Vista Outdoor(VSTO) - 2022 Q2 - Quarterly Report

PART I - Financial Information This part provides Vista Outdoor Inc.'s unaudited condensed consolidated financial statements and related notes for the period ended September 26, 2021 Item 1. Unaudited Financial Statements This section details Vista Outdoor Inc.'s unaudited condensed consolidated financial statements and comprehensive notes for the reported period Condensed Consolidated Balance Sheets This statement provides a snapshot of the company's assets, liabilities, and stockholders' equity at specific reporting dates Condensed Consolidated Balance Sheets (Amounts in thousands) | (Amounts in thousands) | September 26, 2021 | March 31, 2021 | | :--------------------- | :------------------- | :------------- | | ASSETS | | | | Total current assets | $1,292,606 | $1,064,232 | | Total assets | $2,017,957 | $1,764,939 | | LIABILITIES AND STOCKHOLDERS' EQUITY | | | | Total current liabilities | $395,193 | $370,817 | | Total liabilities | $1,082,944 | $1,027,942 | | Total stockholders' equity | $935,013 | $736,997 | | Total liabilities and stockholders' equity | $2,017,957 | $1,764,939 | Condensed Consolidated Statements of Comprehensive Income This statement presents the company's net sales, gross profit, net income, and earnings per share for the reported periods Condensed Consolidated Statements of Comprehensive Income (Amounts in thousands except per share data) | (Amounts in thousands except per share data) | Three months ended Sep 26, 2021 | Three months ended Sep 27, 2020 | Six months ended Sep 26, 2021 | Six months ended Sep 27, 2020 | | :------------------------------------------- | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Sales, net | $778,460 | $575,179 | $1,441,372 | $1,054,319 | | Gross profit | $298,921 | $161,890 | $540,348 | $287,258 | | Earnings before interest and income taxes | $190,739 | $75,256 | $334,395 | $123,299 | | Net income | $139,540 | $79,645 | $242,265 | $120,121 | | Earnings per common share: Basic | $2.43 | $1.37 | $4.20 | $2.07 | | Earnings per common share: Diluted | $2.36 | $1.34 | $4.07 | $2.03 | | Comprehensive income | $139,473 | $81,389 | $243,193 | $124,085 | Condensed Consolidated Statements of Cash Flows This statement details the cash inflows and outflows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows (Amounts in thousands) | (Amounts in thousands) | Six months ended Sep 26, 2021 | Six months ended Sep 27, 2020 | | :--------------------- | :---------------------------- | :---------------------------- | | Net income | $242,265 | $120,121 | | Cash provided by operating activities | $105,180 | $197,825 | | Cash used for investing activities | $(22,919) | $(9,640) | | Cash used for financing activities | $(60,068) | $(166,690) | | Increase in cash, cash equivalents, and restricted cash | $22,036 | $21,581 | | Cash, cash equivalents, and restricted cash at end of period | $265,301 | $52,956 | Condensed Consolidated Statements of Stockholders' Equity This statement outlines changes in total equity, comprehensive income, and treasury share transactions Condensed Consolidated Statements of Stockholders' Equity (Amounts in thousands) | (Amounts in thousands) | Balance, March 31, 2021 | Balance, September 26, 2021 | | :--------------------- | :---------------------- | :-------------------------- | | Total Equity | $736,997 | $935,013 | | Comprehensive income (six months ended Sep 26, 2021) | $243,193 | | | Treasury shares purchased (six months ended Sep 26, 2021) | $(56,239) | | Notes to the Condensed Consolidated Financial Statements This section provides detailed explanations of significant accounting policies and financial statement line items 1. Significant Accounting Policies This note outlines the company's business segments and the early adoption of new accounting standards with no material financial impact - Vista Outdoor Inc. operates through two reportable segments: Shooting Sports and Outdoor Products, headquartered in Anoka, Minnesota[15] - Early adopted ASU 2020-06 on April 1, 2021, with no impact on financial statements, simplifying accounting for convertible instruments[19] - Adopted ASU 2019-12 on April 1, 2021, simplifying income tax accounting, with no material impact[20] 2. Fair