Vista Outdoor (VSTO) Tops Q4 EPS by 38c, Revenues Beat; Offers 1Q EPS/Revenue Guidance Above Consensus

Vista Outdoor (NYSE: VSTO) reported Q4 EPS of $1.03, $0.38 better than the analyst estimate of $0.65. Revenue for the quarter came in at $597 million versus the consensus estimate of $532.78 million.

Fourth Quarter ended March 31, 2021

• Sales increased 40 percent to $597 million, compared with the prior year quarter, driven by strong demand across both Outdoor Products and Shooting Sports segments.
• Gross profit increased to $182 million, compared with $85 million in the prior year quarter. Gross margin increased more than 1,000 bps compared with the prior year quarter, driven by volume, favorable pricing and mix, operating leverage, and strong growth in e-commerce channels.
• Operating expenses were $102 million, compared with $232 million in the prior year quarter, primarily due to a goodwill and indefinite lived intangible asset impairment charge of $156 million in the prior year quarter.
• Earnings before interest and taxes (EBIT) was $74 million, compared with $(147) million in the prior year quarter. Adjusted EBIT was $81 million, compared with the prior year quarter.
• Diluted earnings per share (EPS) rose to $1.11, compared with $(2.44) in the prior year quarter. Adjusted EPS was $1.02, compared to $0.11 in the prior fiscal year period. The prior fiscal year fourth quarter EPS included the aforementioned asset impairment charge.

"Strength in our underlying business fundamentals, disciplined strategy execution and favorable consumer trends fueled our outstanding Fiscal Year 2021 results," said Vista Outdoor Chief Executive Officer Chris Metz. "We delivered all-time record results for earnings per share, EBIT, and free cash flow as a result of our successful multi-year effort to strengthen our operations and improve profitability. The demand and order rate for all of our businesses continued to increase each quarter most recently resulting in fourth quarter sales growth of 40%. The integration of the Remington and HEVI-Shot acquisitions remain ahead of schedule and on track to be accretive to earnings in under 12 months. Our Outdoor Products segment delivered their best year on record. As we look back on the past twelve months, I would like to extend my sincere, heartfelt gratitude to our amazing employees and pass along my thanks for the hard, dedicated work they have shown. This past year's performance is a tribute to our team's excellence as they managed the expanded business and served customers exceptionally well throughout the global COVID-19 pandemic.

"Looking ahead, 2021 promises to be a year where people continue to recreate and enjoy the outdoors. We enter this year with our highest level of cash flow, our lowest level of debt in years, a powerhouse of outdoor brands, an expanded addressable market, record numbers of passionate advocates for our products, and an expanded commitment to preserve and protect our planet as we bring people outside," concluded Metz.

GUIDANCE:

Vista Outdoor sees Q1 2022 EPS of $0.80-$0.90, versus the consensus of $0.69. Vista Outdoor sees Q1 2022 revenue of $600-620 million, versus the consensus of $527.32 million.

Vista Outdoor's Outlook for First Quarter Fiscal Year 2022, is as follows:

• Sales in a range of $600 million to $620 million, compared with $479 million in the prior year quarter.
• Earnings Per Share (EPS) in a range of $0.80 to $0.90, compared with $0.51 of adjusted EPS in the prior year quarter.

"The strength of Vista Outdoor's brands, its innovative product offerings and e-commerce growth of 40 percent delivered strong sales growth in the fourth quarter, and the work done as part of our strategic transformation continued to deliver dramatically improved margins, enabling Vista Outdoor to drive more profit per dollar of sales than ever before," said Sudhanshu Priyadarshi, Chief Financial Officer of Vista Outdoor. "Our continued success has enabled us to accelerate the building of our innovation pipeline and brand leadership, invest in our centers of excellence and generate growth through thoughtful acquisitions. We will continue to be disciplined in our approach to valuation and target selection to ensure we deliver shareholder value through our M&A strategy. We are also pleased to announce that our Board of Directors has approved a two-year share repurchase program for up to $100 million of the Company's common stock, which adds another tool to our capital deployment toolkit that we expect to use primarily to offset dilution."

Vista Outdoor is providing the following assumptions for full year Fiscal Year 2022:

• Tax rate is expected to be in the low 20 percent range
• Interest expense is expected to be in line with prior year adjusted interest expense
• Capital Expenditures are expected to be approximately 15 percent higher than FY21
• R&D expenses are expected to be approximately 25 percent higher than FY21

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

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