UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 26, 2021

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                    to                  

Commission file number 1-36597

Vista Outdoor Inc.

(Exact name of Registrant as specified in its charter)

Delaware			47-1016855
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)
1 Vista Way	Anoka	MN	55303
(Address of Principal Executive Offices)			(Zip Code)

Registrant's telephone number, including area code: (763) 433-1000

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $.01	VSTO	New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒    No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒    No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐    No ☒

As of November 1, 2021, there were 57,296,059 shares of the registrant's common stock outstanding.

TABLE OF CONTENTS

		Page
PART I - Financial Information
Item 1.	Unaudited Financial Statements	2
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	28
Item 4.	Controls and Procedures	28
PART II - Other Information
Item 1.	Legal Proceedings	29
Item 1A.	Risk Factors	29
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	29
Item 3.	Defaults Upon Senior Securities	29
Item 4.	Mine Safety Disclosures	29
Item 5.	Other Information	29
Item 6.	Exhibits	30
SIGNATURES		31

PART I— FINANCIAL INFORMATION

ITEM 1.    FINANCIAL STATEMENTS

VISTA OUTDOOR INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)

(Amounts in thousands except share data)	September 26, 2021		March 31, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	265,301	$	243,265
Net receivables	414,587		301,575
Net inventories	561,506		454,504
Income tax receivable	10,898		37,870
Other current assets	40,314		27,018
Total current assets	1,292,606		1,064,232
Net property, plant, and equipment	190,733		197,531
Operating lease assets	74,384		72,400
Goodwill	97,773		86,082
Net intangible assets	324,115		314,955
Deferred charges and other non-current assets, net	38,346		29,739
Total assets	$	2,017,957	$	1,764,939
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	180,867	$	163,839
Accrued compensation	54,962		63,318
Federal excise, use, and other taxes	32,616		23,092
Other current liabilities	126,748		120,568
Total current liabilities	395,193		370,817
Long-term debt	495,841		495,564
Deferred income tax liabilities	12,891		8,235
Long-term operating lease liabilities	78,126		77,375
Accrued pension and postemployment benefits	30,306		33,503
Other long-term liabilities	70,587		42,448
Total liabilities	1,082,944		1,027,942
Commitments and contingencies (Notes 3, 13, and 16)
Common stock — $.01 par value:
Authorized — 500,000,000 shares
Issued and outstanding — 57,288,160 shares as of September 26, 2021 and 58,561,016 shares as of March 31, 2021	573		585
Additional paid-in capital	1,731,665		1,731,479
Accumulated deficit	(451,771)		(694,036)
Accumulated other comprehensive loss	(82,267)		(83,195)
Common stock in treasury, at cost — 6,676,279 shares held as of September 26, 2021 and 5,403,423 shares held as of March 31, 2021	(263,187)		(217,836)
Total stockholders' equity	935,013		736,997
Total liabilities and stockholders' equity	$	2,017,957	$	1,764,939

See Notes to the Condensed Consolidated Financial Statements.

2

VISTA OUTDOOR INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited)

