Vista Outdoor — Investor Day (September 2019)
128 slides from Vista Outdoor's investor day presentation, Sep 10, 2019
Slide 1: Investor Day September 2019
Investor Day September 2019 © Vista Outdoor | Proprietary © 2019 | Vista Outdoor Presentation
Slide 2: Forward Looking Statements
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,
Slide 3: Non-GAAP Financial Measures
NON-GAAP FINANCIAL MEASURES Non-GAAP financial measures such as earnings before interest, tax, depreciation and amortization (“EBITDA”), Adjusted EBITDA, EBITDA Margin, Adjusted EBITDA Margin, Free Cash Flow and Net Debt as included in this Presentation are supplemental measures that are not calcula
Slide 4: Agenda
AGENDA 8:00 – 9:05 AM 10:55 – 11:20 AM Registration, Breakfast and Financial Priorities Innovation Showcase Mick Lopez, CFO Kelly Reisdorf, VP Investor Relations & Communications 9:05 – 9:35 AM 11:20 – 12:15 PM Strategy In Motion Group Q&A and Closing Remarks Chris Metz, CEO All 9:35 – 10:55 AM 12:1
Slide 5: Bringing the World Outside
“BRINGING THE WORLD OUTSIDE” © 2019 | Vista Outdoor Presentation 5
Slide 6: Chris Metz, CEO
Chris Metz, CEO © 2019 | Vista Outdoor Presentation 6
Slide 7: Chris Metz, CEO
CHRIS METZ CEO Why Vista Outdoor? Vista Outdoor’s portfolio is composed of iconic brands that are leaders in their markets Brands are aligned with my background, experience and interests I am an outdoor enthusiast and athlete with experience using all of Vista Outdoor’s products Background B
Slide 8: Best Team Wins
BEST TEAM WINS Vista Outdoor’s leadership team Chris Metz Mick Lopez Kelly Reisdorf Dylan Ramsey Bob Steelhammer David Stokoe Brad Crandell CEO CFO VP, IR, Comms and VP, General Counsel Chief Digital Officer VP, Procurement Chief Human Govt Relations and Corp Secretary Resources Officer Jason Vander
Slide 9: What You Will Hear Today
WHAT YOU WILL HEAR TODAY 1 Vista Outdoor’s Accelerated Transformation Plan 2 How We Leverage Our Market Leading Brands 3 How We Become More Nimble and Return to Growth 4 How Our Operating Model Driven by a Talented and Proven Leadership Team Makes Us “Better Together” 5 Vista Outdoor’s Goals, Execut
Slide 10: Who We Are
WHO WE ARE ~$2B leading global designer, manufacturer and marketer of outdoor and shooting sports products Ammunition Hunting & Shooting Accessories Action Sports & Outdoor Recreation ~$0.9B in Sales ~$0.4B in Sales ~$0.5B in Sales #1 in Commercial #1 in Hunt / Shoot #1 in Rangefinders #2 in Camp #1
Slide 11: What Makes Us Unique
WHAT MAKES US UNIQUE Vista Outdoor’s market leading brands, in combination with corporate scale and Centers of Excellence, provide a unique investment opportunity in the outdoor industry Key Differentiators Vista Outdoor’s Brands are Renowned and Market Leaders in Many of Their Categories Operationa
Slide 12: How Did We Get Here?
HOW DID WE GET HERE? © 2019 | Vista Outdoor Presentation 12
Slide 13: Seismic Shifts Led to Financial Decline
SEISMIC Ammunition Downturn SHIFTS LED TO ~35% Decline FINANCIAL In Wholesale Ammo Sales From CY2016 to LTM March DECLINE 2019(1) Retail Apocalypse 10+ Headline Bankruptcies In the Outdoor Recreation Space Commodity Headwinds ~70% Increase In Copper Prices From CY2016 to CY2018(2) Acquisition “Buyin
Slide 14: Decisive Changes Were Necessary
WHEN I WALKED IN THE DOOR, DECISIVE CHANGES WERE NECESSARY Ammo: hold share, focus on factory efficiency and build what we need; Outdoor Products: bring back founder’s mentality and drive accountability Corporate Brands Ongoing portfolio evaluation Hire great brand leaders Right-size and take
Slide 15: How Does Vista Outdoor Drive Future Growth?
HOW DOES VISTA OUTDOOR DRIVE FUTURE GROWTH? © 2019 | Vista Outdoor Presentation 15
Slide 16: Vista Outdoor Competes in Large, Strong and Growing Markets
VISTA OUTDOOR COMPETES IN LARGE, STRONG AND GROWING MARKETS The sporting / recreation industry sees healthy YoY consumer spending growth, while Vista Outdoor’s product categories continue to attract more participants Industry Consumer Spending Growth Key End-Markets Exhibit Stable Has Remained Stead
Slide 17: Accelerated Transformation Plan
VISTA OUTDOOR’S ACCELERATED TRANSFORMATION PLAN Transformation Plan has been established to set the foundation for improved long-term financial performance Return to Organic Growth Optimize Organizational Structure Develop Leading Centers of Excellence Explore Tuck-in Acquisitions Reduce Leverage ©
Slide 18: Return to Organic Growth
RETURN TO ORGANIC GROWTH © 2019 | Vista Outdoor Presentation 18
Slide 19: Keys to Organic Growth
KEYS TO ORGANIC GROWTH Vista Outdoor’s Accelerated Transformation Plan provides all of the ingredients for organic growth Innovative New Products Powerhouse Marketing Channel Flexibility – Digital Talent © 2019 | Vista Outdoor Presentation 19
Slide 20: Leveraging Digital Influencers
LEVERAGING DIGITAL INFLUENCERS IS KEY TO DRIVING ORGANIC GROWTH Guy Fieri approached Camp Chef with a partnership idea to increase consumer engagement Guy Fieri Campaign Highlights Genuine Message… …Solidifying Sales Deals with Retailers… …and Increasing Consumer Engagement ~40M Unique Impressions ©
Slide 21: Why Are We Better Together?
