Financial Performance - For the three months ended June 30, 2024, net sales decreased by $49,152 compared to the prior year quarter, with The Kinetic Group experiencing a sales decline of $6,156 due to lower volume across nearly all categories [104]. - The Revelyst segments reported a combined decrease of $8,073 in operating income for the three months ended June 30, 2024, primarily due to a 14.2% decrease in gross profit compared to the same period [104]. - The Kinetic Group reported net sales of $370,437 for the three months ended June 30, 2024, a decrease of 1.6% compared to $376,593 for the same period in 2023 [119]. - Total net sales for the company decreased by 7.1% to $644,181 from $693,333 year-over-year [119]. - Revelyst Outdoor Performance segment net sales decreased by 16.0% to $89,509, down from $106,549, primarily due to lower wholesale volume and the divestiture of RCBS [119]. - Gross profit for the Kinetic Group was $129,767, a decline of 1.6% from $131,903, with a gross profit margin remaining flat at 35.0% [122]. - Operating income for the Kinetic Group decreased by 3.8% to $104,396 from $108,464, with an operating income margin of 28.2% compared to 28.8% in the prior fiscal period [125]. Cash Flow and Debt Management - Cash provided by operating activities during the three months ended June 30, 2024, was $53,765, and total debt decreased to $635,000, resulting in total debt as a percentage of total capitalization decreasing to 34.9% [105]. - Outstanding borrowings under the 2022 ABL Revolving Credit Facility decreased by $85,000 during the three months ended June 30, 2024 [105]. - Cash decreased to $55,981 as of June 30, 2024, from $60,271 at March 31, 2024, primarily due to cash used for debt repayment and capital expenditures [131]. - Total debt as a percentage of total capitalization was 35% as of June 30, 2024 [133]. - The company believes its cash position and anticipated cash flows will be adequate to fund future growth and service debt obligations over the next 12 months [133]. Strategic Initiatives - The company initiated the GEAR Up transformation program to accelerate growth and transformation within its reportable segments [106]. - The GEAR Up transformation program is expected to realize $25,000 to $30,000 in savings in Fiscal Year 2025, with a target of $100,000 in run rate cost savings by fiscal year 2027 [106]. - The company expects to incur pre-tax restructuring charges of approximately $40,000 to $50,000 over the duration of the GEAR Up plan, to be completed by fiscal year 2027 [106]. - The review of strategic alternatives includes exploring a potential sale of Revelyst and engagement with MNC Capital regarding a proposal to acquire the company for $42.00 per share [111]. - The Kinetic Group is being sold to CZECHOSLOVAK GROUP a.s. for an enterprise value of $2,150,000, with cash consideration of $24.00 per share of Vista Outdoor Common Stock [110]. Legal and Environmental Considerations - The company is subject to various legal proceedings but does not consider any currently pending proceedings to be material [136]. - The company has environmental management programs in place to mitigate risks associated with environmental laws and regulations [139]. Market and Customer Insights - Walmart represented 14% of total trade receivables balance as of June 30, 2024 [140]. - No customer contributed more than 10% of sales during the three months ended June 30, 2024 [140]. - The company’s exposure to market risk has not changed materially since March 31, 2024 [141]. - There have been no material changes regarding contractual obligations and commitments since the last annual report [135]. Tax and Expense Management - The effective tax rate for the three months ended June 30, 2024, was 20.1%, down from 23.0% in the prior year, influenced by the release of valuation allowance related to capital losses [129]. - The company experienced a significant decrease in other expenses, down 85.8% to $77 from $541, attributed to changes in foreign exchange gains and losses [127]. - Interest expense decreased by 41.9% to $9,421 from $16,218, due to a reduction in the average debt balance [128]. Lease Liabilities - Current and long-term operating lease liabilities were recorded at $15,295 and $100,983, respectively, as of June 30, 2024 [135].