Value of Financial Instruments This note describes the fair value measurement hierarchy for financial instruments, including hedging and acquisition-related items - Fair value measurements are classified into Level 1 (quoted prices in active markets), Level 2 (observable inputs), and Level 3 (unobservable inputs)[21][22][23] - Commodity price hedging instruments are considered Level 2, while a note receivable from the Firearms business sale and contingent consideration from the QuietKat acquisition are Level 3 instruments[23][24][25] Fair Value of Financial Instruments (Amounts in thousands) | | September 26, 2021 | March 31, 2021 | | :----------------- | :--------------- | :------------- | | Fixed-rate debt | $500,000 | $500,000 | | Fair value of fixed-rate debt | $516,250 | $493,750 | 3. Leases This note details the company's operating leases, recognizing assets and liabilities based on the present value of lease payments. Total lease liabilities increased to $89,403 thousand as of September 26, 2021 - All leases are classified as operating leases, with assets and liabilities recognized at the commencement date based on the present value of lease payments[29] Operating Lease Assets and Liabilities (Amounts in thousands) | | September 26, 2021 | March 31, 2021 | | :----------------------- | :------------------- | :------------- | | Operating lease assets | $74,384 | $72,400 | | Total lease liabilities | $89,403 | $87,419 | Net Lease Costs (Amounts in thousands) | | Three months ended Sep 26, 2021 | Three months ended Sep 27, 2020 | Six months ended Sep 26, 2021 | Six months ended Sep 27, 2020 | | :----------------------- | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Net Lease costs | $6,193 | $5,434 | $11,934 | $10,687 | 4. Acquisitions and Divestitures This note outlines recent acquisitions expanding product portfolios in Outdoor Products and Shooting Sports, alongside a non-strategic divestiture - Acquired QuietKat (electric bicycle company) and Venor (female apparel brand) in Q1 FY2022, both reported in Outdoor Products segment[32][33] - Acquired HEVI-Shot Ammunition in Q4 FY2021 and Remington's ammunition and accessories businesses in Q3 FY2021, both included in the Shooting Sports segment[34][35] Remington Purchase Price Allocation (Amounts in thousands) | | October 12, 2020 | | :-------------------------- | :--------------- | | Total purchase price | $81,691 | | Fair value of assets acquired | $80,784 | | Fair value of liabilities assumed | $3,280 | | Net assets acquired | $77,504 | | Goodwill | $4,187 | 5. Derivative Financial Instruments This note explains the use of commodity forward contracts as cash flow hedges to manage raw material price exposure - The company uses commodity forward contracts to hedge exposure to price fluctuations on raw materials like lead for ammunition manufacturing[41] - These contracts are designated as effective cash flow hedges, with gains/losses included in accumulated other comprehensive loss and reclassified to earnings upon sale of related inventory[41][42] - As of September 26, 2021, outstanding lead forward contracts covered approximately 4.4 million pounds of lead[42] 6. Revenue Recognition This note details revenue recognition policies, including control transfer, sales adjustments, and disaggregation of net sales - Revenue for products is recognized at the point of control transfer to the customer, usually upon shipment[45] - Sales adjustments for discounts, returns, and rebates are estimated based on historical data and current market conditions[48] Net Sales by Segment and Geographic Region (Amounts in thousands) | | Three months ended Sep 26, 2021 | Three months ended Sep 27, 2020 | Six months ended Sep 26, 2021 | Six months ended Sep 27, 2020 | | :------------------ | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Shooting Sports | $566,349 | $379,687 | $1,029,668 | $713,844 | | Outdoor Products | $212,111 | $195,492 | $411,704 | $340,475 | | Total | $778,460 | $575,179 | $1,441,372 | $1,054,319 | | United States | $677,206 | $504,523 | $1,235,160 | $926,927 | | Rest of the World | $101,254 | $70,656 | $206,212 | $127,392 | 7. Earnings Per Share This note explains the calculation of basic and diluted EPS, highlighting the increase