News Releases

Vista Outdoor Reports FY15 Full-Year and Fourth Quarter Operating Results
Vista Outdoor Establishes FY16 Financial Guidance

CLEARFIELD, Utah, May 14, 2015 /PRNewswire/ -- Vista Outdoor Inc. (NYSE: VSTO) today reported operating results for Fiscal Year 2015 (FY15) and the fourth quarter, both of which ended on March 31, 2015. 

Vista Outdoor Inc. logo

"In the fourth quarter, Vista Outdoor successfully spun off from ATK, resulting in a new publicly traded company with a strong balance sheet, a seasoned leadership team, and a powerful and unique portfolio of more than 30 widely recognized brands," said Vista Outdoor Chairman and Chief Executive Officer Mark DeYoung. "The company delivered results for the full year and the fourth quarter in line with our expectations and reflective of continued softness in the shooting sports market. Our financial results also reflect the spin-off of Vista Outdoor from ATK, incremental standalone company costs, stock-based compensation charges, and transaction-related expenses. We are making key strategic investments in FY16 related to our marketing, product development, sales, IT, sourcing and the consolidation of some warehousing facilities. These investments will position Vista Outdoor to deliver future enhanced performance, growth and long-term value creation."

For the fiscal year ended March 31, 2015:

  • Sales were $2.08 billion, up 11 percent from the prior year;
  • Gross profit was $529 million, up 13 percent from the prior year;
  • Operating profit was $184 million, down 21 percent compared to $234 million in the prior year, as a result of a third quarter goodwill/trade name impairment charge and costs related to the spin-off transaction;
  • Fully diluted earnings per share (EPS) were $1.25, compared to $2.09 in the prior year;
  • Free cash flow was $160 million, compared to $159 million in the prior year;
  • Pro forma organic sales were down 9 percent from $2.28 billion in the prior year. Pro forma organic sales were calculated by combining prior-year results with the standalone results of Bushnell and Savage prior to the company's acquisition of these businesses;
  • Adjusted operating profit was $262 million, down 3 percent from the prior year;
  • Adjusted fully diluted EPS was $2.35, down from $2.47 in the prior year.

For the fourth quarter ended March 31, 2015:

  • Sales were $485 million, down 14 percent from the prior-year quarter;
  • Gross profit was $123 million, down 22 percent from the prior-year quarter;
  • Operating profit was $39 million, down 55 percent from the prior-year quarter, as a result of reduced sales and costs related to the spin-off transaction. Reduced sales were largely caused by lower unit volume and a previously disclosed mid-2014 price reduction in .223/5.56 ammunition;
  • Fully diluted EPS was $0.25, compared to $0.75 in the prior-year quarter;
  • Adjusted operating profit was $51 million, down 47 percent from the prior-year quarter;
  • Adjusted fully diluted EPS was $0.47, compared to $0.85 in the prior-year quarter;
  • The company repurchased 162,000 shares in the quarter for $6.9 million. An additional 288,000 shares were repurchased since March 31, 2015 for $12.7 million.

Corporate

For the fiscal year ended March 31, 2015:

  • Operating expenses were $345 million, compared to $233 million in the prior year. The increase was primarily caused by a full year of SG&A for Bushnell, a goodwill/trade name impairment charge, and transaction and transition costs;
  • Tax rate was 48.4 percent, compared to 39.0 percent in FY14;
  • Interest expense was approximately $30.1 million for full year. For the period prior to the spin-off, this was primarily an allocation from ATK to Vista Outdoor. Subsequent to the spin-off, the company has $350 million of debt at an interest rate of LIBOR plus 1.75 percent;
  • Adjusted tax rate was 35.4 percent, compared to 37.9 percent in the prior year.

For the fourth quarter ended March 31, 2015:

  • Operating expenses were $84 million, compared to $71 million in the prior-year quarter;
  • Tax rate was 53.1 percent, compared to 38.5 percent in the prior-year quarter;
  • Interest expense was $5 million, compared to $8 million in the prior-year quarter;
  • Adjusted tax rate was 35.4 percent, compared to 38.3 percent in the prior-year quarter.