Financial Data and Key Metrics Changes - Total sales for Q1 2025 decreased by 7.1% to $644.2 million, driven by lower volumes at both The Kinetic Group and Revelyst, partially offset by increased government sales at Revelyst and price increases at The Kinetic Group [24][25] - Adjusted EBITDA decreased by 11.3% to $110.1 million, resulting in an EBITDA margin of 17.1% [25] - Adjusted free cash flow significantly outperformed expectations, delivering $70 million, allowing for a reduction in net debt by $81 million, ending the quarter at $579 million with a net debt leverage ratio of 1.3 times [26][24] Business Line Data and Key Metrics Changes - Revelyst sales decreased by 13.6% in Q1 to $273.7 million, impacted by pre-order delivery timing and unfavorable product mix [27] - The Kinetic Group reported sales of $370 million with an adjusted EBITDA margin of 30%, equating to $111 million in adjusted EBITDA, despite facing economic headwinds [17][18] - Revelyst's gross profit decreased by 14.2% to $81.4 million, with an EBITDA margin of 5.7%, down 190 basis points year-over-year [28] Market Data and Key Metrics Changes - Revelyst experienced market share gains in categories such as bike helmets and fishing sportswear, despite overall market softness [45] - The Kinetic Group's inventory is well-positioned to meet consumer demand for hunting loads, with expectations of continued momentum in the upcoming hunting seasons [18] - NICS data surpassed one million background checks for the 59th consecutive month, indicating a healthy baseline of shooting and hunting participants [20] Company Strategy and Development Direction - The company is undergoing a strategic review, exploring alternatives for Revelyst, including a potential sale, and engaging with MNC Capital regarding a proposal to acquire Vista Outdoor [4][5] - The GEAR Up transformation initiative aims to achieve $25 million to $30 million in cost savings for fiscal year 2025, with a long-term goal of $100 million by FY 2027 [32][34] - The DragonFly wheel strategy focuses on brand innovation, direct-to-consumer channels, and international expansion to drive growth and margin expansion [7][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in doubling standalone adjusted EBITDA for Revelyst in fiscal year 2025, despite challenges faced in Q1 [17][35] - The company anticipates sequential improvement in sales and EBITDA margins throughout the fiscal year, driven by new product launches and operational improvements [36][32] - Management acknowledged supply chain challenges but emphasized improvements and solutions being implemented to enhance future performance [50][51] Other Important Information - The company announced a significant partnership with celebrity chef Guy Fieri, aimed at enhancing brand visibility and product offerings in outdoor cooking [10][11] - Recent divestitures, including the sale of Fiber Energy Products, are part of a strategy to rebalance the portfolio and focus on core assets with growth potential [15][16] Q&A Session Summary Question: Can you provide more details on the standalone Revelyst EBITDA guidance? - Management highlighted the GEAR Up program's savings and the expected recovery of $13 million in orders shifted to Q2, indicating confidence in achieving the doubling of EBITDA [38][40] Question: What are the reasons for the delay in sales and product shipment issues? - The delay was attributed to quality issues with a new product in the Bushnell Golf platform and order processing challenges, which have since been addressed [49][50] Question: How will the company manage gross margin expectations moving forward? - Management expects gross margins to improve sequentially as sales increase and the GEAR Up program continues to impact cost structures positively [41][42]

| --- | --- | --- | |-------|-------|-------| | | | | | | | | Note: References to The Kinetic Group and Revelyst in the presentation refer to the former Sporting Products and Outdoor Products segments of Vista Outdoor, respectively. Additionally, in the results that follow when referring to "Revelyst", it comprises three new operating and reportable segments: Revelyst Adventure Sports, Revelyst Precision Sports Technology and Revelyst Outdoor Performance. Please see Vista Outdoor's Annual Report on Form 10- ...

Core Viewpoint - Vista Outdoor is exploring strategic alternatives after significant shareholder opposition to the sale of its ammunition division to Czechoslovak Group (CSG) [1] Group 1: Shareholder Reactions - Two of Vista's largest shareholders, Gates Capital Management and GAMCO Asset Management, publicly opposed the sale while supporting MNC Capital Management's all-cash offer of $3.2 billion for The Kinetic Group and its outdoor branch Revelyst [2] - GAMCO described MNC Capital's fully financed $42 per share all-cash offer as superior to the proposed sale to CSG and urged Vista's board to reconsider its position [3] Group 2: Company Actions - Vista is considering re-engaging in talks with MNC Capital in hopes of securing a larger proposal, as MNC has indicated a willingness to increase its offer [3] - The company decided to adjourn its shareholder meeting until September 13, marking the sixth adjournment this year, while asserting its commitment to act in the best interests of the company and its stockholders [4]

The stock might move higher if these key numbers top expectations in the upcoming earnings report, which is expected to be released on August 5. On the other hand, if they miss, the stock may move lower. This maker of firearms, ammunition and accessories is expected to post quarterly earnings of $0.97 per share in its upcoming report, which represents a year-over-year change of -13.4%. Investors should keep in mind that an aggregate change may not always reflect the direction of estimate revisions by each o ...

