Vista Outdoor Reaffirms Fiscal Year 2025
Outlook; Reports Preliminary Q1 FY2025 Results
Revelyst Expected to Pursue 12-Month $50
Million Share Repurchase Program; Strategically Positioned to
Unlock Meaningful Growth and Margin Expansion
Special Meeting of Stockholders to be Adjourned
to July 30, 2024
Company to Host Earnings Conference Call on
Tuesday, August 6, 2024, at 9 a.m. ET to Review Full Quarterly
Results, Outlook and Strategy
Vista Outdoor Inc. (NYSE: VSTO) (“Vista Outdoor”, “we” or the
“Company”) today announced that on July 21, 2024, the Company
entered into an amendment to the merger agreement with Czechoslovak
Group a.s. (“CSG”). In addition, the Company reaffirmed its Fiscal
Year 2025 outlook and reported preliminary, unaudited Q1 Fiscal
Year 2025 results.
CSG Increases Purchase Price for The Kinetic Group
The amended merger agreement with CSG further increases the base
purchase price payable by CSG for the acquisition of The Kinetic
Group business (the “CSG Transaction”) by $50 million to $2.15
billion.
In addition, Vista Outdoor has determined that an additional
~$125 million of cash should be returned to Vista Outdoor’s
stockholders as cash consideration. This follows a careful review
of Revelyst’s capital allocation strategy, contemplated
divestitures and the availability of the ABL facility, and the
determination that capitalizing Revelyst with cash and cash
equivalents of ~$125 million is sufficient to execute the Revelyst
business plan.
In total, the increase in the base purchase price payable by CSG
combined with the additional cash being returned to stockholders by
Vista Outdoor increases the cash consideration payable to Vista
Outdoor stockholders in the CSG Transaction by $3.00 per share to
$24.00 in cash per share of Vista Outdoor common stock. Based on
the amended merger agreement with CSG, Vista Outdoor stockholders
will receive at the closing of the CSG Transaction, $24.00 per
share in cash and one share of Revelyst common stock, in each case,
per share of Vista Outdoor common stock.
Vista Outdoor is confident that the CSG Transaction maximizes
value for its stockholders by providing for a $2.15 billion
purchase price, representing a $240 million increase from the
original $1.91 billion purchase price, and cash consideration of
$24.00 per share of Vista Outdoor common stock, close to double the
cash consideration per share from the original cash consideration
of $12.90 per share of Vista Outdoor common stock, and a share of
Revelyst stock. Vista Outdoor firmly believes this increased offer
is superior to MNC Capital’s proposal of $42.00 per share as the
CSG Transaction allows stockholders to lock in the $2.15 billion
purchase price for The Kinetic Group and benefit from both the
expected increase in multiple from the separation of Revelyst into
a standalone company as well as participate in the significant
EBITDA expansion through growth in the Revelyst business and $100
million of cost savings from the GEAR Up program over the next
three years.
Rather than looking at MNC Capital's proposal in isolation, we
urge stockholders to take into account the significant increase in
value since the CSG merger agreement was first signed in October
2023, which is comprised of (i) the meaningful increase in CSG's
purchase price of $240 million (~$4.05 per share) for The Kinetic
Group, and (ii) Vista Outdoor's additional cash generation of $190
million (~$3.20 per share) during this time that is directly being
returned to stockholders as cash consideration in the CSG
Transaction.
In summary, the CSG Transaction delivers $430 million (~$7.25
per share) in additional value to Vista Outdoor stockholders since
CSG’s original offer and enables stockholders to receive 100% of
the cash that the Company has generated in the interim period plus
retain the upside in Revelyst. Voting “FOR” the CSG Transaction
allows stockholders to crystalize this value increase, as opposed
to MNC Capital using Vista Outdoor’s own cash to finance its fixed
price per share proposal.
“We are pleased that CSG has increased its purchase price for
The Kinetic Group, underscoring their continued commitment to the
transaction and the underlying value they see in our business,”
said Michael Callahan, Chairman of the Board of Directors. “We are
confident the transaction with CSG maximizes value for our
stockholders and provides stockholders the opportunity to realize
superior value in Revelyst when separated from The Kinetic Group.
