Fiscal Year 2020 First Quarter Results August 8, 2019 1 Forward - - PowerPoint PPT Presentation

Fiscal Year 2020 First Quarter Results August 8, 2019

\\\

Forward Looking Statements

Certain statements in this presentation and other oral and written statements made by Vista Outdoor from time to time are forward-looking statements, including those that discuss, among other things: Vista Outdoor’s 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 Vista Outdoor’s actual results to differ materially from expectations described in such forward-looking statements, including the following: general economic and business conditions in the United States and Vista Outdoor’s other markets outside the United States, including 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; Vista Outdoor’s ability to attract and retain key personnel and maintain and grow its relationships with customers, suppliers and other business partners, including Vista Outdoor’s ability to obtain acceptable third party licenses; Vista Outdoor’s ability to adapt its 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; Vista Outdoor’s ability to maintain and enhance brand recognition and reputation; use of social media to disseminate negative commentary and boycotts; reductions, in or unexpected changes in or our inability to accurately forecast demand for ammunition, firearms or accessories or other outdoor sports and recreation products; risks associated with Vista Outdoor’s sales to significant retail customers, including unexpected cancellations, delays and other changes to purchase orders; supplier capacity constraints, production disruptions or quality or price issues affecting Vista Outdoor’s operating costs; Vista Outdoor’s competitive environment; risks associated with compliance and diversification into international and commercial markets; changes in the current tariff structures; the supply, availability and costs of raw materials and components; increases in commodity, energy and production costs; changes in laws, rules and regulations relating to Vista Outdoor’s business, such as federal and state firearms and ammunition regulations; Vista Outdoor’s ability to execute its long-term growth strategy, including

• ur ability to complete and realize expected benefits from acquisitions and integrate acquired businesses; Vista Outdoor’s ability

to take advantage of growth opportunities in international and commercial markets; foreign currency exchange rates and fluctuations in those rates; 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; risks associated with cybersecurity and other industrial and physical security threats; capital market volatility and the availability of financing; changes to accounting standards or policies; and changes in tax rules or pronouncements. You are cautioned not to place undue reliance on any forward-looking statements we make. Vista Outdoor undertakes no

• bligation to update any forward-looking statements except as otherwise required by law. For further information on factors that

could impact Vista Outdoor, and statements contained herein, please refer to Vista Outdoor’s filings with the Securities and Exchange Commission. 1

\\\

Agenda

• Q1 FY2020 Consolidated Results
• Update on Savage divestiture and

debt pay-down progress

• Q1 FY2020 Segment Operating

and Financial Results

• Looking Ahead – Updated FY2020

Guidance

• Reconciliation of GAAP to non-

GAAP results

Earnings Call and Q&A

Thursday, August 8, 9 a.m. EDT Link from investors.vistaoutdoor.com

Hosted by:

Chris Metz Chief Executive Officer Mick Lopez Chief Financial Officer Kelly Reisdorf VP, Investor Relations

2

\\\

$1,054 $994 $874 $893 $818 $695 $711 $682 $738 $581 3.7x 4.1x 4.5x 5.2x 5.5x 5.3x 5.9x 4.9x 5.9x

0.0x 1.0x 2.0x 3.0x 4.0x 5.0x 6.0x 7.0x

$0 $200 $400 $600 $800 $1,000 $1,200 Q1 FY18 Q2 FY18 Q3 FY18 Q4 FY18 Q1 FY19 Q2 FY19 Q3 FY19 Q4 FY19 Q1 FY20 Post Savage Sale Net Debt Net Debt / LTM Adjusted EBITDA

Debt Pay Down Progress

(1) Net Debt / LTM Adjusted EBITDA ratio calculated as Vista’s total debt, less cash & cash equivalents, divided by LTM Adjusted EBITDA (2) Reflects ~$157 million incremental debt paydown from Savage Arms net proceeds

Net Debt and Net Debt / LTM Adjusted EBITDA(1)

($ in millions)

3

(2)

\\\

Q1 FY2020 Consolidated Results

($ millions, except per share data)