Core Viewpoint - The company believes that the $42 all-cash offer from MNC is superior to the revised proposal from CSG for The Kinetic Group and urges immediate negotiations with MNC [1][10]. Financial Results and Analysis - Preliminary Q1 2025 financial results indicate that selling the entire company would provide better returns for shareholders than divesting The Kinetic Group [3]. - MNC's proposal includes an additional $900 million for Revelyst, which generated approximately $40 million in EBITDA for the last twelve months, suggesting a valuation of about 22x LTM EBITDA for Revelyst [7]. - Recent trends show a decline in sales by over 13%, a nearly 200 basis point drop in EBITDA margin, and negative segment operating income for Revelyst, making a spin-off less attractive [7]. Shareholder Engagement - Gates Capital Management, owning approximately 9.6% of Vista, encourages shareholders to express their support for the MNC offer to the Board of Directors [2][10]. - There is a call for a more current record date for voting, as the current date of April 1, 2024, does not accurately reflect the current shareholder base [11]. Proxy Advisory Recommendations - Institutional Shareholder Services (ISS) has recommended that shareholders vote against the latest CSG merger proposal [3].

NEW YORK, July 19, 2024 /PRNewswire/ -- Gates Capital Management, Inc. ("Gates Capital Management" or "we"), an event-driven alternative asset manager that beneficially owns 5,589,041 shares, or approximately 9.6%, of Vista Outdoor, Inc. ("Vista" or the "Company") (NYSE: VSTO), today reiterated its opposition to the pending sale of The Kinetic Group to Czechoslovak Group a.s. ("CSG") in a letter sent to the Vista Board of Directors. The full text of the letter follows: July 19, 2024 Vista Outdoor Inc. Attn: ...

Part I [Business](index=4&type=section&id=Item%201.%20Business) Vista Outdoor is a global designer and manufacturer of outdoor recreation and shooting sports products, undergoing strategic transformation including the sale of The Kinetic Group and implementation of the 'GEAR Up' efficiency program [Company Overview and Reportable Segments](index=4&type=section&id=Company%20Overview%20and%20Reportable%20Segments) Vista Outdoor operates through four reportable segments, with The Kinetic Group being the largest contributor to external sales in fiscal year 2024, and focuses on driving 'Power Brands' within its Revelyst business FY2024 Sales Contribution by Segment | Segment | FY2024 Sales Contribution | Key Product Categories | | :--- | :--- | :--- | | The Kinetic Group | 52.9% | Ammunition, primers, components | | Revelyst Adventure Sports | 22.1% | Protective gear, apparel, footwear, hydration, e-mobility | | Revelyst Outdoor Performance | 16.4% | Fishing, lifestyle apparel, outdoor accessories, outdoor cooking | | Revelyst Precision Sports Technology | 8.6% | Golf technology (GPS, rangefinders, launch monitors) | - The company's brand strategy for its Revelyst business focuses on driving its largest 'Power Brands' (Bell, Bushnell, CamelBak, Fox Racing, etc.) and nurturing 'Challenger Brands' with high growth potential[18](index=18&type=chunk) [Strategic Initiatives](index=7&type=section&id=Strategic%20Initiatives) The company is executing two major strategic initiatives: the planned sale of The Kinetic Group to CSG for an increased price of $1.96 billion, and the 'GEAR Up' transformation program for Revelyst segments to drive efficiency and reinvestment - On October 15, 2023, Vista Outdoor agreed to sell The Kinetic Group business to CSG. The agreement was later amended on May 27, 2024, increasing the base purchase price from $1.91 billion to **$1.96 billion**[27](index=27&type=chunk)[29](index=29&type=chunk) - The 'GEAR Up' transformation program was initiated in Q4 FY2024 to drive efficiency and cost savings within the Revelyst segments by simplifying the business model, streamlining operations, and reinvesting in top brands[30](index=30&type=chunk)[36](index=36&type=chunk) [Market Opportunity and Competitive Strengths](index=8&type=section&id=Market%20Opportunity%20and%20Competitive%20Strengths) Vista Outdoor operates in a growing outdoor recreation market, leveraging its portfolio of iconic brands, strong innovation capabilities with approximately 1,832 patents, and scale advantages through centralized 'Centers of Empowerment' - The outdoor recreation industry's gross economic output grew to **$1.1 trillion** in 2022, representing **2.2% of U.S. GDP**, up from **$862 billion** in 2021[34](index=34&type=chunk) - Participation in key markets is strong: on-course golf participation reached **26.6 million** in 2023 (a decade high), and **54.5 million** Americans fished in 2022 (a **4% increase YoY**)[32](index=32&type=chunk)[33](index=33&type=chunk) - The company holds a portfolio of approximately **1,832 U.S. and foreign patents** and employs around **100 dedicated design and product development professionals** to drive innovation[36](index=36&type=chunk) - The 'GEAR Up' program is establishing 'Centers of Empowerment' to centralize expertise in distribution, supply chain, direct-to-consumer, IT, and international operations, creating a significant scale advantage[40](index=40&type=chunk) [Customers, Marketing, and Competition](index=12&type=section&id=Customers%2C%20Marketing%2C%20and%20Competition) The company sells through diverse