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Section 1: 8-K (8-K)

Document
false0001616318 0001616318 2020-02-06 2020-02-06


 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported): February 6, 2020
 402673490_vistaoutdoora07a06.jpg
 Vista Outdoor Inc.
(Exact name of registrant as specified in its charter)
 
Delaware
001-36597
47-1016855
(State or other jurisdiction of incorporation or organization)
(Commission File Number)
(I.R.S. Employer Identification No.)
 
 
1 Vista Way
Anoka
MN
55303
(Address of Principal Executive Offices)
 
(Zip Code)
Registrant’s telephone number, including area code:  (763) 433-1000

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
        Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
            Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12
            Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
            Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
 
Trading Symbol(s)
 
Name of each exchange on which registered
Common Stock, par value $.01
 
VSTO
 
New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    

 




Item 2.02 Results of Operations and Financial Condition
 
On February 6, 2020, Vista Outdoor Inc. (Vista Outdoor) issued a press release reporting its financial results for the fiscal quarter and nine months ended December 29, 2019. A copy of the press release is furnished as Exhibit 99.1 to this report and incorporated herein by reference.

Note: Information in this report (including the exhibit) furnished pursuant to Item 2.02 of Form 8-K shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section.
 
Item 9.01. Financial Statements and Exhibits
 
(d)                                 Exhibits.
 
Exhibit
No.
 
Description
99.1

 


1



SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
  
 
 
 
VISTA OUTDOOR INC.
 
 
 
 
 
 
By:
/s/ Dylan S. Ramsey
 
 
Name:
Dylan S. Ramsey

 
 
Title:
VP, General Counsel & Corporate Secretary

 
 
 
 
 
 
 
 
Date:
February 6, 2020
 
 


2
(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit
Exhibit 99.1

402673490_vistaoutdoora08a03.jpg                  
 
News Release
 


 
For Immediate Release
 
 
 
Media Contact:
Investor Contact:
 
 
Fred Ferguson
Kelly Reisdorf
Phone: 571-343-7006
Phone: 763-433-1028
 
Vista Outdoor Announces FY20 Third Quarter Operating Results

Vista Outdoor Sees First Positive Organic Revenue Growth Since Transformation

Vista Outdoor Delivers $0.25 of EPS and $0.21 of Adjusted EPS

Vista Outdoor Delivers Strong Free Cash Flow and Raises Full Year Fiscal 2020 Guidance


Anoka, MN, February 6, 2020 Vista Outdoor Inc. (NYSE: VSTO) today reported operating results for the third quarter of its Fiscal Year 2020 (FY20), which ended on December 29, 2019.

"We are pleased to see continued stabilization of the ammunition market, alongside year over year growth for many of our brands. Notably, our Ammunition business delivered positive revenue growth for the first time in eleven quarters." said Vista Outdoor Chief Executive Officer Chris Metz. "While the external environment remains fluid, we continue to favorably position Vista Outdoor to deliver strong, profitable growth, and increased free cash flow. I am confident in the plans we have in place, and in our team's ability to successfully deliver on our full year expectations for Fiscal Year 2020."

For the third quarter ended December 29, 2019:

Sales were $425 million, down 9 percent from the prior-year quarter, and were up 0.2% on an organic basis, excluding results from of our Firearms business which was sold in the second quarter of Fiscal Year 2020.
Gross profit was $89 million, down 6 percent from the prior year quarter, up 4 percent on an adjusted organic basis, excluding results from our Firearms business.
Operating expenses were $70 million. This compares to $609 million of operating expenses in the prior-year quarter, which reflects significant asset impairment charges. Adjusted operating expenses were down 13 percent, at $70 million compared to $80 million in the prior year quarter.
Fully diluted GAAP earnings per share (EPS) was $0.25, compared to $(8.94) in the prior year quarter. Adjusted EPS was $0.21, compared to $0.09 in the prior year quarter.
Cash flow provided by operating activities year-to-date was $63 million, compared to $61 million provided by operations in the prior year period. Year-to-date free cash flow was positive $46 million, compared to free cash flow of positive $51 million in the prior year period. Free cash flow generated in the quarter was positive $70 million.

