Vista Outdoor Announces Solid FY18 Third Quarter Operating Results

FARMINGTON, Utah, Feb. 8, 2018

"The company delivered solid third quarter results in a continuously challenging marketplace," said Vista Outdoor Chief Executive Officer Chris Metz. "We generated strong free cash flow, which enabled us to repay $108 million of debt. As I've said before, we must make significant changes, act decisively, and move quickly. During the quarter, we made great progress on key initiatives that will reposition the business. We also launched innovative new products across the portfolio that are resonating with our customers and end users. In line with our focus to improve profitability, we have begun to implement organizational changes, including streamlining corporate-level functions and improving business operations to maximize efficiency, drive brand-level decision making and improve accountability. We have also received strong interest on the sale of our eyewear business and are currently fielding inquiries."

For the third quarter ended December 31, 2017:

• Sales were $581 million, down 11 percent from the prior-year quarter.
• Gross profit was $126 million, down 25 percent from the prior-year quarter.
• Operating expenses were $107 million, compared to $553 million in the prior-year quarter. The difference was primarily due to a $449 million goodwill and intangibles impairment in the prior-year period.
• Fully diluted earnings per share (EPS) was $0.94, compared to $(6.44) in the prior-year quarter. Adjusted EPS was $0.13, compared to $0.62 in the prior-year quarter.
• Cash flow provided by operating activities year to date was $243 million, compared to $58 million in the prior-year period. Year-to-date free cash flow generation was $205 million, compared to free cash flow use of $18 million in the prior-year period.
• Tax rate was (725.3) percent compared to 4.4 percent in the prior-year quarter, driven by the revaluation of the deferred tax liabilities from the recently enacted tax law. The adjusted tax rate was 25.9 percent, compared to 33.6 percent in the prior-year quarter.

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

Outlook for Fiscal Year 2018
"Looking at the fiscal year, we are raising our free cash flow expectations and lowering our adjusted tax rate," said Metz. "Higher-than-anticipated rebate redemptions, aggressive discounts in certain products to maintain market share, the normal seasonality of our business, and the timing of expenditures will pressure earnings in the fourth quarter. As a result, we are reiterating our FY18 adjusted EPS guidance. The company is focused on cost reduction, margin expansion and cash generation to position us for future success. We are also committed to maintaining our leadership position in the marketplace. In response to significant commodities pressures, we implemented an ammunition price increase in early January and will take another price increase in April."

Vista Outdoor FY18 financial guidance: