Vista Outdoor Inc (VSTO) 2016 Q2 法說會逐字稿

Good day and welcome to the Vista Outdoor second quarter FY16 earnings conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Michael Pici, Vice President of Investor Relations. Please go ahead, sir.

Thank you. Good morning and thank you for joining us for our second quarter FY16 earnings call. With me this morning are Mark DeYoung, Vista Outdoor Chairman and Chief Executive Officer, and Stephen Nolan, Senior Vice President and Chief Financial Officer.

Before we begin, I'd like to remind everyone that during today's call we will be making several forward-looking statements and we make these statements under the Safe Harbor provisions of the Private Securities Litigation Reform Act. These forward-looking statements reflect our best estimates and assumptions based on our understanding of information known to us today. These forward-looking statements are subject to the risks and uncertainties that face Vista Outdoors and the industries in which we operate. We encourage you to review today's press release and Vista Outdoor's SEC filings for more information on these risk factors and uncertainties.

Please also note that we have posted presentation materials on our website, at vistaoutdoor.com, which supplement our comments this morning and include a reconciliation of non-GAAP financial measures. With that said, I'll turn the call over to you, Mark.

Okay, Michael. Thank you. Good morning, everyone. It's a pleasure to welcome you to Vista's second quarter earnings call. We're about halfway through the first fiscal year as a standalone company, and I'm pleased to report on the strong performance and be able to discuss our outlook with you for the rest of this first fiscal year of the new company.

Vista Outdoor reported solid results in the quarter and we achieved organic growth in sales and gross profit, both sequentially and year-over-year. During the quarter, we saw higher year-over-year sales in optics, golf, shooting accessories and firearms, and we're experiencing continued demand for our rimfire ammunition.

Given our strong sales in firearms we continue to ramp up manufacturing at Savage. We are seeing market stabilization in the shooting sports, and Stephen Nolan will elaborate on the market conditions in just a few moments when he provides some additional detail on the financial results from the quarter.

During this past second quarter, we acquired two companies, Jimmy Styks and CamelBak. As a reminder, Jimmy Styks is a leading designer and marketer of stand up paddle boards. The Company provides platforms for water sports enthusiasts who engage in a range of activities, including personal fitness, wave riding and even fishing. As we highlighted in our last earnings call, the acquisition provides us access into the water sports market, which helps to further diversify the Company's outdoor products portfolio. And we can expand Jimmy Styks' product distribution using our current sales channels

CamelBak, as you are aware, is a leading provider of personal hydration solutions that are used by all manner of outdoor enthusiasts in all kinds of recreational activities. The acquisition gives us an even broader product offering and aligns with our strategy to grow into complementary and adjacent markets and also opens up new distribution channels for many of our current products.

The integration of both Jimmy Styks and CamelBak, they're ongoing and they're on track. Both companies are performing in line with our expectations. As we told you when we announced the acquisitions, Jimmy Styks' headquartered in Huntington Beach, California and CamelBak remains headquartered in Petaluma, California.

Both of these acquisitions strengthen our overall leadership position as an outdoor sports and recreation company, and I'm pleased with our progress. We have developed a strong pipeline of additional M&A candidates and we continue to seek out opportunities to grow both organically and through continued acquisition.

Our new product launches this year continue to be well received. Bushnell's Legend binoculars and our Elite riflescopes are getting rave reviews in the field. Optics Planet has nominated Bushnell, Black Hawk and Federal Premium Ammunition as finalists for its 2015 Brilliance Awards, which honor the best of the best in various categories, including optics, tactical accessories and ammunition.

During the second quarter, CamelBak launched several new products, including the Low Ride collection. This is hydration packs which are specifically designed for mountain biking, and the chute and forge divide, which are both designed to contain hot and cold beverages.

Bolle introduced new innovative bike helmets, the Messenger and The One. These represent new categories for us and these helmets have already received excellent reviews. Bolle also recently partnered with popular Outdoor Channel TV host Michael Waddell to offer the first-ever line of camouflage frame sunglasses for hunters and outdoor enthusiasts.

