Quick10K

Vista Outdoor

Price	8.14		EPS	-0
Shares	58		P/E	-16
MCap	470		P/FCF	1,310
Net Debt	562		EBIT	14
TEV	1,033		TEV/EBIT	73
TTM 2019-09-29, in MM, except price, ratios

10-Q	2020-12-27	Filed 2021-02-04 Print
10-Q	2020-09-27	Filed 2020-11-05 Print
10-Q	2020-06-28	Filed 2020-08-06 Print
10-K	2020-03-31	Filed 2020-06-03 Print
10-Q	2019-12-29	Filed 2020-02-06 Print
10-Q	2019-09-29	Filed 2019-11-07 Print
10-Q	2019-06-30	Filed 2019-08-08 Print
10-K	2019-03-31	Filed 2019-05-23 Print
10-Q	2018-12-30	Filed 2019-02-07 Print
10-Q	2018-09-30	Filed 2018-11-08 Print
10-Q	2018-07-01	Filed 2018-08-09 Print
10-K	2018-03-31	Filed 2018-05-18 Print
10-Q	2017-12-31	Filed 2018-02-08 Print
10-Q	2017-10-01	Filed 2017-11-09 Print
10-Q	2017-07-02	Filed 2017-08-10 Print
10-K	2017-03-31	Filed 2017-05-26 Print
10-Q	2017-01-01	Filed 2017-02-09 Print
10-Q	2016-10-02	Filed 2016-11-10 Print
10-Q	2016-07-03	Filed 2016-08-12 Print
10-K	2016-03-31	Filed 2016-05-27 Print
10-Q	2016-01-03	Filed 2016-02-11 Print
10-Q	2015-10-04	Filed 2015-11-12 Print
10-Q	2015-07-05	Filed 2015-08-13 Print
10-K	2015-03-31	Filed 2015-06-01 Print
10-Q	2014-12-28	Filed 2015-03-04 Print

8-K	2020-11-05
8-K	2020-10-13
8-K	2020-09-28
8-K	2020-08-06
8-K	2020-08-04
8-K	2020-05-07
8-K	2020-05-05
8-K	2020-04-27
8-K	2020-02-06
8-K	2019-11-08
8-K	2019-11-07
8-K	2019-09-10
8-K	2019-08-12
8-K	2019-08-09
8-K	2019-08-08
8-K	2019-07-05
8-K	2019-05-09
8-K	2019-02-07
8-K	2018-12-17
8-K	2018-11-19
8-K	2018-11-01
8-K	2018-09-04
8-K	2018-08-09
8-K	2018-08-07
8-K	2018-07-31
8-K	2018-07-13
8-K	2018-07-02
8-K	2018-05-01
8-K	2018-03-29
8-K	2018-02-08
8-K	2018-02-05

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Balance Sheet	Income Statement	Cash Flow
CopyHistoryView Assets, Equity	CopyHistoryView Rev, G Profit, Net Income	CopyHistoryView Ops, Inv, Fin

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PART I— FINANCIAL INFORMATION

ITEM 1.    FINANCIAL STATEMENTS

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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 and shooting sports products. We conduct our operations through two reportable segments, Shooting Sports and Outdoor Products. We are headquartered in Anoka, Minnesota and have 15 manufacturing and distribution facilities in the United States, Canada, Mexico, and Puerto Rico along with international customer service, sales and sourcing operations in Asia, Canada, and Europe. Vista Outdoor was incorporated in Delaware in 2014. The condensed consolidated financial statements reflect our financial position, results of operations, and cash flows in conformity with accounting principles generally accepted in the United States.

This Quarterly Report on Form 10-Q 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, 2020 (“fiscal 2020”).

Reclassifications—Changes to the mathematical sign used to denote income taxes for the three and nine months ended December 29, 2019 were made to conform to the current period presentation in the condensed consolidated statements of income. This reclassification had no impact to our key metrics including Earnings (loss) before income taxes or Net income (loss).

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 have been condensed or omitted. Our accounting policies are described in the notes to the consolidated financial statements in our Annual Report on Form 10-K for fiscal 2020. Management is responsible for the condensed consolidated financial statements included in this report, which are unaudited but, in the opinion of management, include all adjustments necessary for a fair presentation of our financial position as of December 27, 2020 and March 31, 2020, our results of operations for the three and nine months ended December 27, 2020 and December 29, 2019, and our cash flows for the nine months ended December 27, 2020 and December 29, 2019.

New Accounting Pronouncements

Our accounting policies are described in Note 1 of the Notes to the Consolidated Financial Statements included in our fiscal year 2020 Annual Report on Form 10-K. Such significant accounting policies are applicable for periods prior to the following new accounting standards.

