vsto-20240630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒						QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024 or


☐						TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period to

Commission file number 1-36597

Vista Outdoor Inc.

(Exact name of Registrant as specified in its charter)


Delaware						47-1016855
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

1 Vista Way

Anoka, MN 55303

(Address of principal executive offices)

Registrant's telephone number, including area code: (763) 433-1000

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $.01

VSTO

New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None.

____________________________________________________________________________

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of August 5, 2024, there were 58,407,653 shares of the registrant's common stock outstanding.

TABLE OF CONTENTS


		Page

PART I - Financial Information
Item 1.	Unaudited Financial Statements	2
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	30
Item 4.	Controls and Procedures	30
PART II - Other Information
Item 1.	Legal Proceedings	31
Item 1A.	Risk Factors	31
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	31
Item 3.	Defaults Upon Senior Securities	31
Item 4.	Mine Safety Disclosures	31
Item 5.	Other Information	32
Item 6.	Exhibits	32
SIGNATURES		34

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PART I

ITEM 1. FINANCIAL STATEMENTS

VISTA OUTDOOR INC.

CONDENSED CONSOLIDATED BALANCE SHEETS


(Amounts in thousands except share data)	June 30, 2024		March 31, 2024
ASSETS
Current assets:
Cash and cash equivalents	$	55,981	$	60,271
Net receivables	355,968		355,903
Net inventories	619,531		609,999
Income tax receivable	—		9,113
Other current assets	42,369		39,836
Total current assets	1,073,849		1,075,122
Net property, plant, and equipment	184,774		201,864
Operating lease assets	101,427		107,007
Goodwill	318,251		318,251
Net intangible assets	613,324		627,636
Deferred income tax assets	12,504		12,895
Deferred charges and other non-current assets, net	59,664		59,605
Total assets	$	2,363,793	$	2,402,380
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	146,745	$	163,411
Accrued compensation	49,404		56,983
Accrued income taxes	4,104		—
Federal excise, use, and other taxes	35,282		35,552
Other current liabilities	147,597		129,352
Total current liabilities	383,132		385,298
Long-term debt	632,378		717,238
Long-term operating lease liabilities	100,983		105,699
Accrued pension and postemployment benefits	18,766		22,866
Other long-term liabilities	42,275		44,982
Total liabilities	1,177,534		1,276,083
Commitments and contingencies (Notes 14 and 17)
Common stock—$.01 par value:
Authorized—500,000,000 shares
Issued and outstanding—58,363,474 shares as of June 30, 2024 and 58,238,276 shares as of March 31, 2024	583		582
Additional paid-in-capital	1,650,078		1,653,089
Accumulated deficit	(178,913)		(236,033)
Accumulated other comprehensive loss	(73,404)		(74,348)
Common stock in treasury, at cost—5,600,965 shares held as of June 30, 2024 and 5,726,163 shares held as of March 31, 2024	(212,085)		(216,993)
Total stockholders' equity	1,186,259		1,126,297
Total liabilities and stockholders' equity	$	2,363,793	$	2,402,380

See Notes to the Condensed Consolidated Financial Statements.

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VISTA OUTDOOR INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME


	Three months ended
(Amounts in thousands except per share data)	June 30, 2024		June 25, 2023
Sales, net	$	644,181	$	693,333
Cost of sales	433,024		466,576
Gross profit	211,157		226,757
Operating expenses:
Research and development	12,439		12,080
Selling, general, and administrative	137,349		122,491
Gain on divestiture (Note 7)	(19,659)		—
Operating income	81,028		92,186
Other expense, net (Note 4)	(77)		(541)
Interest expense, net	(9,421)		(16,218)
Income before income taxes	71,530		75,427
Income tax provision	(14,410)		(17,327)
Net income	$	57,120	$	58,100
Earnings per common share:
Basic	$	0.98	$	1.01
Diluted	$	0.97	$	0.99