in diluted EPS for the current period - Diluted EPS for the three months ended September 26, 2021, was $2.36, compared to $1.34 for the same period in 2020[51] - Diluted EPS for the six months ended September 26, 2021, was $4.07, compared to $2.03 for the same period in 2020[51] Earnings Per Common Share (Amounts in thousands except per share data) | | Three months ended Sep 26, 2021 | Three months ended Sep 27, 2020 | Six months ended Sep 26, 2021 | Six months ended Sep 27, 2020 | | :------------------------------------ | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Net income | $139,540 | $79,645 | $242,265 | $120,121 | | Weighted-average common shares outstanding basic | 57,353 | 58,193 | 57,732 | 58,124 |\ | Diluted shares | 59,216 | 59,314 | 59,577 | 59,066 | | Basic EPS | $2.43 | $1.37 | $4.20 | $2.07 | | Diluted EPS | $2.36 | $1.34 | $4.07 | $2.03 | 8. Receivables This note details trade receivables, allowance for credit losses, and the increase in net receivables to $414,587 thousand, with Walmart as a key customer - Net receivables increased to $414,587 thousand as of September 26, 2021, from $301,575 thousand as of March 31, 2021[53] - Walmart accounted for 17% of total trade receivables as of September 26, 2021[53] Net Receivables (Amounts in thousands) | | September 26, 2021 | March 31, 2021 | | :--------------------------------------- | :------------------- | :------------- | | Trade receivables | $423,730 | $307,098 | | Less: allowance for estimated credit losses and discounts | $(16,701) | $(13,422) | | Net receivables | $414,587 | $301,575 | 9. Inventories This note reports an increase in net inventories to $561,506 thousand, primarily in finished goods, as of September 26, 2021 - Net inventories increased to $561,506 thousand as of September 26, 2021, from $454,504 thousand as of March 31, 2021[55] Current Net Inventories (Amounts in thousands) | | September 26, 2021 | March 31, 2021 | | :---------------- | :------------------- | :------------- | | Raw materials | $155,509 | $133,970 | | Work in process | $58,094 | $47,829 | | Finished goods | $347,903 | $272,705 | | Net inventories | $561,506 | $454,504 | 10. Accumulated Other Comprehensive Loss (AOCL) This note details the slight decrease in AOCL, mainly influenced by changes in pension and postretirement benefit liabilities - Total AOCL decreased from $(83,195) thousand at March 31, 2021, to $(82,267) thousand at September 26, 2021[56] Components of AOCL (Amounts in thousands) | | September 26, 2021 | March 31, 2021 | | :------------------------------------ | :------------------- | :------------- | | Derivatives | $(212) | $161 | | Pension and other postretirement benefits liabilities | $(76,734) | $(78,166) | | Cumulative translation adjustment | $(5,321) | $(5,190) | | Total AOCL | $(82,267) | $(83,195) | 11. Goodwill and Intangible Assets This note reports increases in goodwill to $97,773 thousand and net intangible assets to $324,115 thousand, driven by acquisitions in the Outdoor Products segment - Goodwill increased by $11,691 thousand to $97,773 thousand as of September 26, 2021, primarily from Outdoor Products acquisitions[60] - Net intangible assets increased to $324,115 thousand as of September 26, 2021, from $314,955 thousand at March 31, 2021[60] Goodwill and Net Intangible Assets (Amounts in thousands) | | September 26, 2021 | March 31, 2021 | | :---------------------- | :------------------- | :------------- | | Goodwill | $97,773 | $86,082 | | Net intangible assets | $324,115 | $314,955 | | Non-amortizing trade names | $135,602 | $135,602 | 12. Other Current and Non-Current Liabilities This note details increases in other current liabilities to $126,748 thousand and non-current liabilities to $70,587 thousand, including a slight rise in product warranty liability - Total other current liabilities increased to $126,748 thousand as of September 26, 2021, from $120,568 thousand at March 31, 2021[62] - Total other non-current liabilities increased significantly to $70,587 thousand as of September 26, 2021, from $42,448 thousand at March 31, 2021[62] Product Warranty Liability (Amounts in thousands) | | September 26, 2021 | March 31, 2021 | | :--------------------------------------- | :------------------- | :------------- | | Balance, March 