As defense spending shrinks, Arlington-based ATK is finding growth in its sporting group, which sells ammunition and shooting accessories from holsters to scopes. Now the company is moving into the gun business with a new acquisition.
Last month, ATK said it has agreed to buy Caliber Co., the parent of Savage Sports, which makes hunting rifles and shotguns. The company is to pay $315 million in cash and said it expects to close the deal by June 30.
The acquisition comes as sales in the sporting group are surging. The company said revenue grew just over 15 percent for the year, hitting $1.16 billion, buoyed both by increased demand as well as ammunition price increases.
The rise helped offset a 14 percent decline in revenue for its defense group, which includes missile defense, military ammunition and rocket motors. Revenue fell to $1.96 billion, reflecting reduced sales in several division.
ATK is no newcomer to hunting gear.
Mark DeYoung ran a predecessor to the sporting group before becoming president and chief executive at ATK. He said in an interview last week that the company has allowed the unit to operate differently than its government-focused businesses.
“We put a business model in there that was consumer-centric, brand-centric,” DeYoung said.
He attributed much of the unit’s growth to increases in demand.
“There’s a younger demographic coming into the shooting sports,” DeYoung said.
Michael Bazinet, a spokesman for the National Shooting Sports Foundation, said demand for firearms and ammunition has been growing for about the last decade.
“There’s clearly a large influx of new customers into the shooting sports,” he said. “We know that more women are involved.”
Buying Savage Sports, a 600-employee company based in Westfield, Mass., and Lakefield, Ontario, was a natural expansion, according to DeYoung. “It’s going to allow us to be a one-stop shop,” he said.
Michael S. Lewis, managing director of the Silverline Group, a consulting firm, said ATK’s “strong consumer brand” in hunting equipment gives it a unique position as defense contractors pursue commercial sales.
Lewis said he expects the sporting group to soon overtake the ATK’s aerospace unit in sales — and could even surpass the defense business within the next few years.
DeYoung noted that ATK is seeking more commercial business in its other units. In aerospace, for instance, the company is building parts of the Airbus A350 jet and seeking to grow its commercial satellite work.
The company is also selling its products internationally. About 10 percent of ATK’s revenue now comes from international sales, and DeYoung said he sees significant room to expand.
He said the company is content to see its focus areas change as the market does.
“We aren’t locked into we have to be a defense company with a certain portion of our revenue from defense,” DeYoung said. “We follow the money.”