- Sale of The Kinetic Group1 For $1.91 Billion is On Track and
Expected to Create Meaningful Value
- Revelyst1 GEAR Up Transformation Program is Well Underway;
Expect to Drive $100 Million of Run-Rate Cost Savings in FY27,
Program Provides a Clear Path to Double Standalone Adjusted EBITDA
In FY252
- Q3 Total Sales of $682 Million In Line With Expectations;
Revelyst Sales of $317 Million; The Kinetic Group Sales of $365
Million
- Q3 Net Income and Adjusted EBITDA of $(148) Million and $94
Million, Respectively; Net Income and Adjusted EBITDA Margins of
(21.7)% and 13.7%, Respectively; Q3 Net Income Included a Non-Cash
Impairment of Goodwill and Intangible Assets of $219
Million
- Balance Sheet Improving With Strong Inventory Reduction;
Capital Allocation Focused on Debt Paydown Until Stockholder Vote;
Total Debt in Q3 Decreased Sequentially to $835 Million With a Net
Debt Leverage Ratio of 1.7x
- Reaffirm FY24 Guidance for Sales of $2.725 Billion to $2.825
Billion and Adjusted EBITDA Margins in the Range of 15.50% to
16.25%
Vista Outdoor Inc. (NYSE: VSTO), the parent company of 41
renowned brands that design, manufacture and market sporting and
outdoor lifestyle products to consumers around the globe, today
reported financial results for the third quarter of Fiscal Year
2024 (FY24), which ended on December 24, 2023.
“Over the last few months, Revelyst’s culture of innovation
drove exciting new product introductions at the brand level,
secured incremental revenue opportunities for the segment and led
to the successful launch of our Revelyst Lyst, which brought
products directly to consumers at the enterprise level,” said Eric
Nyman, CEO of Revelyst and co-CEO of Vista Outdoor. “I’m also proud
to say we are on track and making progress with GEAR Up, our
transformation program designed to simplify our business model,
deliver increased efficiency in the form of new run-rate
profitability improvements and drive organic growth through
innovation. This initiative is helping us to shape a culture of
innovation and collaboration while also strengthening our operating
model.”
“We have continued to see the market sustain a user base above
pre-pandemic levels,” said Jason Vanderbrink, CEO of The Kinetic
Group and co-CEO of Vista Outdoor. “From NICS being more than one
million for another consecutive month, to improved retail sales
data, great recognition from industry media on our new product
innovation and the U.S. Navy contracts we were awarded that are a
great source of pride for our employees, I have full confidence our
business will perform at the highest level.”
1The Kinetic Group was formerly the Sporting Products segment of
Vista Outdoor and Revelyst was formerly the Outdoor Products
segment of Vista Outdoor
2Vista Outdoor has not reconciled adjusted
EBITDA guidance and adjusted EBITDA margin guidance (on a segment
or consolidated basis) to GAAP net income guidance and GAAP net
income margin guidance, respectively, because Vista Outdoor does
not provide guidance for net income, which is the most directly
comparable financial measure calculated in accordance with GAAP
with respect to adjusted EBITDA and a reconciling item between GAAP
net income margin and non-GAAP EBITDA margin. Accordingly,
reconciliations to net income and net income margin are not
available without unreasonable effort. See page four of this press
release for more information.
Consolidated results for the three
months ended December 24, 2023 versus the three months ended
December 25, 2022:
- Sales decreased $73 million to $682 million, down 10 percent
driven by lower shipments across nearly all categories as channel
inventory has normalized and lower pricing at The Kinetic Group and
increased discounting, lower volume, and unfavorable mix due to
continued short-term consumer pressures at Revelyst.
- Gross profit decreased 15 percent to $203 million and gross
profit margin decreased 190 basis points to 29.7 percent primarily
due to decreased volume, increased input costs due to inflation,
and lower price at The Kinetic Group and increased discounting,
lower volume, and unfavorable mix, partially offset by favorable
foreign exchange rates at Revelyst.
- Operating expenses were $383 million, up 169 percent, primarily
caused by increased goodwill and intangible impairment expense,
planned separation costs, non-cash expense related to the change in
the estimated fair value of the contingent consideration recognized
in the prior year, partially offset by reduced inventory step-up
expense and decreased selling costs at The Kinetic Group.
- Operating income decreased 286 percent to $(180) million.
Operating income margins decreased 3,920 basis points to (26.4)
percent. Adjusted operating income was $69 million, down 37
percent. Adjusted operating income margin decreased 443 basis
points to 10.0%.
- Net income decreased 327 percent to $(148) million. Net income
margin decreased 3,035 basis points to (21.7) percent.
- Adjusted EBITDA decreased 30 percent to $94 million. Adjusted
EBITDA margins decreased 405 basis points to 13.7 percent.