31, 2021 | | $8,696 |\ | Balance, September 26, 2021 | $8,939 | | 13. Long-term Debt This note outlines the company's long-term debt, including $500,000 thousand Senior Notes and a $450,000 thousand ABL Revolving Credit Facility, and compliance with covenants - Long-term debt includes $500,000 thousand in 4.5% Senior Notes due March 15, 2029[64][68] - The company has a $450,000 thousand senior secured asset-based revolving credit facility (2021 ABL Revolving Credit Facility) maturing on March 31, 2026[64][65] - As of September 26, 2021, $385,800 thousand was available under the 2021 ABL Revolving Credit Facility, and the company was in compliance with all debt covenants[64][73] 14. Employee Benefit Plans This note details the net loss recognized for employee defined benefit plans and $1,300 thousand in pension trust contributions for the period - Recognized an aggregate net loss of $38 thousand for employee defined benefit plans for the six months ended September 26, 2021, compared to a net benefit of $(43) thousand in the prior year[76] - Made contributions of $1,300 thousand to its pension trust during the six months ended September 26, 2021[77] - No additional contributions are required or expected for pension or other postretirement benefit plans for the remainder of fiscal year 2022[77][78] 15. Income Taxes This note explains the increased effective tax rates due to prior year valuation allowance adjustments and loss carrybacks, with $42,193 thousand in refund filings - Effective tax rates were 24.5% for the three months and 24.9% for the six months ended September 26, 2021[80][81] - The increase in effective tax rate from the prior year is primarily due to the impact of a prior year decrease in valuation allowance and benefit of loss carrybacks[80][81][82] - The company has filed amended income tax returns requesting total refunds of $42,193 thousand[86] 16. Contingencies This note addresses legal proceedings and environmental liabilities, with no expected material adverse effect on financials - The company is subject to various legal proceedings and environmental liabilities, but none are considered material or likely to result in a material adverse effect[87][89] - A liability for environmental remediation of $695 thousand was recorded as of September 26, 2021[89] 17. Operating Segment Information This note provides segment-level financial data, highlighting sales contributions from Shooting Sports and Outdoor Products - Shooting Sports generated approximately 71% of external sales, and Outdoor Products generated approximately 29% for the six months ended September 26, 2021[94] - No single customer contributed 10% or more of sales in the six months ended September 26, 2021[94] Segment Sales, Gross Profit, and EBIT (Six months ended Sep 26, 2021, Amounts in thousands) | | Shooting Sports | Outdoor Products | Corporate and other reconciling items | Total | | :---------- | :-------------- | :--------------- | :------------------------------------ | :------ | | Sales, net | $1,029,668 | $411,704 | — | $1,441,372 | | Gross Profit | $420,530 | $120,202 | $(384) | $540,348 | | EBIT | $336,304 | $49,589 | $(51,498) | $334,395 | 18. Subsequent Event This note details post-quarter acquisitions of Foresight Sports for $474,000 thousand and Fiber Energy Products, both within the Outdoor Products segment - Acquired Foresight Sports, a golf performance analysis technology company, for approximately $474,000 thousand subsequent to quarter-end[97] - Acquired Fiber Energy Products, a wood grilling pellet leader, to secure supply for the Camp Chef business[98] - Both subsequent acquisitions will be reported within the Outdoor Products reportable segment[97][98] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section analyzes Vista Outdoor's financial performance, condition, and liquidity, highlighting strong Q2 FY2022 results and strategic focus - Net sales increased by $203,281 thousand (35.3%) over the comparable quarter last year[112] - Gross profit increased by $137,031 thousand (84.6%), with gross profit margin rising to 38.4%[112] - EBIT increased by $115,483 thousand (153.5%), with EBIT margin reaching 24.5%[112] Forward-Looking Information is Subject to Risk