Accounting Standards Adopted During this Fiscal Year

On April 1, 2020, we adopted ASU No. 2016-13, "Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments" ("Topic 326"). This new standard is intended to improve financial reporting by requiring more timely recording of credit losses on our trade accounts receivable and requires the measurement of all expected credit losses based on historical experience, current conditions, and reasonable and supportable forecasts. The adoption of this ASU did not have a material impact on our condensed consolidated financial statements and disclosures. For further information, see Note 8, Receivables.

On April 1, 2020, we adopted ASU No. 2018-13, "Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement." The amendments in this ASU removed, modified or added to the disclosure requirements for fair value measurements in ASC Topic 820, "Fair Value Measurement" ("Topic 820"). The adoption of this ASU did not have a material impact on our condensed consolidated financial statements and disclosures.

Accounting Standards Yet to Be Adopted

In December 2019, the FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which simplifies the accounting for income taxes, eliminates certain exceptions within ASC 740, Income Taxes, and clarifies certain aspects of the current guidance to promote consistency among reporting entities. ASU 2019-12 is effective for fiscal years beginning after December 15, 2021, although early adoption is permitted. Most amendments within the standard are

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We measure and disclose our financial assets and liabilities at fair value on a recurring and nonrecurring basis. Fair value is defined as the price that would be received to sell an asset or the price paid to transfer a liability (the exit price) in the principal and most advantageous market for the asset or liability in an orderly transaction between market participants. Assets and liabilities carried at fair value are classified using the following three-tier hierarchy:

Level 1—Quoted prices for identical instruments in active markets.

Level 2—Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.

Level 3—Significant inputs to the valuation model are unobservable.

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

Interest Rate Swaps—We periodically enter into floating-to-fixed interest rate swap agreements in order to hedge our forecasted interest payments on our outstanding variable-rate debt. The fair value of those swaps is determined using a pricing model based on observable inputs for similar instruments and other market assumptions. We consider these to be Level 2 instruments. See Note 5, Derivative Financial Instruments, for additional information.

Commodity Price Hedging Instruments—We periodically enter into commodity forward contracts to hedge our exposure to price fluctuations on certain commodities we use for raw material components in our manufacturing process. When actual commodity prices exceed the fixed price provided by these contracts, we receive this difference from the counterparty, and when actual commodity prices are below the contractually provided fixed price, we pay this difference to the counterparty. We consider these to be Level 2 instruments. See Note 5, Derivative Financial Instruments, for additional information.

Note Receivable—In connection with the sale of our Firearms business in July 2019, we received a $12,000 interest-free, five-year pre-payable promissory note due June 2024. Based on the general market conditions and the credit quality of the buyer at the time of the sale, we discounted the Note Receivable at an effective interest rate of 10% and estimated fair value using a discounted cash flow approach. We consider this to be a Level 3 instrument. See Note 8, Receivables, for additional information.

Disclosures about the Fair Value of Financial Instruments

The carrying amount of our receivables, inventory, accounts payable and accrued liabilities at December 27, 2020 and March 31, 2020, approximates fair value because of the short maturity of these instruments. The carrying values of cash and cash equivalents at December 27, 2020 and March 31, 2020 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:

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						December 27, 2020												March 31, 2020
						Carrying amount						Fair value						Carrying amount						Fair value
Fixed-rate debt (1)						$	350,000					$	354,813					$	350,000					$	284,375
Variable-rate debt (2)						—						—						167,256						167,256

(1) In fiscal 2016, we issued $350,000 aggregate principal amount of 5.875% Senior Notes (the "5.875% Notes") that mature on October 1, 2023. These notes are unsecured and senior obligations. The fair value of the fixed-rate long-term debt is calculated based on current market rates for debt of the same risk and maturities, based on market quotes for each issuance. We consider these to be Level 2 instruments. See Note 13, Long-term Debt, for information on long-term debt, including certain risks and uncertainties.

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(2) The carrying value of the amounts outstanding under our ABL Revolving Credit Facility approximates the fair value due to the short-term nature of these obligations. 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 13, Long-term Debt, for additional information on our credit facilities, including related certain risks and uncertainties.

We measure certain nonfinancial assets at fair value on a nonrecurring basis if certain indicators are present. These assets include long-lived assets that are written down to fair value when they are held for sale or determined to be impaired. During the three and nine months ended December 27, 2020 there were no impairments recorded related to our assets that are measured at fair value on a nonrecurring basis. During the nine months ended December 29, 2019, we recognized an impairment of $9,429 related to an expected loss on the sale of the held-for-sale assets of our Firearms business.

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 made 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 our operating lease assets.

Many leases include one or more options to renew, with renewal terms that can extend the lease term for three years or more. 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.

