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Source: Vista Outdoor news release

Farmington, Utah -- Vista Outdoor Inc. has reported operating results for the first quarter of its Fiscal Year 2019 (FY19), which ended on July 1, 2018.

"Vista Outdoor's first quarter results exceeded expectations despite continuing headwinds and market challenges," said Vista Outdoor Chief Executive Officer Chris Metz. "The company generated strong free cash flow, primarily driven by improved working capital management, which we used to pay down $33 million of long-term debt. Our focus on improved profitability is delivering results, we are driving operational excellence through cost savings initiatives and procurement strategies, and we continue to introduce innovative new products into the market.

"Our strategic transformation plan, which we announced in May 2018, is also tracking well. The transformation will allow the company to drive shareholder value by reducing leverage, improving financial flexibility and the efficiency of our capital structure, and providing additional resources to reinvest in our core product categories: ammunition, hunting and shooting accessories, hydration solutions, and outdoor cooking."

On July 9, 2018, Vista Outdoor announced it entered into a definitive agreement to sell its Bollé, Cébé and Serengeti brands. Gross proceeds from the divestiture are expected to be approximately $158 million before net working capital adjustments and transaction costs. The sale is expected to close in the second quarter of FY19, ending September 30, 2018.

"The company continues to explore strategic options for assets that fall outside of our core product categories," said Metz.

For the first quarter ended July 1, 2018:

Sales were $529 million, down 7 percent from the prior-year quarter.

Gross profit was $113 million, down 23 percent from the prior-year quarter.

Operating expenses were $153 million, compared to $107 million in the prior-year quarter. The difference was primarily due to a $45 million impairment in the current period, related to an expected loss on the sale of the company's held-for-sale assets. The loss is primarily attributable to cumulative foreign currency translation adjustments.

Fully diluted earnings per share (EPS) was $(0.91), compared to $0.29 in the prior-year quarter. Adjusted EPS was $0.00, compared to $0.24 in the prior-year quarter.

Cash flow provided by operating activities year to date was $74 million, compared to $41 million in the prior-year period. Year-to-date free cash flow generation was $70 million, compared to free cash flow of $25 million in the prior-year period.

Tax rate was 1.4 percent compared to 38.2 percent in the prior-year quarter, primarily caused by the non-deductible impairment loss in the current period and the income tax effects of The Tax Cuts and Jobs Act. The adjusted tax rate was 119.1 percent, compared to 38.4 percent in the prior-year quarter.

Please see the tables in this press release for a reconciliation of non-GAAP adjusted gross profit, operating profit, tax rate, fully diluted earnings per share, and free cash flow to the comparable GAAP measures.

Updated Outlook for Fiscal Year 2019

"The company generated strong free cash flow in the first quarter, and delivered results that beat expectations," said Vista Outdoor Chief Financial Officer Mick Lopez. "We have updated our sales and EPS guidance to reflect the impact of the pending eyewear sale, and despite the ongoing shooting sports market softness and commodity headwinds, we have raised our EPS and free cash flow expectations given the success of our ongoing efforts to drive profitability and to generate cash."