We urge stockholders to vote for the CSG Transaction, which
delivers clear, compelling value and the ability to close in early
August.”
Special Meeting of Stockholders to be Adjourned
The Vista Outdoor Board of Directors also announced it will
adjourn the special meeting of stockholders scheduled to be held
virtually on July 23, 2024, at 9:00 am (Central Time) to July 30,
2024, at 9:00 am (Central Time) to enable the Company to engage
with stockholders prior to the vote in light of recent
developments.
Reaffirms Outlook for Fiscal Year 2025
The Company reaffirms its guidance for Fiscal Year 2025 for
Vista Outdoor, as well as The Kinetic Group and Revelyst. The
Company expects the following results for Fiscal Year 2025, among
other guidance previously disclosed:
- Sales in the range of $2.665 billion to $2.775 billion
- The Kinetic Group Sales expected to be approximately $1.425
billion to $1.475 billion
- Revelyst Sales expected to be approximately $1.240 billion to
$1.300 billion
- Adjusted EBITDA in the range of $410 million to $490 million1
- The Kinetic Group adjusted EBITDA expected to be approximately
$350 million to $400 million
- Revelyst adjusted EBITDA expected to be approximately $130
million to $160 million
Vista Outdoor expects that Revelyst will pursue a 12-month $50
million share repurchase program following the closing of the CSG
Transaction, subject to approval by the Revelyst Board of
Directors.
“Our balance sheet remains strong, with our net debt
decreasing by $81 million during the quarter to $579 million,” said
Andrew Keegan, CFO of Vista Outdoor. “At Revelyst, we have been
sharply focused on reducing inventory levels, and I am pleased with
the progress our team has made, which has resulted in an
approximately $100 million inventory reduction from the year prior
and nearly $10 million sequentially from the prior quarter. These
efforts continue to drive down our debt levels and contribute to
maintaining our healthy balance sheet. At The Kinetic Group, the
team remains steadfast on achieving our financial expectations
while continuing to face competitive pricing and input cost
headwinds, especially for copper and powder.”
“Looking forward, we expect to see increased sales and EBITDA
momentum in the quarters ahead at Revelyst, as a result of new and
exciting product launches, cross collaborations and improvements in
our channel strategy. We have also seen tremendous progress with
our GEAR Up transformation program, which contributed $5 million in
realized cost savings in Q1 FY2025, providing a clear path to $25-
$30 million of cost savings in FY2025. This progress gives us
confidence in our expectation to double Revelyst standalone
adjusted EBITDA during the year.” Mr. Keegan concluded.
Preliminary Q1 2025 Financial Results
Note that in the results below when referring to “Revelyst”, it
comprises three operating and reportable segments: Revelyst
Adventure Sports, Revelyst Precision Sports Technology and Revelyst
Outdoor Performance. Please see Vista Outdoor’s Fiscal Year 2024
Annual Report on Form 10-K for the year ended March 31, 2024, for
additional information.
Revelyst Results
- Sales are expected to decrease to a range of $272 million to
$276 million. The decline relative to FY2024 Q1 was primarily
driven by $13 million of orders expected in Q1 shifting to Q2 due
to challenges related to shipping filled orders at the end of the
quarter and delayed new product introductions to Q2, strong new
product launches at Bushnell Golf in the prior year period, the
divestiture of the RCBS brand, year over year pre-order delivery
timing delays at Revelyst Adventure Sports and the February 2024
fire at Fiber Energy’s main production facility that temporarily
shuttered operations, partially offset by another quarter of growth
at Foresight from the strong launch of the QuadMAX and Foresight
Falcon product offerings, the launch of the Gridiron line of flat
top griddles at Camp Chef, and an increase in government sales as
we increase our focus on our support of our freedom fighters both
domestically and internationally.
- Operating income2 is expected to be in the range of ($2.5)
million to ($0.5) million.
- Adjusted EBITDA is expected to be in the range of $14.5 million
to $16.5 million. The decrease relative to FY2024 Q1 was primarily
driven by lower volume due to the factors described in the sales
discussion above partially offset by $5 million in realized cost
savings from the GEAR Up transformation program, reduced ocean
freight rates at Revelyst Adventure Sports and component cost
savings at Revelyst Precision Sports Technology.
