News Releases

Vista Outdoor Announces FY16 Second Quarter Operating Results

Vista Outdoor Reports Both Sequential and Year-Over-Year Organic Growth

Vista Outdoor Reaffirms FY16 Financial Guidance

November 12, 2015

CLEARFIELD, Utah, Nov. 12, 2015 /PRNewswire/ -- Vista Outdoor Inc. (NYSE: VSTO) today reported operating results for the second quarter of its Fiscal Year 2016 (FY16), which ended on October 4, 2015. 

Vista Outdoor Inc. logo

"Vista Outdoor delivered both sequential and year-over-year organic sales growth," said Vista Outdoor Chairman and Chief Executive Officer Mark DeYoung. "The company recorded strong results in the quarter. As expected, we are starting to see stabilization in the shooting sports market as evidenced by another quarter of sequential growth in our Shooting Sports segment. In the Outdoor Products segment, I am pleased to report the integration of our two recent acquisitions, Jimmy Styks and CamelBak, is going well and the brands are performing in line with our expectations. Vista Outdoor's product development pipeline is robust, and we plan to launch several new and exciting products during the early 2016 show season."

For the second quarter ended October 4, 2015:

  • Sales were $551 million, up 5 percent from the prior-year quarter, and up 2 percent on an organic sequential basis. The year-over-year increase primarily reflects $24 million of sales from the Jimmy Styks and CamelBak acquisitions.
  • Gross profit was $149 million, up 16 percent from the prior-year quarter. The increase includes $9 million of gross profit from the recent acquisitions as well as increased organic gross profit.
  • Operating expenses were $88 million, compared to $69 million in the prior-year quarter. The increase reflects additional expenses as a result of acquisitions, standalone company costs, stock-based compensation, and additional investments in R&D, selling and marketing.
  • Fully diluted earnings per share (EPS) was $0.52, compared to $0.53 in the prior-year quarter. Adjusted EPS was $0.63, compared to $0.60 in the prior-year quarter.
  • Year-to-date free cash flow was $5 million, compared to a use of $36 million in the prior-year period.
  • The company repurchased approximately 690,000 shares in the quarter for $31 million. Since October 4, 2015, Vista Outdoor repurchased approximately 538,000 additional shares for $23.5 million.

"During the quarter, our sales increased due to the recent acquisitions and balanced performance in our organic businesses," said Vista Outdoor Chief Financial Officer Stephen Nolan. "We achieved increased firearms sales and experienced some market stabilization in the rest of the Shooting Sports segment. Our Outdoor Products segment had strength in optics, golf and shooting accessories, partially offset by challenges in tactical products and archery/hunting accessories, along with foreign currency pressures. Vista Outdoor reaffirms FY16 financial guidance and continues to expect low, single-digit organic growth for the year."

Reaffirmed Outlook for Fiscal Year 2016

Vista Outdoor reaffirms FY16 financial guidance:

  • Sales in a range of $2.17 billion to $2.24 billion;
  • Adjusted EPS in a range of $2.05 to $2.30;
  • Capital expenditures of approximately $45 million;
  • Free cash flow in a range of $150 million to $180 million; and
  • Tax rate of approximately 38 percent.

Please see the tables below for a reconciliation of non-GAAP adjusted EPS, operating profit and free cash flow to the comparable GAAP measures.

Earnings Conference Call Webcast Information

Vista Outdoor will hold an investor conference call to discuss its second quarter fiscal year 2016 financial results on November 12, 2015, at 9 a.m. Eastern Standard 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 1202473.

Reconciliation of Non-GAAP Financial Measures

Operating Profit and Earnings Per Share

The adjusted operating profit (adjusted EBIT), and adjusted earnings per share (adjusted EPS) presented above are non-GAAP financial measures that Vista Outdoor defines as operating profit (EBIT) and EPS excluding, where applicable, the impact of costs incurred in the period for current and possible transactions, facility rationalization costs and acquisition inventory step-up. Vista Outdoor management is presenting these measures so a reader may compare EBIT 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. 