"We are confident in the company's strategy to grow both organically and through acquisition while maintaining a balanced capital deployment strategy, which includes returning cash to shareholders through our share repurchase program," said DeYoung. "The company is focused on delivering innovative new products, and in the fourth quarter, Vista Outdoor received industry recognition and strong orders for several new products launched during the winter trade show season. New products receiving industry awards included some truly revolutionary products like the Bushnell Tour X golf laser rangefinder, the Savage Arms A17 semiautomatic rifle and our Federal Premium 3rd Degree ammunition. In addition, we hired two top executives from the consumer products industry to lead our human resources and marketing functions and round out our highly experienced corporate leadership team."

Please see the tables in the press release for a reconciliation of non-GAAP adjusted operating profit, tax rate, free cash flow and fully diluted earnings per share to the comparable GAAP measures.

Outlook for Fiscal Year 2016

Vista Outdoor is establishing initial FY16 financial guidance. The company expects:

  • Sales in a range of $2.05 billion to $2.11 billion;
  • EPS in a range of $2.00 to $2.20;
  • Capital expenditures of approximately $40 million;
  • Free cash flow in a range of $150 million to $175 million;
  • Tax rate of approximately 38 percent.

The guidance above does not include the impact of any strategic acquisitions, divestitures, investments, business combinations or other significant transactions.

"We expect to continue to show a year-over-year decline in the first two quarters of the year, particularly in the first quarter, compared to the same period in FY15," said Vista Outdoor Chief Financial Officer Stephen Nolan. "Last year, the company recorded one of the highest first quarters for sales in the history of the business. Consistent with what we've previously communicated, we expect to return to growth late in FY16, resulting in low single-digit growth for the full fiscal year, notwithstanding significant headwinds related to effects from foreign exchange translation."

Earnings Conference Call Webcast Information

Vista Outdoor will hold an investor conference call to discuss its fiscal year 2015 financial results on May 14, 2015, at 9 a.m. Eastern Time. The conference call will be accessible through live webcast. Interested investors and other individuals can access the webcast and view and/or download the earnings press release, including a reconciliation of non-GAAP financial measures, and the related earnings release presentation slides, which will also include detailed segment information, via Vista Outdoor's website (www.vistaoutdoor.com). Choose "Investors" then "Events and Presentations." For those who cannot participate in the live webcast, a telephone recording of the conference call will be available for one month after the call. The telephone number for the recorded call is 719-457-0820, and the confirmation code is 2867683.

Reconciliation of Non-GAAP Financial Measures

Operating Profit, Tax Rate and Earnings Per Share

The adjusted operating profit (adjusted EBIT), adjusted tax rate, and adjusted earnings per share (adjusted EPS) presented above are non-GAAP financial measures that Vista Outdoor defines as operating profit (EBIT), tax rate and EPS excluding, where applicable, the impact of goodwill and trade name impairments, transaction and transition costs for the Bushnell acquisition, transaction costs for the recently completed spin-off of Vista Outdoor from ATK, and acquisition inventory step-up. Vista Outdoor management is presenting these measures so a reader may compare EBIT, tax rate and EPS excluding these items, as the measures provide investors with an important perspective on the operating results of the company. Vista Outdoor management uses these measurements internally to assess business performance, and Vista Outdoor's definition may differ from those used by other companies.