and Uncertainty This section cautions that forward-looking statements are subject to various risks and uncertainties that could impact future results - Forward-looking statements are subject to numerous risks and uncertainties, including impacts from the COVID-19 pandemic, general economic conditions, ability to retain key personnel, adapt products, maintain brand recognition, and manage supply chain constraints[101] - Other risks include changes in demand for products, sales to significant retail customers, commodity and energy costs, regulatory changes, ability to realize benefits from acquisitions, foreign currency fluctuations, litigation, cybersecurity threats, and capital market volatility[101] Business and Products This section describes Vista Outdoor's diverse brand portfolio serving outdoor sports and recreation markets through various channels - Vista Outdoor serves outdoor sports and recreation markets with a diverse portfolio of brands, selling through mass, specialty, and independent retailers, distributors, and direct-to-consumer websites[104] - The company leverages customer knowledge, product development, supply chain, and sales/marketing functions across product categories[104] Operating and Reportable Segments This section outlines the company's two reportable segments: Shooting Sports and Outdoor Products, with their respective brand portfolios - The company operates under seven operating segments aggregated into two reportable segments: Shooting Sports and Outdoor Products[105] - Shooting Sports (71% of external sales) includes ammunition and hunting/shooting accessories brands like Federal, Bushnell, Remington Ammunition[107] - Outdoor Products (29% of external sales) includes hydration, outdoor cooking, action sports, cycling, and golf brands like CamelBak, Camp Chef, Bell, Giro, Bushnell Golf[107] Business Strategy This section details Vista Outdoor's strategic pillars, focusing on talent, organic growth, operational excellence, acquisitions, and capital allocation - Vista Outdoor's strategy focuses on five pillars: Talent and Culture, Organic Growth, Centers of Excellence, Acquisitions, and Capital Allocation[107][108] - Key priorities include investing in talent, fostering innovation, expanding market share through new products and distribution, leveraging shared resources for operational excellence and digital capabilities, acquiring complementary businesses, and maintaining a conservative balance sheet[108] Executive Summary This summary highlights strong Q2 FY2022 performance, supported by market trends and e-commerce investments - The company achieved strong performance in Q2 FY2022 with significant increases in net sales, gross profit, and EBIT[110][112] - Long-term participation trends and an expanded, diverse demographic of users support continued increased demand for outdoor recreation and hunting/shooting-sports products[110] - Investments in e-commerce capabilities position brands to benefit from the shift to online shopping[110] Results of Operations This section analyzes the company's financial performance, including net sales, gross profit, and EBIT for the reported periods Net Sales This section details the significant increase in net sales to $778,460 thousand (three months) and $1,441,372 thousand (six months), driven by strong segment performance Net Sales by Segment (Amounts in thousands) | | Three months ended Sep 26, 2021 | Three months ended Sep 27, 2020 | Change (Dollars) | Change (Percent) | | :---------------- | :------------------------------ | :------------------------------ | :--------------- | :--------------- | | Shooting Sports | $566,349 | $379,687 | $186,662 | 49.2 % | | Outdoor Products | $212,111 | $195,492 | $16,619 | 8.5 % | | Total net sales | $778,460 | $575,179 | $203,281 | 35.3 % | | | Six months ended Sep 26, 2021 | Six months ended Sep 27, 2020 | Change (Dollars) | Change (Percent) | | Shooting Sports | $1,029,668 | $713,844 | $315,824 | 44.2 % | | Outdoor Products | $411,704 | $340,475 | $71,229 | 20.9 % | | Total net sales | $1,441,372 | $1,054,319 | $387,053 | 36.7 % | - Shooting Sports sales increase was driven by acquisitions, improved pricing, and strong market demand, partially offset by reduced small rifle ammunition