For the third quarter ended December 29, 2019 Operating Segment Results:

Outdoor Products

The Outdoor Products segment generated $222 million in sales during the third quarter, down 2 percent from the prior-year quarter.

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Gross profit was $56 million, up 3.5 percent from the prior year quarter, and down 1 percent on an adjusted basis. The gross profit margin was 25 percent, up 128 bps from the prior year quarter, and was 25 percent on an adjusted basis, up 26 bps from the prior year quarter.

Shooting Sports

The Shooting Sports segment generated $202 million in sales during the third quarter, down 16 percent from the prior-year quarter. On an organic basis, excluding the results from Firearms, Ammunition sales were up 2 percent over the prior year quarter.

Gross profit was $33 million, down 18 percent from the prior year quarter, up 13 percent on an adjusted organic basis. The gross profit margin was 16 percent, down 42 bps from the prior year quarter, and was 16 percent on an adjusted organic basis, up 150 bps from the prior year quarter.

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

Outlook for Fiscal Year 2020

"Our accelerated transformation plan is on track and is progressing very well. We delivered another consecutive quarter of gross margin improvement, demonstrated significant working capital improvement, generated strong free cash flow and repaid $55 million of our outstanding debt balance. Our focus on maintaining a strong cash and working capital position, alongside our focus on higher quality revenue and rigorous expense controls will continue to position Vista Outdoor to capitalize on organic growth opportunities going forward." said Mick Lopez, Vista Outdoor Chief Financial Officer.

Vista Outdoor's outlook for full year Fiscal 2020 has been updated to reflect the following:

Sales in a range of $1.75 billion to $1.80 billion, compared to the previous expectation of $1.75 billion to $1.85 billion.
Interest expense reported of approximately $40 million and adjusted of approximately $35 million, compared to the previous adjusted interest expense expectation of $37 million.
GAAP Earnings per share in a range of $(0.20) to $(0.15), as compared to the previous range of $(0.23) and $(0.08), and adjusted earnings per share of $0.15 to $0.20, compared to the previous expectation of adjusted earnings per share in the range of $0.10 to $0.25.
Capital expenditures of approximately $35 million, compared to the previous expectation of $40 million.
Free cash flow in a range of $40 million to $50 million, compared to the previous expectation of $30 million to $40 million.

The company expects FY20 EBITDA margins of approximately 6 percent. FY20 guidance does not include the impact of any additional future strategic acquisitions, divestitures, investments, business combinations or other significant transactions.

Earnings Conference Call Webcast Information

Vista Outdoor will hold an investor conference call to discuss its third quarter FY20 financial results on February 6, 2020, at 9 a.m. ET. 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 is 719-457-0820, and the confirmation code is 6386099.


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Reconciliation of Non-GAAP Financial Measures
 
Gross Profit, Operating Profit, and Earnings Per Share

The adjusted gross profit, adjusted operating expenses, adjusted operating profit (earnings before interest, tax and other) (operating profit), adjusted other income/(expense), adjusted interest expense, adjusted tax rate, adjusted net income, and adjusted earnings per share (adjusted EPS) presented below are non-GAAP financial measures. Vista Outdoor defines these measures as gross profit, operating expenses, operating income, other income / (expense), interest expense, income tax rate, net income, and EPS basic and diluted excluding, where applicable, the impact of costs incurred for contingent consideration, transaction costs, restructuring and asset impairment costs, debt issuance costs, goodwill and intangibles impairment, impairment of held-for-sale assets, tax valuation allowance, and transformation costs. Vista Outdoor management is presenting these measures so a reader may compare gross profit, operating profit, 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 this measurement internally to assess business performance, and Vista Outdoor’s definition may differ from those used by other companies.
Three months ended December 29, 2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross Profit
 