	Three months ended				Six months ended
(Amounts in thousands except per share data)	September 26, 2021		September 27, 2020		September 26, 2021		September 27, 2020
Sales, net	$	778,460	$	575,179	$	1,441,372	$	1,054,319
Cost of sales	479,539		413,289		901,024		767,061
Gross profit	298,921		161,890		540,348		287,258
Operating expenses:
Research and development	6,440		5,362		12,308		10,372
Selling, general, and administrative	101,742		81,272		193,645		153,587
Earnings before interest and income taxes	190,739		75,256		334,395		123,299
Interest expense, net	(5,929)		(5,715)		(11,607)		(12,133)
Earnings before income taxes	184,810		69,541		322,788		111,166
Income tax provision	(45,270)		10,104		(80,523)		8,955
Net income	$	139,540	$	79,645	$	242,265	$	120,121
Earnings per common share:
Basic	$	2.43	$	1.37	$	4.20	$	2.07
Diluted	$	2.36	$	1.34	$	4.07	$	2.03
Weighted-average number of common shares outstanding:
Basic	57,353		58,193		57,732		58,124
Diluted	59,216		59,314		59,577		59,066
Net income (from above)	$	139,540	$	79,645	$	242,265	$	120,121
Other comprehensive income (loss), net of tax:
Pension and other postretirement benefit liabilities:
Reclassification of prior service credits for pension and postretirement benefit plans recorded to net income, net of tax benefit of $31 and $54, for the three and six months ended September 26, 2021, respectively, and $0 and $0 for the three and six months ended September 27, 2020, respectively	(95)		(79)		(167)		(157)
Reclassification of net actuarial loss for pension and postretirement benefit plans recorded to net income, net of tax expense of $(260) and $(519) for the three and six months ended September 26, 2021, respectively, and $0 and $0 for the three and six months ended September 27, 2020, respectively	801		970		1,599		1,938
Change in derivatives, net of tax benefit of $141 and $121 for the three and six months ended September 26, 2021, respectively, and $0 and $0 for the three and six months ended September 27, 2020, respectively	(436)		693		(373)		1,674
Change in cumulative translation adjustment	(337)		160		(131)		509
Total other comprehensive income (loss)	(67)		1,744		928		3,964
Comprehensive income	$	139,473	$	81,389	$	243,193	$	124,085

See Notes to the Condensed Consolidated Financial Statements.

3

VISTA OUTDOOR INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

	Six months ended
(Amounts in thousands)	September 26, 2021		September 27, 2020
Operating Activities:
Net income	$	242,265	$	120,121
Adjustments to net income to arrive at cash provided by operating activities:
Depreciation	22,267		22,268
Amortization of intangible assets	10,417		9,899
Amortization of deferred financing costs	701		755
Deferred income taxes	269		1,667
Loss on disposal of property, plant, and equipment	99		278
Share-based compensation	13,812		7,466
Changes in assets and liabilities:
Net receivables	(112,256)		(22,884)
Net inventories	(105,269)		2,388
Accounts payable	16,957		35,996
Accrued compensation	(8,489)		4,416
Accrued income taxes	32,250		(16,980)
Federal excise, use, and other taxes	9,494		2,661
Pension and other postretirement benefits	(1,299)		(6,740)
Other assets and liabilities	(16,038)		36,514
Cash provided by operating activities	105,180		197,825
Investing Activities:
Capital expenditures	(14,439)		(9,665)
Acquisition of businesses, net of cash received	(8,488)		—
Proceeds from the disposition of property, plant, and equipment	8		25
Cash used for investing activities	(22,919)		(9,640)
Financing Activities:
Borrowings on lines of credit	—		43,076
Payments on lines of credit	—		(210,332)
Payments made for debt issuance costs	(1,018)		—
Purchase of treasury shares	(56,239)		—
Proceeds from exercise of stock options	228		805
Payment of employee taxes related to vested stock awards	(3,039)		(239)
Cash used for financing activities	(60,068)		(166,690)
Effect of foreign exchange rate fluctuations on cash	(157)		86
Increase in cash, cash equivalents, and restricted cash	22,036		21,581
Cash, cash equivalents, and restricted cash at beginning of period	243,265		31,375
Cash, cash equivalents, and restricted cash at end of period	$	265,301	$	52,956
Supplemental Cash Flow Disclosures:
Non-cash investing activity:
Capital expenditures included in accounts payable	$	3,085	$	1,968
Contingent consideration in connection with business acquisitions	$	22,400	$	—
Net assets assumed in business acquisitions	$	30,888	$	—

 

See Notes to the Condensed Consolidated Financial Statements.

