; $474 million in 2021 for Foresight Sports, a maker of training products for golfers; $81 million in 2020 for the ammunition maker Remington Outdoor Co.
When Metz joined Vista Outdoor in October 2017, the company was saddled with debt from previous ownership. Since then, it has reduced its leverage ratio and built up its e-commerce capabilities and other back office resources shared among the brands.
"Our business is operating from a position of strength," McArthur said in the news release announcing Vista's' third-quarter results.
For the third quarter ended Dec. 25, Vista earned $65.1 million, or $1.13 a share, down from $118.1 million, or $2 a share, in the same quarter a year ago. Adjusted earnings of $1.30 a share beat the consensus estimate among analysts of $1.12 a share.
Vista saw double-digit sales declines across product categories with the exception of golf products. Overall revenue was $755 million, down 5% and a bit above analyst expectations.
The Sporting Products segment saw sales declines of 13%, with gross profits falling 21% mainly because of the mix of ammunition types sold and increased commodity and freight costs. The Outdoors Products segment saw sales grow 5% while gross profits fell 2%.
"Macroeconomic pressures continue to impact consumer purchasing and retailer inventory levels remain high," McArthur said in the release. The company trimmed full-year expectations.
Before joining Vista, Metz was CEO of Plymouth-based snowmobile maker Arctic Cat from 2014 to 2017. He was at its helm when Rhode Island-based Textron Inc. bought the company for $310 million.
Metz is the second CEO of a major Minnesota-based company to resign in the past several weeks. At the end of December, Bob Biesterfeld, CEO of Eden Prairie-based third-party logistics company C.H. Robinson, stepped down amid disagreements with his board over the direction of that company.
Jack Atkins, a Stephens Inc. analyst who covers C.H. Robinson, wrote in a note to investors that "Biesterfeld was highly respected internally."
Differences with activist investors who had gained seats on the C.H. Robinson board and disappointing third- and fourth-quarter results at the company likely contributed to Biesterfeld's decision to resign.
Shares of Vista Outdoor closed at $29.08 a share, down 2.6% on Thursday. Over the past 52-weeks, the shares have ranged from $22.97 to $41.64 a share.