Jason R. Vanderbrink

Good morning. The Kinetic Group finished the year strong, achieving our financial guidance we provided last quarter. Sales in the fourth quarter were $362 million with an adjusted EBITDA margin of 27.7% or $100.3 million, capping off a solid performance by our team in the face of a difficult market.
For the year, ammunition net sales finished at $1.45 billion with an adjusted EBITDA of $415.8 million, which equates to a margin of 28.6%. As we prepare for a potential ownership transition in 2024, we are encouraged by our quarterly and year-end results and recent sales trends. We have a strong order position and there are backlogs in several product categories that strengthen our confidence in delivering on our financial expectations.
We have some challenges ahead related to higher commodity input costs, including powder and copper, but pricing actions taken to offset the increased production costs have not impacted open orders. From a select group of retail partners, POS data indicates sell-through remained strong with double-digit increases in handgun, shotshell and rifle ammunition year-over-year by a number of rounds in each of the highlighted categories.
Along with the positive sell-through trends, we remain encouraged by overall inventory levels, which have remained stable over the last quarter. For the 57th straight month ending in April, adjusted NICS checks data surpassed more than 1 million firearms checks. This continued high monthly volume, supports a healthy and higher baseline of shooting and hunting participants.
This past quarter, our leading ammunition brands launched several new products at the annual SHOT Show to great fanfare. Federal launched Fusion Tip for the avid whitetail hunter, wanting better accuracy and extended ranges from a proven bullet design. Remington added premier cut to its lineup of effective big game bullets. This tough copper alloy bullet delivers on hunter's expectations of extreme accuracy and terminal performance from a tipped bullet.
CCI, the leader in rimfire ammunition released Uppercut, the first ever expanding self-defense offering in 22 Long Rifle. Our teams at all 4 manufacturing facilities remain focused on building the best ammunition in America and delivering on customer and consumer demand. There are 2 constants in our company history.
We are unapologetic defenders of the Second Amendment as a constitutional right and we'll always support the men and women in law enforcement and the military who protect our homes and freedoms. We will continue to work with all of them on research and development for new products to help them in their missions. I have full confidence that with the best team in the ammunition business, we will continue to perform at the highest level and our future is filled with great opportunities.
Thank you. Andy?