Weighted-average number of common shares outstanding:
Basic	58,312		57,455
Diluted	58,641		58,541

Net income (from above)	$	57,120	$	58,100
Other comprehensive income, net of tax:
Pension and other postretirement benefit liabilities:
Reclassification of net actuarial loss for pension and postretirement benefit plans recorded to net income, net of tax expense of $(178) and $(176)	565		562
Change in derivative instruments, net of tax expense of $(198) and $(493)	628		1,574
Change in cumulative translation adjustment, net of tax benefit (expense) of $0 and $0	(249)		664
Total other comprehensive income	944		2,800
Comprehensive income	$	58,064	$	60,900

See Notes to the Condensed Consolidated Financial Statements.

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VISTA OUTDOOR INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


	Three months ended
(Amounts in thousands)	June 30, 2024		June 25, 2023
Operating Activities
Net income	$	57,120	$	58,100
Adjustments to net income to arrive at cash provided by operating activities:
Depreciation	11,209		12,220
Amortization of intangible assets	12,483		12,707
Amortization of deferred financing costs	764		2,078
Impairment of long-lived assets	8,043		—
Gain on sale of business (Note 7)	(19,659)		—
Deferred income taxes	14		576
(Gain)/loss on foreign exchange	55		(1,272)
(Gain)/loss on disposal of property, plant, and equipment	396		(59)
Share-based compensation	4,123		3,307
Changes in assets and liabilities:
Net receivables	(67)		(51,915)
Net inventories	(17,695)		(6,117)
Accounts payable	(20,040)		21,850
Accrued compensation	(6,914)		(14,546)
Accrued income taxes	14,730		16,231
Federal excise, use, and other taxes	(270)		(2,951)
Pension and other postretirement benefits	(3,357)		341
Other assets and liabilities	12,830		23,151
Cash provided by operating activities	53,765		73,701
Investing Activities
Capital expenditures	(2,284)		(7,616)
Proceeds from the sale of business	33,400		—
Asset acquisition	(263)		—
Proceeds from the disposition of property, plant, and equipment	—		129
Cash provided by (used for) investing activities	30,853		(7,487)
Financing Activities
Proceeds from credit facility	63,000		30,000
Repayments of credit facility	(148,000)		(95,000)
Payments on long-term debt	—		(90)
Payments made for debt issue costs and prepayment premiums	—		(31)
Proceeds from exercise of stock options	—		39
Payments made for contingent consideration	(750)		(8,585)
Payment of employee taxes related to vested stock awards	(2,889)		(16,024)
Cash used for financing activities	(88,639)		(89,691)
Effect of foreign currency exchange rate fluctuations on cash	(269)		432
Decrease in cash and cash equivalents	(4,290)		(23,045)
Cash and cash equivalents at beginning of year	60,271		86,208
Cash and cash equivalents at end of year	$	55,981	$	63,163
Supplemental Cash Flow Disclosures:
Noncash investing activity:
Capital expenditures included in accounts payable and other accrued liabilities	$	3,173	$	2,313

See Notes to the Condensed Consolidated Financial Statements.

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VISTA OUTDOOR INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY


	Common Stock $.01 Par Value
(Amounts in thousands except share data)	Shares	Amount		Additional Paid-In Capital		Retained Earnings (Accumulated Deficit)		Accumulated Other Comprehensive Loss		Treasury Stock		Total Equity
Balance, March 31, 2024	58,238,276	$	582	$	1,653,089	$	(236,033)	$	(74,348)	$	(216,993)	$	1,126,297
Comprehensive income	—	—		—		57,120		944		—		58,064
Share-based compensation	—	—		4,123		—		—		—		4,123
Restricted stock vested and shares withheld	123,578	—		(7,070)		—		—		4,846		(2,224)
Other	1,620	1		(64)		—		—		62		(1)
Balance, June 30, 2024	58,363,474	$	583	$	1,650,078	$	(178,913)	$	(73,404)	$	(212,085)	$	1,186,259