 






October 4, 2015:

















Operating Profit


Net Income


EPS

As reported


$

60,743



$

32,675



$

0.52


Transaction costs


6,735



5,216



0.08


Facility rationalization


2,185



1,355



0.02


Inventory step-up


538



334



0.01


As adjusted


$

70,201



$

39,580



$

0.63









September 28, 2014:
















Operating Profit


Net Income


EPS

As reported


$

59,367



$

33,754



$

0.53


Transaction costs


7,011



4,312



0.07


As adjusted


$

66,378



$

38,066



$

0.60










 

*NOTE: Adjustments to "as reported" results are items that are excluded to arrive at the "as adjusted" results for the quarters October 4, 2015 and September 28, 2014.

During the quarter ended October 4, 2015, Vista Outdoor incurred transaction costs associated with the completed transactions for CamelBak and Jimmy Styks as well as other possible transactions including advisory, legal and accounting service fees, a portion of which were non-deductible for tax purposes.

During the quarter ended October 4, 2015, Vista Outdoor incurred certain facility rationalization costs associated with the closure of the Meridian, Idaho facility.

For the quarter ended October 4, 2015, as a result of the acquisitions of CamelBak and Jimmy Styks, Vista Outdoor recorded a step-up in the inventory balances, which is the purchase accounting fair value adjustment. The inventory step-up will be expensed to the income statement over the first inventory cycle.

For the quarter ended September 28, 2014, 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 $7 million in the quarter.

Free Cash Flow

Free cash flow is defined as cash provided by (used for) operating activities less capital expenditures, allocated interest expense, and excluding transaction costs paid to date, net of tax. 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.



Six months ended
October 4, 2015


Six months ended
September 28, 2014


Projected year ending
March 31, 2016

Cash provided by (used for) operating activities


$

17,495



$

(36,638)



$195,000–$225,000

Capital expenditures


(17,216)



(20,353)



~(45,000)

Allocated interest expense




16,910



Transaction costs paid to date, net of tax


4,413



4,505



Free cash flow


$

4,692



$

(35,576)



$150,000–$180,000

 

Adjusted Earnings Per Share - Guidance Reconciliation Table

The projected adjusted earnings per share (EPS) excluding transaction costs incurred to date associated with current and possible transactions is a non-GAAP financial measure that Vista Outdoor defines as EPS excluding the impact of this item. Vista Outdoor management is presenting this measures so a reader may compare EPS excluding this item as this measure provides investors with an important perspective on the operating results of the company. Vista Outdoor management uses this measurement internally to assess business performance, and Vista Outdoor's definition may differ from those used by other companies. 

 




Current FY16 Full-Year EPS Guidance













Low


High

EPS guidance including transaction costs incurred to date


$

1.97



$

2.22


Transaction costs incurred to date


0.08



0.08


Adjusted EPS guidance


$

2.05



$

2.30








 

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 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: Vista Outdoor's ability to realize anticipated benefits and cost savings from acquisitions; Vista Outdoor's ability to retain and hire key personnel and maintain relationships with customers, suppliers and other business partners of acquired businesses; costs or difficulties related to the integration of acquired businesses; 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; changes 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; changes in interest rates or credit availability; 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 annual report on Form 10-K.

 

 


VISTA OUTDOOR INC.

CONDENSED CONSOLIDATED AND COMBINED STATEMENT OF INCOME

(preliminary and unaudited)




Quarter ended


Six months ended

(Amounts in thousands except per share data)


October 4,
2015


September 28,
2014


October 4,
2015


September 28,
2014

Sales, net


$

551,377



$

525,149



$

1,065,874



$

1,091,144


Cost of sales


402,353



396,554



777,558



819,098


Gross profit


149,024



128,595



288,316



272,046


Operating expenses:









Research and development


2,815



1,074



5,170



4,725


Selling, general, and administrative


85,466



68,154



163,420



133,294


Income before interest and income taxes


60,743



59,367



119,726



134,027


Interest expense


(6,563)



(7,883)



(9,132)



(16,924)


Income before income taxes


54,180



51,484



110,594



117,103


Income tax provision


21,505



17,730



44,029



42,313


Net income


$

32,675



$

33,754



$

66,565



$

74,790


Earnings per common share:









Basic


$

0.52



$

0.53



$

1.06



$

1.17


Diluted


$

0.52



$

0.53



$

1.05



$

1.17


Weighted-average number of common shares outstanding:









Basic


62,816



63,875



63,064



63,875


Diluted


63,155



63,875



63,406



63,875


 

 

 


VISTA OUTDOOR INC.