WHY ARE WE BETTER TOGETHER? © 2019 | Vista Outdoor Presentation 21
Slide 22: Centers of Excellence
CENTERS OF EXCELLENCE LEADING-EDGE VISTA OUTDOOR TEAM PROVIDES LEADERSHIP, BEST PRACTICES, RESEARCH, SUPPORT AND TRAINING TO OUR BRANDS AND BUSINESS UNITS © 2019 | Vista Outdoor Presentation 22
Slide 23: Center of Excellence #1: Digital & E-Commerce
CENTER OF EXCELLENCE #1: DIGITAL & E-COMMERCE Plan globally… Execute locally Connecting with End-Consumers on Their Terms… Digitally Leveraging Leadership Thinking Utilizing Scalable Systems and a Common Technology Platform Sharing Consumer Insights Developing More Connected Products that Drive Affi
Slide 24: Executing Digital Strategies: CamelBak Prime Day
EXECUTING DIGITAL STRATEGIES CASE STUDY: CAMELBAK PRIME DAY RECAP Objective: expose 100M+ Amazon Prime customers to CamelBak products Spotlight Deal Placement ~50k ~$750k Units Sold Total Revenue High Impact Promotions Collaborative Planning to Strategy Optimize the Promotions 5.7M+ 105% Week-over-W
Slide 25: Center of Excellence #2: Operational Excellence
CENTER OF EXCELLENCE #2: OPERATIONAL EXCELLENCE Continuously evaluating and optimizing operations across the business 1 Rigorous and On-going Financial Review Process of All Brands and Functions… Inspect What You Expect 2 Continuous Improvement Mindset to Drive $15-$20M Gross Profit and $1-$5M G&A I
Slide 26: Executing Operational Excellence Strategy
EXECUTING OPERATIONAL EXCELLENCE STRATEGY CASE STUDY Vista Outdoor is leveraging its Center of Operational Excellence to simplify the business and optimize spending Spans and Layers Review all Headcount Using External Benchmark and Assessment Tools Simplification and Savings Spend SKU Zero-Based Bud
Slide 27: Current Business Unit Example
CURRENT VISTA OUTDOOR BUSINESS UNIT EXAMPLE Findings and goals of a Vista Outdoor Business Unit’s execution in conjunction with the Center of Operational Excellence Current # of SKUs FY20 Exit # of SKUs FY21 # of SKUs ~24,000 ~18,000 ~13,000 Current # of Profit Centers FY20 Exit # of Profit Centers
Slide 28: Tuck-in Acquisitions
TUCK-IN ACQUISITIONS © 2019 | Vista Outdoor Presentation 28
Slide 29: Tuck-in Acquisition Approach
TUCK-IN ACQUISITION APPROACH We are looking for businesses that, through the help of our Centers of Excellence, we can take to the next level in terms of sales and profitability Acquire in Adjacent Spaces Acquire Businesses to Which Vista Outdoor Can Add Value Criteria Acquire Great Brands that Reso
Slide 30: Tuck-in Acquisition Case Study
TUCK-IN ACQUISITION CASE STUDY Our acquisition of Camp Chef is an example of how we can leverage the Vista Outdoor platform for tuck-in acquisitions Marketing, Social Media, E-Commerce Partnerships, etc. 15%+ Sales CAGR Key Influencer B2B Relationships, Since Acquisition such as Guy Fieri Adjacent M
Slide 31: Financial Goals and Investment Thesis
FINANCIAL GOALS AND INVESTMENT THESIS © 2019 | Vista Outdoor Presentation 31
Slide 32: Financial Goals
FINANCIAL GOALS The steps we’ve taken in the past two years will enable us to focus on delivering shareholder value by delivering long-term growth and enhanced, stable profitability FY2020E 2 – 3 Year Goal Organic ~0% – (5%) 2% – 3% Sales Growth Adj. EBITDA ~6% ~10% Margin(1) CapEx (% of ~2% ~2% Sal
Slide 33: Investment Thesis
INVESTMENT THESIS Vista Outdoor presents a unique Leading Brands opportunity to invest in a company with significant upside potential Large, Growing Market Profitability Upside Proven Management = Compelling Investment Opportunity © 2019 | Vista Outdoor Presentation 33
Slide 34: The Way to Cook Outdoors
“THE WAY TO COOK OUTDOORS” © 2019 | Vista Outdoor Presentation 34
Slide 35: Brandon Sparrow, President – Camp Chef
Brandon Sparrow, President – Camp Chef 35 © 2019 | Vista Outdoor Presentation 35
Slide 36: Brandon Sparrow
BRANDON SPARROW President, Camp Chef 20 years at Camp Chef – previously served as GM and COO Promoted to President of Camp Chef in September of 2018 Loves to cook and lives for the outdoors International Business & Mandarin Studies, Utah State University © 2019 | Vista Outdoor Presentation 3
Slide 37: Pioneer and Leader in Modular Cooking Stoves
PIONEER AND LEADER IN MODULAR COOKING STOVES Modular cooking stoves allow the user to customize his / her cooking experience to fit a broad range of needs Modular Stoves Grill / Griddle Flat Top Griddle BBQ Grill Box Artisan Oven © 2019 | Vista Outdoor Presentation 37