The Savage Arms A-17 rifle and its accompanying CCI ammunition remain top sellers for us. We continue to see strong reviews and cover story articles about the rifle's innovative approach to performance.

Our investments in innovation continue across all product areas and we look forward to launching many new and exciting products during the show season in early 2016.

The Company is delivering outstanding performance on safety and environmental stewardship, and we recently earned the Idaho Department of Environmental Quality's award for being a Pollution Prevention Champion, in our efforts to reduce waste in our manufacturing processes at our Lewiston, Idaho facility.

We are committed to being a strong community partner and a responsible environmental steward. We recently partnered with Tread Lightly and are leading efforts to help outdoor enthusiasts share in our focus to preserve access to public and private lands.

As you may know, Vista Outdoor is deeply committed to wildlife conservation. Federal Premium recently expanded their commitment with Delta Waterfowl, and you will soon see their logos on our boxes of ammunition to help raise awareness and funding for waterfowl habitat and conservation.

CamelBak recently hit a milestone in their Ditch Disposable campaign, which aims to reduce disposable beverage containers at music festivals. Between 2011 and 2014, CamelBak helped pour the equivalent of 5 million disposable bottles of water for festival goers through water stations that incorporate UV filtration for the freshest water. In 2015, we've already poured the equivalent of 2.3 million disposable bottles.

We continue to build on our worldwide organization and establish our reputation as a premier outdoor sports and recreation company. We're attracting top talent with experience from leading consumer products companies. We're also well underway in our external search for the leader of the Outdoor Products segment and have assembled a very strong candidate pool. We plan to select the finalists for this role within this quarter. We are on track to complete all of our milestones under the transition services agreement with Orbital ATK, and we anticipate completing all transition efforts on or ahead of schedule.

Our ability to execute our strategy and to deliver on our mission of bringing the world outside has positioned Vista Outdoor as the leader in outdoor sports and recreation products. I couldn't be more pleased with the team we've assembled, the innovation we're delivering, and the financial performance of the Company. I am very energized by the opportunities ahead of us. I'm confident in the Company's strategy and I'm confident in our ability to execute that strategy.

Stephen will now provide some additional details and insights on the financial results of the second quarter; and then following Stephen's remarks, we'll be happy to jump into Q&A. Stephen?

Thanks, Mark. Good morning, everyone. Thanks for joining the call. So we have disclosed both as reported and adjusted results in our press release to assist you in your understanding of the underlying numbers and to assist in comparisons to prior periods. You will find a more detailed financial presentation of our second quarter FY16 results on our website. Today, I will discuss the adjusted results, first for Vista Outdoor overall and then for the segments.

The Company achieved second quarter sales of $551 million, up 5% from the prior-year quarter. The year-over-year increase is due primarily to $24 million of sales from our recent Jimmy Styks and CamelBak acquisitions and also includes an organic year-over-year increase of approximately $2 million. Second quarter gross profit was $149 million, up 16% compared to $129 million in the prior-year quarter, including $9 million of gross profit from the recent acquisitions, as well as increased organic gross profit.

Our operating expense for the second quarter was $79 million, compared to $62 million in the prior year quarter. The increase reflects additional expenses as a result of acquisitions, standalone company costs, stock-based compensation, and additional R&D, selling and marketing investments.

We reported operating profit of $70 million in the second quarter, an increase of approximately $4 million, or 6%, from the prior-year period. The increase was driven by the increased gross profit partially offset by the increased operating expense that I just discussed.

Interest expense for the quarter was $7 million, compared to $8 million in the prior-year period. The interest expense in the prior-year period was an allocation to Vista Outdoor from Orbital ATK, while our current period interest expense reflects interest on our actual debt. You may recall that last quarter, we discussed the borrowing against our revolver related to acquisitions. That was paid off fully during the second quarter.

The tax rate for the quarter was 37.8%, compared to 34.9% in the prior-year quarter. The higher tax rate is primarily caused by the absence of the favorable true-up of prior year taxes recorded last year.