channels, with its top ten customers accounting for 30% of net sales in FY2024, primarily in the U.S. market, and faces significant competition based on price, quality, innovation, and performance - Sales to the top ten customers accounted for approximately **30% of consolidated net sales** in fiscal year 2024[49](index=49&type=chunk) - In FY2024, U.S. customers represented **83% of sales**, while international customers accounted for **17%**. Law enforcement and military professionals made up **13% of sales**[49](index=49&type=chunk) - Key competitors include Winchester Ammunition (Olin Corporation), Garmin, Nikon, Topgolf Callaway, Yeti, and Patagonia across the company's various segments[53](index=53&type=chunk) [Regulatory Matters and Human Capital](index=13&type=section&id=Regulatory%20Matters%20and%20Human%20Capital) Vista Outdoor is subject to extensive regulation, particularly concerning ammunition, and employs approximately 6,400 individuals globally, emphasizing employee engagement, safety, and professional development - The company is subject to numerous laws and regulations, including those from the ATF, which control the manufacture, export, import, distribution, and sale of ammunition[59](index=59&type=chunk) - The company employs approximately **6,400 individuals globally**, with **70% in production roles**. Employee relations are considered strong, with no union representation in the U.S[62](index=62&type=chunk)[63](index=63&type=chunk) U.S. Employee Diversity Statistics (as of March 31) | Statistic | 2024 | 2023 | | :--- | :--- | :--- | | % of employees identifying as persons of color | 19% | 20% | | % of leadership identifying as persons of color | 11% | 10% | | % of employees who are female | 27% | 28% | | % of leadership who are female | 28% | 29% | | % of employees who are veterans | 7% | 7% | [Risk Factors](index=16&type=section&id=Item%201A.%20Risk%20Factors) The company faces numerous risks, including operational challenges, market competition, reputational issues, legal and regulatory hurdles, cybersecurity threats, macroeconomic factors, and specific risks related to the pending sale of The Kinetic Group [Risks Related to Operations](index=16&type=section&id=Risks%20Related%20to%20Operations) Operational risks include reliance on third-party suppliers, inaccurate demand forecasting, shipping disruptions, international operational challenges, and potential catastrophic events at manufacturing facilities handling explosive materials - Reliance on third-party suppliers for components and finished goods creates exposure to volatility in availability, quality, and price, which could increase operating costs[83](index=83&type=chunk) - Inability to accurately forecast customer demand may lead to excess inventory levels, write-downs, or product shortages, which could damage customer relationships and financial results[100](index=100&type=chunk)[102](index=102&type=chunk) - Some manufacturing processes involve explosive and flammable materials, which have previously resulted in incidents that disrupted production and created liability[112](index=112&type=chunk) [Risks Related to Markets and Brands](index=21&type=section&id=Risks%20Related%20to%20Markets%20and%20Brands) The company's dependence on a few large customers, intense industry competition, and the need to maintain brand reputation, especially given its association with the firearms industry, pose significant market and brand-related risks - Sales are highly dependent on a few large customers, with the top ten accounting for approximately **30% of consolidated net sales** in fiscal year 2024[113](index=113&type=chunk) - The company's association with the firearms industry may affect relationships with financial institutions, resellers, and other service providers who may cease or limit business due to reputational concerns[129](index=129&type=chunk) - Negative commentary and organized boycotts on social media platforms can have an immediate and adverse impact on the company's reputation and business[130](index=130&type=chunk)[131](index=131&type=chunk) [Legal, Regulatory, and Cybersecurity Risks](index=24&type=section&id=Legal%2C%20Regulatory%2C%20and%20Cybersecurity%20Risks) The company faces potential product liability claims, extensive regulation, particularly for firearms and ammunition, and significant cybersecurity threats that could lead to data loss, enforcement actions, and reputational damage - The company manufactures products that create exposure to potential product liability, warranty liability, or personal injury claims and litigation[133](index=133&type=chunk) - Changes in government policies and legislation regarding firearms and ammunition could become more restrictive and have a material adverse effect on business[145](index=145&type=chunk)[146](index=146&type=chunk) - A breach of security measures could result in unauthorized access to customer data, leading to reputational damage, loss of customers, and significant liability[151](index=151&type=chunk)[152](index=152&type=chunk) [Risks Related to Macro-Economic Conditions and Indebtedness](index=28&type=section&id=Risks%20Related%20to%20Macro-Economic%20Conditions%20and%20Indebtedness) The company is exposed to interest rate risk on its variable-rate debt, potential cost increases from global trade policy changes, reduced demand due to general economic conditions like