4

VISTA OUTDOOR INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(unaudited)

	Common Stock $.01 Par Value
(Amounts in thousands except share data)	Shares	Amount		Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Treasury Stock		Total Equity
Balance, March 31, 2021	58,561,016	$	585	$	1,731,479	$	(694,036)	$	(83,195)	$	(217,836)	$	736,997
Comprehensive income	—	—		—		102,725		995		—		103,720
Exercise of stock options	7,373	—		(94)		—		—		291		197
Share-based compensation	—	—		7,038		—		—		—		7,038
Restricted stock vested and shares withheld	174,885	—		(10,937)		—		—		7,896		(3,041)
Treasury shares purchased	(1,212,496)	—		—		—		—		(44,232)		(44,232)
Other	7,380	(10)		(282)		—		—		292		—
Balance, June 27, 2021	57,538,158	$	575	$	1,727,204	$	(591,311)	$	(82,200)	$	(253,589)	$	800,679
Comprehensive income	—	—		—		139,540		(67)		—		139,473
Exercise of stock options	1,928	—		(45)		—		—		76		31
Share-based compensation	—	—		6,774		—		—		—		6,774
Restricted stock vested and shares withheld	2,840	—		(167)		—		—		109		(58)
Employee stock purchase plan	2,726	—		12		—		—		108		120
Treasury shares purchased	(311,187)	—		—		—		—		(12,007)		(12,007)
Other	53,695	(2)		(2,113)		—		—		2,116		1
Balance, September 26, 2021	57,288,160	$	573	$	1,731,665	$	(451,771)	$	(82,267)	$	(263,187)	$	935,013
	Common Stock $.01 Par Value
(Amounts in thousands except share data)	Shares	Amount		Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Treasury Stock		Total Equity
Balance, March 31, 2020	58,038,822	$	580	$	1,744,096	$	(960,048)	$	(100,994)	$	(241,129)	$	442,505
Comprehensive income	—	—		—		40,476		2,220		—		42,696
Exercise of stock options	5,000	—		(203)		—		—		203		—
Share-based compensation	—	—		4,404		—		—		—		4,404
Restricted stock vested and shares withheld	21,824	—		(1,324)		—		—		1,224		(100)
Other	1,313	1		(54)		—		—		53		—
Balance, June 28, 2020	58,066,959	$	581	$	1,746,919	$	(919,572)	$	(98,774)	$	(239,649)	$	489,505
Comprehensive income	—	—		—		79,645		1,744		—		81,389
Exercise of stock options	50,814	—		(1,258)		—		—		2,063		805
Share-based compensation	—	—		3,062		—		—		—		3,062
Restricted stock vested and shares withheld	29,680	—		(1,741)		—		—		1,535		(206)
Employee stock purchase plan	5,435	—		(146)		—		—		221		75
Other	103,355	2		(4,191)		—		—		4,196		7
Balance, September 27, 2020	58,256,243	$	583	$	1,742,645	$	(839,927)	$	(97,030)	$	(231,634)	$	574,637

See Notes to the Condensed Consolidated Financial Statements.

5

VISTA OUTDOOR INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Six Months Ended September 26, 2021

(Amounts in thousands except per share data and unless otherwise indicated)

1. Significant Accounting Policies

Nature of Operations—Vista Outdoor Inc. (together with our subsidiaries, "Vista Outdoor", "we", "our", and "us", unless the context otherwise requires) is a leading global designer, manufacturer, and marketer of outdoor and shooting sports products. We conduct our operations through two reportable segments, Shooting Sports and Outdoor Products. We are headquartered in Anoka, Minnesota and have 18 manufacturing and distribution facilities in the United States, Canada, Mexico, and Puerto Rico along with international customer service, sales, and sourcing operations in Asia, Canada, and Europe. Vista Outdoor was incorporated in Delaware in 2014. The condensed consolidated financial statements reflect our financial position, results of operations, and cash flows in conformity with accounting principles generally accepted in the United States.

This Quarterly Report on Form 10-Q should be read in conjunction with our Consolidated Financial Statements and Notes included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2021 (“fiscal year 2021”).