Revelyst Highlights
- In Adventure Sports, there is “newness” gaining traction with
customers where many new styles, such as the V3RS, Raceframe,
Purevue and more are sold out. The Company intends to further
capitalize on this behavior with upcoming product launches across
the platform;
- In Outdoor Performance, recent and upcoming new product
launches across the platform including the successful launch of the
Camp Chef Gridiron in the spring, which drove 8% growth in the
flattop category, and the upcoming Bushnell R-Series Optics,
demonstrate the Company’s commitment to innovation; and
- In Precision Sports Technology, Foresight saw another quarter
of growth as a result of the QuadMAX and Falcon product launches.
The delayed launch of the Phantom 3 GPS drove Bushnell Golf sales
lower than expected in the quarter, though the Company still
expects this product to capture additional sales for the rest of
FY2025. Foresight and Bushnell Golf are now under the same roof and
cross collaborating on new products, including an exciting
innovation the Company plans to announce later this year.
“Vista Outdoor executed against our plan in the first quarter,
and we are grateful for the hard work across the organization that
has driven solid results in the face of continued market headwinds
in certain segments, which gives us confidence in our full year
financial targets,” said Eric Nyman, Co-CEO of Vista Outdoor and
CEO of Revelyst. “We are looking forward to bringing this
separation process to an end which will allow further focus by our
teams on the opportunities ahead. At Revelyst we continue to
leverage our portfolio of category defining Power Brands to win
market share despite challenges related to market softness, order
timing and divestitures. Specifically at Simms, we hold a dominant
position in waders and are gaining share in sportswear; at Bushnell
Golf, we continue to set the standard with our leading position;
and at Fox, Bell, Giro and CamelBak we are capturing share across
numerous categories, including Helmets, Mountain Bike Protection
and Bike Hydration despite a declining market environment. We
remain focused on driving growth and share gains regardless of
market conditions and are poised to revolutionize our future
through innovative, brand-led and consumer obsessed product and
technology offerings, as well as leading partnerships.”
Nyman continued, “Across the enterprise, we are making good
progress on our GEAR Up transformation, where we saw $5 million in
realized savings during the quarter. We significantly reduced our
inventories by over $100 million year over year and continue to
create an optimal portfolio through strategic M&A with the sale
of the Fiber Energy business in the second quarter. The GEAR Up
transformation is working to simplify our business model, increase
efficiency and expand strategic opportunities that allow us to
reinvest in our highest potential brands, with more progress
expected in the months ahead.”
The Kinetic Group Results
- Sales are expected to be between $368 million and $372 million.
The decrease relative to FY2024 Q1 was driven by lower shipments
across nearly all categories partially offset by increased
price.
- Operating income3 is expected to be in the range of $102.0
million to $106.0 million.
- Adjusted EBITDA is expected to be in the range of $108.5
million to $112.5 million. The decrease relative to FY2024 Q1 was
driven by lower volume, increased input costs in powder and copper
and increased SG&A partially offset by increased price.
“The Kinetic Group delivered a strong start to the year,
reporting sales in line with expectations and profitability ahead
of expectations,” said Jason Vanderbrink, Co-CEO of Vista Outdoor
and CEO of The Kinetic Group. “The team continues to navigate a
dynamic environment, including a global powder shortage, increasing
input costs including for copper and powder, and competitive market
pricing, with a continued focus on execution and delivering on our
financial expectations. As our history shows from TKG, we are laser
focused on operational excellence and never resting on our laurels
in every aspect of our business. As we enter the election season,
we are focused on controlling matters we can control and continuing
to drive value for our stockholders and other stakeholders. As we
continue FY25, the company has, without question, the most
innovative product launch coming in our long history of game
changing technologies.”
These preliminary results for Q1 2025 are an estimate, based on
information available to management as of the date of this release,
and are subject to further changes upon completion of the Company’s
quarter-end procedures. Vista Outdoor’s preliminary financial
results should not be viewed as a substitute for full audited or
reviewed financial statements prepared in accordance with U.S.