inflation, and restrictive covenants in its debt agreements - A portion of the company's indebtedness has variable interest rates, exposing it to risk. A **0.25% change in interest rates** would result in a **$0.4 million change** in annual interest expense on the unhedged portion of its debt[154](index=154&type=chunk) - General economic conditions, such as high inflation, affect consumer discretionary spending and can reduce demand for the company's products[165](index=165&type=chunk) - Debt covenants in the 2022 ABL Revolving Credit Facility and 4.5% Notes impose significant operating and financial restrictions, limiting the ability to incur debt, make investments, or sell assets[167](index=167&type=chunk)[169](index=169&type=chunk) [Risks Related to Announced Transaction](index=33&type=section&id=Risks%20Related%20to%20Announced%20Transaction) The completion of the Sporting Products Sale to CSG is subject to various conditions, and failure to complete the transaction could adversely affect the stock price and business, while the pending sale imposes business uncertainties and a potential termination fee - The consummation of the Sporting Products Sale is subject to conditions including stockholder approval and CFIUS clearance, and there is no assurance it will be completed[173](index=173&type=chunk) - Failure to complete the sale could adversely affect the company's stock price, business, and results of operations due to transaction costs, business restrictions, and potential loss of key employees[174](index=174&type=chunk) - The Merger Agreement contains a termination fee of **$47,750,000** payable by Vista Outdoor under certain circumstances, which could discourage competing acquisition proposals[177](index=177&type=chunk) [Unresolved Staff Comments](index=34&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports that it has no unresolved staff comments from the SEC - None[180](index=180&type=chunk) [Cybersecurity](index=34&type=section&id=Item%201C.%20Cybersecurity) The company has implemented a cybersecurity risk management program overseen by its Information Security organization and the Audit Committee, which includes risk identification, testing, and employee training, with no material incidents identified to date - The company's cybersecurity program involves risk identification via third-party services, annual internal and external penetration testing, and mandatory employee training on identifying risks[182](index=182&type=chunk)[183](index=183&type=chunk) - The Board of Directors, through its Audit Committee, provides oversight of cybersecurity risk, receiving presentations at least annually on the enterprise risk management program[188](index=188&type=chunk)[189](index=189&type=chunk) - To date, no cybersecurity threats or incidents have been identified that have materially affected or are reasonably likely to materially affect the company's operations, strategy, or financial condition[187](index=187&type=chunk) [Properties](index=36&type=section&id=Item%202.%20Properties) As of March 31, 2024, Vista Outdoor occupies various manufacturing, warehouse, research, and office facilities, mostly leased, and believes its properties are well-maintained and sufficient for near-term operating needs - The company's significant operations are spread across the U.S., Mexico, and Puerto Rico. Most facilities are leased, with key owned properties supporting The Kinetic Group and Revelyst Outdoor Performance segments[193](index=193&type=chunk) [Legal Proceedings](index=36&type=section&id=Item%203.%20Legal%20Proceedings) The company is subject to various legal proceedings incidental to its business but does not consider any currently pending proceedings to be material, nor does it expect environmental liabilities from former subsidiaries to be material - The company does not consider any currently pending legal proceedings, individually or in the aggregate, to be material to its business or likely to result in a material adverse effect[194](index=194&type=chunk) - Certain former subsidiaries are identified as potentially responsible parties (PRPs) for hazardous waste sites, but the company does not expect these environmental liabilities to be material[195](index=195&type=chunk)[196](index=196&type=chunk) [Mine Safety Disclosures](index=36&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[198](index=198&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=37&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Vista Outdoor's common stock trades on the NYSE, with 2,642 holders of record as of May 20, 2024, and its $200 million share repurchase program expired in January 2024 with no shares repurchased under it during FY2024, aside from those for tax withholding - The company's **$200 million share repurchase program** expired on January 24, 2024. No shares were repurchased under this program in fiscal year 2024[203](index=203&type=chunk) - During the fourth quarter of fiscal year 2024, **51,000 shares** were repurchased at an average price of **$31.26 per share** to satisfy tax withholding obligations upon the vesting of employee stock awards[203](index=203&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=38&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In fiscal year 2024, net sales decreased 10.8% to $2.75 billion, driven by declines in The Kinetic Group and Revelyst segments, leading to significant