Total Vista Outdoor for the Year Ended

                   
                             

March 31, 2015:

                           
                             
   

Operating Profit

 

Margin

 

Profit Before Tax

 

Taxes

 

Tax Rate

 

Net Income

 

EPS

As reported

 

$

184,154

   

8.8

%

 

$

154,046

   

$

74,518

   

48.4

%

 

$

79,528

   

$

1.25

 

Goodwill/trade name impairment

 

52,220

       

52,220

   

4,172

       

48,048

   

0.75

 

Transaction costs

 

19,641

       

19,641

   

1,094

       

18,547

   

0.29

 

Transition costs

 

5,988

       

5,988

   

2,246

       

3,742

   

0.06

 

As adjusted

 

$

262,003

   

12.6

%

 

$

231,895

   

$

82,030

   

35.4

%

 

$

149,865

   

$

2.35

 
                             

March 31, 2014:

                           
                             
   

Operating Profit

 

Margin

 

Profit Before Tax

 

Taxes

 

Tax Rate

 

Net Income

 

EPS

As reported

 

$

233,807

   

12.5

%

 

$

218,338

   

$

85,081

   

39.0

%

 

$

133,257

   

$

2.09

 

Inventory step-up

 

15,500

       

15,500

   

5,774

       

9,726

   

0.15

 

Bushnell transaction costs

 

14,254

       

14,254

   

3,143

       

11,111

   

0.17

 

Transition costs

 

5,700

       

5,700

   

2,138

       

3,562

   

0.06

 

As adjusted

 

$

269,261

   

14.4

%

 

$

253,792

   

$

96,136

   

37.9

%

 

$

157,656

   

$

2.47

 
 
 

 

Total Vista Outdoor for the Quarter Ended

               
                             

March 31, 2015:

                           
                             
   

Operating Profit

 

Margin

 

Profit Before Tax

 

Taxes

 

Tax Rate

 

Net Income

 

EPS

As reported

 

$

38,733

   

8.0

%

 

$

33,906

   

$

17,999

   

53.1

%

 

$

15,907

   

$

0.25

 

Transaction costs

 

9,598

       

9,598

   

(2,672)

       

12,270

   

0.19

 

Transition costs

 

2,735

       

2,735

   

1,026

       

1,709

   

0.03

 

As adjusted

 

$

51,066

   

10.5

%

 

$

46,239

   

$

16,353

   

35.4

%

 

$

29,886

   

$

0.47

 
                             

March 31, 2014:

                           
                             
   

Operating Profit

 

Margin

 

Profit Before Tax

 

Taxes

 

Tax Rate

 

Net Income

 

EPS

As reported

 

$

85,673

   

15.2

%

 

$

77,875

   

$

29,944

   

38.5

%

 

$

47,931

   

$

0.75

 

Inventory step-up

 

5,123

       

5,123

   

1,908

       

3,215

   

0.05

 

Transition costs

 

5,171

       

5,171

   

1,939

       

3,232

   

0.05

 

As adjusted

 

$

95,967

   

17.0

%

 

$

88,169

   

$

33,791

   

38.3

%

 

$

54,378

   

$

0.85

 
 
 

 

*NOTE: Adjustments to "as reported" results are items that are excluded to arrive at the "as adjusted" results for the quarters and years ended March 31, 2015 and 2014.

During the year ended March 31, 2015, as a result of the current market correction impacting demand for firearms and a decline in Vista Outdoor's near-term projected cash flows in the firearms business, the company recorded a $52 million ($48 million, net of tax) non-cash impairment charge to the goodwill and indefinite-lived trade name within the firearms business. The goodwill impairment was non-deductible for tax purposes.

For the quarter and year ended March 31, 2015, a portion of the transaction costs incurred by Orbital ATK in conjunction with the spin-off and merger were allocated to Vista Outdoor and have been included in the "as reported" results. The total amount allocated was $9.6 million in the quarter and $19.7 million for the year. A number of these costs were non-deductible for tax purposes and had a disproportionate effect on the income tax rate.

For the quarter and year ended March 31, 2014, as a result of the acquisitions of Bushnell and Savage, Vista Outdoor recorded a step-up in the inventory balances, which is the purchase accounting fair value adjustment. These increases were expensed to the income statement over the first inventory cycle.

During the year ended March 31, 2014, Vista Outdoor incurred transaction costs associated with the acquisition of Bushnell including advisory, legal and accounting service fees, a portion of which were non-deductible for tax purposes.

During the quarters and years ended March 31, 2015 and 2014, Vista Outdoor incurred certain transition costs associated with the acquisition of Bushnell and continuing to implement business strategy.