Slide 38: From Back Country to Back Patio
FROM BACK COUNTRY TO BACK PATIO Camp Chef is the leading innovator in outdoor cooking Category Creator… Pellet Grills Stoves / Flat Tops Stove / Grill Accessories ...With Significant Room for Market Share Growth Pellet Grills & Smokers Other Stoves Flat Top Grills Stove / Grill Accessories Growing S
Slide 39: Top-of-the-Line Products at Great Price Points
TOP-OF-THE-LINE PRODUCTS AT GREAT PRICE POINTS © 2019 | Vista Outdoor Presentation 39
Slide 40: Three-Part Organic Growth Strategy
THREE-PART ORGANIC GROWTH STRATEGY Numerous opportunities exist for Camp Chef to grow in its existing categories, adjacent categories and abroad 1 Market Penetration Vigorous Digital Marketing that …to Penetrate Further Existing Leverages Digital & E-Commerce Categories Center of Excellence… Tailgat
Slide 41: Influencer Awareness Strategy
INFLUENCER AWARENESS STRATEGY To drive awareness, Camp Chef, leveraging the Digital & E-Commerce Center of Excellence, partners with a broad array of influencers with followings ranging from the largest segments to niche activities Camp Chef Influencer Segments Veteran PTSD and Suicide Awareness a
Slide 42: Camp Chef Summary
CAMP CHEF SUMMARY Camp Chef is the original innovator in modular style cooking systems, with continued upside potential across the outdoor cooking category Growth Opportunities in Pellet Grills… …and Flat Tops… …Supported by Digital & E-Commerce Initiatives ✓ The business has grown at a 15%+ CAGR si
Slide 43: Got Your Bak
“GOT YOUR BAK” © 2019 | Vista Outdoor Presentation 43
Slide 44: Greg Williamson, President – CamelBak
Greg Williamson, President – CamelBak © 2019 | Vista Outdoor Presentation 44
Slide 45: Greg Williamson
GREG WILLIAMSON President, CamelBak 27 years of sales and marketing experience Formerly Chief Marketing Officer at EagleRider and Arctic Cat Previously held executive sales and marketing positions at Spectrum Brands and Stanley Black & Decker B.A., Advertising, Louisiana State University M
Slide 46: Hydration Market Leadership Position
HYDRATION MARKET LEADERSHIP POSITION CamelBak dominates bike hydration and is growing in other categories Bike Hike Run Capitalizing on the Following Trends: 70% 25% 15% Belts and vests SHARE SHARE SHARE Top On-trend, multi-use designs Hydration Packs #1 #1 Five Stainless Plastic Bike Steel $1
Slide 47: Path to Profitable Growth
PATH TO PROFITABLE GROWTH Implemented initiatives to “fix the foundation” and position the brand for profitable growth Current Status Phase 1 Phase 2 Phase 3 SUCCESSFULLY ENTER FIX THE FOUNDATION ACHIEVE PROFITABLE NEW CHANNELS AND GROWTH Strengthen the Business CATEGORIES Implemented Strategic Amen
Slide 48: Return to Organic Growth
RETURN TO ORGANIC GROWTH CamelBak’s revenue expansion strategy utilizes three key opportunities to fuel growth 1 2 Optimize the Core Channel Expansion Flawless Retail Execution Relevant New Products Digital & E-Commerce Investment 3 Product Expansion $1.0B+ Addressable Market in Drinkware and Daypac
Slide 49: New Product Vitality
NEW PRODUCT VITALITY Product pipeline leverages the strength of the CamelBak brand, while staying true to our core Bottles Fresh New Colors and Styles New Drink Interfaces Innovative New Features & Materials By FY2021, ~65% of CamelBak’s Revenue Will Come Pivot Bottle Chute Mag Eddy+ Kids (powder co
Slide 50: Digital & E-Commerce Capabilities
DIGITAL & E-COMMERCE CAPABILITIES Leveraging Vista Outdoor’s Centers of Excellence, Digital & E-Commerce capabilities enable us to be available everywhere consumers shop Key Digital Initiatives Social Media Enhanced Lifestyle Content 1. Exclusive Promotions and SKUs YoY Sales: +23% Followers: 1.2M 2
Slide 51: CamelBak Summary
CAMELBAK SUMMARY Focused On: Innovation Execution Cost Increased “Voice of Customer” in Product Development and Reduced Development Times Robust Product Life Cycle Management Improved Sales and Channel Execution Nimble and Cost Competitive Operational Footprint © 2019 | Vista Outdoor Presentation 51
Slide 52: Performance That Delivers
“PERFORMANCE THAT DELIVERS” © 2019 | Vista Outdoor Presentation 52
Slide 53: Vishak Sankaran, President – Hunt / Shoot
Vishak Sankaran, President – Hunt / Shoot 53 © 2019 | Vista Outdoor Presentation 53
Slide 54: Vishak Sankaran