- Diluted Earnings per Share (EPS) was $(2.55), down 326 percent,
compared with $1.13. Adjusted EPS was $0.80, down 37 percent,
compared with $1.27.
- Year to date cash provided by operating activities was $240
million, compared with $308 million. Year to date adjusted free
cash flow was $270 million, compared with $315 million.
Segment results for the three months
ended December 24, 2023 versus the three months ended December 25,
2022:
The Kinetic Group
- Sales decreased 9 percent to $365 million driven primarily by
lower shipments across nearly all categories as channel inventory
has normalized and lower pricing, partially offset by increased
shipments in rifle and primer categories.
- Gross profit decreased 17 percent to $118 million primarily
caused by decreased volume, increased input costs due to inflation,
and lower price. Gross margin decreased 287 basis points to 32.4
percent.
- Operating income decreased 19 percent to $95 million primarily
driven by lower gross profit, partially offset by decreased selling
costs. Operating income margin decreased 325 basis points to 26.1
percent.
- Adjusted EBITDA decreased 18 percent to $102 million. Adjusted
EBITDA margins decreased 301 basis points to 27.9 percent.
Revelyst
- Sales decreased 10 percent to $317 million driven primarily by
increased discounting, lower volume, and unfavorable mix as
consumers are pressured by high interest rates and other short-term
factors affecting their purchases of consumer durable goods.
- Gross profit decreased 17 percent to $85 million primarily
caused by increased discounting, lower volume, and unfavorable mix,
partially offset by favorable foreign exchange rates. Gross margin
decreased 228 basis points to 26.7 percent.
- Operating income decreased 121 percent to $(3) million
primarily driven by decreased gross profit. Operating income margin
decreased 471 basis points to (0.9) percent.
- Adjusted EBITDA decreased 53 percent to $15 million. Adjusted
EBITDA margins decreased 416 basis points to 4.6 percent.
“Sales in the third quarter of Fiscal Year 2024 were in line
with our expectations, EBITDA was better than we had expected and
our balance sheet improved in the period as inventory decreased
more than 15% year-over-year,” said Andy Keegan, CFO of Vista
Outdoor. “Year-to-date cash flow provided by operating activities
was $240 million and year-to-date adjusted free cash flow was $270
million. Total debt at the end of the period decreased $110 million
sequentially to $835 million and net debt decreased $127 million
sequentially to $778 million as inventories have improved by 5
percent sequentially. Our net debt leverage ratio is now at 1.7x.
Looking ahead, we are reaffirming Fiscal Year 2024 guidance. On The
Kinetic Group side, we are pleased to report the transaction
process is progressing well and on track. And on the Revelyst side,
we remain enthusiastic as we expect to return to growth in our
fiscal fourth quarter and see positive impacts from the GEAR Up
transformation program that is well underway, which we expect to
drive $100 million in run-rate cost savings in FY2027 and see a
clear path to doubling standalone Adjusted EBITDA in FY2025.”
Outlook for Fiscal Year 2024
Vista Outdoor has not reconciled adjusted EBITDA margin guidance
to GAAP net income margin guidance because Vista Outdoor does not
provide guidance for net income, which is a reconciling item
between GAAP net income margin and non-GAAP adjusted EBITDA margin.
Accordingly, a reconciliation to net income margin is not available
without unreasonable effort. Vista Outdoor has not reconciled
adjusted effective tax rate guidance to GAAP effective tax rate
guidance because Vista Outdoor does not provide guidance for income
(loss) before income taxes, which is a reconciling item between
GAAP effective tax rate and non-GAAP adjusted effective tax rate.
Accordingly, a reconciliation to effective tax rate is not
available without unreasonable effort. Reconciliations of adjusted
EPS guidance to EPS guidance and adjusted free cash flow guidance
to cash provided by operating activities guidance are available on
page seven of this press release.
The Company expects:
- Sales in the range of $2.725 billion to $2.825 billion
- The Kinetic Group sales expected to be approximately $1.450
billion to $1.500 billion
- Revelyst sales expected to be approximately $1.275 billion to
$1.325 billion
- Adjusted EBITDA margin in the range of 15.50 percent to 16.25
percent
- The Kinetic Group EBITDA margin range of 26.50 percent to 27.50
percent
- Revelyst EBITDA margin range of 7.75 percent to 8.25
percent
- Earnings per share in the range of $0.00 to $0.40. Adjusted
Earnings per share in the range of $3.65 to $4.05
- Cash provided by operating activities between $256 million to
$308 million; adjusted free cash flow in the range of $265 million
to $315 million
- Effective tax rate of approximately (63.0) percent and an
adjusted effective tax rate of approximately 19.5 percent
- Interest expense in the range of $55 million to $65
million
- Capital expenditures as a percent of sales of approximately
1.50 percent
Earnings Conference Call Webcast Information
Vista Outdoor will hold an investor conference call to discuss
its business operations, third quarter FY24 financial results, and
provide an update on its business outlook on February 1, 2024, at 9
a.m. ET. The conference call will be accessible through a live
webcast. Interested investors and other individuals can access the
webcast and view and/or download the 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 until March 2, 2024. The telephone number is (866)
813-9403, and the access code is 838410.