Andrew Keegan

Thank you, Jason, and hello, everyone. My comments today will focus on adjusted results compared to the prior year period, unless otherwise noted, which are presented using non-GAAP financial measures. In the appendix to the slide presentation, we've included reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures.
For additional information regarding forward-looking statements and non-GAAP financial measures, please refer to Page 4 of the slide presentation. I would also like to note that during the quarter, we updated our reporting segments to include the Kinetic Group and the 3 Revelyst segments, Revelyst Adventure sports, Revelyst Outdoor Performance and Revelyst Precision Sports Technology.
I will reference the 3 Revelyst segments in a combined manner as Revelyst in my remarks, step out. Overall, we had a solid fourth quarter. We met our expectations for revenue in both businesses with Kinetic sales meeting the lower end of our guidance range and Revelyst's sales growing organically in the fourth quarter for the first time in 9 quarters.
On the EBITDA front, Kinetic was above our expectations, and Revelyst met our fourth quarter expectations of margins in the high single digits, which was an over 400 basis point improvement over the third quarter. Additionally, adjusted free cash flow significantly outperformed our expectations in the fourth quarter, delivering $161 million, allowing us to reduce our net debt position by $118 million in the quarter.
For the fourth quarter, total sales decreased 6.4% to $693.7 million due to lower volumes at the Kinetic Group, partially offset by an increase in the Revelyst business. For the fiscal year, total sales decreased 10.8% to $2.7 billion and organic sales were $2.6 billion, down 14.5%.
Gross profit in Q4 decreased 7% to $220.5 million due to lower gross profit at the Kinetic Group, partially offset by higher gross profit at Revelyst. Q4 gross margin was relatively flat at 31.8%. Fiscal year gross profit decreased 17.4% to $859 million and gross margin contracted 250 basis points to 31.3%.
EBITDA in Q4 decreased 7.5% to $109.2 million, equating to an EBITDA margin of 15.7% due to lower gross profit at Kinetic Group, partially offset by higher gross profit at Revelyst and lower SG&A costs at both the Kinetic Group and Revelyst. For FY '24, EBITDA dropped 27.8% to $442.5 million, and EBITDA margin contracted 378 basis points to 16.1%, while organic EBITDA for the year was $430 million, a decline of 17.7% and organic margin was 16.3%.
Q4 EPS declined 2.9% to $1.02 and full year EPS declined 38.3% to $3.86.
Turning to Slide 22. Our balance sheet continues to improve, and we are optimizing our portfolio. We remain committed to prioritizing the health of our balance sheet and implementing sound financial policies. These efforts continued to improve our business fundamentals through the team's hard work to lower debt levels and further optimize our inventory, which decreased approximately 14% year-over-year and about 7% sequentially during the quarter, primarily driven by Revelyst's year-over-year inventory reduction of 27% and sequential decrease of 9%.
These efforts drove strong adjusted free cash flow of $161 million in the quarter, and as mentioned, allowed us to decrease our net debt by $118 million during Q4. Our net debt leverage ratio is now at 1.5x. In fiscal year 2025, we've already gotten off to a great start, continuing to improve the health of our balance sheet and executing on our plan to optimize our portfolio. We are pleased to report that on May 1, we completed the divestiture of the RCBS brand to Hodgdon Powder, providing the brand and its dedicated employees with the right home long term as well as a highly attractive valuation for us to transact.
This divestiture will allow us to concentrate our focus on core assets that provide significant value and growth potential. The capital from this transaction will be included in the excess cash that will be returned to shareholders upon the completion of the CSG transaction.
Our strategic review is ongoing and is a critical step that allows us to redefine our focus and position ourselves for long-term success to deliver synergies and leverage our expertise to accelerate growth, improve efficiencies and drive value.
Turning to our business results on Slide 23 and 24. Within Revelyst, sales increased 1.4% in Q4 to $332.1 million, driven by an increase of 18.8% in Revelyst Precision sports technology due to new product introductions. This was partially offset by lower volume in Revelyst Outdoor performance. FY '24 sales were $1.29 billion, a decrease of 2.2% and 10.7% on an organic basis.
Gross profit increased 17.3% in Q4 to $100 million, and Q4 gross margin increased 408 basis points to 30.1%, due to increased efficiencies, volume and price, partially offset by increased discounting. FY '24 gross profit decreased 3.5% to $373.2 million and FY '24 gross margin decreased to 28.9%.
Q4 EBITDA was $29.1 million, up 209.5%, and EBITDA margin for the quarter was 8.8%, up 413 basis points sequentially and up 590 basis points year-over-year due to increased gross profit and lower SG&A costs. FY '24 EBITDA decreased 21.5% to $98.3 million and EBITDA margin contracted to 7.6%.
Organic EBITDA for the year declined to $85.8 million and organic EBITDA margin was 7.3%. For the Kinetic Group, sales decreased 12.5% in Q4 to $361.6 million due to lower volumes across nearly all categories and lower pricing. FY '24 sales decreased 17.4% to $1.45 billion.
Gross profit decreased 20.7% in Q4 to $120.5 million, and Q4 gross margin decreased to 33.2% due to lower volume and price, unfavorable mix and increased input costs due to inflation. FY '24 gross profit decreased 25.7% to $485.8 million and FY '24 gross margin decreased to 33.4%.
Q4 EBITDA was $100.3 million, down 23.3% and EBITDA margin for the quarter was 27.7% due to lower gross profit, partially offset by lower SG&A cost. FY '24 EBITDA decreased 28% to $415.8 million and EBITDA margin contracted to 28.6%.
Moving on to Page 25. As we look to fiscal year 2025. At the Kinetic Group, a global powder shortage, limiting production and increasing input costs including for copper and powder, are factors expected to pressure both the top and bottom line in the upcoming year. Both net sales and EBITDA are expected to be evenly distributed from a seasonality standpoint throughout fiscal year 2025.
In our Revelyst business, our fiscal year 2025 sales guidance excludes RCBS, which has been divested and sales related to our Fiber Energy products. On February 6, 2024, a fire occurred at Fiber Energy products' main production facility in Seymour, Missouri. There were no injuries or environmental issues from the fire. However, as a result of the fire, we do not expect material revenue contribution from the business in our fiscal year 2025.
RCBS and Fiber Energy products contributed approximately $30 million of total combined sales in fiscal year 2024. As Eric mentioned in his prepared remarks, we do not expect consumers to meaningfully change purchasing patterns in our fiscal year 2025 due to the ongoing macroeconomic uncertainties and challenges.
In addition, we have observed retail and wholesale channels becoming healthier in recent months in many of the categories we sell. However, inventory levels at certain channels, including the specialty channels at Revelyst Adventure Sports, continue to work through inventory burden. Across most retailers, inventory levels have come down but the retailers are managing their inventory tightly as we see more just in time and smaller quantity orders.
We expect this dynamic to continue as we head into fiscal year 2025 and have included it as a factor in our guidance. As we look at Revelyst's EBITDA guidance, we expect meaningful improvement, primarily driven by the following: One, $25 million to $30 million of cost savings related to our GEAR Up transformation program; two, contributions from our previously announced April 2023 cost restructuring program, of which $25 million is related to Revelyst, which has begun to fully run rate by the end of our fiscal year 2024; three, improvements in supply chain and freight as our inventory with higher priced freight has turned through our inventory balance and four, lower expected promotions as compared to our fiscal year 2024 in which we had higher than usual promotion levels to drive inventory levels down.
Based on this, for the full fiscal year 2025, we expect sales of $2.665 billion to $2.775 billion, the Kinetic Group's sales of $1.425 billion to $1.475 billion and Revelyst's sales of $1.24 billion to $1.3 billion. EBITDA between $410 million and $490 million, the Kinetic Group EBITDA range of $350 million to $400 million and Revelyst's EBITDA range of $130 million to $160 million.
EPS in the range of $3.60 to $4.50 and free cash flow between $240 million and $320 million. As we look to Q1 at Revelyst, we expect sales to be down low single digits year-over-year, driven by the loss of the sales from RCBS and Fiber Energy. We expect EBITDA margins to be in the mid- to high single digits to start the fiscal year and grow to low teens in the back half as GEAR Up savings take full effect.
Thank you, everyone. Operator, please open the line for questions.

