Vista Outdoor Inc. reported first-quarter sales were down 7 percent on an organic basis, excluding results from the sale of its Eyewear brands. Adjusted EPS was a loss of 8 cents a share compared to break-even results in the prior-year quarter.
The company’s major brands include Federal Premium, CamelBak, Bushnell, Camp Chef, Primos, BLACKHAWK, Bell and Giro.
“We’ve now completed the first phase of Vista Outdoor’s turnaround,” said Vista Outdoor Chief Executive Officer Chris Metz. “By divesting our Eyewear business and now our Savage firearms business, we’ve right-sized our portfolio to brands who are, or can be, market leaders in their space. While we continued to see softness and challenges in our markets in the first quarter of Fiscal Year 2020, I remain confident in our plan to restore our brands to greatness. We are mitigating unprecedented challenges while making continued progress to a more growth-centric Vista Outdoor.”
For the first quarter ended June 30, 2019:
- Sales were $460 million, down 13 percent from the prior-year quarter, down 7 percent on an organic basis, excluding results from the sale of our Eyewear brands, which were sold in the second quarter of Fiscal Year 2019. Sales for its ammunition business were $214 million, down 1.5 percent from the prior year quarter.
- Gross profit was $95 million, down 16 percent from the prior year quarter, down 8 percent on an adjusted organic basis, excluding results from the sale of our Eyewear brands.
- Operating expenses were $100 million, which reflects a pre-tax, non-cash $9 million impairment related to a loss on the sale of Savage and Stevens firearms brands. This compares to $153 million of operating expenses in the prior-year quarter. Adjusted operating expenses were $89 million compared to $94 million in the prior year quarter on an organic basis, excluding results from the sale of our Eyewear brands.
- Including the pre-tax, non-cash held-for-sale impairment charge, the net loss came to $16.6 million, or 29 cents a share, against $52.3 million, or 91 cents, in the prior-year quarter. On an adjusted basis, the loss came to $4.7 million, or 8 cents a share, compared to a loss of $247,000, or 0 cents, results in the prior-year quarter. Wall Street had expected a loss of 3 cents a share on average.
- Cash flow used in operating activities year-to-date was $36 million, compared to $74 million provided by operations in the prior year period. Year-to-date free cash flow was negative $45 million, compared to free cash flow of positive $70 million in the prior year period.
- Tax rate was (4.6) percent compared to 1.4 percent in the prior year quarter. The adjusted tax rate was 10.0 percent, compared to 119.1 percent in the prior year quarter.
Outlook for Fiscal Year 2020
“We are pleased to have closed on the divestiture of Savage Arms and reduced our debt by another $150 million or 20 percent. This brings our long-term debt balance down to approximately $590 million, which is a 50 percent reduction from our peak long-term debt balance of approximately $1.176 billion. In addition, we’ve also successfully reduced adjusted operating expenses in our remaining business units by an additional 6 percent compared to the prior year quarter, demonstrating our ongoing commitment to continuously improving operational efficiency. Our guidance has been updated to reflect expected results for the full Fiscal Year 2020, which included our firearms business units in the first quarter.” said Mick Lopez, Vista Outdoor chief financial officer.
Vista Outdoor’s updated guidance for FY20 to reflect the sale of Savage Arms is as follows:
- Sales in a range of $1.79 billion to $1.89 billion, compared to $1.94 billion to $2.03 billion
- Interest expense of approximately $40 million, compared to $45 million to $50 million
- Tax rate reported of 140 percent and adjusted of approximately (25) percent, compared to a tax rate reported and adjusted of approximately 5 percent
- Earnings per share in a range of $(0.03) to $0.12 and adjusted earnings per share of $0.10 to $0.25, compared to earnings per share of $0.28 to $0.38
- Capital expenditures of approximately $40 million, compared to $45 million to $50 million
- Free cash flow in a range of $30 million to $40 million, compared to $55 million to $65 million
The company also 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.