Basis of Presentation—Our unaudited condensed consolidated financial statements have been prepared in accordance with the requirements of the Securities and Exchange Commission ("SEC") for interim reporting. As permitted under those rules, certain disclosures and other financial information that normally are required by accounting principles generally accepted in the United States have been condensed or omitted. Our accounting policies are described in the Notes to the Consolidated Financial Statements in our Annual Report on Form 10-K for fiscal year 2021. Management is responsible for the condensed consolidated financial statements included in this report, which are unaudited but, in the opinion of management, include all adjustments necessary for a fair presentation of our financial position as of September 26, 2021 and March 31, 2021, our results of operations for the three and six months ended September 26, 2021 and September 27, 2020, and our cash flows for the six months ended September 26, 2021 and September 27, 2020.

Our accounting policies are described in Note 1 of the Notes to the Consolidated Financial Statements in our Annual Report on Form 10-K for fiscal year 2021. Such significant accounting policies are applicable for periods prior to the following new accounting standards.

Accounting Standards Adopted by us in Fiscal Year 2022

In August 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2020-06, "Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity." This ASU simplifies the accounting for convertible instruments by removing the separation models for (1) convertible debt with a cash conversion feature and (2) convertible instruments with a beneficial conversion feature. Also, this ASU requires the application of the if-converted method for calculating diluted earnings per share and provided that the treasury stock method will be no longer available. The new guidance is effective for fiscal years beginning after December 15, 2021, with early adoption permitted no earlier than fiscal years beginning after December 15, 2020. Entities may adopt the guidance through either a modified retrospective method of transition or a fully retrospective method of transition. We early adopted ASU 2020-06 on April 1, 2021 with no impact on our financial statements.

On April 1, 2021, we adopted ASU No. 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes.” This ASU removes specific exceptions to the general principles of ASC Topic 740, "Accounting for Income Taxes" and simplifies certain U.S. GAAP requirements. This update is effective for fiscal years beginning after December 15, 2020. The adoption of this standard does not have a material impact on our consolidated financial statements and related disclosures.

2. Fair Value of Financial Instruments

We measure and disclose our financial assets and liabilities at fair value on a recurring and nonrecurring basis. Fair value is defined as the price that would be received to sell an asset or the price paid to transfer a liability (the exit price) in the principal and most advantageous market for the asset or liability in an orderly transaction between market participants. Assets and liabilities carried at fair value are classified using the three-tier hierarchy:

Level 1—Quoted prices for identical instruments in active markets.

Level 2—Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.

6

Level 3—Significant inputs to the valuation model are unobservable.

The following section describes the valuation methodologies we use to measure our financial instruments at fair value on a recurring basis:

Commodity Price Hedging Instruments

We periodically enter into commodity forward contracts to hedge our exposure to price fluctuations on certain commodities we use for raw material components in our manufacturing process. When actual commodity prices exceed the fixed price provided by these contracts, we receive this difference from the counterparty, and when actual commodity prices are below the contractually provided fixed price, we pay this difference to the counterparty. We consider these to be Level 2 instruments. See Note 5, Derivative Financial Instruments, for additional information.

Note Receivable

In connection with the sale of our Firearms business in July 2019, we received a $12,000 interest-free, five-year pre-payable promissory note due June 2024. Based on the general market conditions and the credit quality of the buyer at the time of the sale, we discounted the Note Receivable at an effective interest rate of 10% and estimated fair value using a discounted cash flow approach. We consider this to be a Level 3 instrument. See Note 8, Receivables, for additional information.

Contingent Consideration

The acquisition-related contingent consideration liability represents the estimated fair value of earn-outs payable related to our acquisition of QuietKat Inc. ("QuietKat"). See Note 4, Acquisitions and Divestitures, for additional information. The earn-out liability is valued using a Monte Carlo simulation analysis in a risk-neutral framework with assumptions for volatility, market price of risk adjustment, risk-free rate, and cost of debt. The contingent consideration is measured to fair value at each reporting date through December 31, 2023, and is based on management estimates and entity-specific assumptions, which are considered Level 3 inputs. The liability is included in other long-term liabilities on our balance sheet.