impairment charges, yet the company achieved strong operating cash flow of $400.9 million and reduced debt by $340 million, while initiating the 'GEAR Up' program and proceeding with the sale of The Kinetic Group [Critical Accounting Estimates](index=38&type=section&id=Critical%20Accounting%20Estimates) Management's critical accounting estimates focus on goodwill and indefinite-lived intangibles, with significant impairment charges of $161.7 million for goodwill and $50.3 million for indefinite-lived intangibles recorded in Q3 FY2024, particularly impacting the Golf reporting unit - In Q3 FY2024, the company conducted an interim impairment test due to challenging economic conditions, resulting in a **$161.7 million goodwill impairment loss** and a **$50.3 million indefinite-lived intangible impairment loss**[220](index=220&type=chunk)[223](index=223&type=chunk) - The goodwill impairment included the full carrying value for the Outdoor Cooking (**$26.2M**) and Stone Glacier (**$10.0M**) reporting units, and a partial impairment of **$125.5M** for the Golf reporting unit[220](index=220&type=chunk) - After the Q3 FY2024 impairment, the fair value of the Golf reporting unit was equal to its carrying value, suggesting high sensitivity to future performance. A hypothetical **1% increase in the discount rate** would have resulted in an additional **$35 million impairment**[222](index=222&type=chunk) [Executive Summary and Financial Highlights](index=42&type=section&id=Executive%20Summary%20and%20Financial%20Highlights) Fiscal year 2024 saw a $333.7 million decrease in net sales due to lower volumes and challenging economic conditions, yet the company generated $400.9 million in cash from operations, reduced debt by $340 million, initiated the 'GEAR Up' program targeting $100 million in annualized savings, and progressed with the sale of The Kinetic Group for an increased price of $1.96 billion - Net sales for FY2024 decreased by **$333.7 million**, primarily due to lower volume and pricing in The Kinetic Group and challenging economic conditions affecting the Revelyst segments[229](index=229&type=chunk) - The company maintained a strong balance sheet, with cash from operations of **$400.9 million** and a debt reduction of **$340 million** in FY2024. Total debt to capitalization decreased to **39.0% from 48.4%**[231](index=231&type=chunk) - The GEAR Up transformation program is expected to deliver approximately **$100 million in annualized pre-tax operating profit improvements** by fiscal year 2027, with estimated pre-tax restructuring charges of **$40 to $50 million**[232](index=232&type=chunk) - The agreement to sell The Kinetic Group to CSG was amended to increase the base purchase price to **$1.96 billion** and the cash consideration per share of Vista Outdoor stock to **$16.00**[234](index=234&type=chunk)[236](index=236&type=chunk) [Results of Operations](index=45&type=section&id=Results%20of%20Operations) In fiscal year 2024, net sales fell 10.8% to $2.75 billion, gross profit decreased 16.7% to $859.0 million, and operating income dropped 53.2% to $50.5 million, primarily due to lower volume and pricing in The Kinetic Group and reduced consumer demand in Revelyst segments Consolidated Results of Operations (FY2024 vs. FY2023) | Metric | FY 2024 | FY 2023 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net Sales | $2,746.1M | $3,079.8M | ($333.7M) | (10.8)% | | Gross Profit | $859.0M | $1,030.9M | ($171.9M) | (16.7)% | | Operating Income | $50.5M | $107.9M | ($57.4M) | (53.2)% | Net Sales by Segment (FY2024 vs. FY2023) | Segment | FY 2024 Sales | FY 2023 Sales | Change (%) | | :--- | :--- | :--- | :--- | | The Kinetic Group | $1,452.6M | $1,757.9M | (17.4)% | | Revelyst Outdoor Performance | $450.1M | $460.8M | (2.3)% | | Revelyst Adventure Sports | $607.5M | $625.3M | (2.8)% | | Revelyst Precision Sports Technology | $235.9M | $235.8M | — % | - The Kinetic Group's gross profit decreased **25.7%** in FY2024 due to lower volume and price, unfavorable mix, and increased input costs[249](index=249&type=chunk) [Liquidity and Capital Resources](index=49&type=section&id=Liquidity%20and%20Capital%20Resources) As of March 31, 2024, the company had $60.3 million in cash, with net cash from operating activities at $400.9 million, and successfully reduced total debt to $720 million, believing its current resources are sufficient for near-term operations and strategic initiatives - Net cash provided by operating activities was **$400.9 million** in FY2024, compared to **$486.2 million** in FY2023[282](index=282&type=chunk)[283](index=283&type=chunk) - The company paid off its 2022 Term Loan and made net repayments on its ABL Revolving Credit Facility during FY2024[285](index=285&type=chunk) Material Cash Requirements as of March 31, 2024 | Category | Total | Less than 1 year | Years 2 - 3 | Years 4 - 5 | More than 5 years | | :--- | :--- | :--- | :--- | :--- | :--- | | Long-term debt | $720.0M | $0 | $220.0M | $500.0M | $0 | | Interest on debt | $143.1M | $37.8M | $60.3M | $45.0M | $0 | | Operating leases | $176.3M | $24.2M | $44.5M | $34.7M | $72.9M | - As of March 31, 2024, the company had **$237.1 million** available for borrowing under its 2022 ABL Revolving Credit Facility[287](index=287&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=52&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company is exposed to