For the second quarter, we recorded net income of $40 million, up 4% from $38 million in the prior-year quarter, resulting in EPS of $0.63 compared to $0.60 in the prior-year quarter. Year-to-date free cash flow was $5 million, compared to a use of $36 million in the prior-year quarter. The year-over-year improvement in free cash flow was largely driven by improvements in working capital and accounting for inter-company activity with Orbital ATK prior to the spin-off. Pre-spin, items such as inter-company purchases were settled with Orbital ATK immediately; while as a stand-alone company, our results reflect the more normal timing for these types of payments.

As you know, in February, our Board of Directors authorized a $200 million share repurchase program. The Company repurchased approximately 690,000 shares for $31 million in the second quarter. During the third quarter to date, we've purchased approximately 538,000 more shares for $23.5 million. Since the program's inception, we've repurchased approximately 1.9 million shares for $84.4 million. The Company will continue to opportunistically repurchase shares under this program.

Now turning to our business segments, where we report sales and gross profit. Shooting Sports recorded second quarter sales of $338 million, down 1% from $343 million in the prior-year quarter. This segment delivered very strong performance in the first and second quarters of FY15, resulting in the tough year-over-year comparison for the first half of this year. With our second quarter results, we have now delivered four quarters of sequential growth in the segment, in line with our expectation for market stabilization. The year-over-year decrease was primarily a result of reduced volume in centerfire and shotshell ammunition partially offset by an increase in firearms and rimfire ammunition.

Second quarter gross profit in Shooting Sports was $92 million, up 16% from $79 million in the prior-year quarter. Gross profit grew sequentially by 6%. The year-over-year increase was driven by product mix, raw material procurement favorability, and a previously announced rimfire ammunition price increase, partially offset by previously disclosed lower sales volumes.

Second quarter sales in Outdoor Products were $213 million, up 17% from $182 million in the prior-year quarter, including approximately $24 million of sales from acquisitions. Organically, the segment was up approximately 3% both sequentially and from the prior-year period. The organic increase of $6 million was driven by higher sales in optics, golf and shooting accessories, partially offset by lower sales in tactical products and archery and hunting accessories and an unfavorable foreign exchange impact.

Gross profit in the second quarter for Outdoor Products was $57 million, an increase of 17% from $49 million in the prior-year quarter. The increase includes $9 million of gross profit from recent acquisitions. Organic gross profit in Outdoor Products was down 2% as a result of inventory related charges from the closure of the Meridian facility and a slightly lower margin product mix, partially offset by the increased sales volumes.

Turning back to the overall Company level, our performance in the first half of the year benefited from timing of operating expenses, including the previously announced one-time investment. We anticipate completion of those investments in the second half of FY16. Additionally, selling expenses typically trend higher in the second half of the year.

As Mark discussed, we do see market stabilization in the shooting sports and hunting market, and this has also contributed to the strong performance year-to-year -- or, year-to-date. That said, both the warmer weather and its impact on the fall hunting season, the overall trends in retail, and the back-ended nature of operating expenses discussed a moment ago, we expect full-year results in line with previous guidance.

Therefore, we maintain our expectations of low single-digit revenue growth and low double-digit margins, with EBITDA margins on the low end of the 14% to 16% range. We are reaffirming our FY16 guidance with sales in the range of $2.17 billion to $2.24 billion and EPS in the range of $2.05 to $2.30 per share. As mentioned last quarter, EPS guidance excludes transaction costs incurred to date.

We continue to expect capital expenditures of approximately $45 million and free cash flow in a range of $150 million to $180 million. The effective tax rate for the year is expected to be approximately 38%. With that, we'll open it up for questions.

(Operator Instructions)

Greg Konrad, Jefferies.

Good morning. Just wanted to start around ammunition. You had mentioned on the previous call, and we saw it in the results, the step up in rimfire ammunition pricing. And one of your competitors had flagged pricing in the quarter. Sequentially, has there been any change to what you're seeing, just in terms of promotional activity or pricing?

There's not been any broad pricing changes which have been instituted in the market that we've seen, either by competitors and certainly not led by ourselves. There have been some pockets here and there of additional promotional activities, so I think that's true. That is also typical of this time of year, as you go into the holidays and you go into the fall season, a lot of the smaller ammunition companies are feeling the pinch of the normalization within the shooting sports market and so they are heavily trying to promote and place their products, and so large brands and competitors like ourselves will compete with them. So we've seen some of that. We've seen some pricing pressures by particular calibers or particular uses types of ammunition.

