News Releases

Vista Outdoor Announces FY17 First Quarter Operating Results

Vista Outdoor Reaffirms FY17 Financial Guidance

August 11, 2016

FARMINGTON, Utah, Aug. 11, 2016 /PRNewswire/ -- Vista Outdoor Inc. (NYSE: VSTO) today reported operating results for the first quarter of its Fiscal Year 2017 (FY17), which ended on July 3, 2016. 

Vista Outdoor Inc. logo

"Vista Outdoor continues to execute on its growth strategy," said Vista Outdoor Chairman and Chief Executive Officer Mark DeYoung. "Early in the quarter, Vista Outdoor completed the acquisition of Action Sports, which has enhanced our market offerings in cycling, snow sports and powersports, and the integration is on track. Including recent acquisitions, both sales and gross profit increased 23 percent over the prior-year period. We, like other consumer products companies, experienced a soft retail environment in the first quarter. Additionally, we were impacted by a shift in consumer spending from accessories to firearms platforms outside our portfolio, and the timing of international orders from the first quarter to later in our fiscal year. We expect a recovery in the second half of the fiscal year due to sell through of new products, increased international sales, the continued improvement in the retail environment, and seasonal upside in the shooting sports market."

For the first quarter ended July 3, 2016:

  • Sales were $630 million, up 23 percent from the prior-year quarter, including $134 million from the recent acquisitions, and down 4 percent on an organic basis.
  • Gross profit was $171 million, up 23 percent from the prior-year quarter. The increase includes $42 million of gross profit from the recent acquisitions, partially offset by a 7 percent decrease in organic gross profit.
  • Operating expenses were $112 million, compared to $80 million in the prior-year quarter. The increase primarily reflects additional expenses generated by the acquisitions, as well as previously announced ongoing investments in SG&A and R&D.
  • The tax rate for the quarter was 38.2 percent down from 39.9 percent in the prior-year quarter. The decrease was primarily caused by a true-up of assets in the prior year, partially offset by non-deductible acquisition costs in the current quarter.
  • Fully diluted earnings per share (EPS) was $0.48, compared to $0.53 in the prior-year quarter. Adjusted EPS was $0.48, compared to $0.54 in the prior-year quarter.
  • Cash flow use for operating activities was $22 million compared to a use of $42 million in the prior-year period. Year-to-date free cash flow use was $41 million, compared to a use of $52 million in the prior-year period.
  • The company repurchased approximately 462,000 shares for $22 million. Since July 3, 2016, Vista Outdoor repurchased approximately 159,000 additional shares for $8 million.

"With expected improved performance in the second half of the year, the company reaffirms its financial guidance in fiscal year 2017, as we anticipate an improved retail landscape and a return to spending on hunting and shooting accessories to complement the growing firearms installed base," said Vista Outdoor Chief Financial Officer Stephen Nolan. "We will also continue to leverage the strength of our portfolio, including new capabilities and talent from recent acquisitions, to improve performance and achieve execution excellence."

Reaffirmed Outlook for Fiscal Year 2017

Vista Outdoor reaffirms FY17 financial guidance:

  • Sales in a range of $2.72 billion to $2.78 billion.
  • Interest expense of approximately $45 million.
  • Tax rate of approximately 37 percent.
  • Adjusted EPS in a range of $2.65 to $2.85.
  • Capital expenditures of approximately $90 million.
  • Free cash flow in a range of $130 million to $160 million.

The guidance above does not include the impact of any future strategic acquisitions, divestitures, investments, business combinations or other significant transactions, nor the impact of contingent consideration revaluation, transition expenses or inventory step-ups for already-completed acquisitions.

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 first quarter FY17 financial results on August 11, 2016, at 9 a.m. Eastern Daylight 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 6662649.

Reconciliation of Non-GAAP Financial Measures

Operating Profit and Earnings Per Share

The adjusted cost of sales, gross profit, operating expenses, 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 gross profit, operating profit (EBIT), tax rate and EPS excluding, where applicable, the impact of costs incurred in the period for current and possible transactions, transition costs for the Action Sports acquisition, changes in value of future payments of contingent consideration, and acquisition inventory step-up. Vista Outdoor management is presenting these measures so a reader may compare gross profit, 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. 