Operating Expenses
 
Operating Profit
 
Other Income / (Expense)
 
Interest Expense
 
Income Tax
 
Income Tax Rate
 
Net Income
 
EPS
 
As reported
 
$
88,790

 
$
70,121

 
$
18,669

 
$

 
$
(8,373
)
 
$
(4,352
)
 
(42.3
)%
 
$
14,648

 
$
0.25

 
Restructuring and asset impairment
 

 
(479
)
 
479

 

 

 
115

 
 
 
364

 
0.01

 
Debt issuance costs
 

 

 

 

 
911

 
219

 
 
 
692

 
0.01

 
Tax valuation allowance
 

 

 

 

 

 
3,308

 
 
 
(3,308
)
 
(0.06
)
 
As adjusted
 
$
88,790

 
$
69,642

 
$
19,148

 
$

 
$
(7,462
)
 
$
(710
)
 
(6.1
)%
 
$
12,396

 
$
0.21

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three months ended December 30, 2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross Profit
 
Operating Expenses
 
Operating Profit
 
Other Income / (Expense)
 
Interest Expense
 
Income Tax
 
Income Tax Rate
 
Net Income
 
EPS
 
As reported
 
$
94,236

 
$
609,387

 
$
(515,151
)
 
$
(1,871
)
 
$
(16,003
)
 
$
(18,383
)
 
3.4
 %
 
$
(514,642
)
 
$
(8.94
)
 
Contingent consideration
 

 
(843
)
 
843

 

 

 
202

 
 

641

 
0.01

 
Transaction costs
 

 
(1,786
)
 
1,786

 

 

 
429

 
 

1,357

 
0.02

 
Debt issuance costs
 

 

 

 

 
3,061

 
735

 
 
 
2,326

 
0.04

 
Goodwill and intangibles impairment
 

 
(432,612
)
 
432,612

 

 

 
12,183

 
 
 
420,429

 
7.30

 
Impairment of held-for-sale assets
 

 
(83,854
)
 
83,854

 

 

 

 
 
 
83,854

 
1.46

 
Transformation
 
2,701

 
(9,827
)
 
12,528

 
1,871

 

 
3,007

 
 
 
11,392

 
0.20

 
As adjusted
 
$
96,937

 
$
80,465

 
$
16,472

 
$

 
$
(12,942
)
 
$
(1,827
)
 
(51.8
)%
 
$
5,357

 
$
0.09

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


3


Outdoor Products
 
 
 
 
 
(in thousands)
 
Three months ended December 29, 2019
 
Three months ended December 30, 2018
 
Gross profit as reported
 
$
56,035

 
$
54,143

 
Business transformation
 

 
2,317

 
Gross profit as adjusted
 
$
56,035

 
$
56,460

 
 
 
 
 
 
 
Shooting Sports
 
 
 
 
 
(in thousands)
 
Three months ended December 29, 2019
 
Three months ended December 30, 2018
 
Gross profit as reported
 
$
32,755

 
$
40,095

 
Business transformation
 

 
384

 
Gross profit as adjusted
 
$
32,755

 
$
40,479

 
 
 
 
 
 
 

*NOTE: Adjustments to "as reported" results are items that are excluded to arrive at the "as adjusted" results for the quarters ended December 29, 2019 and December 30, 2018. EPS amounts may not foot due to rounding.

For the quarter ended December 29, 2019:

During the quarter ended December 29, 2019 we incurred restructuring and asset impairment costs related to impairment on rent receivables and operational realignments costs which were incurred to generate longer-term benefits. We do not consider these items indicative of earnings from ongoing business activities. The tax effect of these costs was calculated based on a blended statutory rate of approximately 24 percent.

During the quarter ended December 29, 2019, in connection with the repayment of the Junior Term Loan, unamortized debt issuance costs were written off and repayment premium fees were paid. Given the infrequent and unique nature of these costs, the company believes these costs are not indicative of ongoing operations of the company. The tax effect of the transaction costs was calculated based on a blended statutory rate of approximately 24 percent.