So general promotional activity, some challenges on pricing that we have seen in the market, but I would say no wholesale price reductions in the market. And as I mentioned in the past, our approach toward dealing with this is to create incentives with our retailers or with our wholesalers and special programs to allow them to reap the benefits of selling our brands without having to take permanent pricing reductions in the market, and we continue to execute that strategy on the price front.

Thank you. That's helpful. And then just to follow up on CamelBak, can you maybe help us understand some of the accomplishments you've completed just on integration and maybe some of the larger items that you have moving forward?

Sure. So on the CamelBak front in terms of integration, we were able very quickly to integrate and align our financial reporting with CamelBak. They're a well-run company. As you know, they had publicly available financials, which strengthened their systems and their practices. So that has allowed us to quickly align ourselves from a financial reporting and budgeting process with CamelBak. So that's gone very well.

In terms of the sales channels, we were able to work very quickly with their sales team and with the Vista Outdoor sales team and find opportunities to discuss CamelBak products and expanding their distribution with some of our key retailers. So that went very quickly and is definitely on track. In terms of product innovation, we've had some very good reviews with their innovative team, looked at their new product introductions and were quickly able to make some good management decisions about investments in the future and in the innovative solutions that CamelBak is working.

So I think generally, it's gone very smoothly. I'm very, very pleased with not only the CamelBak acquisition in terms of its strategic benefit to Vista Outdoor, but I'm very, very pleased with how quickly we've been able to align their culture with our culture, their systems with our systems, their disciplines with our disciplines, and it's going very well.

Steve Cahall, Royal Bank of Canada.

Thank you very much. Maybe just a follow-up on some of the ammunition questions. I was wondering if you can give us a sense of within shooting sports, did you have sequential growth in revenue on the ammo side or did you have sequential growth in volume?

Steve, I think as we reported, we mentioned that in terms of the growth, we were off 1% in terms of the ammunition year-over-year results. Sequentially in ammunition, we are pretty much flat. It was a couple of million dollars, Steve, difference between the quarters, so it was relatively flat. Rimfire was strong. Promotional shotshell is in demand. Centerfire's a little softer and slightly down. So it was a little bit of a mixed bag in ammunition.

But generally, we are quite pleased with their performance, considering, as Stephen mentioned, the warm weather, which is impacting the hunting season, and the lackluster performance by retail across the country, including, as you've heard reported, many of the outdoor recreation retailers. So in light of that, we were pretty happy with our outcome.

And as we've discussed, firearms has been performing very well. Mark talked about ramping up productions at our firearms facilities and there's strong performance, so again, a sequential basis, on the firearms side.

Okay. And I know you're not guiding to the next fiscal year yet, but as we just think about where we are in terms the recovery cycle, if firearms continue on pace and you will get into some easier comps as we get into the next year and possibly years after, how should we think about a medium term growth rate for the shooting sports segment once we're through the ups and downs of this recovery cycle?

You know, I hate to say you answer your own question in the first half, where we're not, at this point, going to give FY17 guidance. We've given our long-term expectations of organic growth and we've discussed that before, which is mid to high single digit growth. We did talk about it would take us a few years to get back to that level after reaching the trough in the market correction. We believe that trough is behind us, as we've discussed before. We're delivering the sequential year-over-year growth. And as we get closer to FY17, we will give you additional insight as to how much of that growth we expect to see in FY17. But it would be premature for us to disclose that at this point in time.

Steve, more clarification. So the sequential was off about 1%, but year-over-year we were mid-single-digits off. I just want to make sure I clarify that, in terms of ammo. But again, in light of the market, in light of our competition, in light of the tough year-over-year comparisons we had, as Stephen mentioned, in our Q1 and Q2, we're pretty happy with those results.

Jay Sole, Morgan Stanley.

Thanks. Good morning.

Good morning, Jay.

I was wondering if we can dig into the shooting sports gross margin a little bit. If it would be possible to list which of the drivers you called out in terms of product mix, raw materials, and the price increase was the biggest driver of the gross margin. And even on the mix, what of the product mix helped gross margin in the quarter?