supply[114][116] - Outdoor Products sales increase was due to continued demand in Hydration, Golf, and Action Sports, including sales from the QuietKat acquisition[115][117] Gross Profit This section analyzes the substantial increase in gross profit to $298,921 thousand and margin, with strong growth across both segments Gross Profit by Segment (Amounts in thousands) | | Three months ended Sep 26, 2021 | Three months ended Sep 27, 2020 | Change (Dollars) | Change (Percent) | | :------------------ | :------------------------------ | :------------------------------ | :--------------- | :--------------- | | Shooting Sports | $239,202 | $104,983 | $134,219 | 127.8 % | | Outdoor Products | $59,719 | $56,907 | $2,812 | 4.9 % | | Total gross profit | $298,921 | $161,890 | $137,031 | 84.6 % | | Gross profit margin | 38.4% | 28.1% | | | | | Six months ended Sep 26, 2021 | Six months ended Sep 27, 2020 | Change (Dollars) | Change (Percent) | | Shooting Sports | $420,530 | $189,484 | $231,046 | 121 % | | Outdoor Products | $120,202 | $97,774 | $22,428 | 22 % | | Total gross profit | $540,348 | $287,258 | $253,090 | 88 % | | Gross profit margin | 37.5% | 27.2% | | | - Shooting Sports gross profit increase was due to acquisitions, improved pricing, sales volume, and operating efficiencies, partially offset by increased commodity costs[119][121] - Outdoor Products gross profit increase was driven by sales volume and operating efficiencies, partially offset by higher logistics costs and sales channel mix[120][122] EBIT This section details the significant increase in EBIT to $190,739 thousand and margin, driven by Shooting Sports, despite a decrease in Outdoor Products EBIT by Segment (Amounts in thousands) | | Three months ended Sep 26, 2021 | Three months ended Sep 27, 2020 | Change (Dollars) | Change (Percent) | | :------------------ | :------------------------------ | :------------------------------ | :--------------- | :--------------- | | Shooting Sports | $194,582 | $70,337 | $124,245 | 176.6 % | | Outdoor Products | $23,662 | $26,385 | $(2,723) | (10.3)% | | Corporate and other | $(27,505) | $(21,466) | $(6,039) | (28.1)% | | Total EBIT | $190,739 | $75,256 | $115,483 | 153.5 % | | EBIT margin | 24.5% | 13.1% | | | | | Six months ended Sep 26, 2021 | Six months ended Sep 27, 2020 | Change (Dollars) | Change (Percent) | | Shooting Sports | $336,304 | $124,901 | $211,403 | 169.3 % | | Outdoor Products | $49,589 | $37,892 | $11,697 | 30.9 % | | Corporate and other | $(51,498) | $(39,494) | $(12,004) | (30.4)% | | Total EBIT | $334,395 | $123,299 | $211,096 | 171.2 % | | EBIT margin | 23.2% | 11.7% | | | - Shooting Sports EBIT increase was driven by gross profit, partially offset by higher SG&A and marketing expenses[124][127] - Outdoor Products EBIT decrease (three months) was due to higher SG&A from acquisitions and increased marketing, partially offset by gross profit growth[125][128] Interest expense, net This section analyzes the changes in net interest expense, increasing to $5,929 thousand (three months) and decreasing to $11,607 thousand (six months) Interest Expense, Net (Amounts in thousands) | | Three months ended Sep 26, 2021 | Three months ended Sep 27, 2020 | Change (Dollars) | Change (Percent) | | :------------------ | :------------------------------ | :------------------------------ | :--------------- | :--------------- | | Corporate and other | $5,929 | $5,715 | $214 | 3.7 % | | | Six months ended Sep 26, 2021 | Six months ended Sep 27, 2020 | Change (Dollars) | Change (Percent) | | Corporate and other | $11,607 | $12,133 | $(526) | (4.3)% | - Three-month increase in interest expense due to higher average debt balance, offset by lower interest rate on 4.5% Notes[130] - Six-month decrease in interest expense due to a reduction in the interest rate on the 4.5% Notes[130] Income Tax Provision This section details the income tax provision and effective tax rates, noting a significant increase from the prior year Income Tax Provision (Amounts in thousands) | | Three months ended Sep 26, 2021 | Effective Rate | Three months ended Sep 27, 2020 | Effective Rate | $ Change | | :------------------ | :------------------------------ | :------------- | :------------------------------ | :------------- | :------- | | Corporate