Disclosures about the Fair Value of Financial Instruments

The carrying amount of our receivables, inventory, accounts payable and accrued liabilities at September 26, 2021 and March 31, 2021 approximates fair value because of the short maturity of these instruments. The carrying values of cash and cash equivalents at September 26, 2021 and March 31, 2021 are categorized within Level 1 of the fair value hierarchy. 

The table below discloses information about carrying values and estimated fair value relating to our financial assets and liabilities:

	September 26, 2021				March 31, 2021
	Carrying amount		Fair value		Carrying amount		Fair value
Fixed-rate debt (1)	$	500,000	$	516,250	$	500,000	$	493,750

(1) Fixed rate debt—In fiscal year 2021, we issued $500,000 aggregate principal amount of 4.5% Senior Notes that will mature on March 15, 2029. These notes are unsecured and senior obligations. We consider these to be Level 2 instruments. See Note 13, Long-term Debt, for information on long-term debt, including certain risks and uncertainties.

We measure certain nonfinancial assets at fair value on a nonrecurring basis if certain indicators are present. These assets include long-lived assets that are written down to fair value when they are held for sale or determined to be impaired.

3. Leases

We lease certain warehouse and distribution space, manufacturing space, office space, retail locations, equipment, and vehicles. All of these leases are classified as operating leases. Operating lease assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. We use our incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. These rates are assessed on a quarterly basis. The operating lease assets also include any lease payments made less lease incentives. Leases with an initial term of twelve months or less are not recorded on the balance sheet. For operating leases, expense is recognized on a straight-line basis over the lease term. Variable lease payments associated with our leases are recognized upon occurrence of the event, activity, or circumstance in the lease agreement on which those payments are assessed. Tenant improvement allowances are recorded as leasehold improvements with an offsetting adjustment included in our calculation of its right-of-use asset.

7

Many leases include one or more options to renew, with renewal terms that can extend the lease term up to five years. The exercise of lease renewal options is at our sole discretion. The depreciable life of assets and leasehold improvements are limited by the expected lease term.

The amounts of assets and liabilities related to our operating leases were as follows:

	Balance Sheet Caption	September 26, 2021		March 31, 2021
Assets:
Operating lease assets	Operating lease assets	$	74,384	$	72,400
Liabilities:
Current:
Operating lease liabilities	Other current liabilities	$	11,277	$	10,044
Long-term:
Operating lease liabilities	Long-term operating lease liabilities	78,126		77,375
Total lease liabilities		$	89,403	$	87,419

The components of lease expense are recorded to cost of sales and selling, general, and administration expenses in the condensed consolidated statements of comprehensive income. The components of lease expense were as follows:

	Three months ended				Six months ended
	September 26, 2021		September 27, 2020		September 26, 2021		September 27, 2020
Fixed operating lease costs (1)	$	5,386	$	5,052	$	10,502	$	10,111
Variable operating lease costs	914		659		1,583		1,241
Sublease income	(107)		(277)		(151)		(665)
Net Lease costs	$	6,193	$	5,434	$	11,934	$	10,687

(1) Includes short-term leases

	September 26, 2021		March 31, 2021
Weighted Average Remaining Lease Term (Years):
Operating leases	8.80		9.32
Weighted Average Discount Rate:
Operating leases	8.37	%	8.64	%

The approximate minimum lease payments under non-cancelable operating leases as of September 26, 2021 are as follows:

Remainder of fiscal year 2022	$	9,210
Fiscal year 2023	17,201
Fiscal year 2024	14,990
Fiscal year 2025	14,152
Fiscal year 2026	12,909
Thereafter	61,532
Total lease payments	129,994
Less imputed interest	(40,591)
Present value of lease liabilities	$	89,403

