Vista Outdoor(VSTO) - 2023 Q2 - Quarterly Report

Financial Performance - Net sales increased by $3,218, or 0.4%, to $781,678 for the three months ended September 25, 2022, compared to $778,460 for the same period last year[121] - Sporting Products net sales decreased by $17,704, or 3.9%, while Outdoor Products net sales increased by $20,922, or 6.4%[121] - Gross profit decreased by $36,047, or 12.1%, to $262,874, with a gross profit margin of 33.6%, down 480 basis points from the prior year[121] - EBIT decreased by $58,831, or 30.8%, with an EBIT margin of 16.9%, down 760 basis points compared to the same quarter last year[121] - Net income decreased to $93,455, or $1.62 per diluted share, compared to $139,540, or $2.36 per diluted share for the same quarter last year[121] - Total EBIT for the three months ended September 25, 2022, was $131.9 million, a decrease of 30.8% compared to $190.7 million in the prior year[133] Acquisitions and Corporate Strategy - The company acquired Fox Racing and Simms Fishing during the second fiscal quarter of 2023[121] - The planned separation of Outdoor Products and Sporting Products is expected to be completed in calendar year 2023, creating independent publicly traded companies[118] Market Trends and Consumer Behavior - Outdoor Products brands are expected to benefit from increased e-commerce capabilities and a shift in consumer shopping behavior towards online channels[122] - The company anticipates continued increased demand for hunting and shooting-sports related products due to strong participation rates and a broader demographic of users[121] Brand and Marketing Initiatives - The company aims to enhance brand differentiation through focused research and development and increased digital marketing investments[122] Profit Margins - Sporting Products gross profit margin decreased to 36.8% from 45.0% year-over-year, driven by increased commodity and freight costs, lower volume, and unfavorable mix[129] - Outdoor Products gross profit margin increased to 30.6% from 29.3% year-over-year, primarily due to volume from businesses acquired in the last twelve months[130] - EBIT margin for Sporting Products decreased to 30.9% from 39.0% year-over-year, primarily due to decreased gross profit[134] Cash Flow and Debt Management - Cash provided by operating activities increased by $88.2 million for the six months ended September 25, 2022, compared to the prior year period[143] - Cash used for investing activities increased by $751.2 million for the six months ended September 25, 2022, primarily driven by acquisitions[144] - Cash provided by financing activities increased by $685.5 million for the six months ended September 25, 2022, related to proceeds from the 2022 ABL Revolving Credit Facility and 2022 Term Loan[145] - As of September 25, 2022, total debt as a percentage of total capitalization was 49.4%[147] - The company anticipates that its cash position, combined with expected cash flows, will be adequate to fund future growth and service long-term debt obligations[147] Tax and Market Risks - The effective income tax rate for Corporate and Other decreased to 20.8% from 24.5% year-over-year, primarily due to non-taxable contingent consideration income[140] - Market risks primarily arise from changes in interest rates, commodity prices, and foreign currency exchange rates[160] - Market risks as of September 25, 2022, are consistent with those disclosed in the Annual Report for fiscal year 2022[160] - Information regarding market risk is incorporated by reference from the Annual Report on Form 10-K filed on May 24, 2022[160]