and other | $(45,270) | 24.5 % | $10,104 | (14.5)% | $(55,374) | | | Six months ended Sep 26, 2021 | Effective Rate | Six months ended Sep 27, 2020 | Effective Rate | $ Change | | Corporate and other | $(80,523) | 24.9 % | $8,955 | (8.1)% | $(89,478) | - The increase in the effective tax rate for both periods is primarily due to the impact of the prior year's decrease in valuation allowance and benefit of loss carrybacks[132] Financial Condition This section reviews the company's financial position, focusing on cash flows from operating, investing, and financing activities Operating Activities This section analyzes the decrease in cash from operating activities by $92,645 thousand, driven by inventory, receivables, and tax payment timing - Cash provided by operating activities decreased by $92,645 thousand for the six months ended September 26, 2021[134] - The decrease was driven by increased inventory purchases, higher accounts receivable due to sales volume, and timing of income tax payments[134] - Increased net income partially offset the decrease in cash from operating activities[134] Investing Activities This section details the increase in cash used for investing activities by $13,279 thousand, primarily due to acquisitions and capital expenditures - Cash used for investing activities increased by $13,279 thousand for the six months ended September 26, 2021[135] - The increase was primarily due to the acquisition of businesses and increased capital expenditures[135] Financing Activities This section analyzes the decrease in cash used for financing activities by $106,622 thousand, influenced by debt payments and share repurchases - Cash used for financing activities decreased by $106,622 thousand for the six months ended September 26, 2021[136] - This decrease was due to a reduction in net debt payments, partially offset by the repurchase of approximately 1.5 million shares for $56,239 thousand[136] Liquidity and Capital Resources This section discusses the company's liquidity sources, future cash requirements, and debt position - Primary sources of liquidity include operating cash flows, committed credit facilities, and access to public debt and equity markets[137] - Future cash requirements include capital expenditures, debt repayments, employee benefit obligations, share repurchases, and strategic acquisitions[138] - As of September 26, 2021, $385,800 thousand was available under the 2021 ABL Revolving Credit Facility, and total debt as a percentage of total capitalization was 34.8%[139] Contractual Obligations and Commitments This section outlines the company's operating lease liabilities and confirms no material changes to contractual obligations - Current and long-term operating lease liabilities were $11,277 thousand and $78,126 thousand, respectively, as of September 26, 2021[142] - No material changes to contractual obligations, commitments, or off-balance sheet arrangements since the fiscal year 2021 Annual Report on Form 10-K[143] Contingencies This section addresses legal proceedings and environmental liabilities, with no expected material adverse effect on financials - The company is subject to various legal proceedings and environmental liabilities, but none are expected to have a material adverse effect on operating results, financial condition, or cash flows[144][146] - Environmental management programs are in place to mitigate risks, but future material impact from environmental laws and regulations is difficult to predict[147] Critical Accounting Policies and Estimates This section confirms no material changes to critical accounting policies, except for the adoption of new ASUs - No changes to critical accounting policies and estimates from the fiscal year 2021 Annual Report on Form 10-K, except for the adoption of ASU 2019-12 and ASU 2020-06[148] Dependence on Key Customers; Concentration of Credit This section discusses customer concentration, noting no single customer exceeded 10% of sales in the current period - No single customer contributed 10% or more of sales in the six months ended September 26, 2021[149] - Walmart represented approximately 10% of sales in the six months ended September 27, 2020[149] - Failure of a key customer to meet payment