VISHAK SANKARAN President, Hunt / Shoot 20+ years of experience as an executive at top consumer products corporations 4 years as GM of Craftsman 12 years at Stanley Black & Decker in a variety of leadership roles 8 years within GE’s industrial diamond business where he left as the GM of Micr
Slide 55: Who We Are
WHO WE ARE Vista Outdoor’s Hunt / Shoot Business Unit has a broad presence across all of its addressable markets Hunting Shooting Tactical Observation Golf EMDs Accessories Accessories Addressable Wholesale ~$3.0B $0.2B Market Size: Market Positions: #1 #1 #1 #2 #1 Notes: Sources: Addressable Retail
Slide 56: Unrivaled Category Breadth
UNRIVALED CATEGORY BREADTH Hunt / Shoot is the only industry player with a leadership presence across both large and niche markets that serves all categories of hunters and shooters In the Field On the Range At Home © 2019 | Vista Outdoor Presentation 56
Slide 57: Hunt / Shoot Vision
HUNT / SHOOT VISION… Enhance the experiences of hunting, shooting, golfing and nature-watching enthusiasts LIVE YOUR PASSION Distinctive and Deliver Best-in-Class Be Intuitive and Ergonomic Design Performance in Real- Simple to Use that Evokes a Sense Life Application of Passion © 2019 | Vista Outdo
Slide 58: How Do We Return to Organic Growth?
HOW DO WE RETURN TO ORGANIC GROWTH? 1 Leverage Nimble Platform 2 Deliver Innovative Products 3 Grow Market Share Internationally 4 Expand Into Adjacent Categories Capitalize on Digital and 5 E-Commerce Capabilities © 2019 | Vista Outdoor Presentation 58
Slide 59: Creating an Optimal Organizational Structure
CREATING AN OPTIMAL ORGANIZATIONAL STRUCTURE FOR GROWTH & SPEED TO MARKET Hunt / Shoot is leveraging Vista Outdoor’s Center of Operational Excellence to simplify its portfolio and create a platform for sustainable growth Manufacturing Distribution Sourcing Cost Optimization / SKU Rationalization Con
Slide 60: Product Innovation and Market Expansion
PRODUCT INNOVATION AND MARKET EXPANSION Hunt / Shoot is innovating, inventing and expanding to drive growth Innovation in ProXE Laser Rangefinder Existing Categories ASAP Electronic SurroundView Market Magazine Loader Blind Expansion International Europe APAC Expansion Adjacent Category Expansion ©
Slide 61: Primos SurroundView Blind: Case Study
PRIMOS SURROUNDVIEW BLIND: CASE STUDY Primos’ SurroundView Blind successfully expanded the blind category, which historically has been flat with limited innovation SurroundView Technology Game Changing Design ~60% of Primos’ Blind Sales in FY20 Value Driver ~35% Increase in Average Sale Price Over F
Slide 62: Digital & E-Commerce Strategy
DIGITAL & E-COMMERCE STRATEGY Hunt / Shoot has leveraged Vista Outdoor’s Digital & E-Commerce Center of Excellence to engage consumers and increase ease of purchase across the portfolio In Addition to Brand-specific Pages, Hunt / Shoot Products can be Purchased in One Cart at Bushnell.com, with Furt
Slide 63: Own Your Passion
OWN YOUR PASSION Hunt / Shoot’s brands provide athletes & outdoor enthusiasts with the tools they need to live their passion Platform Strengths… …Drive Shareholder Value 1 Consumer-Centric Vision ✓ Above Market Growth 2 Channel Relationships & Brands ✓ Margin Expansion 3 Innovative Product Developme
Slide 64: We Define Action Sports
“WE DEFINE ACTION SPORTS” © 2019 | Vista Outdoor Presentation 64
Slide 65: Ric Kern, VP / GM – Bell (Mass)
Ric Kern, VP / GM – Bell (Mass) © 2019 | Vista Outdoor Presentation 65
Slide 66: Ric Kern
RIC KERN VP / GM – Bell (Mass) TBU: Professional Headshot 34 years of consumer durables experience 6 years with Bell / Giro in Sr. VP roles Previously held executive sales and marketing roles at Stanley Black and Decker B.S., Marketing, Marshall University © 2019 | Vista Outdoor Presentation
Slide 67: Portfolio of Brands
PORTFOLIO OF BRANDS Bell / Giro is a portfolio of leading brands in cycling, powersports and snowsports Brand Lanes Categories Channels ✓ Powersports ✓ Bike Helmets Specialty Mass ✓ Bike Accessories ✓ Bike – Helmets, Footwear & Softgoods / Apparel Specialty ✓ Snow – Helmets & Goggles ✓ Children’s Bi
Slide 68: Enhance Profitability
ENHANCE PROFITABILITY Bell / Giro is undergoing a series of strategic initiatives to drive margin enhancement Simplification Tariff Mitigation Leveraging Center of Operational Excellence to Re-Pricing optimize organizational structure SKU rationalization: ~30% reduction by Q4 FY20 Revamped pro
Slide 69: Return to Organic Growth