Non-GAAP Financial Measures
Non-GAAP financial measures such as adjusted EBITDA, adjusted
EBITDA margin, adjusted operating income, adjusted operating income
margin, adjusted EPS, adjusted free cash flow, adjusted effective
tax rate, net debt and net debt leverage ratio as included in this
press release are supplemental measures that are not calculated in
accordance with Generally Accepted Accounting Principles (“GAAP”).
These non-GAAP measures should be considered in addition to, and
not as substitutes for, GAAP measures. Please see the tables below
for reconciliations of these non-GAAP measures to the most directly
comparable GAAP measures.
Beginning with the second quarter of fiscal year 2024, we
modified our presentation of non-GAAP results and no longer exclude
from adjusted results expenses related to retention payments in
connection with our acquisitions. These specified expenses that
were previously excluded from adjusted results under the line items
of transition costs and post-acquisition compensation are included
in “operating expenses” in our as reported results. The Company
made these changes to its presentation of non-GAAP financial
measures following comments from, and discussions with, staff
members of the U.S. Securities and Exchange Commission (the “SEC”).
Prior period adjusted results have been revised for comparability.
Revised adjusted EPS includes the negative impact of this change of
approximately $0.03 for the period ending December 25, 2022. The
revised presentation of the reconciliation to previously reported
adjusted EPS, and the revised reconciliation to adjusted results
for the three months ended December 25, 2022, is reported
below.
Reconciliation of previously reported adjusted EPS
(in thousands)
Three months ended December
25, 2022
(Unaudited, dollars in thousands, except per share data)
Transition costs previously specified
$
198
Post-acquisition compensation previously
specified
2,126
Income tax impact
(270
)
Decrease in as adjusted net income
$
2,054
Decrease in adjusted EPS
$
0.03
Adjusted EPS previously reported
1.30
Revised adjusted EPS
$
1.27
In addition to the results prepared in accordance with GAAP, we
are providing the information below on a non-GAAP basis, including
adjusted gross profit, adjusted operating expenses, adjusted
operating income, adjusted taxes, adjusted net income and adjusted
diluted earnings per share (EPS). Vista Outdoor defines these
measures as gross profit, operating expenses, operating income,
operating income margin, taxes, net income, and EPS, excluding,
where applicable, the impact of costs incurred for transition
costs, executive transition costs, planned separation costs,
impairment of goodwill and intangibles, restructuring, contingent
consideration, post-acquisition compensation, inventory step-up and
transaction costs. We calculate “adjusted operating income margin”
as adjusted operating income divided by net sales. Vista Outdoor
management is presenting these measures so a reader may compare
gross profit, operating expenses, operating income, taxes, net
income, and EPS excluding these items, as such adjusted measures
provide investors with an important perspective on the operating
results of the Company. Vista Outdoor management uses such adjusted
measures internally to assess business performance, and Vista
Outdoor’s definitions thereof may differ from those used by other
companies.
Three months ended December 24,
2023
(in thousands except per share
amounts)
Sales, Net
Gross Profit
Operating Expenses
Operating Income
Operating Income
Margin
Taxes
Tax Rate
Net Income
EPS (1)
As reported
$
682,253
$
202,851
$
382,900
$
(180,049
)
(26.4
)%
$
46,995
24.1
%
$
(148,195
)
$
(2.55
)
Transition costs
—
—
(1,255
)
1,255
(301
)
954
Executive transition costs
—
—
(250
)
250
(60
)
190
Planned separation costs
—
—
(23,741
)
23,741
(5,698
)
18,043
Impairment of goodwill and intangibles
—
—
(218,812
)
218,812
(47,318
)
171,494
Restructuring
—
—
(1,186
)
1,186
(285
)
901
Contingent consideration
—
—
(3,146
)
3,146
—
3,146
Post-acquisition compensation
—
—
(160
)
160
—
160
As adjusted
$
682,253
$
202,851
$
134,350
$
68,501
10.0
%
$
(6,667
)
12.5
%
$
46,693
$
0.80
(1) Potential common stock equivalents
were excluded from the computation of as reported net loss per
share, as their effect was antidilutive. As reported net loss per
share is calculated based on 58,078 basic and diluted weighted
average shares of common stock. Adjusted net income per share is
calculated based on 58,378 diluted shares of common stock.