Okay. So the order in which I listed them, which was product mix, raw material, procurement favorability, and the rimfire ammunition price increase was the order of importance. When we list those drivers, we list them largest to smallest, so product mix was the major one, and then raw materials, then the pricing.

In terms of the product mix, part of that was driven, as we were just discussing, the improved performance in firearms relative to ammunition. Typically, we see a higher gross margin from firearms. If you certainly go back to when we completed the Savage acquisition and we were disclosing data at that point in time, you can see those numbers back then, because we have not broken them out lately, but you can certainly go back, and they're directionally similar in terms of the relative gross margin between the two. So that was one of the other drivers.

And then within ammunition, as we've discussed before, we've a whole host of different ammunition products catering to different parts of the market, premium ammunition for the hunter right down to promo ammunition for target shooters. And there's always going to be shifts back and forth between those within any given quarter. And there was some of that occurring. But the primary driver was probably the firearms, in terms of the product mix.

Understood. Got it. And maybe if we can talk about the sales in shooting sports. Mark, you mentioned, and some of the retailers have said, how much of the sequential improvement in sales is due to market stabilization and how much do you think is due to share gains? If you could talk about that, it would be helpful.

As I mentioned in the past, I think as we go through this correction and come out of it and begin to stabilize in the market, that a lot of the smaller brands and smaller manufacturers will find themselves being squeezed out. I think that's going on right now. I think you see inventory liquidating some of those smaller brands and re-consolidating. So that helps us in terms of market share. So I believe that is occurring. And we will be very aggressive in the markets, as we always are, with our brands and with our offering and with our programs for key wholesalers and retailers to capture some of that share.

I also think when you just look at new participants in the shooting sports, since 2010 through 2015, there's been about 17 million new shooters in participating in the shooting sports. So that's a pretty big number. About half of those have been female. Two-thirds of them are between the ages of 18 and 34. So all those metrics, I think, also are part of what you're seeing. You're seeing more participation, you're seeing a different mix, which we think is very healthy for the industry, in terms of demographics.

And so I think it's a combination, Jay, of some consolidation allowing us to recapture some share which was lost when demand outpaced supply. But I also think that the overall growth of participation and activity in the shooting sports is going to contribute to this stability going forward and should allow us to achieve organic growth.

Gautam Khanna, Cowen and Company.

Good morning, Mark.

Good morning.

Had a couple quick questions. In terms of the gross profit margin at Outdoor Products, it sounds like if you just take the $9 million of contribution and the $24 million of in organic, that the acquisitions have something like a 37% margin. Is that the right number, and is that excluding the step up or how should we think about that one?

I think it's directionally -- I think it's directionally correct. One of the things we told you, Gautam, when we did acquisitions and one of our strategies with acquisitions was to look at companies which could bolster the profitability and performance of Vista Outdoor. And so those companies have strong gross margins. And I think, as we mentioned with both of them, we were pleased when we acquired them that they would help lift the overall margins of the Company. So directionally, I think you're generally correct.

And in terms of the part -- your question about the inventory step up -- you will recall that the numbers we've disclosed and that I discussed were adjusted results which had taken out the impact of transaction-related expenses, including inventory step up. So the calculation you did was directionally correct and excluded the impact of inventory step up, which is listed in the adjustments in the table, which was relatively small, but just to make sure you understand that those are adjusted out when we do that calculation.

Got it. And there was nothing one -- the general mix of these new acquisitions is just better. It's a higher margin contribution and that doesn't change. There's nothing unusual.

There was nothing unusual in the quarter about their sales. There was nothing unusual in the quarter we're reporting about something that happened in their markets with their products or anything like that, Gautam. It was general product sales of their offering within the quarter to their consumers and outlets. So as I said, these are great companies. We think they're going to bolster our strategy, and we actually think we can improve their performance as we go forward.

Brian Ruttenbur, BB&T.

Yes. Thank you very much. It's an A and B question. Got to get two questions in quickly. Interest expense moving forward, is there any other charges that will be related to the whole ATK situation? So that's part A.