Balance, March 31, 2023	57,085,756	$	570	$	1,711,155	$	(230,528)	$	(80,802)	$	(268,602)	$	1,131,793
Comprehensive income	—	—		—		58,100		2,800		—		60,900
Exercise of stock options	2,410	—		(55)		—		—		94		39
Share-based compensation	—	—		3,307		—		—		—		3,307
Restricted stock vested and shares withheld	901,094	—		(57,520)		—		—		41,483		(16,037)
Other	8,390	9		(329)		—		—		320		—
Balance, June 25, 2023	57,997,650	$	579	$	1,656,558	$	(172,428)	$	(78,002)	$	(226,705)	$	1,180,002

See Notes to the Condensed Consolidated Financial Statements.

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VISTA OUTDOOR INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands except per share data and unless otherwise indicated)

1. The Company and Basis of Presentation

Nature of Operations—Vista Outdoor Inc. (together with our subsidiaries, "Vista Outdoor", "we", "our", and "us", unless the context otherwise requires) is a leading global designer, manufacturer, and marketer of outdoor recreation and shooting sports products. We operate through four reportable segments, The Kinetic Group, Revelyst Outdoor Performance, Revelyst Adventure Sports, and Revelyst Precision Sports Technology. We are headquartered in Anoka, Minnesota and have manufacturing and distribution facilities in the United States, Mexico, and Puerto Rico along with international customer service, sales and sourcing operations in Asia and Europe. We have a robust global distribution network serving customers in over 100 countries. Vista Outdoor was incorporated in Delaware in 2014.

Basis of Presentation—Our unaudited condensed consolidated financial statements have been prepared in accordance with the requirements of the Securities and Exchange Commission ("SEC") for interim reporting. As permitted under those rules, certain disclosures and other financial information that normally are required by accounting principles generally accepted in the United States of America have been condensed or omitted. Management is responsible for the unaudited condensed consolidated financial statements included in this report, which in the opinion of management, include all adjustments necessary for a fair presentation of our financial position, results of operations, and cash flows for the periods and dates presented. These unaudited condensed consolidated financial statements should be read in conjunction with our consolidated financial statements and notes included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2024 (“fiscal year 2024”), which was filed with the SEC on May 29, 2024.

Use of Estimates—The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect amounts reported therein. Due to the inherent uncertainty involved in making estimates, actual results reported in future periods may differ from those estimates. We review our estimates to ensure that these estimates properly reflect changes in our business or as new information becomes available. See our discussion of Critical Accounting Policies and Estimates in Part I, Item 2 of this Quarterly Report.

2. Fair Value of Financial Instruments

The following section describes the valuation methodologies we use to measure our financial instruments at fair value on a recurring basis:

Derivative Financial Instruments

Hedging instruments (see Note 4, Derivative Financial Instruments), are re-measured on a recurring basis using broker quotes, daily market foreign currency rates, and interest rate curves as applicable and are therefore categorized within Level 2 of the fair value hierarchy.

Contingent Consideration

In connection with some of our acquisitions, we recorded contingent consideration liabilities that can be earned by the sellers upon achievement of certain milestones. The liabilities are measured on a recurring basis and recorded at fair value, using a discounted cash flow analysis or a Monte Carlo simulation analysis in a risk-neutral framework with assumptions for volatility, market price of risk adjustment, risk-free rate, and cost of debt, utilizing revenue projections for the respective earn-out period, corresponding targets and approximate timing of payments as outlined in the purchase agreements. The inputs used to calculate the fair value of the contingent consideration liabilities are considered to be Level 3 inputs due to the lack of relevant market activity and significant management judgment. Changes in the fair value of the contingent consideration obligation results from changes in discount periods and rates, and changes in probability assumptions with respect to the likelihood of achieving the performance targets. The fair value adjustments are recorded in selling, general, and administrative in the condensed consolidated statements of comprehensive income. The estimated fair value of contingent consideration payable related to our acquisition of Stone Glacier as of June 30, 2024 is $2,806.

