Vista Outdoor (VSTO) Tops Q1 EPS by 51c, Revenues Beat; Offers 2Q EPS/Revenue Guidance Above Consensus

Vista Outdoor (NYSE: VSTO) reported Q1 EPS of $0.51, $0.51 better than the analyst estimate of $0.00. Revenue for the quarter came in at $479 million versus the consensus estimate of $405.81 million.

For the first quarter ended June 28, 2020:

• Sales were $479 million, up 4 percent compared with the prior-year quarter, and up 10 percent adjusted for divested businesses.
• Gross profit was $125 million, up 32 percent compared with the prior-year quarter, and up 41 percent adjusted for divested businesses. Gross profit margin improved by 549 bps compared with the prior-year quarter, and by 574 bps adjusted for divested businesses.
• Operating expenses were $77 million, down 23 percent when compared with the prior-year quarter, or down 8 percent when adjusted for divested businesses and asset impairments.
• Earnings before interest and taxes (EBIT) was $48 million, up significantly when compared with the prior-year.
• Interest expense was $6 million, or down 42 percent when compared with the prior-year quarter.
• Fully Diluted Earnings per Share (EPS) was $0.69, compared with $(0.29) in the prior-year quarter. Adjusted EPS was $0.51, or up 738 percent, compared with $(0.08) in the prior-year quarter.
• Cash flow provided by operating activities was positive $77 million, compared with a use of cash of $(36) million in the prior-year quarter. Free cash flow generation was positive $73 million, compared with a use of cash of $(45) million in the prior-year quarter.

"We had an incredible start to our fiscal year, and we see continued strength going forward in both our Outdoor Products and Shooting Sports segments, with increasing participation rates across all of our categories. The hard work we have done over the past two years in building a nimble and profitable platform has enabled our brands to capitalize on these outdoor recreation trends. We are turning incremental sales growth into margin acceleration, higher quality earnings and strong cash flow, allowing us to further de-leverage our balance sheet", said Vista Outdoor Chief Executive Officer, Chris Metz. "Going forward, we will continue to reinvest our improved cash flow in several areas, including enhancing the new product innovation pipeline within our market leading brands; pursuing acquisitions that deliver top line growth and earnings accretion within one year of purchase; and further expanding our e-commerce channels to make it even easier for consumers to buy our products wherever and however they shop."

GUIDANCE:

Vista Outdoor sees Q2 2021 EPS of $0.60-$0.70, versus the consensus of $0.46. Vista Outdoor sees Q2 2021 revenue of $495-515 million, versus the consensus of $468.4 million.

"I was brought in to help accelerate growth at the Company. During the first quarter, in addition to organic growth, we have expanded gross margin, reduced operating expenses, lowered working capital through improved S&OP capabilities resulting in strong EBIT and free cash flow. We have made further progress towards debt paydown and have successfully reduced our leverage to 2.6 times from 4.3 times at year end. Achieving our targeted 3x and below leverage goal earlier than anticipated, we are now able to shift our collective attention to top line growth and margin acceleration. Investors can expect to see a focus on EBIT, Free Cash Flow and Revenue Growth in FY21," said Sudhanshu Priyadarshi, Vista Outdoor Chief Financial Officer.

Vista Outdoor's outlook for second quarter Fiscal Year 2021 is as follows:

• Sales in a range of $495 million to $515 million
• Earnings per Share in a range of $0.60 to $0.70

FY21 guidance does not include the impact of any additional future strategic acquisitions, divestitures, investments, business combinations or other significant transactions.

For earnings history and earnings-related data on Vista Outdoor (VSTO) click here.

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