 










Vista Outdoor








Quarter ended July 3, 2016:




























Cost of
Sales


Gross
Profit


Operating
Expenses


Operating
Profit


Income
Tax


Income
Tax Rate


Net
Income


EPS


As reported


$

458,892



$

171,377



$

112,275



$

59,102



$

18,015



38.2

%


$

29,124



$

0.48



Contingent consideration
revaluation






3,396



(3,396)



(1,274)





(2,122)



(0.04)



Transaction and transition
costs






(2,002)



2,002



130





1,872



0.03



Inventory step-up


(817)



817





817



310





507



0.01



As adjusted


$

458,075



$

172,194



$

113,669



$

58,525



$

17,181



36.9

%


$

29,381



$

0.48





















Quarter ended July 5, 2015:






































Cost of
Sales


Gross
Profit


Operating
Expenses


Operating
Profit


Income
Tax


Income
Tax Rate


Net
Income (Loss)


EPS


As reported


$

375,205



$

139,292



$

80,309



$

58,983



$

22,523



39.9

%


$

33,891



$

0.53



Transaction costs






(678)



678



258





420



0.01



As adjusted


$

375,205



$

139,292



$

79,631



$

59,661



$

22,781



39.9

%


$

34,311



$

0.54





















 

Outdoor Products






Quarter ended July 3, 2016:














Cost of Sales


Gross Profit


As reported


$

206,568



$

80,897



Inventory step-up


(817)



817



As adjusted


$

205,751



$

81,714









Acquisitions






Quarter ended July 3, 2016:














Cost of Sales


Gross Profit


As reported


$

91,741



$

42,329



Inventory step-up


(817)



817



As adjusted


$

90,924



$

43,146









 

*NOTE: Adjustments to "as reported" results are items that are excluded to arrive at the "as adjusted" results for the quarters  ended July 3, 2016 and July 5, 2015.

During the quarter ended July 3, 2016, Vista Outdoor incurred transaction and transition costs associated with the completed transaction of Action Sports as well as other possible transactions, including advisory, legal and accounting service fees, a portion of which were non-deductible for tax purposes. Transition costs for the Action Sports business include one-time costs related to the integration of the business into the company including vendor change fees, insurance policy start up fees, and  severance costs. For the quarter ended July 5, 2015, Vista Outdoor incurred transaction costs for potential transactions including advisory, legal and accounting service fees.

For the quarter ended July 3, 2016, as result of not attaining the level of growth required to achieve the first-year growth milestone earnout for the Jimmy Styks acquisition, the company revalued the contingent consideration based on expected incremental profitability growth milestones and reduced the liability.

For the quarter ended July 3, 2016, as a result of the acquisitions of Action Sports, 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.

Free Cash Flow

Free cash flow is defined as cash provided by operating activities less capital expenditures and excluding transaction and transition costs net of taxes 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. 



Three months
ended July 3, 2016


Three months
ended July 5, 2015


Projected year ending
March 31, 2017

Cash (used for) provided by operating activities


$

(22,158)



$

(41,919)



$217,581–$247,581

Capital expenditures


(21,006)



(10,557)



~(90,000)

Transaction and transition costs paid to date, net of tax


2,419





2,419

Free cash flow


$

(40,745)



$

(52,476)



$130,000–$160,000

Adjusted Earnings Per Share - Guidance Reconciliation Table

The projected adjusted earnings per share (EPS), excluding the impact of costs incurred for current and possible transactions, transition costs for the Action Sports acquisition, changes in value of future payments of contingent consideration, and acquisition inventory step-up, is a non-GAAP financial measure that Vista Outdoor defines as EPS excluding the impact of these items. Vista Outdoor management is presenting this measure so a reader may compare EPS, excluding these items, 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 FY17 Full-Year Adjusted EPS Guidance














Low


High


EPS guidance including contingent consideration revaluation, transaction and transition costs, and inventory step-up incurred to date


$

2.65



$

2.85



Contingent consideration revaluation


(0.04)



(0.04)



Transaction and transition costs incurred to date


0.03



0.03



Inventory step-up


$

0.01



$

0.01



Adjusted EPS guidance


$

2.65



$

2.85









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, Outdoor Products and Shooting Sports, and has a portfolio of well-recognized brands that provides consumers with a wide range of performance-driven, high-quality and innovative products for individual outdoor recreational pursuits. 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 13 U.S. States, Canada, Mexico and Puerto Rico along with international customer service, 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 attract and retain 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, unexpected changes in or our inability to accurately forecast 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; 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, including our ability to complete and realize expected benefits from acquisitions and integrate acquired businesses; 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; 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.

 

 

VISTA OUTDOOR INC.