RETURN TO ORGANIC GROWTH Bell / Giro is carrying out internal initiatives and working with customers to drive share, market, channel and revenue growth Launch Innovative New Products Drive International Growth Expand into Adjacent Categories Continued Investment in DTC and E-Commerce Continued Execu
Slide 70: We'll Stop When You Stop
We’ll Stop When You Stop © 2019 | Vista Outdoor Presentation 70
Slide 71: Giro: Market Leader in Bicycle and Snowsports Helmets
GIRO: MARKET LEADER IN BICYCLE AND SNOWSPORTS HELMETS Trusted leader in head and eye protection with burgeoning presence in adjacent categories Market Position Sample Customer Base #1 in U.S. Bicycle and Snowsports Helmets #2 in U.S. Snowsports Goggles Sample Products #4 in U.S. Cycling Footwear Not
Slide 72: Giro: Consumer-Researched Product Pipeline
GIRO: CONSUMER-RESEARCHED PRODUCT PIPELINE Incessantly adapting to athlete and enthusiast demand preferences New Product Description New Products Technologically Advanced Cycling Helmets Class Leading Cycling Footwear Cycling Apparel & Softgoods (with Custom Options) Snow Helmets & Goggles (Zeiss VI
Slide 73: Giro: Strategic Growth Initiatives
GIRO: STRATEGIC GROWTH INITIATIVES New & improved products, market expansion and revamped consumer focus to drive growth Growth Initiatives… Drive Innovation New Product Launches International Expansion ASIAN-FIT HELMET & GOGGLES …Bolstered by Consumer-Centric Engagement Expand Social Media PR Engag
Slide 74: Specialty and Powersports
Specialty and Powersports A Legacy of Championship and Confidence © 2019 | Vista Outdoor Presentation 74
Slide 75: Bell: Renowned in Action Sports
BELL: RENOWNED IN ACTION SPORTS Established product lines providing technologically advanced solutions for action sports athletes and enthusiasts Market Position Sample Customer Base #3 in U.S. Bicycle Helmets (Specialty Channel) #1 in U.S.#2 Powersports Helmets #5 Sample Products Notes: Sources: sp
Slide 76: Bell: Consumer-Researched Product Pipeline
BELL: CONSUMER-RESEARCHED PRODUCT PIPELINE Consumers expect constant product improvement and technological advancement Product Description Representative Products Flex Spherical / Pro Tint / Integrated Helmet Lights Customizable Helmet Accessory Options Aero Optimized Helmets New Products – Super Ai
Slide 77: Bell: Strategic Growth Initiatives
BELL: STRATEGIC GROWTH INITIATIVES Innovation and expansion growth strategy coupled with consumer-centric digital upgrades Growth Initiatives… New Product Innovation E-Commerce Investment FULL-CYCLE DIGITAL A+ CONTENT MARKETING International Expansion POWERSPORTS EXPANSION IN EUROPE …Combined with D
Slide 78: Mass
Mass We Don’t Just Make Helmets; We Make Possibilities © 2019 | Vista Outdoor Presentation 78
Slide 79: Mass: Market Leader in Helmets & Accessories
MASS: MARKET LEADER IN HELMETS & ACCESSORIES Bell is the most popular, recognizable and widely available cycling brand in the mass channel Mass Retail Helmet & Accessory Share Sample Customer Base #1 50%+ share Sample Products Notes: Sources: retail channel checks, internal data and management estim
Slide 80: Mass: Consumer-Researched Product Pipeline
MASS: CONSUMER-RESEARCHED PRODUCT PIPELINE Pipeline of quality bike helmets & accessories, including those equipped with MIPS technology Product Description Representative Products MIPS in Mass USB Rechargeable Lights LED Infused Helmets Built-in Bluetooth Speaker © 2019 | Vista Outdoor Presentation
Slide 81: Mass: Strategic Growth Initiatives
MASS: STRATEGIC GROWTH INITIATIVES Strategy composed of top-line initiatives combined with investment in digital modernization Growth Initiatives… New Product Innovation E-Commerce Investment International Expansion …Partnered with Digital Center of Excellence Revamp Raskullz and Provide Stronger Co
Slide 82: Bell / Giro Summary
BELL / GIRO SUMMARY Powerhouse Brands… …with Unrivaled Market Position & Breadth… …a Well-Defined Roadmap for Growth… …and a Simplified Business Model © 2019 | Vista Outdoor Presentation 82
Slide 83: Break
Break © Vista Outdoor | Proprietary © 2019 | Vista Outdoor Presentation 83
Slide 84: Rethinking Innovation
“RETHINKING INNOVATION” © 2019 | Vista Outdoor Presentation 84
Slide 85: Jason Vanderbrink, President – Ammo
Jason Vanderbrink, President – Ammo 85 © 2019 | Vista Outdoor Presentation 85
Slide 86: Jason Vanderbrink
JASON VANDERBRINK President, Ammunition 15 years at Vista Outdoor / ATK 20 years of industry experience Avid outdoorsman B.A., Criminal Justice, Saginaw Valley St. M.S., Administration, Missouri St. © 2019 | Vista Outdoor Presentation 86