During the quarter ended December 29, 2019, we recorded a tax valuation allowance of $(3.3) million. Due to previous impairments, the Company continues to be in a three-year cumulative loss position resulting in a tax valuation allowance on its deferred tax assets. Given the infrequent and unique nature of this tax valuation allowance, we do not believe the $(3.3) million tax expense related to the tax valuation allowance of the deferred tax assets is indicative of operations of the company.

For the quarter ended December 30, 2018:

During the quarter ended December 30, 2018, we recorded a portion of the approximately $10 million of compensation for the Camp Chef earn-out, which will be paid over the next year, subject to continued Camp Chef leadership employment and the achievement of certain incremental profitability growth milestones. Given this balance is related to the purchase price of the company and is not normal compensation of the employees and will not be a continuing cost, we do not believe these costs are indicative of operations of the company. The tax effect of the contingent consideration cost was calculated based on a blended statutory rate of approximately 24 percent.

During the quarter ended December 30, 2018, we incurred transaction costs associated with possible and completed transactions, including advisory, legal, and accounting service fees. Given the nature of transaction costs, and differences in these amounts from one transaction to another, the company feels these costs are not indicative of operations of the company. The tax effect of the transaction costs that are deductible for tax was calculated based on a blended statutory rate of approximately 24 percent.

During the quarter ended December 30, 2018, we wrote off debt issuance costs in connection with the refinancing our Amended and Restated Credit Agreement dated April 1, 2016. Given the infrequent and unique nature of the debt issuance write-off costs, the company believes these costs are not indicative of operations of the company. The tax effect of the transaction costs was calculated based on a blended statutory rate of approximately 24 percent.


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During the quarter ended December 30, 2018, we recognized a $433 million total impairment of goodwill and identifiable intangible assets. The trading price of our common stock declined significantly in the quarter ended December 30, 2018, increasing the difference between the market value of Vista Outdoor equity and the book value of the assets recorded on our balance sheet and implying that investors’ may believe that the fair value of our reporting units is lower than their book value. In addition, as a result of a weaker than expected 2018 holiday shopping season and increasing uncertainty from the impact of retail bankruptcies, tariffs and other factors affecting the market for our products, we reduced our sales projections for fiscal year 2020 and beyond for a number of our reporting units for purposes of our long-range financial plan, which is updated annually beginning in our third quarter. As a result of these factors, we determined that a triggering event had occurred during the quarter with respect to our Hunting and Shooting Accessories, Outdoor Recreation, and Action Sports reporting units, which required that we assess the fair value of these reporting units using the income-based and market-based approaches described above. Given the unusual and infrequent nature of this impairment we do not believe these costs are indicative of operations of the company. The tax effect of the goodwill and intangibles impairment charge was determined based on the fact that the goodwill impairment charge of $328 million, a portion of which was non-deductible and the remainder was deductible at a rate of approximately 24 percent for tax purposes, and the remaining intangible asset impairment of $105 million was deductible at a rate of approximately 24 percent. The current quarter impairment caused the Company to be in a three-year cumulative loss position, which resulted in a valuation allowance on deferred tax assets to be recorded. Given the unusual and infrequent nature of this valuation allowance, we do not believe the $29 million tax expense related to the valuation allowance of the deferred tax assets is indicative of operations of the company.

During the quarter ended December 30, 2018, Vista Outdoor recognized a loss of $84 million related to the impairment of the firearms held-for-sale assets. Given the infrequent and unique nature of the firearms business divestiture, the company believes these costs are not indicative of ongoing operations. There is no tax effect of this loss because it is not deductible for tax purposes.

During the quarter ended December 30, 2018, Vista Outdoor also incurred business transformation costs related to the sublease of the former corporate headquarters, operational realignments, and the implementation of a new ERP system. Given the infrequent and unique nature of these business transformation costs, the company believes these costs are not indicative of ongoing operations. The tax effect of these costs was calculated based on a blended statutory rate of approximately 24 percent.

