Vista Outdoors finalized a long-term contract with Orbital ATK last month for its supply of .223 and 5.56 ammunition produced at its Missouri-based plant through 2020.
CEO Mark DeYoung said May 11 the deal supports Vista’s “long-held market position … in these ammunition categories.”
“This new agreement sustains our leadership position in providing these products to the shooting sports market,” he said.
Orbital ATK, a defense contractor, operates the Lake City Army Ammunition Plant in Independence, Missouri. The plant manufactures approximately 1 billion small-caliber munitions for the military annually, conducts contract oversight and operates a NATO test center.
An April 11 explosion in the plant’s primer mixing area that killed one man and wounded four others, however, could produce Vista’s largest year-over-year declines in 2018, said Stephen Nolan, Vista’s Chief Financial Officer, during a May 8 conference call with investors.
“Looking to the near term, we see conditions in the first quarter similar to those we saw in the fourth quarter,” he said. “We expect these conditions to be exacerbated by impacts from Gander Mountain inventory liquidations and the recent incident at Orbital ATK Lake City Army Ammunition Plant, which will lead to constrained supply of certain products from that facility during the quarter.”
Gander Mountain filed for Chapter 11 bankruptcy protections in a Minnesota court on March 10. DeYoung told investors Vista wrote off $17 million of receivables with no hope of ever recovering its money.
“The likelihood of our recovery … is low and we believe it was prudent to write off the entirety of that balance,” he said. “In terms of other customers, we obviously monitor customers very closely and unfortunately some of these things are difficult to predict.”
Vista owns more than three dozen firearms, ammunition and shooting accessory companies, including Savage Arms, Stevens, Federal Premium, Speer and American Eagle.