GAAP, and undue reliance should not be placed on these preliminary
financial results. Vista Outdoor’s independent registered public
accounting firm has not completed review procedures on the
preliminary financial results included in this press release or
expressed any form of assurance on such preliminary financial
results. In addition, items or events may be identified or occur
after the date of this press release due to the completion of
operational and financial closing procedures, final review
adjustments and other developments that may require Vista Outdoor
to make material adjustments to the preliminary financial results
included in this press release.
Q1 FY2025 Earnings Conference Call and Webcast
Information
Vista Outdoor will issue its full first quarter earnings results
after market close on Monday, August 5, 2024, and host a conference
call on Tuesday, August 6, 2024, at 9 a.m. ET. In addition to the
results, the company expects to discuss its outlook and financial
guidance and may discuss matters of strategy during the call. The
conference call will be accessible through a live webcast.
Interested investors and other individuals can access the webcast
and view and/or download the press releases via Vista Outdoor’s
website (vistaoutdoor.com). Choose “Investors” then “Events and
Presentations.” For those who cannot participate in the live
webcast, a telephone recording of the conference call will be
available. The telephone number is 1-866-813-9403, and the access
code is 360569. The recording will be available until Thursday,
Sept. 5, 2024.
About Vista Outdoor Inc.
Vista Outdoor (NYSE: VSTO) is the parent company of more than
three dozen renowned brands that design, manufacture and market
sporting and outdoor products. Brands include Bushnell, CamelBak,
Bushnell Golf, Foresight Sports, Fox Racing, Bell Helmets, Camp
Chef, Giro, Simms Fishing, QuietKat, Stone Glacier, Federal
Ammunition, Remington Ammunition and more. Our reporting segments,
Revelyst Outdoor Performance, Revelyst Adventure Sports, Revelyst
Precision Sports Technology (combined “Revelyst”) and The Kinetic
Group, provide consumers with a wide range of performance-driven,
high-quality and innovative outdoor and sporting products. For news
and information, visit our website at www.vistaoutdoor.com.
Adjusted EBITDA and Adjusted EBITDA Margin
Adjusted EBITDA is defined as net income before other income
(expense), interest, taxes, depreciation and amortization and
amortization of cloud computing software. We calculate “Adjusted
EBITDA margins” as Adjusted EBITDA divided by net sales. Vista
Outdoor management believes adjusted EBITDA and adjusted EBITDA
margin provide investors with an important perspective on the
Company’s core profitability and help investors analyze underlying
trends in the Company’s business and evaluate its performance on an
absolute basis and relative to its peers. Adjusted EBITDA and
adjusted EBITDA margin should be considered in addition to, and not
as a substitute for, GAAP net income and GAAP net income margin.
Vista Outdoor’s definitions may differ from those used by other
companies.
Segment Adjusted EBITDA Reconciliation
For the three months ended
June 30, 2024
(in thousands except percentages)
The Kinetic Group
Revelyst
Segment operating income(1)
~$102,000 - $106,000
~$(2,500) - $(500)
Depreciation and amortization
~6,500
~16,500
Amortization of cloud computing software
costs(2)
-
~500
Adjusted segment EBITDA
~$108,500 - $112,500
~$14,500 - $16,500
Operating income margin
~27.5% - 28.5%
~(1.0%) - 0.0%
Adjusted segment EBITDA margin
~29.5% - 30.0%
~5.0% - 6.0%
(1)
The values presented above are preliminary
results within the ranges provided for the preliminary segment
results above and may change. We do not calculate GAAP net income
at the segment level, but have provided segment operating income as
a relevant measurement of profitability. Segment operating income
does not include interest expense and taxes as well as other
non-cash and non-recurring items.
(2)
Amortization of cloud computing software
costs consist of expense recognized in selling, general and
administrative expense for capitalized implementation costs of IT.
This expense is not included in depreciation and amortization
above.
Forward-Looking Statements
Some of the statements made and information contained in these
materials, excluding historical information, are “forward-looking
statements,” including those that discuss, among other things:
Vista Outdoor Inc.’s (“Vista Outdoor”, “we”, “us” or “our”) plans,
objectives, expectations, intentions, strategies, goals, outlook or
other non-historical matters; projections with respect to future
revenues, income, earnings per share or other financial measures
for Vista Outdoor; and the assumptions that underlie these matters.