Three months ended December 25,
2022
(in thousands except per share
amounts)
Sales, Net
Gross Profit
Operating Expenses
Operating Income
Operating Income
Margin
Taxes
Tax Rate
Net Income
EPS (1)
As reported
$
754,775
$
238,806
$
142,120
$
96,686
12.8
%
$
(13,225
)
(14.5
)%
$
65,147
$
1.13
Inventory step-up
—
5,043
—
5,043
(1,261
)
3,782
Transaction costs
—
—
(180
)
180
(14
)
166
Contingent consideration
—
—
4,977
(4,977
)
(6
)
(4,983
)
Transition costs
—
—
(633
)
633
(158
)
475
Post-acquisition compensation
—
—
(1,404
)
1,404
(266
)
1,138
Planned separation costs
—
—
(10,247
)
10,247
(2,562
)
7,685
As adjusted
$
754,775
$
243,849
$
134,633
$
109,216
14.5
%
$
(17,492
)
19.2
%
$
73,410
$
1.27
(1) As reported net earnings per share and
adjusted net earnings per share are both calculated based on 57,843
diluted weighted average shares of common stock.
During the three months ended December 24, 2023, we incurred
costs that we feel are not indicative of ongoing operations as
follows:
- transition costs for prior acquisitions to integrate into the
Company such as professional fees and travel costs;
- executive transition costs for executive search fees and
related costs for the transition of our CEO and General Counsel
executives;
- costs associated with the planned separation of our Revelyst
and The Kinetic Group reportable segments into two separate
companies, including restructuring, severance, advisory and legal
fees;
- impairment expense related to goodwill, and indefinite-lived
and amortizing intangibles.
- restructuring costs related to a $50 million cost reduction and
earnings improvement program, announced during our fourth fiscal
quarter of 2023, which includes severance and asset impairments
related to product line reassessments, office closures, and
headcount reductions across our brands and corporate teams;
- change in the estimated fair value of the contingent
consideration payable related to our QuietKat acquisition; and
- post-acquisition compensation expense related to the Stone
Glacier acquisition.
As noted above, our reported tax benefit of $46,995 results in a
tax rate of 24.1 percent and our adjusted tax expense of $(6,667)
results in an adjusted tax rate of 12.5 percent.
During the three months ended December 25, 2022, we incurred
costs and recognized income that we believe are not indicative of
ongoing operations as follows:
- inventory step-up costs associated with our acquisitions, which
is expensed over their inventory cycles;
- non-cash income for the change in the estimated fair value of
the contingent consideration payable related to our QuietKat
acquisition;
- transaction costs associated with possible and actual
transactions, including advisory and legal fees;
- costs for prior acquisitions to integrate into the Company such
as professional fees and travel costs;
- incurred post-acquisition compensation expense in connection
with the Stone Glacier acquisition;
- costs associated with the planned separation of our Revelyst
and The Kinetic Group reportable segments into two separate
companies, including restructuring, severance, advisory and legal
fees;
- post-acquisition compensation expense related to the Stone
Glacier acquisition.; and
- non-cash income for the change in the estimated fair value of
the contingent consideration payable related to our Fox and
HEVI-Shot acquisition.
As noted above, our reported tax expense of $(13,225) results in
a tax rate of 16.9 percent and our adjusted tax expense of
$(17,492) results in an adjusted tax rate of 19.2 percent.
Free Cash Flow
Free cash flow is defined as cash provided by operating
activities less capital expenditures. Vista Outdoor management
believes that free cash flow provides investors with an important
indication of the cash generated by our business 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 to assess
overall liquidity. Vista Outdoor’s definition of free cash flow may
differ from those used by other companies.
Adjusted free cash flow is defined as free cash flow eliminating
the cash impact of the following items that are adjusted in our
presentation of adjusted net income: transaction costs, transition
costs, planned separation costs, post-acquisition compensation,
restructuring, and executive transition costs. Vista Outdoor
management believes that adjusted free cash flow enhances
investors’ understanding of the liquidity of our ongoing
operations. Adjusted free cash flow is also used by Vista Outdoor
to assess employees’ performance and determine their annual
incentive payments. Vista Outdoor’s definition of adjusted free
cash flow may differ from those used by other companies. During the
fourth quarter of fiscal year 2023, we modified our definition of
adjusted free cash flow to no longer adjust for applicable tax
amounts. Beginning with the second quarter of fiscal year 2024, we
modified our presentation of non-GAAP results and no longer exclude
from adjusted free cash flow, cash payments related to retention
payments in connection with our acquisitions and planned
separation. All periods presented have been adjusted for this
modification.