market risks from interest rate, foreign currency, and commodity price fluctuations, using derivative instruments to mitigate these risks without engaging in speculative activities, with particular sensitivity to changes in variable-rate debt and major foreign currencies - The company is exposed to interest rate risk on its variable-rate debt. A **1/4 of one percent change in interest rates** would result in a **$0.4 million change** in annual estimated interest expense on the **$145 million** of unhedged variable-rate debt[299](index=299&type=chunk) - To mitigate risks, the company uses derivative financial instruments, including interest rate swaps, foreign currency forward contracts, and commodity hedges, but not for trading or speculative purposes[300](index=300&type=chunk) - The company is exposed to foreign currency exchange rate fluctuations, particularly with the Euro, British pound, Chinese renminbi, and Canadian dollar, which could affect reported results[301](index=301&type=chunk) [Financial Statements and Supplementary Data](index=53&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the company's audited consolidated financial statements for FY2024, including the independent auditor's unqualified opinion on both the financial statements and internal control over financial reporting, along with detailed notes on accounting policies, impairments, and debt structure [Report of Independent Registered Public Accounting Firm](index=54&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) Deloitte & Touche LLP issued an unqualified opinion on Vista Outdoor's consolidated financial statements and the effectiveness of its internal control over financial reporting, highlighting goodwill impairment for the Golf reporting unit and indefinite-lived trade name impairment for Fox Racing as critical audit matters - The independent auditor, Deloitte & Touche LLP, issued an unqualified opinion, stating the financial statements are presented fairly in all material respects[305](index=305&type=chunk) - The audit identified two critical audit matters: the impairment of goodwill for the Golf reporting unit and the impairment of the Fox Racing indefinite-lived trade name, due to the significant judgments and estimates involved[310](index=310&type=chunk)[312](index=312&type=chunk) [Consolidated Financial Statements](index=57&type=section&id=Consolidated%20Financial%20Statements) For the fiscal year ended March 31, 2024, Vista Outdoor reported a net loss of $5.5 million on sales of $2.75 billion, with total assets of $2.40 billion and total liabilities of $1.28 billion, and cash provided by operating activities of $400.9 million primarily used for debt repayment Key Financial Statement Data (FY ended March 31, 2024) | Metric | Amount (in thousands) | | :--- | :--- | | **Income Statement:** | | | Sales, net | $2,746,063 | | Gross Profit | $858,985 | | Operating Income | $50,453 | | Net Loss | ($5,505) | | Diluted Loss Per Share | ($0.10) | | **Balance Sheet (End of Period):** | | | Total Assets | $2,402,380 | | Total Liabilities | $1,276,083 | | Total Stockholders' Equity | $1,126,297 | | **Cash Flow Statement:** | | | Cash from Operating Activities | $400,887 | | Cash for Investing Activities | ($46,684) | | Cash for Financing Activities | ($380,441) | [Notes to the Consolidated Financial Statements](index=61&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) The notes provide detailed disclosures on significant accounting policies, the planned sale of The Kinetic Group, acquisitions, goodwill and intangible asset impairments totaling $161.7 million and $57.1 million respectively in FY2024, debt structure including $720 million in long-term debt, and the reorganization of Revelyst into three new reportable segments in Q4 FY2024 - In Q3 FY2024, the company recorded impairment charges of **$161.7 million for goodwill** and **$57.1 million for intangible assets** (**$50.3 million indefinite-lived** and **$6.8 million amortizing**)[352](index=352&type=chunk)[355](index=355&type=chunk)[359](index=359&type=chunk) - As of March 31, 2024, long-term debt totaled **$720 million**, consisting of **$220 million** outstanding on the 2022 ABL Revolving Credit Facility and **$500 million** of 4.5% Senior Notes due 2029[453](index=453&type=chunk) - During Q4 FY2024, the company reorganized its reporting structure, splitting the former Revelyst segment into three new reportable segments: Revelyst Outdoor Performance, Revelyst Adventure Sports, and Revelyst Precision Sports Technology[510](index=510&type=chunk) [Controls and Procedures](index=102&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures and internal control over financial reporting were effective as of March 31, 2024, with no material changes during the fiscal year, and this assessment was affirmed by the independent auditor - Management concluded that the company's disclosure controls and procedures were effective as of March 31, 2024[520](index=520&type=chunk) - Management concluded that the company's internal control over financial reporting was effective as of March 31, 2024, and the independent auditor, Deloitte & Touche LLP, concurred[524](index=524&type=chunk)[527](index=527&type=chunk) [Other Information](index=104&type=section&id=Item%209B.