Slide 87: Our Mission
OUR MISSION: Build better ammunition to create community, power defense and conserve our heritage Domestic Domestic Law International Military / International Commercial Enforcement Commercial Law Enforcement #1 #1 Growing Growing Presence Presence Notes: Sources: Excise Taxes per the U.S. Departmen
Slide 88: Domestic Commercial Ammo Trends
DOMESTIC COMMERCIAL AMMO TRENDS U.S. Commercial Wholesale Ammo Sales ($ in billions) $3.5 $3.0 $2.5 $2.0 $1.5 $1.0 $0.5 $0.0 1992 1994 1996 1998 2000 2002 2004 2008 2010 2014 2016 2006 2012 2018 Notes: Source: Industry wholesale dollar sales ($B) via Excise Taxes per the U.S. Department of the Treas
Slide 89: The Market Leader in Domestic Commercial Ammunition
THE MARKET LEADER IN DOMESTIC COMMERCIAL AMMUNITION Vista Outdoor’s portfolio of Ammunition brands serve all categories of the domestic commercial market Leading Position to Capitalize on a Total Domestic Commercial Market Return to Growth Vista Brands: Vista Outdoor’s Ammunition Brands Command a St
Slide 90: Domestic Commercial Market Position by Segment
DOMESTIC COMMERCIAL MARKET POSITION BY SEGMENT Vista Outdoor’s Ammunition brands continue to lead the domestic commercial market across categories Pistol Market Rifle Market #1 and #1 and holding growing share Rimfire Market Shotshell Market Top 3 and #1 and holding growing share Notes: Sources: Sou
Slide 91: The Market Leader in U.S. Law Enforcement
THE MARKET LEADER IN U.S. LAW ENFORCEMENT Ammunition holds the #1 position in the U.S. law enforcement market Representative Relationships Market Position Customer Base Includes Many of the Most Prominent Agencies Speer and Federal are Well-respected for Innovation and Performance #1 and growing Not
Slide 92: Growing Presence in Int'l Law Enforcement and Specialty Military
GROWING PRESENCE IN INT’L LAW ENFORCEMENT AND SPECIALTY MILITARY Prioritizing Ammunition’s addressable market within the international law enforcement and specialty military segments Market Position Representative Relationships Partnering with Select International and Specialty Military Customers Ex
Slide 93: Product Innovation Will Lead to a Return to Organic Growth
PRODUCT INNOVATION WILL LEAD TO A RETURN TO ORGANIC GROWTH Ammunition: Rethinking Innovation New Product Introductions Industry Partnerships 70th Anniversary Ammunition from CCI – OEM Private Label High Performance Rimfire Round #1 Partnered with Leading Firearms Premium Bismuth Segmented Buckshot C
Slide 94: E-Commerce Build-Out
E-COMMERCE BUILD-OUT Utilizing Digital & E-Commerce Center of Excellence to enable us to be available everywhere consumers shop Retailer E-Commerce and B2B 1 E-Retailer 2 Vendor of Choice for Partnerships Customer E-Commerce Platforms 3 Streamlined B2B & Distribution Capabilities Brand Level Initiat
Slide 95: Premium Program
PREMIUM 365 PROGRAM Best-In-Class Dealer Partner Program The Premium 365 Dealer Program is designed to help grow business in all ammunition categories Premium Product Placement Tailored Independent Dealer Offering Preferential Dealer Treatment & Communication Retail Rewards & Conservation Programs R
Slide 96: Available-to-Promise (ATP)
AVAILABLE-TO-PROMISE (“ATP”) ATP function utilizes Vista Outdoor’s Center of Operational Excellence to increase Ammunition’s value to our customers and drive efficiency Ensure Customers Enable Ammunition Get Product When to More Closely They Want it Match Demand Available-to- Increased Customer Incr
Slide 97: Strategic Procurement & Manufacturing Efficiency
STRATEGIC PROCUREMENT & MANUFACTURING EFFICIENCY Leveraging the Center of Operational Excellence to drive cost savings and optimize manufacturing operations at three powerful brands Federal Premium Factory of the Future CCI / Speer Factory of the Future TBU – Anoka Facility Picture Center of Operati
Slide 98: Disciplined Capital Investment
DISCIPLINED CAPITAL INVESTMENT Continued capital investment facilitates cost savings and adaptability Cost Savings, Adaptability & Innovation Industry Leading Equipment Design Flexible Capacity Expansions Manufacturing Flow Efficiencies Targeted Capital Investments © 2019 | Vista Outdoor Presentatio
Slide 99: Ammo Summary
AMMO SUMMARY Leveraging unrivaled scale and product development capabilities to expand on leading market position Start with End-User and Work Backwards Continue to Drive Out Cost Double-Down on Innovation Lead Market With New Products Leverage Scale and Pricing Leadership © 2019 | Vista Outdoor Pre