The amounts of assets and liabilities related to our operating leases were as follows:

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						Balance Sheet Caption						December 27, 2020						March 31, 2020
Assets:
Operating lease assets						Operating lease assets						$	73,114					$	69,024
Liabilities:
Current:
Operating lease liabilities						Other current liabilities						$	9,983					$	10,780
Long-term:
Operating lease liabilities						Long-term operating lease liabilities						78,429						73,738
Total lease liabilities												$	88,412					$	84,518

The components of lease expense are recorded to cost of sales and selling, general and administration expenses in the unaudited condensed consolidated statements of comprehensive income (loss). The components of lease expense were as follows:

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						Three months ended												Nine months ended
						December 27, 2020						December 29, 2019						December 27, 2020						December 29, 2019
Fixed operating lease costs (1)						$	5,593					$	5,733					$	15,704					$	15,349
Variable operating lease costs						806						846						2,047						2,085
Sublease income						(67)						—						(732)						(386)
Net Lease costs						$	6,332					$	6,579					$	17,019					$	17,048

(1) Includes short-term leases, which are immaterial.

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Copy History

						December 27, 2020						March 31, 2020
Weighted Average Remaining Lease Term (Years):
Operating leases						9.52						9.55
Weighted Average Discount Rate:
Operating leases						8.65		%				8.64		%

The approximate minimum lease payments under non-cancelable operating leases as of December 27, 2020 are as follows:

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Remainder of fiscal 2021						$	4,429
Fiscal 2022						16,581
Fiscal 2023						15,107
Fiscal 2024						13,410
Fiscal 2025						12,246
Thereafter						71,628
Total lease payments						133,401
Less imputed interest						(44,989)
Present value of lease liabilities						$	88,412

Supplemental cash flow information related to leases is as follows:

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						Nine months ended
						December 27, 2020						December 29, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows - operating leases						$	13,077					$	15,111
Operating lease assets obtained in exchange for lease liabilities:
Operating leases						11,487						1,848

During the quarter we acquired certain assets related to Remington Outdoor Company, Inc.’s ("Remington") ammunition and accessories businesses, including Remington's ammunition manufacturing facility in Lonoke, Arkansas and related intellectual property. The aggregate consideration of the transaction including working capital adjustments was $81,691 for the net assets acquired, subject to certain customary closing adjustments. We funded the acquisition using a combination of approximately $51,691 of cash on hand and approximately $30,000 drawn from our existing asset-based revolving credit facility. The acquisition will allow us to leverage our current manufacturing infrastructure, distribution channels and scale to restore efficiency, profitability and sustainability to the Remington ammunition and accessories business.

Remington's net sales of $15,334 and a net loss of $7,874 since the acquisition date, October 12, 2020, were included in our consolidated results for the three months ended December 27, 2020, and reflected in the Shooting Sports reportable segment.

We accounted for the acquisition of Remington as a business combination using the acquisition method of accounting. The preliminary purchase price allocation below was allocated to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date. The preliminary fair values of acquired assets and liabilities assumed represent management’s estimate of fair value and are subject to change if additional information, such as post-close working capital adjustments becomes available. We expect to finalize the purchase price allocation as soon as practicable within the measurement period, but not later than one year following the acquisition date. The excess of the consideration transferred over the estimated fair value of the net assets received has been recorded as goodwill. The factors that contributed to the recognition of goodwill primarily relate to acquisition-driven anticipated cost savings and synergies along with the assembled workforce acquired. Assembled workforce is not recognized separate and apart from goodwill as it is neither separable nor contractual in nature. The goodwill is deductible for tax purposes.

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Remington Preliminary Purchase Price Allocation:

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						October 12, 2020
Total preliminary purchase price:
Cash paid												$	81,400
Cash paid for working capital												291
Total purchase price												81,691
Preliminary fair value of assets acquired:
Inventories						$	20,021
Intangible assets						26,200
Property, plant, and equipment						31,250
Other assets						3,363
Total assets						80,834
Preliminary fair value of liabilities assumed:
Accounts payable						311
Other liabilities						2,969
Total liabilities						3,280
Net assets acquired												77,554
Goodwill												$	4,137

Intangible assets above include:

						Value						Useful life (years)
Indefinite lived tradenames						$	24,500					Indefinite
Customer relationships						1,700						20

Supplemental Pro Forma Data:

The following pro forma financial information presents our results as if the Remington acquisition had occurred on April 1, 2019:

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						Three months ended												Nine months ended
						December 27, 2020						December 29, 2019						December 27, 2020						December 29, 2019
Sales, net						$	579,332					$	463,061					$	1,701,872					$	1,465,492
Net income (loss)						79,476						3,732						187,841						(56,133)

The unaudited supplemental pro forma data above include the following significant non-recurring adjustments to net income (loss) to account for certain costs which would have been incurred if the Remington acquisition had been completed on April 1, 2019:

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						Three months ended												Nine months ended
						December 27, 2020						December 29, 2019						December 27, 2020						December 29, 2019
Fees for advisory, legal, and accounting services (1)						$	(1,459)					$	—					$	(3,260)					$	3,260
Inventory step-up, net (2)						(400)						—						(400)						400
Interest (3)						—						717						835						2,936
Depreciation (4)						—						951						1,902						2,853
Amortization (5)						—						21						42						63
Income taxes (6)						290						—						2,324						—

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(1) Adjustment for fees that were incurred in connection with the acquisition of Remington during fiscal 2021 as if those fees were incurred during the first quarter of fiscal 2020. Costs were recorded in Selling, general, and administrative expense. We paid a total of $3,260 in transaction costs.