Free Cash Flow

Free cash flow is defined as cash (used for) provided by operating activities less capital expenditures, and excluding the following costs which have been adjusted for applicable tax amounts: contingent consideration costs, transaction costs, debt issuances costs, restructuring and asset impairment costs, business transformation costs and loss on divestiture (Eyewear Brands). Vista Outdoor management believes free cash flow provides investors with an important perspective on the cash available for debt repayment 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.
 
 
 
 
 
 
 
 
 
 
(in thousands)
 
Three months ended December 29, 2019
 
Nine months ended December 29, 2019
 
Nine months ended December 30, 2018
 
Projected year ending March 31, 2020
 
Cash (used for) provided by operating activities
 
$
71,292

 
$
63,054

 
$
60,948

 
$69,748–$79,748

 
Capital Expenditures
 
(4,257
)
 
(21,977
)
 
(30,911
)
 
~(35,000)

 
Contingent consideration
 
3,371

 
3,371

 
3,371

 
3,371

 
Transaction costs
 

 
367

 
7,456

 
367

 
Debt issuance costs
 
(619
)
 
(1,015
)
 
(1,503
)
 
(1,015
)
 
Loss on divestiture (Eyewear Brands)
 

 

 
1,379

 

 
Restructuring and asset impairment costs
 
41

 
2,529

 

 
2,529

 
Transformation costs
 

 

 
10,499

 

 
Free cash flow
 
$
69,828

 
$
46,329

 
$
51,239

 
$40,000–$50,000

 
 
 
 
 
 
 
 
 
 
 
 

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Adjusted Earnings Per Share - Guidance Reconciliation Table

The projected adjusted earnings per share (EPS), excluding the impact of costs incurred to date for contingent consideration costs, current transaction costs, restructuring and asset impairment costs, debt issuance costs, loss on divestiture, impairment of held-for-sale assets, and tax valuation allowance 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 FY20 Full-Year Adjusted EPS Guidance
 
 
 
 
 
 
 
Low
 
High
 
EPS guidance including contingent consideration, current transaction costs, restructuring and asset impairment costs, debt issuance costs, loss on divestiture, impairment of held-for-sale assets, and tax valuation allowance
 
$
(0.20
)
 
$
(0.15
)
 
Contingent consideration
 
0.02

 
0.02

 
Transaction costs
 
0.01

 
0.01

 
Restructuring and asset impairment
 
0.10

 
0.10

 
Debt issuance costs
 
0.06

 
0.06

 
Loss on divestiture (Firearms)
 
0.01

 
0.01

 
Impairment of held-for-sale assets
 
0.16

 
0.16

 
Tax valuation allowance
 
(0.01
)
 
(0.01
)
 
Adjusted EPS guidance
 
$
0.15

 
$
0.20

 
 
 
 
 
 
 

About Vista Outdoor Inc.

Vista Outdoor is a global designer, manufacturer and marketer of consumer products in the outdoor sports and recreation markets. The company 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. For news and information, visit www.vistaoutdoor.com or follow us on Twitter @VistaOutdoorInc and Facebook at www.facebook.com/vistaoutdoor.



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 United States and Vista Outdoor’s other markets outside the United States, including conditions affecting employment levels, consumer confidence and spending, conditions in the retail environment, and other economic conditions affecting demand for our products and the financial health of our customers; 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, including our ability to respond to shifting preferences of the end consumer from brick and mortar retail to online retail; Vista Outdoor’s ability to maintain and enhance brand recognition and reputation; others' use of social media to disseminate negative commentary about us and boycotts; reductions in or unexpected changes in or our inability to accurately forecast demand for ammunition, 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

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constraints, production disruptions or quality or price issues affecting Vista Outdoor’s operating costs; Vista Outdoor’s competitive environment; risks associated with diversification into new international and commercial markets including regulatory compliance; changes in the current tariff structures; 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 ammunition regulations; Vista Outdoor’s ability to realize expected benefits from acquisitions and integrate acquired businesses; Vista Outdoor's ability to execute our strategic transformation plan, including our ability to realize expected benefits from the successful divestiture of non-core brands and profitability improvement initiatives; 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. You are cautioned not to place undue reliance on any forward-looking statements we make. Vista Outdoor undertakes no obligation to update any forward-looking statements except as otherwise required by law. 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.