CONDENSED CONSOLIDATED STATEMENT OF INCOME

(preliminary and unaudited)




Quarter ended

(Amounts in thousands except per share data)


July 3, 2016


July 5, 2015

Sales, net


$

630,269



$

514,497


Cost of sales


458,892



375,205


Gross profit


171,377



139,292


Operating expenses:





Research and development


7,831



2,355


Selling, general, and administrative


104,444



77,954


Income before interest and income taxes


59,102



58,983


Interest expense, net


(11,963)



(2,569)


Income before income taxes


47,139



56,414


Income tax provision


18,015



22,523


Net income


$

29,124



$

33,891


Earnings per common share:





Basic


$

0.48



$

0.54


Diluted


$

0.48



$

0.53


Weighted-average number of common shares outstanding:





Basic


60,384



63,286


Diluted


60,715



63,611


 

 


VISTA OUTDOOR INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(preliminary and unaudited)


(Amounts in thousands except share data)


July 3, 2016


March 31, 2016

ASSETS





Current assets:





Cash and cash equivalents


$

66,000



$

151,692


Net receivables


519,762



428,398


Net inventories


553,631



440,240


Other current assets


36,337



29,334


Total current assets


1,175,730



1,049,664


Net property, plant, and equipment


238,282



203,485


Goodwill


1,204,046



1,023,451


Net intangible assets


794,720



650,472


Deferred charges and other non-current assets


22,319



15,562


Total assets


$

3,435,097



$

2,942,634


LIABILITIES AND EQUITY





Current liabilities:





Current portion of long-term debt


$

122,000



$

17,500


Accounts payable


139,642



147,738


Accrued compensation


33,505



47,394


Accrued income taxes


25,697



12,171


Federal excise tax


28,386



27,701


Other current liabilities


160,085



116,397


Total current liabilities


509,315



368,901


Long-term debt


936,299



652,787


Deferred income tax liabilities


182,875



135,957


Accrued pension and postemployment liabilities


72,548



73,503


Other long-term liabilities


68,301



51,319


Total liabilities


1,769,338



1,282,467







Common stock—$.01 par value:





Authorized—500,000,000 shares





Issued and outstanding— 60,359,234 shares at July 3, 2016 and 60,825,914 shares at March 31, 2016


603



608


Additional paid-in capital


1,746,469



1,743,371


Retained earnings


195,545



166,421


Accumulated other comprehensive loss


(114,051)



(110,214)


Common stock in treasury, at cost— 3,605,205 shares held at July 3, 2016 and 3,138,525 shares held at March 31, 2016


(162,807)



(140,019)


Total stockholders' equity


1,665,759



1,660,167


Total liabilities and stockholders' equity


$

3,435,097



$

2,942,634


 

 

VISTA OUTDOOR INC.

CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOWS

(preliminary and unaudited)




Three months ended

(Amounts in thousands)


July 3, 2016


July 5, 2015

Operating Activities:





Net income


$

29,124



$

33,891


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





Depreciation


13,676



9,255


Amortization of intangible assets


10,106



7,302


Amortization of deferred financing costs


2,172



538


Deferred income taxes


52



1,005


Loss on disposal of property, plant, and equipment


41



30


Stock-based compensation


3,310



2,949


Excess tax benefits from share-based plans




(206)


Changes in assets and liabilities, net of acquisition of businesses:





Net receivables


(12,908)



(67,242)


Net inventories


(57,697)



(54,480)


Accounts payable


(33,196)



(728)


Accrued compensation


(19,322)



(4,531)


Accrued income taxes


14,396



13,849


Federal excise tax


737



386


Pension and other postretirement benefits


579



1,791


Other assets and liabilities


26,772



14,272


Cash used for operating activities


(22,158)



(41,919)


Investing Activities:





Capital expenditures


(21,006)



(10,557)


Acquisition of businesses, net of cash acquired


(405,943)




Proceeds from the disposition of property, plant, and equipment


34



20


Cash used for investing activities


(426,915)



(10,537)


Financing Activities:





Borrowings on line of credit


115,000




Payments on line of credit


(25,000)




Proceeds from issuance of long-term debt


307,500




Payments made on long-term debt


(8,000)



(4,375)


Payments made for debt issuance costs


(3,660)




Purchase of treasury shares


(22,058)



(23,743)


Excess tax benefits from share-based plans




206


Proceeds from employee stock compensation plans




438


Cash provided by (used for) financing activities


363,782



(27,474)


Effect of foreign exchange rate fluctuations on cash


(401)



254


Decrease in cash and cash equivalents


(85,692)



(79,676)


Cash and cash equivalents at beginning of period


151,692



263,951


Cash and cash equivalents at end of period


$

66,000



$

184,275


 

 

Media Contact:

Investor Contact:



Amanda Covington

Michael Pici

Phone: 801-447-3035

Phone: 801-447-3168

E-mail: media.relations@vistaoutdoor.com

E-mail: investor.relations@vistaoutdoor.com

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SOURCE Vista Outdoor Inc.


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