The words “believe,” “expect,” “anticipate,” “intend,” “aim,”
“should” and similar expressions are intended to identify such
forward-looking statements. To the extent that any such information
is forward-looking, it is intended to fit within the safe harbor
for forward-looking information provided by the Private Securities
Litigation Reform Act of 1995.
Numerous risks, uncertainties and other factors could cause our
actual results to differ materially from the expectations described
in such forward-looking statements, including the following: risks
related to the previously announced transaction among Vista
Outdoor, Revelyst, Inc., CSG Elevate II Inc., CSG Elevate III Inc.
and CZECHOSLOVAK Group a.s. (the “Transaction”), including (i) the
failure to receive, on a timely basis or otherwise, the required
approval of the Transaction by our stockholders, (ii) the
possibility that any or all of the various conditions to the
consummation of the Transaction may not be satisfied or waived,
including the failure to receive any required regulatory approvals
from any applicable governmental entities (or any conditions,
limitations or restrictions placed on such approvals), (iii) the
possibility that competing offers or acquisition proposals may be
made, (iv) the occurrence of any event, change or other
circumstance that could give rise to the termination of the merger
agreement relating to the Transaction, including in circumstances
which would require Vista Outdoor to pay a termination fee, (v) the
effect of the announcement or pendency of the Transaction on our
ability to attract, motivate or retain key executives and
employees, our ability to maintain relationships with our
customers, vendors, service providers and others with whom we do
business, or our operating results and business generally, (vi)
risks related to the Transaction diverting management’s attention
from our ongoing business operations and (vii) that the Transaction
may not achieve some or all of any anticipated benefits with
respect to either business segment and that the Transaction may not
be completed in accordance with our expected plans or anticipated
timelines, or at all; impacts from the COVID-19 pandemic on our
operations, the operations of our customers and suppliers and
general economic conditions; supplier capacity constraints,
production or shipping disruptions or quality or price issues
affecting our operating costs; the supply, availability and costs
of raw materials and components; increases in commodity, energy,
and production costs; seasonality and weather conditions; our
ability to complete acquisitions, realize expected benefits from
acquisitions and integrate acquired businesses; reductions in or
unexpected changes in or our inability to accurately forecast
demand for ammunition, accessories, or other outdoor sports and
recreation products; disruption in the service or significant
increase in the cost of our primary delivery and shipping services
for our products and components or a significant disruption at
shipping ports; risks associated with diversification into new
international and commercial markets, including regulatory
compliance; our ability to take advantage of growth opportunities
in international and commercial markets; our ability to obtain and
maintain licenses to third-party technology; our ability to attract
and retain key personnel; disruptions caused by catastrophic
events; risks associated with our sales to significant retail
customers, including unexpected cancellations, delays, and other
changes to purchase orders; our competitive environment; our
ability to adapt our products to changes in technology, the
marketplace and customer preferences, including our ability to
respond to shifting preferences of the end consumer from brick and
mortar retail to online retail; our ability to maintain and enhance
brand recognition and reputation; others’ use of social media to
disseminate negative commentary about us, our products, and
boycotts; the outcome of contingencies, including with respect to
litigation and other proceedings relating to intellectual property,
product liability, warranty liability, personal injury, and
environmental remediation; our ability to comply with extensive
federal, state and international laws, rules and regulations;
changes in laws, rules and regulations relating to our business,
such as federal and state ammunition regulations; risks associated
with cybersecurity and other industrial and physical security
threats; interest rate risk; changes in the current tariff
structures; changes in tax rules or pronouncements; capital market
volatility and the availability of financing; foreign currency
exchange rates and fluctuations in those rates; general economic
and business conditions in the United States and our markets
outside the United States, including as a result of the war in
Ukraine and the imposition of sanctions on Russia, the COVID-19
pandemic, conditions affecting employment levels, consumer
confidence and spending, conditions in the retail environment, and
other economic conditions affecting demand for our products and the
financial health of our customers.