CONDENSED CONSOLIDATED AND COMBINED BALANCE SHEETS

(preliminary and unaudited)


(Amounts in thousands except share data)


October 4, 2015


March 31, 2015

ASSETS





Current assets:





Cash and cash equivalents


$

86,132



$

263,951


Net receivables


403,729



361,694


Net inventories


503,224



375,621


Deferred income taxes


51,905



50,343


Other current assets


21,391



13,452


Total current assets


1,066,381



1,065,061


Net property, plant, and equipment


191,051



190,607


Goodwill


1,019,352



782,163


Net intangible assets


667,673



517,482


Deferred charges and other non-current assets


19,411



17,811


Total assets


$

2,963,868



$

2,573,124


LIABILITIES AND EQUITY





Current liabilities:





Current portion of long-term debt


$

17,500



$

17,500


Accounts payable


130,424



134,432


Accrued compensation


35,467



27,146


Accrued income taxes


3,452



9,569


Federal excise tax


26,041



23,194


Other current liabilities


121,155



96,071


Total current liabilities


334,039



307,912


Long-term debt


673,750



332,500


Non-current deferred income tax liabilities


191,539



193,382


Accrued pension and postemployment liabilities


59,444



59,345


Other non-current liabilities


39,693



31,221


Total liabilities


$

1,298,465



$

924,360


Commitments and contingencies (Notes 11 and 14)





Common stock—$.01 par value:





Authorized—500,000,000 shares





Issued and outstanding— 62,710,652 shares at October 4, 2015 and 63,878,499 shares at March 31, 2015


627



639


Additional paid-in-capital


1,746,433



1,742,125


Retained earnings


85,949



19,384


Accumulated other comprehensive loss


(112,038)



(110,303)


Common stock in treasury, at cost— 1,253,787 shares held at October 4, 2015 and 85,940 shares held at March 31, 2015


(55,568)



(3,081)


Total stockholders' equity


1,665,403



1,648,764


Total liabilities and stockholders' equity


$

2,963,868



$

2,573,124


 

 

VISTA OUTDOOR INC

CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOWS

(preliminary and unaudited)




Six months ended

(Amounts in thousands)


October 4,
2015


September 28, 2014

Operating Activities





Net income


$

66,565



$

74,790


Adjustments to net income to arrive at cash provided by (used for) operating activities:





  Depreciation


18,784



15,548


  Amortization of intangible assets


15,651



15,378


  Amortization of deferred financing costs


1,156



1,398


  Deferred income taxes


695



338


  Loss on disposal of property


498



311


Stock-based compensation


6,137




Excess tax benefits from share-based plans


(206)




Changes in assets and liabilities:





  Net receivables


(10,907)



(105,147)


  Net inventories


(95,550)



(6,016)


  Accounts payable


(8,220)



(42,655)


  Accrued compensation


1,134



(10,504)


  Accrued income taxes


(7,015)



5,906


  Federal excise tax


2,856



(1,485)


  Pension and other postretirement benefits


3,650




  Other assets and liabilities


22,267



15,500


Cash provided by (used for) operating activities


17,495



(36,638)


Investing Activities:





  Capital expenditures


(17,216)



(20,353)


  Acquisition of business, net of cash acquired


(462,182)




  Proceeds from the disposition of property, plant, and equipment


130



16


Cash used for investing activities


(479,268)



(20,337)


Financing Activities:





  Borrowings on line of credit


360,000




  Payments on line of credit


(360,000)




  Proceeds from issuance of long-term debt


350,000




  Net transfers from parent




58,113


  Payments made on long-term debt to parent




(6,364)


  Payments made on long-term debt


(8,750)




  Payments made for debt issuance costs


(4,379)




  Purchase of treasury shares


(53,009)




  Proceeds from employee stock compensation plans


438




  Excess tax benefits from share-based plans


206




Cash provided by financing activities


284,506



51,749


Effect of foreign exchange rate fluctuations on cash


(552)



(629)


Decrease in cash and cash equivalents


(177,819)



(5,855)


Cash and cash equivalents at beginning of period


263,951



40,004


Cash and cash equivalents at end of period


$

86,132



$

34,149


 

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.


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