Part B, which is totally different, is the shooting sports. The quarter was -- it's been asked over again, but I'm asking it from a different angle -- is it because the mix of business, was it the more expensive rifle selling or was it that you didn't discount because a lot of your competitors were discounting? So interest expense and then discounting, and mix.

So on the first one, specific to interest expense, there will be no additional charges related to the split from Orbital ATK. We are now reporting our own interest expense. The interest expense we report to you obviously includes some amortization of the upfront costs of the debt we took on. So that's very clean. But more broadly, in terms of charge to Orbital ATK, Mark mentioned we're largely off the transition services agreement. There will be some minor additional expenses hitting us there, but they're at an immaterial level. And then the only remaining item that will really affect us is when we do the true-up of taxes with Orbital ATK under the transition -- on the tax matters agreement, which was signed as part of that, where we will do a synthetic tax return as if we'd been together and determine our respective tax burdens. But there's no additional operating charges or interest charges which are going to hit us from Orbital ATK.

And on part B, Brian, of your question, in terms of the quarter and shooting sports, in particular in firearms, we did not do any broad kind of discounting across our Savage firearm lines. We did offer some rebates this year as we've gone through the season. We have seasonal promotions which we offer, because we're in the hunting season. So some of our hunting rifles are offered through promotions with key retailers who will advertise through co-op advertising and promote some of those Savage firearms. But there was not a broad reduction across the line where we were really taking price out, trying to sell volume. That's not our strategy and we didn't employ that this fall.

I think the A-17 solution has been very well received. It has created a halo effect, I think, recently around the Savage brand. It's had people look more closely at the innovation we've delivered in the Savage brand, with things like our AccuStock and our AccuTrigger, out-of-box accuracy for the value of the price of that firearm. And we are simply having a really terrific season, and the guys running the factory are doing a great job managing costs, which is bolstering and supporting these higher margins Stephen talked about in our Savage lines. And that's really what's driving the business.

Jim Chartier, Monness, Crespi & Hardt.

Thanks for taking my question. Can you give us a sense, how much of your ammunitions do you believe is used for hunting versus target shooting? And how do you feel the weather impacts the target shooting part of the business?

Okay. So let me talk first with that back piece, in terms of the weather. Weather is an interesting element in outdoor recreation. Obviously, if it doesn't snow, you don't have great ski seasons, and if you don't have -- if you have overly wet winters, you lose some of the wildlife populations. And in our case, warm falls are one of the things that contribute to a delay or a slow start in the hunting season, which sometimes can never materialize. So I know if you listen to some of the key retailers who talked about this, and I think even some of the manufacturers in the shooting sports have had their earnings call prior to this call, Jim, you heard this reference to weather broadly discussed.

So we would never look to blame an external force on Company performance. We are really pleased with the Company's performance. We think we're doing great. We're very excited about our strategy and our future. And this quarter's results are very solid. But that said, we have to tell you that weather does contribute and did contribute to a slow back half of our second quarter and it could slow down the third quarter, which we are in right now, depending on how people respond and how the hunting season picks up. Hunting season and bird migrations and things do auger around weather, and so we are impacted by it and it has not been a favorable fall.

And in terms of the split for ammunition, unfortunately, we haven't disclosed that for competitive reasons and don't disclose it typically. We have different brands which cater to those markets, and our relative size of our brands is closely held for competitive reasons.

Robert Sassoon, R.F. Lafferty.

Good morning. Thanks for taking my questions. I have a question on the two acquisitions. Can you give us a sense of their underlying performance in terms of how the quarter's results compare with their -- I know they weren't part of the group -- with their performance in the year-ago quarter? And can you quantify what sort of synergies, integration synergies, you expect to get out of those acquisitions in the back half of the year, yearly targets? The final question I have is, could you give us some sort of sense of your acquisition pipeline, whether there is further acquisitions down the road, maybe in this current year or into next financial year going to come through?