obligations could adversely affect operating results and financial condition[149] Inflation and Commodity Price Risk This section addresses the impact of inflation and commodity price volatility, particularly in the Shooting Sports Segment - Inflation has not significantly impacted operations, but commodity metal prices (copper, zinc, lead) and energy costs remain volatile, primarily affecting the Shooting Sports Segment[150] - The company employs a strategic sourcing, pricing, and hedging strategy to mitigate commodity price fluctuation risks[151] Item 3. Quantitative and Qualitative Disclosures about Market Risk This section confirms that market risks, including interest rates, commodity prices, and foreign currency, remain consistent with prior disclosures - Market risks primarily stem from changes in interest rates, commodity prices, and foreign currency exchange rates[152] - Market risks at September 26, 2021, are similar to those disclosed in the Annual Report on Form 10-K for fiscal year 2021[152] Item 4. Controls and Procedures This section confirms the effectiveness of disclosure controls and procedures, with no material changes in internal control over financial reporting - Disclosure controls and procedures were evaluated and deemed effective as of September 26, 2021[153] - No material changes in internal control over financial reporting occurred during the six months ended September 26, 2021[154] PART II - Other Information This part provides additional information, including legal proceedings, risk factors, equity sales, and exhibits Item 1. Legal Proceedings This section details ongoing legal and environmental proceedings, none of which are expected to have a material adverse effect - The company is subject to various legal proceedings and environmental actions[157][158] - None of the pending proceedings are considered material or likely to have a material adverse effect on the business, financial condition, or cash flows[157][158] Item 1A. Risk Factors This section confirms no material changes to previously disclosed risk factors, which could impact the business - No material changes to the risk factors disclosed in the Annual Report on Form 10-K for fiscal year 2021[159] - Risks and uncertainties have the potential to materially affect the business, financial condition, results of operations, cash flows, projected results, and future prospects[159] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details the authorized $100,000 thousand share repurchase program and the 1,524 thousand shares repurchased for $56,239 thousand as of September 26, 2021 - Board of Directors authorized a $100,000 thousand share repurchase program on May 6, 2021, expiring May 3, 2023[160] - As of September 26, 2021, 1,524 thousand shares were repurchased for $56,239 thousand under the program[162] Share Repurchase Activity (Amounts in thousands except price per share) | Period | Total number of shares repurchased | Average price paid per share | | :-------------------------------- | :------------------------------- | :--------------------------- | | June 28, 2021 - July 25, 2021 | 126 | $38.88 | | July 26, 2021 - August 22, 2021 | 185 | $38.40 | | August 23, 2021 - September 26, 2021 | — | — | | Fiscal Quarter Ended September 26, 2021 | 311 | $38.60 | Item 3. Defaults Upon Senior Securities This item is not applicable for the reported period - Not applicable[163] Item 4. Mine Safety Disclosures This item is not applicable for the reported period - Not applicable[164] Item 5. Other Information No other information is reported under this item for the period - None[165] Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including various agreements and certifications - Includes Tax Matters Agreement, Stock Purchase Agreements (e.g., for Foresight Sports), Amended and Restated Certificate of Incorporation, Bylaws, Indentures, and various certifications[166] - Financial statements and cover page are formatted in Inline Extensible Business Reporting Language (iXBRL)[166] SIGNATURES This section contains the required signatures for the financial report - The report is signed by Sudhanshu Priyadarshi, Senior Vice President and Chief Financial Officer, on behalf of Vista Outdoor Inc. on November 4, 2021[170]