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Following is a summary of our contingent consideration liability Level 3 activity:


March 31, 2024	$	3,556
Payments made	(750)
Balance, June 30, 2024	$	2,806

Contingent consideration liabilities are reported under the following captions in the condensed consolidated balance sheets:


	June 30, 2024		March 31, 2024
Other current liabilities	$	2,806	$	750
Other long-term liabilities	—		2,806
Total	$	2,806	$	3,556

Disclosures about the Fair Value of Financial Instruments

The carrying amount of our receivables, inventory, accounts payable, and accrued liabilities as of June 30, 2024 and March 31, 2024 approximates fair value because of the short maturity of these instruments. The carrying values of cash and cash equivalents as of June 30, 2024 and March 31, 2024 are categorized within Level 1 of the fair value hierarchy.

The table below discloses information about carrying values and estimated fair value relating to our financial assets and liabilities:


	June 30, 2024				March 31, 2024
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Fixed rate debt(1)	$	500,000	$	501,605	$	500,000	$	500,865
Variable rate debt(2)	135,000		135,000		220,000		220,000

(1) Fixed rate debt—In fiscal year 2021, we issued $500,000 aggregate principal amount of 4.5% Senior Notes which will mature on March 15, 2029. These notes are unsecured and senior obligations. The fair value of the fixed-rate debt is based on market quotes for each issuance. We consider these to be Level 2 instruments. See Note 14, Long-term Debt, for information on our credit facilities, including certain risks and uncertainties.

(2) Variable rate debt— The carrying value of the amounts outstanding under our ABL Revolving Credit Facility approximates the fair value because the interest rates are variable and reflective of market rates as of June 30, 2024. The fair value of this debt is categorized within Level 2 of the fair value hierarchy based on the observable market borrowing rates. See Note 14, Long-term Debt, for additional information on our credit facilities, including related certain risks and uncertainties.

We periodically evaluate the recoverability of the carrying amount of our long-lived assets, including amortizing intangible assets, whenever events or changes in circumstances indicate that the carrying amount of the asset may not be fully recoverable or exceeds its fair value. These assets include long-lived assets that are written down to fair value when they are held for sale or determined to be impaired. See Note 7, Divestitures and Acquisitions, for discussion of impairment recorded during the first fiscal quarter of 2025 related to divestiture completed in the second fiscal quarter of 2025. See Note 3, Leases, for discussion of right of use asset (ROU) impairments during the first fiscal quarter of 2025. Significant assumptions were used to estimate fair value of long-lived assets, which were categorized within Level 3 of the fair value hierarchy. See Note 13, Restructuring, for discussion of long-lived asset impairments related to our GEAR Up restructuring plan during the first fiscal quarter of 2025.

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3. Leases

We lease certain warehouse and distribution space, manufacturing space, office space, retail locations, equipment, and vehicles. All of these leases are classified as operating leases. Operating lease assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. We use our incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. These rates are assessed on a quarterly basis. The operating lease assets also include any lease payments less lease incentives. Leases with an initial term of twelve months or less are not recorded on the balance sheet. For operating leases, expense is recognized on a straight-line basis over the lease term. Variable lease payments associated with our leases are recognized upon occurrence of the event, activity, or circumstance in the lease agreement on which those payments are assessed. Tenant improvement allowances are recorded as leasehold improvements with an offsetting adjustment included in our calculation of its right-of-use asset.

Many leases include one or more options to renew, with renewal terms that can extend the lease term up to five years. The exercise of lease renewal options is at our sole discretion. The depreciable life of assets and leasehold improvements are limited by the expected lease term.

SEC Form 10-Q filed by Vista Outdoor Inc.