Vista Outdoor reported fourth quarter sales of $612 million, u up 26 percent from the prior-year quarter and up 15 percent organically. Gross profit was $164 million, up 33 percent from the prior-year quarter and up 15 percent organically.
Strong results were supported by a fourth-quarter surge in demand for Shooting Sports products, said Vista Outdoor Chairman and CEO Mark DeYoung. “Sales for the full year increased 9 percent year over year, including acquisitions, and gross profit increased 17 percent from the prior-year period. We recorded year-over-year organic growth in Outdoor Products and Shooting Sports.”
“As we’ve previously discussed, each year our capital expenditures include funding to improve output through the elimination of bottlenecks and driving efficiencies, and we will continue those efforts,” said DeYoung. “Looking ahead, we see continued growth in the ammunition market at rates higher than can be met with throughput enhancement alone. To better position Vista Outdoor to meet this growing demand for the long-term, we will commence a three-year ammunition capacity expansion project in FY17, with the additional capacity starting to become available in FY18.
“The company will also make significant investments in research and development to foster new product development in both of our segments. Our strategic vision is to meet market demand and provide our consumers with innovative, state-of-the-art products that deliver success in any outdoor adventure.
“Our acquisition pipeline remains robust, and we are committed to delivering long-term shareholder value. On April 1, Vista Outdoor completed the acquisition of the Action Sports division of BRG Sports, Inc., including leading brands Bell and Giro, complementing and enhancing our market offerings in cycling, snow sports and powersports. The integration of CamelBak is on track and our integration of Action Sports is underway. We have completed approximately 80 percent of our share repurchase program since its inception, and in FY17, we expect to continue to opportunistically repurchase additional shares in anticipation of completing the authorized program.”
For the fiscal year ended March 31, 2016:
- Sales were $2.27 billion, up 9 percent from the prior year and up 3 percent organically.
- Gross profit was $619 million, up 17 percent from the prior year and up 8 percent organically.
- Operating expenses were $357 million. Adjusted operating expenses were $343 million, compared to $267 million in the prior year.
- EPS was $2.35. Adjusted EPS was $2.50, up 6 percent from the prior-year period.
- Free cash flow was $163 million, compared to $160 million in the prior-year period.
- The company repurchased approximately 3.2 million shares in the fiscal year for $142 million. Since March 31, 2016, Vista Outdoor repurchased approximately 200,000 additional shares for $10 million.
Outlook for Fiscal Year 2017
Vista Outdoor is establishing initial FY17 financial guidance. The company expects:
- Sales in a range of $2.72 billion to $2.78 billion.
- Interest expense of approximately $45 million.
- Tax rate of approximately 37 percent.
- EPS in a range of $2.65 to $2.85.
- Capital expenditures of approximately $90 million.
- Free cash flow in a range of $130 million to $160 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.
“Our FY17 financial guidance reflects the momentum created by our strong overall performance in FY16 and recent acquisitions, as well as our commitment to investing in future growth,” said Vista Outdoor CFO Stephen Nolan. “This includes a significant increase in R&D to support growth in our organic business and for our recent acquisitions, with FY17 R&D spending expected to be approximately $30 million. We expect FY17 EBITDA margins at approximately 15 percent. Our FY17 EPS guidance includes the EPS resulting from the Action Sports acquisition, which we expect to be in the range of $0.07 to $0.10 per share, including the impact of interest on acquisition-related debt.
“The increase in capital expenditures reflects the beginning of our capacity expansion plan and continued investments in ammunition factory modernization and efficiency projects to improve output rates and to reduce production costs. The higher capital expenditures also reflect recent acquisitions, where approximately $10 million of the $90 million in FY17 is Action Sports related.”