Slide 100: Mick Lopez, CFO
Mick Lopez, CFO 100 © 2019 | Vista Outdoor Presentation
Slide 101: Mick Lopez
MICK LOPEZ Chief Financial Officer Joined Vista Outdoor as CFO in April 2018 Previously served as CFO at Veritas Technologies, Harris Corporation & Aricent Group/KKR Served as VP, Corporate Finance at Cisco and Director of Finance / CFO for various IBM divisions B.S.B.A., Georgetown Universi
Slide 102: What You Will Hear
WHAT YOU WILL HEAR Today’s discussion will cover the current state of Vista Outdoor and initiatives to return to profitable organic growth Financial Overview Financial Plan FY20 7-Point Profit Improvement Platform for Profitable Growth Capital Deployment Priorities © 2019 | Vista Outdoor Presentatio
Slide 103: Vista Outdoor Financial History
VISTA OUTDOOR FINANCIAL HISTORY Vista Outdoor’s financial performance has been mostly impacted by the ammunition market decline since 2016, and the recent divestitures of Firearms and Eyewear $3.5 3 FY16A – FY20E Net Sales Summary 25%22.0% ($ in billions) $3.0 $2.5 2.5 $2.3 17.0% $0.3 $2.3 20% $2.5
Slide 104: Vista Outdoor Gross Profit
VISTA OUTDOOR GROSS PROFIT Gross Profit has declined ~$200M from 2017 to 2019, of which 90% is driven by industry challenges in Ammunition, as margins have decreased from 27% to 15% FY2017A – FY2019A Gross Profit Summary(1) ($ in millions) $560 Margin Volume Price $426 Margin $318 Cost/Mix Rimfire D
Slide 105: Outdoor Industry
OUTDOOR INDUSTRY Vista Outdoor participates in a large, growing and profitable outdoor products industry that is highly fragmented, while holding share in the ammunition industry which is highly segmented Representative Market Share by Segment ($ in billions) Total: ~$7B+ ~$2.0 ~$1.0+ ~$3.0+ ~$1.0+
Slide 106: Outdoor Industry Participation and Margin Profile
OUTDOOR INDUSTRY 10-Year Participation Growth CAGRs(1) PARTICIPATION 4% 3% AND MARGIN 2% 1% PROFILE 0% 0% The outdoor products (1%) industry provides stable Hiking Running Snow- Cycling Shooting(2)Camping Hunting(2) participation rates and an sports Sports attractive margin profile LTM Industry EBIT
Slide 107: Financial Improvement Plan
FINANCIAL IMPROVEMENT PLAN Vista Outdoor has a multi-year transformation plan for financial recovery Operational Stabilization Efficiency Platform for Growth FY18 FY19 FY20 FY21 FY22 © 2019 | Vista Outdoor Presentation 107
Slide 108: Financial Improvement: Stabilization
FINANCIAL IMPROVEMENT: STABILIZATION Debt has been cut by half by asset sales (~$300M) and working capital optimization (~$200M). Expect future debt paydowns and profit increase to lower leverage to ~3X. Debt matures in November 2023 FY2018 - FY2019 Historical Net Debt(1) ($ in millions) $557 $1,076
Slide 109: Financial Improvement: Future
FINANCIAL IMPROVEMENT: FUTURE Vista Outdoor is executing on its plan to create a stable foundation from which it can execute its operational goals and generate long-term, sustainable profitable growth Operational Execution Platform for Profit Growth Eliminate Stranded Costs Further Digital & E-
Slide 110: Operational Efficiency: SG&A and CapEx
OPERATIONAL EFFICIENCY: SG&A AND CAPEX Major reductions in SG&A and CapEx have been executed to align cash expenditures with revenue model $2.5B $2.3B $2.1B ~$1.8B $91M / 4% $67M / 3% $42M / 2% ~$40M / 2% $455M / 18% $444M / 19% $371M / 18% ~18% FY2020 FY2017A FY2018A FY2019A Guidance (1) Revenue Ca
Slide 111: FY20 7-Point Profit Improvement
FY20 7-POINT PROFIT IMPROVEMENT Vista Outdoor has specific plans to improve profitability in the second half of FY2020. Risk remains with Walmart transition and further tariffs Adjusted Q1 Net Income ( $5M )(1) 1 G&A Cost Right-Sizing Corporate G&A and Some Reduction Business Units Costs in August $
Slide 112: FY2020 Updated Outlook
FY2020 UPDATED OUTLOOK Guidance updated to reflect tariff risk and Walmart announcement Current FY2020 Prior FY2020 Guidance Guidance Sales $1.75B – $1.85B $1.79B – $1.89B Interest expense(1) ~$37M ~$40M Adj. tax rate(2) ~(25%) ~(25%) Adj. earnings per share(2) $0.10 – $0.25 $0.10 – $0.25 Capital ex
Slide 113: Platform for Growth Scenarios
PLATFORM FOR GROWTH SCENARIOS Vista Outdoor is utilizing a three-part strategy to grow the business both organically and inorganically Potential Revenue and Margin Growth Scenarios ($ in billions) ~$1.6 to ~$1.8 ~$0.3 ~$0.1+ ~$1.8+ ~$0.1+ ~$0.1+ ~6% ~10% Adjusted Adjusted EBITDA EBITDA FY20E Divesti