Q1 FY20 Q1 FY19

Sales

Organic*

$460

$460

$529

$497

• Adj. Gross Profit*

Organic*

$95

$95

$119

$104

• Adj. Operating Expense*

Organic*

$89

$89

$104

$93

• Adj. Interest Expense*

$11 $13

• Adj. Net Income (loss)*

($5) $0

• Adj. Earnings per Share*

($0.08) $0.00 Free Cash Flow* YTD ($45M) $70

4

\\\

Q1 FY20 – Shooting Sports

238 258 Q1 FY20 Q1 FY19

(8%)

($ in millions)

Revenue 39 45 16.6% 17.2%

Q1 FY20 Q1 FY19

(12%)

($ in millions)

• Adj. Gross Profit(1)

Drivers



Revenue decrease due to:

‒

Softness in the firearms market, lower demand in rimfire ammunition, offset by increased demand for centerfire ammunition



Gross Profit decrease due to:

‒

Lower sales volume partially offset by favorable commodities and reduced discounting $217.1 $224.5 $197.6 $243.9 $213.8 FY19 Q1 FY19 Q2 FY19 Q3 FY19 Q4 FY20 Q1 (1) Non-GAAP financial measure. See reconciliation table for details.

(8%)

Ammunition Quarterly Revenue

~(1.5%) YoY

Firearms Quarterly Revenue

5

\\\

Q1 FY20 – Outdoor Products

Drivers



Revenue decrease due to:

‒

Loss of Eyewear, market softness in Hunting / Shooting market and unfavorable weather conditions for Action Sports



Gross Profit dollars decrease due to:

‒

Loss of Eyewear and lower overall sales volumes (1) Non-GAAP financial measure. See reconciliation table for details (2) Adjusted for sale of Bolle, Serengeti and Cebe brands (3) FY19 Q1 figure includes $3 million of Jimmy Styks sales

222 239 Q1 FY20 Q1 FY19

(19%)

($ in millions)

Revenue 56 60 25.1% 25.1%

Q1 FY20 Q1 FY19

(25%)

($ in millions)

• Adj. Gross Profit(1)

(7%)

Organic(2)

(8%)

Organic(2)

Hunt and Shoot Accessories Action Sports Outdoor Recreation

6

(3)

\\\

FY2020 Updated Outlook

Current FY2020 Guidance Prior FY 2020 Guidance(3)

Sales $1.79 to $1.89 billion $1.94 to $2.03 billion Interest expense(1) ~ $40 million $45 million to $50 million

• Adj. Tax rate(2)

~ (25%) ~ 5%

• Adj. Earnings per share(2)

$0.10 to $0.25 $0.28 to $0.38 Capital expenditures ~ $40 million $45 million to $50 million Free cash flow(2) $30 million to $40 million $55 million to $65 million

(1) Includes amortization of financing costs (2) Non-GAAP financial measure. See reconciliation table for details (3) Includes Savage Arms for the full-year

Q2 FY2020:



We expect Shooting Sports gross margins in the low to mid teens

Additional Commentary: Full Year FY2020:



We expect approximately ~ 6% EBITDA



We expect Shooting Sports gross margins in the mid teens



We expect Outdoor Products gross margins in the low to mid 20s 7

EPS Guidance Bridge:

Low High Previous FY20 Guidance $0.28 $0.38 Less: Savage FY20 Guidance

(mid-point of 10¢-15¢)

($0.125) ($0.125) Less: Savage Q1 Loss ($0.01) ($0.01) Subtotal $0.15 $0.25 Tariff Risk ($0.05)

• Revised FY20 Guidance

$0.10 $0.25

\\\

Savage Divestiture Update

($ in millions) Q1 FY2020 Q1 FY2019 Historical Savage Other(1) Pro Forma Historical Savage Eyewear Other(1) Pro Forma Sales $460 ($24) $0 $436 $529 ($41) ($32) $0 $456 Gross Profit $95 ($6) $0 $89 $113 ($10) ($15) $0 $89 Operating Expense $100 ($5) ($10) $85 $153 ($7) ($9) ($46) $91 Interest Expense ($11) $2 $0 ($9) ($13) $2 $2 $0 ($9) Tax Expense $1 $0 $0 $1 ($1) ($0) ($1) $0 ($0) Net Income (loss) ($17) $1 $10 ($6) ($52) ($0) ($2) $46 ($9) Earnings per Share ($0.29) $0.01 $0.17 ($0.10) ($0.91) ($0.01) ($0.04) $0.80 ($0.16)