 
#          #          #

7


VISTA OUTDOOR INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(preliminary and unaudited)

 
 
Three months ended
 
Nine months ended
(Amounts in thousands except per share data)
 
December 29, 2019
 
December 30, 2018
 
December 29, 2019
 
December 30, 2018
Sales, net
 
$
424,770

 
$
467,771

 
$
1,329,560

 
$
1,543,192

Cost of sales
 
335,980

 
373,535

 
1,055,428

 
1,226,861

Gross profit
 
88,790

 
94,236

 
274,132

 
316,331

Operating expenses:
 


 
 
 
 

 
 

Research and development
 
5,703

 
6,503

 
17,750

 
20,681

Selling, general, and administrative
 
64,418

 
86,418

 
231,298

 
284,754

Goodwill and intangibles impairment
 

 
432,612

 

 
456,023

Impairment of held-for-sale assets
 

 
83,854

 
9,429

 
128,775

Income (loss) before interest, income taxes, and other
 
18,669

 
(515,151
)
 
15,655

 
(573,902
)
Other income (expense), net
 

 
(1,871
)
 
(433
)
 
(6,796
)
Interest expense, net
 
(8,373
)
 
(16,003
)
 
(31,811
)
 
(46,340
)
Earnings (loss) before income taxes
 
10,296

 
(533,025
)
 
(16,589
)
 
(627,038
)
Income tax provision (benefit)
 
(4,352
)
 
(18,383
)
 
(2,724
)
 
(27,230
)
Net income (loss)
 
$
14,648

 
$
(514,642
)
 
$
(13,865
)
 
$
(599,808
)
Earnings (loss) per common share:
 
 

 
 

 
 

 
 

Basic and Diluted
 
$
0.25

 
$
(8.94
)
 
$
(0.24
)
 
$
(10.43
)
Weighted-average number of common shares outstanding:
 


 
 

 
 

 
 

Basic
 
57,878

 
57,572

 
57,812

 
57,525

Diluted
 
57,978

 
57,572

 
57,812

 
57,525



8


VISTA OUTDOOR INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(preliminary and unaudited)
 
(Amounts in thousands except share data)
 
December 29, 2019
 
March 31, 2019
ASSETS
 
 

 
 

Current assets:
 
 

 
 

Cash and cash equivalents
 
$
32,068

 
$
21,935

Net receivables
 
319,990

 
344,249

Net inventories
 
334,729

 
344,491

Income tax receivable
 
564

 

Assets held for sale
 

 
207,607

Other current assets
 
18,075

 
21,180

Total current assets
 
705,426

 
939,462

Net property, plant, and equipment
 
191,945

 
215,592

Operating lease assets
 
67,934

 

Goodwill
 
204,496

 
204,496

Net intangible assets
 
345,615

 
360,520

Deferred charges and other non-current assets, net
 
33,517

 
17,953

Total assets
 
$
1,548,933

 
$
1,738,023

LIABILITIES AND EQUITY
 
 

 
 

Current liabilities:
 
 

 
 

Current portion of long-term debt
 
$

 
$
19,335

Accounts payable
 
96,555

 
99,283

Accrued compensation
 
27,263

 
36,456

Accrued income taxes
 

 
436

Federal excise, use, and other taxes
 
18,707

 
18,482

Liabilities held for sale
 

 
46,030

Other current liabilities
 
100,984

 
97,175

Total current liabilities
 
243,509

 
317,197

Long-term debt
 
523,860

 
684,670

Deferred income tax liabilities
 
17,677

 
17,757

Long-term operating lease liabilities
 
72,347

 