Question and Answer Session

Operator

(Operator Instructions) Our first question comes from Anna Glaessgen with B. Riley.

Anna Glaessgen

I was going to start by -- I'd like to start by unpacking the fiscal '25 revenue outlook for Revelyst. What's being assumed by segment? And any color on how you expect sales to progress through the year would be great.

Andrew Keegan

Yes. I appreciate the question, Anna. So as we look at -- we haven't guided by segment, I would start. I think as we look at the opportunities within the businesses, the Precision Sports, as we've discussed in the past, continues to be a strong business and sees the opportunities as we've introduced new products even this past quarter with a north of 18% growth rate. We see that as the strongest potential growth.
Other businesses are still facing some challenges. The Adventure Sports, as we mentioned, has some inventory hangover in the specialty channel that will progress through the year. So you'll start out a little bit slower on that, and then it will progress throughout that year as we continue on.

Anna Glaessgen

Got it. And understanding that there's some inventory hangover in the adventure sports segment, likely mostly within the bike specialty channel, could you update us on -- that said, where the POS stands within those categories, to give some perspective on what that underlying demand looks like taking out that inventory issue?

Andrew Keegan

Yes. On the POS, it's still down year-over-year to be fair. But what I'd say is we are still gaining market share in those categories is a key as we are looking at, and evaluating the businesses -- though POS has been down, the inventory is clearing. It's not that -- we're not saying it's not clearing. It is going through that. It's just going to take probably through this spring season to really be able to push the rest of that through.
Once that's cleared, given the market share that we're gaining, we are excited by the future of the adventures sports in all of our platforms, but that is going to take a little time, which is why we see the trajectory happening throughout the rest of the year.

Anna Glaessgen

Got it. And just one more for me. I want to think through the margin outlook for fiscal '25, are the upside and downside cases in guidance, mostly related to just where sales kind of fall in the associated leverage or deleverage? Or is there a sliding scale, the underlying margin assumption as well, as we think about the opportunities for margin improvement year-over-year?

Andrew Keegan

I want to clarify, is that specific to Revelyst or for the total business?

Anna Glaessgen

Sorry, yes, specific to Revelyst.

Andrew Keegan

So specific to Revelyst, it is going to be mostly a sales-related item. We do have flow-through on the sales from a guidance perspective that you're going to have a little bit more. So you'll see the rate come down a little bit. We are confident in the GEAR Up savings and the other pieces that we've talked about. So it's less focused on that.

Operator

We now turn to Matt Koranda with ROTH MKM.