Slide 114: Capital Deployment Priorities
CAPITAL DEPLOYMENT PRIORITIES Vista Outdoor’s first priority is debt paydown occurring alongside profitability-focused initiatives that will result in reduced leverage and increased shareholder value Net Debt Paydown Scenario 1 Paydown Debt ($ in millions) $893 Reflects ~$157M Paydown from Savage Pr
Slide 115: Investment Thesis
INVESTMENT THESIS Vista Outdoor presents a unique Leading Brands opportunity to invest in a company with significant upside potential Large, Growing Market Profitability Upside Proven Management = Compelling Investment Opportunity © 2019 | Vista Outdoor Presentation 115
Slide 116: Group Q&A
Group Q&A © 2019 | Vista Outdoor Presentation 116
Slide 117: Closing Remarks
Closing Remarks © 2019 | Vista Outdoor Presentation 117
Slide 118: What You Heard Today
WHAT YOU HEARD TODAY 1 Vista Outdoor’s Accelerated Transformation Plan 2 How We Leverage Our Market Leading Brands 3 How We Become More Nimble and Return to Growth 4 How Our Operating Model Driven by a Talented and Proven Leadership Team Makes Us “Better Together” 5 Vista Outdoor’s Goals, Execution
Slide 119: Better Together: Leveraging Vista's Key Strengths
BETTER TOGETHER: LEVERAGING VISTA’S KEY STRENGTHS Vista Outdoor’s market leading brands, in combination with corporate scale and Centers of Excellence, provide a unique investment opportunity in the outdoor industry Key Differentiators Market Leading Brands in Commercial Vista Outdoor’s Brands are R
Slide 120: Investment Thesis
INVESTMENT THESIS Vista Outdoor presents a unique Leading Brands opportunity to invest in a company with significant upside potential Large, Growing Market Profitability Upside Proven Management = Compelling Investment Opportunity © 2019 | Vista Outdoor Presentation 120
Slide 121: Appendix
Appendix © 2019 | Vista Outdoor Presentation 121
Slide 122: Historical Financial Highlights
HISTORICAL FINANCIAL HIGHLIGHTS Net Sales ($ in millions) $3,000 $2,271 $2,547 $2,308 Guidance = $2,083 $2,059 (1) $2,000 $1,750 – $1,850 $1,000 $0 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020E Net Income ($ in millions) $80 $147 $0 ($60) ($500) ($274) ($1,000) ($648) FY2015 FY2016 FY2017 FY2018 FY2019
Slide 123: Historical Cash Flow & Capital Spending
HISTORICAL CASH FLOW & CAPITAL SPENDING Free Cash Flow Generation(1) Disciplined Capital Expenditures ($ in millions) ($ in millions) $225 $100 $206 $91 $200 $90 Increase driven by acquisitions and $175 $80 $160 $163 capacity expansion initiatives $70 $67 $150 $60 $125 $50 Guidance = $43 $42 $42 $10
Slide 124: Historical Financial Summary
HISTORICAL FINANCIAL SUMMARY Years Ended March 31, ($ in millions) FY2016 FY2017 FY2018 FY2019 Net Sales $2,271 $2,547 $2,308 $2,059 Gross Profit 619 669 521 416 % Margin 27.3% 26.3% 22.6% 20.2% Operating Income 263 (207)(1) (85)(2) (617)(3) % Margin 11.6% (8.1%) (3.7%) (30.0%) D&A 73 94 90 78 EBITD
Slide 125: Non-GAAP Reconciliation: Adjusted EBITDA
NON-GAAP RECONCILIATION: ADJUSTED EBITDA ($ in 000’s) FY2016 FY2017 FY2018 FY2019 Net income $147,037 ($274,454) ($60,232) ($648,443) Interest expense (income), net 24,351 43,670 49,214 57,191 Income tax provision (benefit) 91,370 23,760 (73,557) (25,829) Depreciation and amortization 72,614 93,779
Slide 126: Non-GAAP Reconciliation: Quarterly Adjusted EBITDA
NON-GAAP RECONCILIATION: QUARTERLY ADJUSTED EBITDA ($ in 000’s) Q2 FY2019 Q3 FY2019 Q4 FY2019 Q1 FY2020 LTM Q1 FY2020 Net income ($32,818) ($514,642) ($48,635) ($16,615) ($612,710) Interest expense (income), net 16,865 16,003 10,851 11,124 54,843 Income tax provision (benefit) (8,118) (18,383) 1,401
Slide 127: Non-GAAP Reconciliation: Free Cash Flow
NON-GAAP RECONCILIATION: FREE CASH FLOW Free cash flow is defined as cash provided by (used for) operating activities less capital expenditures, and excluding the following costs which have been adjusted for applicable tax amounts: contingent consideration, transaction costs paid to date, debt issua
Slide 128: Non-GAAP Reconciliation: Net Debt
NON-GAAP RECONCILIATION: NET DEBT Years Ended March 31, ($ in 000’s) FY2016 FY2017 FY2018 FY2019 Q1 FY2020(1) Current Portion of Long-Term Debt $17,500 $32,000 $32,000 $19,335 $19,335 Long-Term Debt 652,787 1,089,252 883,399 684,670 740,312 Cash and Cash Equivalents (151,692) (45,075) (22,870) (21,9