%20Other%20Information) During the fourth quarter of fiscal year 2024, no director or officer adopted or terminated a Rule 10b5-1 trading plan, and the company maintains an Insider Trading Policy applicable to all personnel - No director or officer adopted or terminated any Rule 10b5-1 trading arrangement during the fourth quarter of fiscal year 2024[534](index=534&type=chunk) [Disclosure Regarding Foreign Jurisdictions That Prevent Inspections](index=104&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20That%20Prevent%20Inspections) This item is not applicable to the company - None[536](index=536&type=chunk) Part III [Directors, Executive Officers, Corporate Governance, Executive Compensation, Security Ownership, and Principal Accountant Fees](index=105&type=section&id=Items%2010%2C%2011%2C%2012%2C%2013%20and%2014) Information for Items 10 through 14, covering directors, executive officers, corporate governance, executive compensation, security ownership, related party transactions, director independence, and principal accountant fees, is incorporated by reference from the company's definitive Proxy Statement for the 2024 Annual Meeting of Stockholders - Information for Part III (Items 10-14) is incorporated by reference from the registrant's definitive Proxy Statement for the 2024 Annual Meeting of Stockholders[6](index=6&type=chunk)[539](index=539&type=chunk)[542](index=542&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=106&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists the financial statements, financial statement schedules, and exhibits filed as part of the Form 10-K, including key agreements such as the amended merger agreement for the sale of The Kinetic Group and credit agreements - This section lists all financial statements, schedules, and exhibits filed with the report. Key exhibits include the amended merger agreement for the sale of The Kinetic Group and the company's credit agreements[549](index=549&type=chunk)[553](index=553&type=chunk) [Form 10-K Summary](index=110&type=section&id=Item%2016.%20Form%2010-K%20Summary) No Form 10-K summary is provided - None[559](index=559&type=chunk)

Financial Data and Key Metrics Changes - Total sales for the fiscal year decreased 10.8% to $2.7 billion, with organic sales down 14.5% to $2.6 billion [17] - Adjusted EBITDA for the fiscal year dropped 27.8% to $442.5 million, with an EBITDA margin contracting 378 basis points to 16.1% [18] - Adjusted free cash flow significantly outperformed expectations, delivering $161 million in the fourth quarter, allowing a reduction in net debt by $118 million [16][20] Business Line Data and Key Metrics Changes - The Kinetic Group's sales decreased 12.5% in Q4 to $361.6 million, with FY24 sales down 17.4% to $1.45 billion [26] - Revelyst sales increased 1.4% in Q4 to $332.1 million, driven by an 18.8% increase in Revelyst Precision Sports Technology [23] - Revelyst's Q4 EBITDA was $29.1 million, up 209.5%, with an EBITDA margin of 8.8% [25] Market Data and Key Metrics Changes - POS data indicates strong sell-through with double-digit increases in handgun, shotshell, and rifle ammunition year-over-year [9] - Adjusted NICS checks data surpassed 1 million firearms checks for the 57th straight month, indicating a healthy baseline of shooting and hunting participants [10] Company Strategy and Development Direction - The company aims to double standalone adjusted EBITDA in fiscal year 2025, with long-term expectations for Revelyst's adjusted EBITDA margins to be in the mid-teens [4] - A divestiture of the RCBS brand was completed to focus on core assets with significant growth potential [21][22] - The GEAR Up transformation program is expected to yield $25 million to $30 million in cost savings, supporting potential EBITDA growth [54] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the uncertain macroeconomic climate and emphasized the importance of market share gains [5][32] - The company anticipates challenges from higher commodity input costs but remains optimistic about future sales trends and inventory management [8][30] Other Important Information - The company reported a stable inventory level, with a year-over-year reduction of approximately 14% [20] - The recent fire at Fiber Energy Products' facility is expected to impact revenue contributions for fiscal year 2025 [29] Q&A Session Summary Question: What is the fiscal '25 revenue outlook for Revelyst? - Management indicated that while they haven't guided by segment, they see strong growth potential in Precision Sports, while Adventure Sports may face inventory challenges [38][39] Question: How does the margin improvement plan integrate into '25? - The expected $25 million to $30 million in run rate savings will contribute to the fiscal '25 guidance, with improvements anticipated throughout the year [78] Question: What is the pricing strategy for the year? - Management confirmed that no price increases were assumed in the guidance, but a targeted price increase was implemented, with plans for a broader increase to cover rising costs [91][96]

Vista Outdoor (VSTO) came out with quarterly earnings of $1.02 per share, beating the Zacks Consensus Estimate of $0.99 per share. This compares to earnings of $1.08 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 3.03%. A quarter ago, it was expected that this maker of firearms, ammunition and accessories would post earnings of $0.84 per share when it actually produced earnings of $0.80, delivering a surprise of -4.76%.Over t ...