Matthew Butler Koranda

Just wanted to focus my questions maybe on Revelyst since I'm guessing we probably can't really cover too much of the deal update. But the sales outlook for Revelyst, I guess the right way to think about it, in your mind, is it basically flat if we just strip out the $30 million from Fiber and RCBS. And then it inflected positive in the fourth quarter. Was that just product launch related? Like why shouldn't that sustain through the rest of the fiscal year in '25 just given that the channel likely needs some restock in certain pockets, and you just highlighted DTC growth?

Eric C. Nyman

Sure. Matt. It's good to hear from you. So I'll start with the first comment. We continue to plan the business conservatively for this year based on a lot of the uncertain macroeconomic trends that everyone is seeing right now. We feel confident, I guess, your question about being flat to midpoint, we provide a range, I think we feel good about where we are in that range. And I think you'd be correct that the midpoint would be fairly flat. And that's -- we've built most of our assumptions on that. There obviously could be variability.
So we want to make sure that we provide a range around that. On the margin side and all the things that we're doing, we feel really confident that the team is doing the right things to make sure that we improve margin against that. So that's our focus. And I think you'd be right that flat x divestitures is how we've thought about things.

Matthew Butler Koranda

Okay. Got it. And then just in terms of the margin improvement plan for this year, I know you have $25 million in run rate savings that you called out in '24, maybe Andy, just how does that wrap into '25? And then the $25 million to $30 million in run rate, how much of that actually, I guess, gets realized in '25? Or are we counting on all of that to sort of hit the midpoint of the EBITDA guide for Revelyst specifically?

Andrew Keegan

Yes. So thanks, Matt. The $25 million to $30 million is the expected amount that's going to be contributed to the FY '25 guidance number. That will then increase because some of that will, as you said, be effective throughout the year. It won't all hit all at once, which is part of why you'll see margins improve throughout the year is that those cost savings will start hitting as we go forward.
I mean, we've announced several things on changes that we've made to offices. Those will take effect here in the spring and the summer, the announcement of the Reno facility that Eric mentioned to confect here in the quarter here. So that will wrap as we go forward too. And we'll have a couple of other items that happen throughout this year.
So there will be $25 million to $30 million that actually hit in the current year, and then that will annualize in '26 to more than the $25 million to $30 million.

Matthew Butler Koranda

Okay. Got you. And then just in terms of the implied corporate expense in the guide for this year looks, I guess, a little bit lower than the combined level that you put out before. Where is that improvement coming from? And does that mean that we could see some reduction in maybe Revelyst's stand-alone corporate costs? Maybe just update us on that, if you could.

Andrew Keegan

For the, you mean the end of the year, how corporate cost came through?

Matthew Butler Koranda

Well, so I guess I'm just backing into an implied level of guidance based on the consolidated EBITDA guide versus the segment level EBITDA guide. So it just looks a little bit lower implied. So that's what I'm alluding to.

Andrew Keegan

Yes, yes. I got you. For the Revelyst stand-alone costs, we're still in the ballpark of what we had expected previously. What we're looking for the current year is, we have made some cuts that we're taking from what the current run rate for total Vista is. But as we build up the Revelyst plan, we are still expecting it to be in that kind of $55-ish million kind of range.

Matthew Butler Koranda

Okay. Got you. And then maybe just last one in terms of how we should be thinking about the pro forma balance sheet at Revelyst, that had like a 2-parter here. Any thoughts, Andy, on just the seasonality of the free cash flow that you expect in fiscal '25. I noticed the midpoint is still pretty healthy.
Just wondering if we should expect like a relatively normal seasonal year from a cash flow perspective. And then from a divestiture standpoint, just curious, RCBS, I guess, being the best near-term example of monetization. Are there other items in the pipeline that could go off, I guess, in the next short bit here, but that will improve the balance sheet, stand-alone Revelyst even further?

Andrew Keegan

Sure. Matt, we'll take the 2-part question with 2 people. I think -- so I'll take the divestiture part, Matt. Strategically, we've talked a lot about creating a great portfolio of brands. And we do feel like there's still more room to explore the right divestitures and frankly, the right acquisitions that could create bolt-on momentum and sales growth in the right areas.
So I think we're really proud of what the team was able to do in RCBS, not just for selling the company and returning some good momentum to the balance sheet, but also finding the right company for our team to connect with over at Hodgdon. And I'd say we are continuing discussions around a few other brands that we think could be really strong opportunities for other companies. And you'll hear from that in the months ahead.

