Vista Outdoor Inc., which was spun off into a publicly traded company earlier this year as the result of a merger of two defense and aerospace companies, reported sales declined 14 percent to $485 million in the fourth quarter ended March 31 compared with the prior-year quarter.

“The company is focused on delivering innovative new products, and in the fourth quarter, Vista Outdoor received industry recognition and strong orders for several new products launched during the winter trade show season,” said Mark DeYoung, Chairman and Chief Executive Officer for the Clearfield, UT-based owner of more than a dozen firearms brands as well as the Bushnell, Bolle and Cebe optics brands.  “New products receiving industry awards included some truly revolutionary products like the Bushnell Tour X golf laser rangefinder, the Savage Arms A17 semiautomatic rifle and our Federal Premium 3rd Degree ammunition. In addition, we hired two top executives from the consumer products industry to lead our human resources and marketing functions and round out our highly experienced corporate leadership team.”

Fourth quarter results included:

  • Gross profit was $123 million, down 22 percent from the prior-year quarter;
  • Operating profit was $39 million, down 55 percent from the prior-year quarter, as a result of reduced sales and costs related to the spin-off transaction. Reduced sales were largely caused by lower unit volume and a previously disclosed mid-2014 price reduction in .223/5.56 ammunition;
  • Fully diluted EPS was $0.25, compared to $0.75 in the prior-year quarter;
  • Adjusted operating profit was $51 million, down 47 percent from the prior-year quarter;
  • Adjusted fully diluted EPS was $0.47, compared to $0.85 in the prior-year quarter;

The company repurchased 162,000 shares in the quarter for $6.9 million. An additional 288,000 shares were repurchased since March 31, 2015 for $12.7 million.

“In the fourth quarter, Vista Outdoor successfully spun off from ATK, resulting in a new publicly traded company with a strong balance sheet, a seasoned leadership team, and a powerful and unique portfolio of more than 30 widely recognized brands,” said DeYoung. “The company delivered results for the full year and the fourth quarter in line with our expectations and reflective of continued softness in the shooting sports market. Our financial results also reflect the spin-off of Vista Outdoor from ATK, incremental standalone company costs, stock-based compensation charges, and transaction-related expenses. We are making key strategic investments in FY16 related to our marketing, product development, sales, IT, sourcing and the consolidation of some warehousing facilities. These investments will position Vista Outdoor to deliver future enhanced performance, growth and long-term value creation.”

Fiscal year results
For the fiscal year ended March 31, Vista Outdoor reported:

  • Sales of $2.08 billion, up 11 percent from the prior year;
  • Gross profit was $529 million, up 13 percent from the prior year;
  • Operating profit was $184 million, down 21 percent compared to $234 million in the prior year, as a result of a third quarter goodwill/trade name impairment charge and costs related to the spin-off transaction;
  • Fully diluted earnings per share (EPS) were $1.25, compared to $2.09 in the prior year;
  • Free cash flow was $160 million, compared to $159 million in the prior year;
  • Pro forma organic sales were down 9 percent from $2.28 billion in the prior year. Pro forma organic sales were calculated by combining prior-year results with the standalone results of Bushnell and Savage prior to the company's acquisition of these businesses;
  • Adjusted operating profit was $262 million, down 3 percent from the prior year;
  • Adjusted fully diluted EPS was $2.35, down from $2.47 in the prior year.

Initial guidance for Fiscal Year 2016
“We are confident in the company's strategy to grow both organically and through acquisition while maintaining a balanced capital deployment strategy, which includes returning cash to shareholders through our share repurchase program,” said DeYoung.

Vista Outdoor issued initial guidance for fiscal 2016 which calls for:
 

  • Sales in a range of $2.05 billion to $2.11 billion;
  • EPS in a range of $2.00 to $2.20;
  • Capital expenditures of approximately $40 million;
  • Free cash flow in a range of $150 million to $175 million;
  • Tax rate of approximately 38 percent.

The guidance does not include the impact of any strategic acquisitions, divestitures, investments, business combinations or other significant transactions.

“We expect to continue to show a year-over-year decline in the first two quarters of the year, particularly in the first quarter, compared to the same period in FY15,” said Vista Outdoor Chief Financial Officer Stephen Nolan. “Last year, the company recorded one of the highest first quarters for sales in the history of the business. Consistent with what we've previously communicated, we expect to return to growth late in FY16, resulting in low single-digit growth for the full fiscal year, notwithstanding significant headwinds related to effects from foreign exchange translation.”

VISTA OUTDOOR INC.
CONDENSED CONSOLIDATED AND COMBINED STATEMENT OF INCOME
(preliminary and unaudited)




QUARTERS ENDED


YEARS ENDED

(Amounts in thousands except per share data)


March 31,
2015


March 31,
2014


March 31,
2015


March 31,
2014

Sales


$

485,389



$

565,165



$

2,083,414



$

1,873,919


Cost of sales


362,551



408,202



1,554,493



1,406,616


Gross profit


122,838



156,963



528,921



467,303


Operating expenses:









Research and development


2,475



7,710



9,518



13,984


Selling, general and administrative


81,630



63,580