Okay. So starting with the questions about the two acquisitions we completed. So I'll take the second part of the first part of your question first, in terms of the synergies we expect to derive from both of those acquisitions. As we discussed on our last call, when we really announced those acquisitions and discussed their likely impact on us, both of the acquisitions are more focused on revenue synergies than cost synergies. These are not acquisitions where we expect to take out a lot of costs. On the one hand, in Jimmy Styks, it's a very small operation right now. There are not a lot of costs to take out. We're really augmenting the current operation with additional sales and marketing resources to improve their performance in the end market.

And in the case of CamelBak, very strong, well-run company where a lot of the infrastructure will remain in place; and what we will really bring to bear there is additional selling capability to introduce CamelBak's products into our existing sales channels. So it's not going to be a cost synergy play, it's really a revenue synergy play where we think we can get cross-selling of CamelBak's products, both taking their products into our current customer set and increase sales of our current products into their customer set. So I think you will see those develop over time. Revenue synergies, unlike cost synergies, take a little longer to develop, because you have to get to a new buying season with your customers, and those will develop over the next 12 to 18 months. There will be some cases nearer term that we will see in the next six months, but it's really a long-term sales synergy development effort we have underway.

In terms of their year-over-year performance, I'm going to slightly hedge here in that we are not breaking out separate results for Jimmy Styks and CamelBak. We're (Indiscernible) for the acquisitions overall. CamelBak's external results, or previous year results, are available as part of Compass Diversified, the prior owner, which was a public company. You can certainly get those from Compass' previous 10-Qs and 10-Ks, and you can compare to our current results. Obviously, Jimmy Styks, this is the time of the year, as a stand-up paddle board company, where you're largely out of season for them. So a significant portion of our current quarter results come from CamelBak. So if you want, you can certainly do a comparison of our current quarter results to the previous quarter. But we're not going to do that specific breakdown for you. And I'll let Mark talk about the acquisition pipeline.

The only thing I would add to Stephen's comments, in terms of performance, is their performance is in line with our expectations. The performance in the quarter of both of those M& A activities are aligned with the model we put together when we did our analysis of these companies, and we're very happy with their performance. Nothing in their performance in the quarter is disappointing. Nothing is surprising. So they're performing pretty much exactly as we expected them to and hitting the expectations we set for them. So we're happy with that.

In terms of the acquisition pipeline, we do continue to work that pipeline. I've used the word in the past that it is robust. I would use that word again right now. Even after completing the Jimmy Styks and CamelBak acquisitions, the pipeline is robust. There are lots of opportunities in this $63 billion outdoor recreation market, and we are pursuing those. And we have lots of irons in the fire. And it's unlikely we will be announcing acquisitions every quarter for Vista's existence, but we are confident that our strategy to find the right kind of companies that will bolster our portfolio and allow us to continue to drive this leadership position in outdoor rec is going to pay off for us. And we're very much engaged in that process every day.

And just as one go back, obviously on both Jimmy Styks and CamelBak, even more so, we have somewhat less than a full quarter of results in our numbers right now, which also makes the year-over-year comparison challenging, because I think the relative part we'd like to look at is since we've acquired them, rather than just their results beforehand. But as Mark said, it's completely in line with our expectations, so we are very happy with the results to date and with the projected performance of both businesses.

(Operator Instructions)

Gautam Khanna, Cowen and Company.

Thank you. I was wondering if you cold just elaborate on the types of acquisitions you are looking at in the pipeline, maybe relative size, maybe some characteristics on whether you're looking at things in the shooting sports market, as well, and any sort of color you can give there?

Sure, Gautam. You know, the benefit of asking a second question is you get your name pronounced right. Did you notice that? (Laughter)

I'll take it. I'll take it.

That was great. So Gautam, I think that's obviously a question on everyone's mind. So let me flesh that out as best I can and give you an update and some color. When we launched Vista Outdoor, we created what I think is a very compelling strategy for the company. And that was to look at individual outdoor recreation, look at those areas where we're not chasing team sports and we're not involved in schools and distribution networks we don't understand, but we are pursuing and involved in distribution networks where we have extreme expertise, we understand the consumers of individual outdoor recreation products, and we have a portfolio of companies which has proven that they can deliver value to those outdoor recreation consumers pursuing those individual activities.