YoY Pro Forma Financials Excluding Savage Arms

8

(1) Refer to 8KA for details on costs applied in pro-forma

Section Title Appendix

Reconciliation to GAAP Measures

10

\\\

Non-GAAP Financial Measures

Gross Profit, Operating Profit, and Earnings Per Share

The adjusted gross profit, adjusted operating expenses, adjusted earnings before interest and tax (EBIT), adjusted tax rate, adjusted net income, and adjusted earnings per share (adjusted EPS) presented below are non-GAAP financial measures. Vista Outdoor defines these measures as gross profit, operating expenses, EBIT, tax rate, net income, and EPS excluding, where applicable, the impact of costs incurred for contingent consideration, transaction costs, impairment of held-for-sale assets, valuation allowance, and transformation. Vista Outdoor management is presenting these measures so a reader may compare gross profit, EBIT, tax rate, and EPS excluding these items, as the measures provide investors with an important perspective on the operating results of the company. Vista Outdoor management uses this measurement internally to assess business performance, and Vista Outdoor’s definition may differ from those used by other companies.

9

3 months ended June 30, 2019 (in thousands) Gross Profit Operating Expenses EBIT Taxes Income Tax Rate Net Income EPS As reported $ 95,078 $ 99,832 $ (4,754) $ 737 (4.6)% $ (16,615) $ (0.29) Contingent consideration — (843) 843 202 641 0.01 Transaction costs — (401) 401 96 305 0.01 Impairment of held-for-sale assets — (9,429) 9,429 — 9,429 0.16 Valuation allowance — — — (1,555) 1,555 0.03 As adjusted $ 95,078 $ 89,159 $ 5,919 $ (520) 10.0% $ (4,685) $ (0.08) 3 months ended July 1, 2018 (in thousands) Gross Profit Operating Expenses EBIT Income Tax Income Tax Rate Net Income EPS As reported $ 113,338 $ 152,943 $ (39,605) $ (729) 1.4% $ (52,348) $ (0.91) Contingent consideration — (843) 843 202 — 641 0.01 Transaction costs — (1,215) 1,215 292 — 923 0.02 Impairment of held-for-sale assets — (44,921) 44,921 — 44,921 0.78 Transformation 5,207 (2,182) 7,389 1,773 5,616 0.10 As adjusted $ 118,545 $ 103,782 $ 14,763 $ 1,538 119.1% $ (247) $ —

\\\

Non-GAAP Financial Measures

Free Cash Flow Free cash flow is defined as cash provided by (used for) operating activities less capital expenditures, and excluding the following costs which have been adjusted for applicable tax amounts: transaction costs paid to date and transformation costs paid to date. Vista Outdoor management believes free cash flow provides investors with an important perspective on the cash available for debt repayment, share repurchases and acquisitions after making the capital investments required to support ongoing business operations. Vista Outdoor management uses free cash flow internally to assess both business performance and overall liquidity. 10

(in thousands) 3 months ended June 30, 2019 3 months ended July 1, 2018 Projected year ending March 31, 2020 Cash (used for) provided by operating activities $ (36,168) $ 74,172 $69,599–$79,599 Capital Expenditures (9,212) (9,949) ~(40,000) Transaction costs 401 511 401 Transformation costs — 5,616 — Free cash flow $ (44,979) $ 70,350 $30,000–$40,000

\\\

Non-GAAP Financial Measures

Adjusted Earnings Per Share - Guidance Reconciliation Table The projected adjusted earnings per share (EPS), excluding the impact of costs incurred to date for contingent consideration, current transactions, impairment of held-for-sale assets, and valuation allowance is a non-GAAP financial measure that Vista Outdoor defines as EPS excluding the impact of these items. Vista Outdoor management is presenting this measure so a reader may compare EPS, excluding these items, as this measure provides investors with an important perspective on the operating results of the company. Vista Outdoor management uses this measurement internally to assess business performance, and Vista Outdoor’s definition may differ from those used by other companies. 11

Current FY20 Full-Year Adjusted EPS Guidance Low High EPS guidance including contingent consideration, transaction costs and impairment of held-for-sale assets. $ (0.03) $ 0.12 Contingent consideration 0.01 0.01 Transaction costs 0.01 0.01 Impairment of held-for-sale assets 0.16 0.16 Valuation allowance (0.05) (0.05) Adjusted EPS guidance $ 0.10 $ 0.25