(2) Adjustment reflects the increased cost of goods sold expense resulting from the fair value step-up in inventory which was expensed over the first inventory cycle.

(3) Adjustment to reflect an increase in interest expense resulting from interest on the asset-based revolving credit facility.

(4) Adjustment for depreciation related to the revised basis of the acquired property, plant and equipment and change in estimated useful lives.

(5) Adjustment for amortization of acquired intangible assets.

(6) Income tax effect of the adjustments made at a blended federal and state statutory rate including the impact of the valuation allowance.

The unaudited pro forma financial information has been presented for illustrative purposes only and is not necessarily indicative of results of operations that would have been achieved had the acquisition taken place on the date indicated, or of our future consolidated results of operations. The pro forma financial information presented above has been derived from our historical condensed consolidated financial statements and from the historical accounting records of Remington.

Divestiture of Business:

We entered into an asset purchase agreement during the quarter to sell a non-strategic business in our Shooting Sports segment. As part of the agreement we will provide limited transition services that will be complete by the end of the fiscal year. During the three months ended December 27, 2020 we recognized a pretax gain on this divestiture of approximately $18,467, which is included in other income/(expense) on the condensed consolidating statements of income. This transaction does not meet the criteria for discontinued operations as it does not represent a strategic shift that will have a major effect on the Company's ongoing operations. The assets of this business represented a portion of our Ammunition reporting unit. See Note 11, Goodwill and Intangible Assets.

In the normal course of business, we are exposed to market risks arising from adverse changes in:

•commodity prices affecting the cost of raw materials, and

•interest rates.

We record our interest rate swaps and commodity forward contracts that are accounted for as designated hedges pursuant to ASC Topic 815, “Derivatives and Hedging” ("ASC Topic 815"). ASC Topic 815 requires that an entity recognize all derivatives as either assets or liabilities on the balance sheet, measure those instruments at fair value and recognize changes in the fair value of derivatives in earnings in the period of change unless the derivative qualifies as designated cash flow hedge that offsets certain exposures. Certain criteria must be satisfied in order for derivative financial instruments to be classified and accounted for as a cash flow hedge. Derivatives that are not elected for hedge accounting treatment are recorded immediately in earnings.

From time to time, we have entered into floating-to-fixed interest rate swap agreements in order to hedge our forecasted interest payments on our outstanding variable-rate debt. Gains and losses from the remeasurement of our interest rate swap contract agreement are recorded as a component of accumulated other comprehensive income (loss) and released into earnings as a component of interest expense during the period in which the hedged transaction takes place. There are no cash flow hedge interest rate swaps in place as of December 27, 2020.

We entered into various commodity forward contracts during fiscal 2021 and 2020. These contracts are used to hedge our exposure to price fluctuations on lead we purchase for raw material components in our ammunition manufacturing process and are designated and qualify as effective cash flow hedges. The effectiveness of cash flow hedge contracts is assessed quantitatively at inception and qualitatively thereafter considering transactions critical terms and counterparty credit quality.

The gains and losses on these hedges are included in accumulated other comprehensive income (loss) and are reclassified into earnings at the time the forecasted revenue or expense is recognized. The gains or losses on the lead forward contracts are recorded in inventory as the commodities are purchased and in cost of sales when the related inventory is sold. As of December 27, 2020, we had outstanding lead forward contracts on approximately 16 million pounds of lead. In the event the underlying forecasted transaction does not occur, or it becomes probable that it will not occur, the related change in fair value of the derivative instrument would be reclassified from accumulated other comprehensive income (loss) and recognized in earnings. As of December 27, 2020, there is an asset balance related to the lead forward contracts. The balance is recorded within other current and non-current assets and is immaterial.

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The following tables disaggregate our net sales by major category:

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						Three months ended
						December 27, 2020																		December 29, 2019(1)
						Shooting Sports						Outdoor Products						Total						Shooting Sports						Outdoor Products						Total
Ammunition						$	287,855					$	—					$	287,855					$	202,316					$	—					$	202,316
Hunting and Shooting						113,662						—						113,662						83,144						—