Nine months ended
(in thousands)
Three months ended December
24, 2023
December 24, 2023
December 25, 2022
Projected year ending March
31, 2024
Cash provided by operating activities
$
132,729
$
240,269
$
307,516
$256,280–307,780
Capital expenditures
(5,993
)
(19,418
)
(25,157
)
~(40,875-42,375)
Free cash flow
$
126,736
$
220,851
$
282,359
$215,405-265,405
Transaction costs
—
—
9,175
—
Transition costs
4,034
10,699
1,257
10,699
Planned separation costs
20,192
27,226
21,790
27,226
Post acquisition compensation
84
250
—
250
Restructuring
2,997
7,278
—
7,278
Executive transition
668
4,142
—
4,142
Adjusted free cash flow
$
154,711
$
270,446
$
314,581
$265,000–315,000
Current FY24 Full-Year Adjusted EPS
Guidance Reconciliation
Low
High
EPS guidance including transition costs,
executive transition costs, planned separation costs,
restructuring, and post-acquisition compensation
$
—
$
0.40
Transition costs
0.10
0.10
Executive transition costs
0.01
0.01
Contingent consideration
0.05
0.05
Impairment of goodwill and intangibles
2.94
2.94
Planned separation costs
0.45
0.45
Restructuring
0.08
0.08
Post-acquisition compensation
0.02
0.02
Adjusted EPS guidance
$
3.65
$
4.05
Adjusted EBITDA and Adjusted EBITDA Margin
Adjusted EBITDA is defined as net income before other
income/(expense), interest, taxes, and depreciation and
amortization, excluding the non-recurring and non-cash items
referenced above. We calculate “Adjusted EBITDA margins” as
Adjusted EBITDA divided by net sales. Vista Outdoor management
believes adjusted EBITDA and adjusted EBITDA margin provide
investors with an important perspective on the Company’s core
profitability and help investors analyze underlying trends in the
Company’s business and evaluate its performance on an absolute
basis and relative to its peers. Adjusted EBITDA and adjusted
EBITDA margin should be considered in addition to, and not as a
substitute for, GAAP net income and GAAP net income margin. Vista
Outdoor’s definitions may differ from those used by other
companies.
Segment Adjusted EBITDA Reconciliation
Three months ended December
24, 2023
(in thousands)
The Kinetic
Group
Revelyst
Total
Segment operating income (1)
$
95,347
$
(2,853
)
$
92,494
Depreciation and amortization
6,491
17,573
24,064
Segment adjusted EBITDA
$
101,838
$
14,720
$
116,558
Segment adjusted EBITDA margin
27.9
%
4.6
%
Three months ended December
25, 2022
(in thousands)
The Kinetic Group
Revelyst
Total
Segment operating income (1)
$
117,935
$
13,475
$
131,410
Depreciation and amortization
6,171
17,598
23,769
Segment adjusted EBITDA
$
124,106
$
31,073
$
155,179
Segment adjusted EBITDA margin
30.9
%
8.8
%
(1) We do not calculate GAAP net income at
the segment level, but have provided segment operating income as a
relevant measurement of profitability. Segment operating income
does not include interest expense and taxes as well as other
non-cash and non-recurring items. Segment operating income is
reconciled to our consolidated net income in the segment income to
consolidated net income reconciliation table included in this press
release.
Consolidated Adjusted EBITDA Reconciliation
Three months ended
(in thousands)
December 24, 2023
December 25, 2022
Net Income
$
(148,195
)
$
65,147
Other income, net
(86
)
(639
)
Interest expense, net
15,227
18,953
Income tax (benefit) provision
(46,995
)
13,225
Depreciation and amortization
25,001
24,791
Inventory step-up
—
5,043
Transaction costs
—
180
Transition costs
1,255
633
Impairment of goodwill and intangibles
218,812
—
Restructuring
1,186
—
Executive transition costs
250
—
Contingent consideration
3,146
(4,977
)
Planned separation costs
23,741
10,247
Post-acquisition compensation
160
1,404
Adjusted EBITDA
$
93,502
$
134,007
Adjusted EBITDA Margin
13.7
%
17.8
%
Segment Income to Consolidated Net Income
Reconciliation
Three months ended
(in thousands)
December 24, 2023
December 25,
2022
Segment income
$
92,494
$
131,410
Corporate costs and expenses (1)
(272,543
)
(34,724
)
Operating income
$
(180,049
)
$
96,686
Other income, net
86
639
Interest expense, net
(15,227
)
(18,953
)
Income tax benefit (provision)
46,995
(13,225
)
Net Income
$
(148,195
)
$
65,147
(1) Includes corporate overhead and
certain non-recurring items as described in the schedules to this
press release
Net Debt and Net Debt Leverage Ratio
Net debt is defined as total debt less cash and cash
equivalents. Net debt leverage ratio is defined as net debt as of
the balance sheet date divided by adjusted EBITDA for the twelve
months then ended. We believe that using net debt is useful to
investors in determining our leverage ratio since we could choose
to use cash and cash equivalents to retire debt. Vista Outdoor’s
definitions may differ from those used by other companies.