You are cautioned not to place undue reliance on any
forward-looking statements we make, which are based only on
information currently available to us and speak only as of the date
hereof. A more detailed description of risk factors that may affect
our operating results can be found in Part 1, Item 1A, Risk
Factors, of our Annual Report on Form 10-K for fiscal year 2024,
and in the filings we make with Securities and Exchange Commission
(the “SEC”) from time to time. We undertake no obligation to update
any forward-looking statements, except as otherwise required by
law.
No Offer or Solicitation
This communication is neither an offer to sell, nor a
solicitation of an offer to buy any securities, the solicitation of
any vote, consent or approval in any jurisdiction pursuant to or in
connection with the Transaction or otherwise, nor shall there be
any sale, issuance or transfer of securities in any jurisdiction in
contravention of applicable law. No offer of securities shall be
made except by means of a prospectus meeting the requirements of
Section 10 of the Securities Act of 1933, as amended, and otherwise
in accordance with applicable law.
Additional Information and Where to Find It
These materials may be deemed to be solicitation material in
respect of the Transaction. In connection with the Transaction,
Revelyst, Inc., a subsidiary of Vista Outdoor, filed with the SEC a
registration statement on Form S-4 in connection with the proposed
issuance of shares of common stock of Revelyst, Inc. to Vista
Outdoor stockholders pursuant to the Transaction, which Form S-4
includes a proxy statement of Vista Outdoor that also constitutes a
prospectus of Revelyst, Inc. (the “proxy statement/prospectus”).
INVESTORS AND STOCKHOLDERS ARE URGED TO READ ALL RELEVANT DOCUMENTS
FILED WITH THE SEC, INCLUDING OUR PROXY STATEMENT/PROSPECTUS,
BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT THE TRANSACTION
AND THE PARTIES TO THE TRANSACTION. The Registration Statement was
declared effective by the SEC on March 22, 2024, and we have mailed
the definitive proxy statement/prospectus to each of our
stockholders entitled to vote at the meeting relating to the
approval of the Transaction. Investors and stockholders may obtain
the proxy statement/ prospectus and any other documents free of
charge through the SEC’s website at www.sec.gov. Copies of the
documents filed with the SEC by Vista Outdoor will be available
free of charge on our website at www.vistaoutdoor.com.
Participants in Solicitation
Vista Outdoor, Revelyst, Inc., CSG Elevate II Inc., CSG Elevate
III Inc. and CZECHOSLOVAK GROUP a.s. and their respective
directors, executive officers and certain other members of
management and employees, under SEC rules, may be deemed to be
“participants” in the solicitation of proxies from our stockholders
in respect of the Transaction. Information about our directors and
executive officers is set forth in our proxy statement on Schedule
14A for our 2023 Annual Meeting of Stockholders, which was filed
with the SEC on June 12, 2023, and subsequent statements of changes
in beneficial ownership on file with the SEC. These documents are
available free of charge through the SEC’s website at www.sec.gov.
Additional information regarding the interests of potential
participants in the solicitation of proxies in connection with the
Transaction, which may, in some cases, be different than those of
our stockholders generally, is also included in the proxy
statement/prospectus relating to the Transaction.
1 Vista Outdoor does not calculate GAAP net income at the
segment level and is not providing preliminary Q1 FY2025 net income
at this time, and accordingly, has not reconciled our segment
operating income to consolidated net income. We have included a
reconciliation of Adjusted EBITDA to our segment operating income.
See page five of this press release for more information. 2 Vista
Outdoor does not calculate GAAP net income at the segment level and
is not providing preliminary Q1 FY2025 net income at this time, and
accordingly, has not reconciled our segment operating income to
consolidated net income. We have included a reconciliation of
Adjusted EBITDA to our segment operating income. See page five of
this press release for more information. 3 Vista Outdoor does not
calculate GAAP net income at the segment level and is not providing
preliminary Q1 FY2025 net income at this time, and accordingly, has
not reconciled our segment operating income to consolidated net
income. We have included a reconciliation of Adjusted EBITDA to our
segment operating income. See page five of this press release for
more information.
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version on businesswire.com: https://www.businesswire.com/news/home/20240722672942/en/
Investor Contact: Tyler Lindwall Phone:
612-704-0147 E-mail:
investor.relations@vistaoutdoor.com
Media Contact: Eric Smith Phone:
720-772-0877 E-mail:
media.relations@vistaoutdoor.com
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