Free Cash Flow

Free cash flow is defined as cash provided by operating activities less capital expenditures, allocated interest expense, and excluding transaction costs incurred to date. Vista Outdoor management believes free cash flow provides investors with an important perspective on the cash available for debt repayment, share repurchases and acquisitions after making the capital investments required to support ongoing business operations. Vista Outdoor management uses free cash flow internally to assess both business performance and overall liquidity.

   

Year ended March
31, 2015

 

Year ended March
31, 2014

 

Projected Year Ending
March 31, 2016

Cash provided by operating activities

 

$

154,338

   

$

172,310

   

$190,000–$215,000

Capital expenditures

 

(43,189)

   

(40,234)

   

~(40,000)

Interest expense

 

30,108

   

15,469

   

Transaction costs incurred to date, net of tax

 

18,547

   

11,111

   

Free cash flow

 

$

159,804

   

$

158,656

   

$150,000–$175,000

 

Vista Outdoor is a leading global designer, manufacturer and marketer of consumer products in the growing outdoor sports and recreation markets. The company operates in two segments, Shooting Sports and Outdoor Products, and has more than 30 well-recognized brands that provide consumers with a range of performance-driven, high-quality and innovative products in the ammunition, firearms and outdoor accessories categories. Vista Outdoor products are sold at leading retailers and distributors across North America and worldwide. Vista Outdoor is headquartered in Utah and has manufacturing operations and facilities in 10 U.S. States, Canada, Mexico and Puerto Rico along with international sales and sourcing operations in Asia, Australia, Canada, Europe and New Zealand.

Forward-Looking Statements

Certain statements in this press release and other oral and written statements made by Vista Outdoor from time to time are forward-looking statements, including those that discuss, among other things: Vista Outdoor's plans, objectives, expectations, intentions, strategies, goals, outlook or other non-historical matters; projections with respect to future revenues, income, earnings per share or other financial measures for Vista Outdoor; and the assumptions that underlie these matters. The words 'believe', 'expect', 'anticipate', 'intend', 'aim', 'should' and similar expressions are intended to identify such forward-looking statements.  To the extent that any such information is forward-looking, it is intended to fit within the safe harbor for forward-looking information provided by the Private Securities Litigation Reform Act of 1995.  Numerous risks, uncertainties and other factors could cause Vista Outdoor's actual results to differ materially from expectations described in such forward-looking statements, including the following: general economic and business conditions in the U.S. and Vista Outdoor's other markets, including conditions affecting employment levels, consumer confidence and spending; Vista Outdoor's ability to operate successfully as a standalone business; Vista Outdoor's ability to retain and hire key personnel and maintain and grow its relationships with customers, suppliers and other business partners, including Vista Outdoor's ability to obtain acceptable third party licenses; Vista Outdoor's ability to adapt its products to changes in technology, the marketplace and customer preferences; Vista Outdoor's ability to maintain and enhance brand recognition and reputation; reductions or unexpected changes in demand for ammunition, firearms or accessories or other outdoor sports and recreation products; risks associated with Vista Outdoor's sales to significant retail customers, including unexpected cancellations, delays and other changes to purchase orders; supplier capacity constraints, production disruptions or quality or price issues affecting Vista Outdoor's operating costs; seasonality and weather conditions in Vista Outdoor's markets; Vista Outdoor's competitive environment; risks associated with compliance and diversification into international and commercial markets; the supply, availability and costs of raw materials and components; increases in commodity, energy and production costs; changes in laws, rules and regulations relating to Vista Outdoor's business, such as federal and state firearms and ammunition regulations; Vista Outdoor's ability to execute its long-term growth strategy; Vista Outdoor's ability to take advantage of growth opportunities in international and commercial markets; foreign currency exchange rates and fluctuations in those rates; the outcome of contingencies, including with respect to litigation and other proceedings relating to intellectual property, product liability, warranty liability, personal injury and environmental remediation; risks associated with cybersecurity and other industrial and physical security threats;  risks associated with pension asset returns and assumptions regarding future returns, discount rates and service costs; capital market volatility and the availability of financing; changes to accounting standards or policies; and changes in tax rules or pronouncements.  Vista Outdoor undertakes no obligation to update any forward-looking statements. For further information on factors that could impact Vista Outdoor, and statements contained herein, please refer to Vista Outdoor's filings with the Securities and Exchange Commission, including the company's registration statement on Form 10.