Net Debt and Net Debt Leverage Ratio Reconciliation
(in thousands)
As of December 24,
2023
Total Debt Outstanding
$
835,000
Less: Cash
(57,028
)
Net Debt
$
777,972
(in thousands)
Twelve months ended December
24, 2023
Net Income
$
(340,008
)
Other expense, net
885
Interest expense, net
68,208
Income tax provision
(33,586
)
Depreciation and amortization
99,805
Transition costs
10,084
Executive transition costs
6,972
Post-acquisition compensation
(5,285
)
Planned separation costs
38,497
Restructuring
19,067
Inventory step-up
1,449
Transaction costs
60
Impairment of goodwill and intangibles
593,167
Contingent consideration
(7,959
)
Adjusted EBITDA
$
451,356
Net debt leverage ratio
1.7
About Vista Outdoor Inc.
Vista Outdoor (NYSE: VSTO) is the parent company of more than
three dozen renowned brands that design, manufacture and market
sporting and outdoor products. Brands include Bushnell, CamelBak,
Bushnell Golf, Foresight Sports, Fox Racing, Bell Helmets, Camp
Chef, Giro, Simms Fishing, QuietKat, Stone Glacier, Federal
Ammunition, Remington Ammunition and more. Our reporting segments,
Revelyst and The Kinetic Group, provide consumers with a wide range
of performance-driven, high-quality and innovative outdoor and
sporting products. For news and information, visit our website at
www.VistaOutdoor.com.
No Offer or Solicitation
This communication is neither an offer to sell, nor a
solicitation of an offer to buy any securities, the solicitation of
any vote, consent or approval in any jurisdiction pursuant to or in
connection with the Transaction (as defined below) or otherwise,
nor shall there be any sale, issuance or transfer of securities in
any jurisdiction in contravention of applicable law. No offer of
securities shall be made except by means of a prospectus meeting
the requirements of Section 10 of the Securities Act of 1933, as
amended, and otherwise in accordance with applicable law.
Additional Information and Where to Find It
These materials may be deemed to be solicitation material in
respect of the transaction among Vista Outdoor Inc, Revelyst, Inc.
(“Revelyst”), CSG Elevate II Inc., CSG Elevate III Inc. and
CZECHOSLOVAK GROUP a.s. (the “Transaction”). In connection with the
Transaction, Revelyst, a subsidiary of Vista Outdoor, filed with
the SEC on January 16, 2024 a registration statement on Form S-4 in
connection with the proposed issuance of shares of common stock of
Revelyst to Vista Outdoor stockholders pursuant to the Transaction,
which Form S-4 includes a proxy statement of Vista Outdoor that
also constitutes a prospectus of Revelyst (the “proxy
statement/prospectus”). INVESTORS AND STOCKHOLDERS ARE URGED TO
READ ALL RELEVANT DOCUMENTS FILED WITH THE SEC, INCLUDING VISTA
OUTDOOR’S PROXY STATEMENT/PROSPECTUS, BECAUSE THEY CONTAIN
IMPORTANT INFORMATION ABOUT THE TRANSACTION AND THE PARTIES TO THE
TRANSACTION. After the Registration Statement is declared
effective, Vista Outdoor will mail the definitive proxy
statement/prospectus to each Vista Outdoor stockholder entitled to
vote at the meeting relating to the approval of the Transaction.
Investors and stockholders may obtain the proxy
statement/prospectus and any other documents free of charge through
the SEC’s website at www.sec.gov. Copies of the documents filed
with the SEC by Vista Outdoor are available free of charge on Vista
Outdoor’s website at www.vistaoutdoor.com.
Participants in Solicitation
Vista Outdoor, Revelyst, CSG Elevate II Inc., CSG Elevate III
Inc. and CZECHOSLOVAK GROUP a.s. and their respective directors,
executive officers and certain other members of management and
employees, under SEC rules, may be deemed to be “participants” in
the solicitation of proxies from Vista Outdoor’s stockholders in
respect of the Transaction. Information about Vista Outdoor’s
directors and executive officers is set forth in Vista Outdoor’s
proxy statement on Schedule 14A for its 2023 Annual Meeting of
Stockholders, which was filed with the SEC on June 12, 2023 and
subsequent statements of changes in beneficial ownership on file
with the SEC. These documents are available free of charge through
the SEC’s website at www.sec.gov. Additional information regarding
the interests of potential participants in the solicitation of
proxies in connection with the Transaction, which may, in some
cases, be different than those of Vista Outdoor’s stockholders
generally, is also included in the proxy statement/prospectus
relating to the Transaction.