So our strategy going forward is to stay focused on those key lanes. So for us, that includes things like biking and camping and hunting and shooting sports and water sports. It might include fishing. It could include trail sports, snow sports, anywhere you find individual outdoor recreation pursuits with high-performance gear being a requirement. So we're very much still focused on that strategy.

The companies we are looking at range in size. As you would expect, this is a very fragmented market, a $63 billion revenue market in the United States. And yet Vista Outdoors probably the largest pure-play in that space, so that gives you some idea of how fragmented it is. So the companies we look at range anywhere from $20 million to $200 million. A lot of companies in that space. The larger the company, the smaller the options there are available in terms of targets. But that is the range where we're typically going to find companies in this space.

We've assembled an M&A team. Stephen Nolan is leading that team. We have bolstered that team and added a couple of other key talents to it in the last quarter. So we have a team which is solely focused on finding the right kind of value creating M&A opportunities in this space, as we have defined it. And as I mentioned, there are lots of those companies in our pipeline that we're looking at.

But we are not going to just go buy whatever is for sale at whatever price is demanded. We are going to scrutinize those in terms of our strategy, in terms of value creation, and in terms of not only a cultural fit, but business and financial fit with our objectives. And as I mentioned, I'm confident that this process will result in additional fruits from our labor and we'll be able to announce in the future other key strategic acquisitions. So we're very happy with the process. We've got a dedicated team doing it. The market is ripe. We're just making sure that we find the right opportunities and we land them.

Thanks a lot, guys.

You bet.

Steve Cahall, Royal Bank of Canada.

Thank you. Just a housekeeping question for you, Stephen. The adjusted guidance has the $0.08 of transaction costs. I noticed you took $0.11 in the quarter for the adjustments between your reported and adjusted numbers. So is it correct to assume that the guidance includes the $0.08 of transaction but not the $0.03 of other stuff in the adjusted number?

The guidance is consistent with our as adjusted numbers, so it will include the full $0.11, not the $0.08. So if we confused you there -- and I can fully understand the confusion, because in my remarks, I did just reference transaction costs. I should have said transaction and other adjustments that we typically make.

Okay. So the difference between reported and adjusted EPS for the year, we should assume around $0.11? Is that about right?

There's the $0.11, plus the small amount we have that we recognize as a charge in the prior quarter. I don't have that number directly in front of me here, but we did have a small amount we recognized in the first quarter (Indiscernible), but there was a small charge there. So you would add those together for the difference between the two.

Okay. I appreciate that. Thank you.

Rommel Dionisio, Wunderlich.

Thanks very much. Just a question on the shooting sports segment. Historical data would indicate that election years, Presidential election years, there's been some modest pick up or acceleration in firearms sales trends. And I wonder if you're starting to see this. The question might be a little premature. But are you starting to see some proclivity on behalf of major retail customers to take on a little more inventory with that expectation in mind?

You know, it's really interesting, because you're correct in that past election periods, going back to 2008, saw pretty significant increases in demand for both firearms and, subsequently following that, ammunition. We are not seeing significant up tick yet. Even though we have the primaries near at hand and we have the Republican and Democratic debates on prime time, it has not yet seemed to have spurred any real peak firearms or ammunition buying. And so whether that is because people previously had purchased firearms and ammunition or are comfortable with what they have, whether that is because they have built inventory at home, we're not sure exactly. But it has not driven a significant spike in demand yet.

Could that happen next year around the Presidential election? It's possible. Certainly, it would be consistent with past election trends, if it does pick up next year in the spring/summer season. So we'll keep our eye on that. So far, it's been quite muted.

Okay. Thanks very much, Mark.

And it appears we have no further questions at this time. I'll turn the call back to the speakers for closing remarks.

Okay. Well, thank you. Thank you, everyone, for joining us. We're pleased to be able to report another solid quarter for Vista Outdoor. I am really thrilled with the management team we've put together, the execution excellence we're demonstrating, the performance we delivered in the last two quarters of the year, and looking forward to significant execution of our strategy going forward and excited about what that's going to bring to us. Appreciate you joining us. Have a good day.

This does conclude today's teleconference. You may now disconnect. Thank you and have a great day.