Vista Outdoor Inc.’s earnings and sales dropped in its fiscal first quarter, but results exceeded Wall Street’s expectations and the company reaffirmed its guidance for the year.
“We delivered a solid start to Fiscal Year 2018 in the face of a challenging retail environment,” said Vista Outdoor Interim Chairman and Chief Executive Officer Michael Callahan. “The company continues its focus on new product development, improved operational performance, and cost savings.”
For the first quarter ended July 2, 2017:
- Sales were $569 million, down 10 percent from the prior-year quarter, including $21 million of additional sales from the acquisition of Camp Chef. Sales were down 13 percent on an organic basis.
- Gross profit was $147 million, down 14 percent from the prior-year quarter. This includes $7 million of gross profit from the Camp Chef acquisition, offset by an 18 percent decrease in organic gross profit.
- Operating expenses were $107 million, compared to $112 million in the prior-year quarter.
- Fully diluted earnings per share (EPS) was 29 cents, compared to 48 cents in the prior-year quarter. Adjusted EPS was 24 cents, compared to 48 cents in the prior-year quarter.
- Cash flow provided by operating activities was $39 million, compared to a use of $22 million for operating activities in the prior-year period. Year-to-date free cash flow generation was $23 million, compared to free cash flow use of $41 million in the prior-year period.
Results surpassed Wall Street targets. The Street was expecting on average of 12 cents on sales of $554 million.
Outlook For Fiscal Year 2018
“We are pleased with our performance in the quarter,” said Vista Outdoor Chief Financial Officer Stephen Nolan. “Our working capital reduction efforts are delivering results, with strong cash performance in a quarter when traditionally the company has had a net cash use. Margins were helped by the timing of some general overhead spending and by a late introduction in the quarter of ammunition promotional programs. This late introduction pushed the impact of those programs into later quarters. Our sales programs also resulted in the company pulling ahead some revenue from the second quarter into the latter part of our first quarter. Nonetheless, we are reaffirming previously issued guidance for the full year.”
Vista Outdoor reaffirmed its fiscal year 2018 financial guidance. The company expects:
- Sales in a range of $2.36 billion to $2.42 billion.
- Interest expense of approximately $50 million.
- Adjusted tax rate of approximately 37 percent.
- Adjusted EPS in a range of $1.10 to $1.30.
- Capital expenditures of approximately $70 million.
- Free cash flow in a range of $175 million to $200 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 transition expenses for already-completed acquisitions.
The company’s brands include Federal Premium, CamelBak, Savage Arms, Bushnell, Primos, Blackhawk, Bollé, Bell and Giro.
Photo courtesy Vista Outdoor