Forward-Looking Statements
Some of the statements made and information contained in this
press release, excluding historical information, are
“forward-looking statements,” including those that discuss, among
other things: our 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 our actual results to differ materially
from the expectations described in such forward-looking statements,
including the following: risks related to the Transaction,
including (i) the failure to receive, on a timely basis or
otherwise, the required approval of the Transaction by Vista
Outdoor’s stockholders, (ii) the possibility that any or all of the
various conditions to the consummation of the Transaction may not
be satisfied or waived, including the failure to receive any
required regulatory approvals from any applicable governmental
entities (or any conditions, limitations or restrictions placed on
such approvals), (iii) the possibility that competing offers or
acquisition proposals may be made, (iv) the occurrence of any
event, change or other circumstance that could give rise to the
termination of the merger agreement relating to the Transaction,
including in circumstances which would require Vista Outdoor to pay
a termination fee, (v) the effect of the announcement or pendency
of the Transaction on Vista Outdoor’s ability to attract, motivate
or retain key executives and employees, its ability to maintain
relationships with its customers, vendors, service providers and
others with whom it does business, or its operating results and
business generally, (vi) risks related to the Transaction diverting
management’s attention from Vista Outdoor’s ongoing business
operations and (vii) that the Transaction may not achieve some or
all of any anticipated benefits with respect to either business
segment and that the Transaction may not be completed in accordance
with our expected plans or anticipated timelines, or at all;
impacts from the COVID-19 pandemic on Vista Outdoor’s operations,
the operations of our customers and suppliers and general economic
conditions; supplier capacity constraints, production or shipping
disruptions or quality or price issues affecting our operating
costs; the supply, availability and costs of raw materials and
components; increases in commodity, energy, and production costs;
seasonality and weather conditions; our ability to complete
acquisitions, realize expected benefits from acquisitions and
integrate acquired businesses; reductions in or unexpected changes
in or our inability to accurately forecast demand for ammunition,
accessories, or other outdoor sports and recreation products;
disruption in the service or significant increase in the cost of
our primary delivery and shipping services for our products and
components or a significant disruption at shipping ports; risks
associated with diversification into new international and
commercial markets, including regulatory compliance; our ability to
take advantage of growth opportunities in international and
commercial markets; our ability to obtain and maintain licenses to
third-party technology; our ability to attract and retain key
personnel; disruptions caused by catastrophic events; risks
associated with our sales to significant retail customers,
including unexpected cancellations, delays, and other changes to
purchase orders; our competitive environment; our ability to adapt
our 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; our ability to maintain and enhance brand
recognition and reputation; others’ use of social media to
disseminate negative commentary about us, our products, and
boycotts; 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; our ability to comply with extensive
federal, state and international laws, rules and regulations;
changes in laws, rules and regulations relating to our business,
such as federal and state ammunition regulations; risks associated
with cybersecurity and other industrial and physical security
threats; interest rate risk; changes in the current tariff
structures; changes in tax rules or pronouncements; capital market
volatility and the availability of financing; foreign currency
exchange rates and fluctuations in those rates; general economic
and business conditions in the United States and our markets
outside the United States, including as a result of the war in
Ukraine and the imposition of sanctions on Russia, the COVID-19
pandemic, 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. You are cautioned not to place
undue reliance on any forward-looking statements we make, which are
based only on information currently available to us and speak only
as of the date hereof. A more detailed description of risk factors
that may affect our operating results can be found in Part 1, Item
1A, Risk Factors, of our Annual Report on Form 10-K for fiscal year
2023, in Part II, Item 1A, Risk Factors, of our Quarterly Report on
Form 10-Q for the third quarter of fiscal year 2024, and in the
filings we make with the SEC from time to time. We undertake no
obligation to update any forward-looking statements, except as
otherwise required by law.