 

VISTA OUTDOOR INC.
CONDENSED CONSOLIDATED AND COMBINED STATEMENT OF INCOME
(preliminary and unaudited)

 
   

QUARTERS ENDED

 

YEARS ENDED

(Amounts in thousands except per share data)

 

March 31,
2015

 

March 31,
2014

 

March 31,
2015

 

March 31,
2014

Sales

 

$

485,389

   

$

565,165

   

$

2,083,414

   

$

1,873,919

 

Cost of sales

 

362,551

   

408,202

   

1,554,493

   

1,406,616

 

Gross profit

 

122,838

   

156,963

   

528,921

   

467,303

 

Operating expenses:

               

Research and development

 

2,475

   

7,710

   

9,518

   

13,984

 

Selling, general and administrative

 

81,630

   

63,580

   

283,029

   

219,512

 

Goodwill and tradename impairment

 

   

   

52,220

   

 
                 

Income before interest and income taxes

 

38,733

   

85,673

   

184,154

   

233,807

 

Interest expense

 

(4,827)

   

(7,798)

   

(30,108)

   

(15,469)

 

Income before income taxes

 

33,906

   

77,875

   

154,046

   

218,338

 

Income tax provision

 

17,999

   

29,944

   

74,518

   

85,081

 

Net income

 

$

15,907

   

$

47,931

   

$

79,528

   

$

133,257

 

Vista Outdoor Inc. earnings per common share:

               

Basic

 

$

0.25

   

$

0.75

   

$

1.25

   

$

2.09

 

Diluted

 

$

0.25

   

$

0.75

   

$

1.25

   

$

2.09

 

Vista Outdoor Inc. weighted-average number of common shares outstanding:

               

Basic

 

63,602

   

63,875

   

63,626

   

63,875

 

Diluted

 

63,846

   

63,875

   

63,870

   

63,875

 
                 

 

   

 

VISTA OUTDOOR INC.

CONDENSED CONSOLIDATED AND COMBINED BALANCE SHEETS

(preliminary and unaudited)

 

(Amounts in thousands except share data)

 

March 31, 2015

 

March 31, 2014

Assets

       

Current assets:

       

Cash and cash equivalents

 

$

263,951

   

$

40,004

 

Net receivables

 

360,615

   

301,729

 

Net inventories

 

374,737

   

421,949

 

Deferred income tax assets

 

50,343

   

46,447

 

Other current assets

 

14,918

   

20,901

 

Total current assets

 

1,064,564

   

831,030

 

Net property, plant, and equipment

 

190,607

   

189,071

 

Goodwill

 

777,766

   

847,134

 

Net intangible assets

 

517,482

   

568,116

 

Deferred charges and other non-current assets

 

17,769

   

22,270

 

Total assets

 

$

2,568,188

   

$

2,457,621

 

LIABILITIES AND EQUITY

       

Current liabilities:

       

Current portion of long-term debt

 

$

17,500

   

$

 

Accounts payable

 

134,432

   

181,513

 

Accrued compensation

 

26,202

   

32,449

 

Accrued income taxes

 

9,569

   

1,678

 

Federal excise tax

 

23,194

   

27,990

 

Other accrued liabilities

 

94,912

   

89,330

 

Total current liabilities

 

305,809

   

332,960

 

Long-term debt

 

332,500

   

 

Long-term debt payable to parent

 

   

1,014,911

 

Noncurrent deferred income tax liabilities

 

193,382

   

215,768

 

Postretirement and postemployment benefits liabilities

 

2,663

   

 

Accrued pension liability

 