Unidentified Company Representative

And to your question on seasonality of cash, I would look at it similar to what we did kind of this year that, it will grow throughout the year. It's kind of how we've trended. I think we'll expect similar kind of outlook.

Operator

Our next question comes from Jim Chartier with Monness, Crespi & Hardt.

James Andrew Chartier

Jason, how are you kind of thinking about price increases for the year? And what level of price increases are you kind of assuming in the guidance? And they'd be -- increase you've taken so far, do you assume that all of those are fully implemented? Or is there some conservatism there?

Jason R. Vanderbrink

Yes, Jim. In the guide, we didn't assume any price increases. Having said that, we have just implemented one on May 1, a pretty targeted price increase. And we're confident that the market is going to accept that. And given the momentum, if you will, the copper pricing, I think it's safe to assume we're going to have to take another price increase, a broader price increase, in the coming months to help cover that copper.
So I think we like what we see in the pricing side of the business, and I think we're going to be challenged all year with powder and copper, and we're going to offset as much as we can to come in at the high range of that EBITDA margin that we've guided to. We're going to still be solely focused on the bottom line. I mean, to deliver 27.7% in the quarter, we would love to continue that momentum that we have in fiscal year '24 into '25.

James Andrew Chartier

Great. And then Eric or Andy, what is kind of the POS trend that's assumed in the guidance for FY '25?

Eric C. Nyman

Sure. Jim, good to hear from you. So for POS and shipments, we're feeling like this year, again, we're being modest and planning modestly and conservatively as we talked about with both Matt and Anna. Right now, we feel like the trend will probably be slightly down in Q1 and then we'll build momentum throughout the rest of the year.
Again, we are seeing good market share gains across the business, that's clearly really important to us. We're really seeing positive momentum, particularly on brands like Fox and Bell and Giro on the market share front. And regardless of what the consumer does, winning market share is really significant when the market starts to turn. So we feel like we're at that inflection point, and I think we'll see some good back half momentum for some of our businesses, which will allow us to achieve our range.

Operator

(Operator Instructions)
We now turn to Mark Smith with Lake Street.

Mark Eric Smith

First, I just want to follow up on something, Jason, that you just said. The price increase, it sounds like that you guys took in May -- it sounds like that's not enough to kind of cover the inflationary pressures that you're seeing right now?

Jason R. Vanderbrink

Yes, it wouldn't be enough to cover everything, Mark. And it was a very targeted price increase, in a particular category. So we will be here shortly coming out with a broader price increase to more categories to help cover the copper cost increase that we're seeing right now.

Mark Eric Smith

Okay. And then I'm curious, primarily on Revelyst,but if there is anything on the Kinetics side, kind of what you guys are seeing in the promotional environment, what competitors are doing if there's anything that just gives you a little bit of pause or maybe leads to some of the conservativeness primarily on the Revelyst side?

Eric C. Nyman

Sure. Mark, on the Revelyst side, we're seeing promotion activity, certainly, in our business, decrease. We had a lot of activity in our fiscal Q3, and that was purposeful. I think the teams did an excellent job working through some of the inventory in our business. You saw a significant decline year-over-year over $100 million in inventory. So we feel like we're in a pretty good position at this point.
We can always do better, but we feel pretty good about where we are. And I think you'll see that promotional activity decrease year-over-year when you think about the Revelyst side of the business. I'll turn it over to Jason on Kinetic.

Jason R. Vanderbrink

Yes. Mark, on Kinetic, we're not seeing much promotion at all on the ammo side of the business, and we kind of expect that for the remainder of the calendar year to be status quo.

Mark Eric Smith

Okay. And last one for me, it's a small one. But on the -- following that fire at Fiber Energy plant, is there a plan to rebuild? Is that a business that you want to continue to stay in? Any plans on that side?

Andrew Keegan

Yes, Mark, I mean it certainly was tough to see that, that happen to the team down there. We're evaluating right now. It's a little bit early for us to be able to say what the exact outcome is going to be. We're working through the insurance claim, as it's covered by our insurance group. So we have a few things that we're working through. We'll certainly have more updates in the months ahead as we come up with the solution down there.

Operator

Ladies and gentlemen, this concludes our Q&A and today's conference call. We'd like to thank you for your participation. You may now disconnect your lines.