Accrued pension and postemployment benefits
 
41,001

 
46,083

Other long-term liabilities
 
45,589

 
63,276

Total liabilities
 
943,983

 
1,128,983

 
 
 
 
 
Common stock — $.01 par value:
 
 
 
 
Authorized — 500,000,000 shares
 
 
 
 
Issued and outstanding — 57,909,645 shares as of December 29, 2019 and 57,710,934 shares as of March 31, 2019
 
578

 
577

Additional paid-in capital
 
1,749,545

 
1,752,419

Accumulated deficit
 
(818,834
)
 
(804,969
)
Accumulated other comprehensive loss
 
(78,242
)
 
(82,967
)
Common stock in treasury, at cost — 6,054,794 shares held as of December 29, 2019 and 6,253,505 shares held as of March 31, 2019
 
(248,097
)
 
(256,020
)
Total stockholders' equity
 
604,950

 
609,040

Total liabilities and stockholders' equity
 
$
1,548,933

 
$
1,738,023


9


VISTA OUTDOOR INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(preliminary and unaudited)

 
 
Nine months ended
(Amounts in thousands)
 
December 29, 2019
 
December 30, 2018
Operating Activities:
 
 
 
 
Net income (loss)
 
$
(13,865
)
 
$
(599,808
)
Adjustments to net income (loss) to arrive at cash provided by operating activities:
 
 
 
 
Depreciation
 
36,207

 
40,112

Amortization of intangible assets
 
14,996

 
19,284

Impairment of held-for-sale assets
 
9,429

 
128,775

Goodwill and intangibles impairment
 

 
456,023

Amortization of deferred financing costs
 
5,569

 
10,458

Deferred income taxes
 
348

 
(26,610
)
(Gain) loss on disposal of property, plant, and equipment
 
(48
)
 
8,098

Loss on divestitures
 
431

 
4,925

Share-based compensation
 
5,167

 
5,838

Changes in assets and liabilities:
 
 
 
 
Net receivables
 
38,098

 
47,088

Net inventories
 
(7,510
)
 
(88,657
)
Accounts payable
 
(4,676
)
 
36,961

Accrued compensation
 
(9,865
)
 
(6,911
)
Accrued income taxes
 
(3,744
)
 
(4,872
)
Federal excise, use, and other taxes
 
(2,243
)
 
(3,630
)
Pension and other postretirement benefits
 
(2,521
)
 
(555
)
Other assets and liabilities
 
(2,719
)
 
34,429

Cash provided by operating activities
 
63,054

 
60,948

Investing Activities:
 
 
 
 
Capital expenditures
 
(21,977
)
 
(30,911
)
Proceeds from sale of Eyewear brands and Firearms business
 
156,567

 
151,595

Proceeds from the disposition of property, plant, and equipment
 
270

 
365

Cash provided by investing activities
 
134,860

 
121,049

Financing Activities:
 
 
 
 
Borrowings on lines of credit
 
272,321

 
440,000

Payments on lines of credit
 
(312,623
)
 
(180,000
)
Proceeds from issuance of long-term debt
 

 
149,343

Payments made on long-term debt
 
(144,509
)
 
(576,000
)
Payments made for debt issuance costs and prepayment premiums
 
(903
)
 
(10,271
)
Settlement from former parent
 

 
13,047

Deferred payments for acquisitions
 
(1,348
)
 
(1,348
)
Shares withheld for payroll taxes
 
(507
)
 
(1,001
)
Cash used for financing activities
 
(187,569
)
 
(166,230
)
Effect of foreign exchange rate fluctuations on cash
 
(212
)
 
(1,013
)
Increase in cash and cash equivalents
 
10,133

 
14,754

Cash and cash equivalents at beginning of period
 
21,935

 
22,870

Cash and cash equivalents at end of period
 
$
32,068

 
$
37,624


10
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