61,312

   

 

Other long-term liabilities

 

26,824

   

23,251

 

Total liabilities

 

$

922,490

   

$

1,586,890

 

Commitments and contingencies

       

Common stock—$.01 par value:

       

Authorized—500,000,000 shares

       

Issued and outstanding—63,873,222 shares at March 31, 2015 and 0 shares at March 31, 2014

 

639

   

 

Additional paid-in-capital

 

1,739,198

   

 

Retained earnings

 

19,384

   

 

Parent's equity

 

   

872,236

 

Accumulated other comprehensive loss

 

(110,231)

   

(1,505)

 

Common stock in treasury, at cost—85,940 shares held at March 31, 2015 and 0 shares held at March 31, 2014

 

(3,292)

   

 

Total stockholders' equity

 

1,645,698

   

870,731

 

Total liabilities and equity

 

$

2,568,188

   

$

2,457,621

 

 

 

VISTA OUTDOOR INC.

CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOWS

(preliminary and unaudited)

 
   

Years Ended March 31

(Amounts in thousands)

 

2015

 

2014

Operating Activities

       

Net income

 

$

79,528

   

$

133,257

 

Adjustments to net income to arrive at cash provided by operating activities:

       

Depreciation

 

35,405

   

24,891

 

Amortization of intangible assets

 

31,146

   

20,011

 

Amortization of deferred financing costs

 

2,447

   

897

 

Goodwill and tradename impairment

 

52,220

   

 

Deferred income taxes

 

9,096

   

8,746

 

Loss (gain) on disposal of property

 

(136)

   

7,668

 

Share-based plans expense

 

3,358

   

 

Excess tax benefits from share-based plans

 

(120)

   

 

Changes in assets and liabilities:

       

Net receivables

 

(71,243)

   

(357)

 

Net inventories

 

41,875

   

8,970

 

Accounts payable

 

(38,915)

   

(32,277)

 

Accrued compensation

 

(17,482)

   

1,016

 

Accrued income taxes

 

17,246

   

(1,182)

 

Federal excise tax

 

6,935

   

9,042

 

Other assets and liabilities

 

(955)

   

(8,372)

 

Cash provided by operating activities

 

154,338

   

172,310

 

Investing Activities

       

Capital expenditures

 

(43,189)

   

(40,234)

 

Acquisitions of businesses, net of cash acquired

 

   

(1,301,687)

 

Proceeds from the disposition of property, plant, and equipment

 

320

   

174

 

Cash used for investing activities

 

(42,869)

   

(1,341,747)

 

Financing Activities

       

Borrowings on line of credit

 

   

200,000

 

Repayments of line of credit

 

   

(200,000)

 

Proceeds from issuance of long-term debt

 

350,000

   

 

Net transfers (to) from parent

 

16,181

   

206,678

 

Dividend paid to parent

 

(214,000)

   

 

Payments made on long-term debt to parent

 

(20,087)

   

(6,362)

 

Proceeds from issuance of long-term debt to parent

 

50,000

   

1,021,273

 

Payments made to extinguish debt

 

(50,000)

   

 

Payments made for debt issue costs

 

(10,991)

   

(12,273)

 

Purchase of treasury shares

 

(5,097)

   

 

Excess tax benefits from share-based plans

 

120

   

 

Cash provided by (used for) financing activities

 

116,126

   

1,209,316

 

Effect of foreign currency exchange rate fluctuations on cash

 

(3,648)

   

58

 

Decrease in cash and cash equivalents

 

223,947

   

39,937

 

Cash and cash equivalents at beginning of year

 

40,004

   

67

 

Cash and cash equivalents at end of year

 

$

263,951

   

$

40,004

 

 

 

Media Contact:

     

Investor Contact:

         

Amanda Covington

     

Michael Pici

Phone: 801-779-4625

     

Phone: 801-779-4614

E-mail: media.relations@vistaoutdoor.com

     

E-mail: investor.relations@vistaoutdoor.com

 

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SOURCE Vista Outdoor Inc.