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 24, 2023
December 25, 2022
December 24, 2023
December 25, 2022
Sales, net
$
682,253
$
754,775
$
2,052,394
$
2,339,065
Cost of sales
479,402
515,969
1,413,916
1,543,915
Gross profit
202,851
238,806
638,478
795,150
Operating expenses:
Research and development
12,267
12,382
36,550
31,433
Selling, general, and administrative
151,821
129,738
395,194
363,439
Impairment of goodwill and intangibles
218,812
—
218,812
—
Operating income (loss)
(180,049
)
96,686
(12,078
)
400,278
Other income (expense), net
86
639
(1,629
)
1,380
Interest expense, net
(15,227
)
(18,953
)
(48,088
)
(39,197
)
Income (loss) before income taxes
(195,190
)
78,372
(61,795
)
362,461
Income tax benefit (provision)
46,995
(13,225
)
16,122
(77,844
)
Net income (loss)
$
(148,195
)
$
65,147
$
(45,673
)
$
284,617
Earnings (loss) per common share:
Basic
$
(2.55
)
$
1.15
$
(0.79
)
$
5.03
Diluted
$
(2.55
)
$
1.13
$
(0.79
)
$
4.91
Weighted-average number of common shares
outstanding:
Basic
58,078
56,574
57,866
56,538
Diluted
58,078
57,843
57,866
58,022
VISTA OUTDOOR INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(preliminary)
(unaudited)
(Amounts in thousands except share
data)
December 24, 2023
March 31, 2023
ASSETS
Current assets:
Cash and cash equivalents
$
57,028
$
86,208
Net receivables
374,010
339,373
Net inventories
654,839
709,897
Income tax receivable
13,692
—
Other current assets
36,630
60,636
Total current assets
1,136,199
1,196,114
Net property, plant, and equipment
208,277
228,247
Operating lease assets
95,906
106,828
Goodwill
303,995
465,709
Net intangible assets
638,298
733,176
Deferred income tax assets
4,973
—
Deferred charges and other non-current
assets, net
65,953
68,808
Total assets
$
2,453,601
$
2,798,882
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Current portion of long-term debt
$
65,000
$
65,000
Accounts payable
126,507
136,556
Accrued compensation
46,438
60,719
Accrued income taxes
—
6,676
Federal excise, use, and other taxes
35,323
38,543
Other current liabilities
166,764
146,377
Total current liabilities
440,032
453,871
Long-term debt
763,986
984,658
Deferred income tax liabilities
—
40,749
Long-term operating lease liabilities
95,429
103,313
Accrued pension and postemployment
benefits
23,990
25,114
Other long-term liabilities
47,259
59,384
Total liabilities
1,370,696
1,667,089
Common stock — $.01 par value:
Authorized — 500,000,000 shares
Issued and outstanding — 58,122,198 shares
as of December 24, 2023 and 57,085,756 shares as of March 31,
2023
580
570
Additional paid-in capital
1,655,539
1,711,155
Accumulated deficit
(276,201
)
(230,528
)
Accumulated other comprehensive loss
(75,331
)
(80,802
)
Common stock in treasury, at cost —
5,842,241 shares held as of December 24, 2023 and 6,878,683 shares
held as of March 31, 2023
(221,682
)
(268,602
)
Total stockholders' equity
1,082,905
1,131,793
Total liabilities and stockholders'
equity
$
2,453,601
$
2,798,882
VISTA OUTDOOR INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(preliminary and
unaudited)
Nine months ended
(Amounts in thousands)
December 24, 2023
December 25, 2022
Operating Activities:
Net income (loss)
$
(45,673
)
$
284,617
Adjustments to net income (loss) to arrive
at cash provided by operating activities:
Depreciation
36,981
35,660
Amortization of intangible assets
37,826
31,431
Amortization of deferred financing
costs
6,222
4,603
Impairment of goodwill and intangibles
218,812
—
Impairment of long-lived assets
2,845
—
Change in fair value of contingent
consideration
3,146
(16,403
)
Deferred income taxes
(47,139
)
(6,165
)
Gain on foreign exchange
(941
)
(586
)
Loss on disposal of property, plant, and
equipment
387
699
Share-based compensation
7,917
19,590
Changes in assets and liabilities:
Net receivables
(33,761
)
31,127
Net inventories
58,634
(45,568
)
Accounts payable
(8,260
)
(11,254
)
Accrued compensation
(14,166
)
(39,558
)
Accrued income taxes
(22,683
)
13,538
Federal excise, use, and other taxes
(3,214
)
(4,643
)
Pension and other postretirement
benefits
1,090
1,600
Other assets and liabilities
42,246
8,828
Cash provided by operating
activities
240,269
307,516
Investing Activities:
Capital expenditures
(19,418
)
(25,157
)
Acquisition of businesses, net of cash
received
—
(761,497
)
Proceeds from the disposition of property,
plant, and equipment
137
43
Cash used in investing
activities
(19,281
)
(786,611
)
Financing Activities:
Proceeds from credit facility
172,000
468,000
Repayments of credit facility
(257,000
)
(223,000
)
Proceeds from issuance of long-term
debt
—
350,000
Debt issuance costs
(63
)
(16,935
)
Payments on long-term debt
(140,000
)
(35,000
)
Payments made for contingent
consideration
(8,585
)
—
Proceeds from exercise of stock
options
127
205
Payment of employee taxes related to
vested stock awards
(16,840
)
(8,946
)
Cash (used in) provided by financing
activities
(250,361
)
534,324
Effect of foreign exchange rate
fluctuations on cash
193
(387
)
Increase (decrease) in cash and cash
equivalents
(29,180
)
54,842
Cash and cash equivalents at beginning of
period
86,208
22,584
Cash and cash equivalents at end of
period
$
57,028
$
77,426
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240131772248/en/
Investor Contact: Tyler Lindwall Phone:
612-704-0147 E-mail:
investor.relations@vistaoutdoor.com
Media Contact: Eric Smith Phone:
720-772-0877 E-mail:
media.relations@vistaoutdoor.com
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