Century-old Federal Ammunition continues to drive results for parent company

Federal Ammunition, about to turn 100 years old, still produces its legacy shotgun shells in a process that has changed little since the Anoka company's founding.

Yet it also is an innovator — and one of the largest players — in the ammunition industry, producing rounds for nearly every type of firearm and are used by law enforcement, the military, hunters, competitive shooters and gold medal-winning Olympians.

The company also is a significant employer in the north metro, with 1,500 workers, and a key driver of growth for its parent, Vista Outdoor, which reported a 50% increase in third-quarter net income on Thursday.

"Not too many companies get to celebrate 100 years in business, so we are super excited," said Chris Metz, Vista's chief executive.

Federal, founded by Charles Horn in 1922, now employs the third- and fourth-generation of families making everything from a new cartridge for self-defense uses to the original paper hulls for the legacy shotgun shells.

"We're the only American company that still makes paper hulls the same way they've been made since the beginning," said Jason Nash, vice president of marketing for Federal.

The heavily waxed paper takes about 11 days to cure in a temperature- and humidity-controlled building before the completed hulls are moved to the production line.

In the legacy shells, the rest of the components have all been modernized, but paper fans feel they have a softer recoil and that the shells maintain their nostalgic aroma.

The hulls are only used to make Federal Premium Gold Medal 12-gauge 2- and 3/4-inch shells and are used by competitive skeet, trap and sporting clays shooters, including four-time Olympian and three-time gold medalist in skeet shooting Vincent Hancock.

Plastic hulls can be filled almost as soon as they are produced so the paper hull shells represent only a fraction of overall production, but an important nod to enthusiasts.

Federal still produces plenty of other legacy products. But innovation has been essential in its 100-year history. It recently introduced an all-new handgun cartridge for self-defense called the 30 Super Carry. And Federal and Speer recently won new ammunition supply contracts with the FBI.

"We are not only growing because of the increased demand, but we are growing at an out-paced rate because of the innovation we are driving," Metz said in an interview

Vista sold a firearms maker several years ago and now only produces ammunition. Since that sale, it has acquired more ammunition makers, such as Hevi-Shot and Remington, and Federal's employees — about one-quarter of Vista's total workforce — and their expertise have been vital in the integration of the acquired ammunition brands, the company said.

Vista, including Federal, is growing, riding a trend of increased interest in the outdoors during the pandemic. It now has 39 outdoor product brands — including Stone Glacier, a maker of technical gear and clothing for backcountry enthusiasts bought during the quarter.

But Vista's foundation is Federal. Its headquarters is about 3 miles from Federal's main manufacturing facility.

Net income for the third quarter was $118.1 million, or $2 a share, up about 50%. Revenue grew 38% to $794.7 million. Both beat analysts' expectations.

"Two years into the pandemic, people continue to find enjoyment in their newly acquired and rediscovered outdoor passions," Metz said in an earnings release. "We continue to see increasing levels of activity and participation across outdoor recreation whether it be golfing, camping, hiking, biking, hunting or recreational shooting."

The company reorganized its segments during the quarter, and its Sporting Products segment now includes only its ammunition brands, including Federal, Speer, Remington and Hevi-Shot. The segment saw revenue increase 60% in the quarter to $460 million, while gross profit increased 123% to $178 million.

Vista Outdoor and Federal will celebrate Federal's history throughout the year with releases of commemorative packaging designs, a coffee table book on Federal's history and recognition events for employees.

Shares of Vista Outdoor closed Thursday at $39.54, down 7 cents. During the past 52 weeks, shares have ranged between $27.02 and $52.69.