8

Supplemental cash flow information related to leases is as follows:

	Six months ended
	September 26, 2021		September 27, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows - operating leases	$	8,966	$	9,080
Operating lease assets obtained in exchange for lease liabilities:
Operating leases	5,785		1,285

4. Acquisitions and Divestitures

During the first quarter of fiscal year 2022, we completed the acquisition of QuietKat, an electric bicycle company that specializes in designing, manufacturing, and marketing rugged, all-terrain eBikes. We accounted for the acquisition as a business combination using the acquisition method of accounting. The acquisition is not significant to our consolidated financial statements. The results of this business are reported within our Outdoor Products reportable segment. Contingent consideration with an initial fair value of $22,400 was included in the purchase price. See Note 2, Fair Value of Financial Instruments, for information related to the fair value calculation. In addition to the consideration we paid at closing, $13,000 was paid to key members of QuietKat management and is considered compensation that will be expensed over approximately three years provided they continue their employment with us through the respective milestone dates.

During the first quarter of fiscal year 2022, we completed the acquisition of Venor, a hunt-inspired female apparel brand. The Venor lifestyle is anchored in adventure, community, and empowering women to live their best outdoor lives. We accounted for the acquisition as a business combination using the acquisition method of accounting. The acquisition is not significant to our consolidated financial statements. The results of this business will be reported within the Outdoor Products reportable segment.

During the fourth quarter of fiscal year 2021, we completed the acquisition of HEVI-Shot Ammunition, which will immediately add a high-end offering, specialized lead-free ammunition capabilities and another iconic brand to our ammunition portfolio. We accounted for the acquisition as a business combination using the acquisition method of accounting. The acquisition is not significant to our consolidated financial statements. We finalized the purchase price allocation during the first quarter of fiscal year 2022. The results of this business are included in the Shooting Sports reportable segment.

During the third quarter of fiscal year 2021, we acquired certain assets related to Remington Outdoor Company, Inc.’s ("Remington") ammunition and accessories businesses, including Remington's ammunition manufacturing facility in Lonoke, Arkansas and related intellectual property. We accounted for the acquisition of Remington as a business combination using the acquisition method of accounting. The purchase price allocation below was allocated to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date. The fair values of acquired assets and liabilities assumed represent management’s estimate of fair value. We finalized the purchase price allocation during the fourth quarter of fiscal year 2021.

9

Remington Purchase Price Allocation:

	October 12, 2020
Total purchase price:
Cash paid			$	81,400
Cash paid for working capital			291
Total purchase price			81,691
Fair value of assets acquired:
Inventories	$	20,021
Intangible assets	26,200
Property, plant, and equipment	31,200
Other assets	3,363
Total assets	80,784
Fair value of liabilities assumed:
Accounts payable	311
Other liabilities	2,969
Total liabilities	3,280
Net assets acquired			77,504
Goodwill			$	4,187

Intangible assets above include:

	Value		Useful life (years)
Indefinite lived tradenames	$	24,500	Indefinite
Customer relationships	1,700		20

Divestiture of Business:

We entered into an asset purchase agreement during the third quarter of fiscal year 2021 to sell a non-strategic business in our Shooting Sports segment. As part of the agreement, we provided limited transition services during fiscal year 2021. During the three months ended December 27, 2020, we recognized a pretax gain on this divestiture of approximately $18,467, which was included in other income/(expense). This transaction does not meet the criteria for discontinued operations as it does not represent a strategic shift that will have a major effect on our ongoing operations. The assets of this business represented a portion of our Ammunition reporting unit.

5. Derivative Financial Instruments

In the normal course of business, we are exposed to market risks arising from adverse changes in:

•commodity prices affecting the cost of raw materials, and

•interest rates

We use designated cash flow hedges to manage our level of exposure.

We entered into various commodity forward contracts during fiscal years 2022 and 2021. These contracts are used to hedge our exposure to price fluctuations on lead we purchase for raw material components in our ammunition manufacturing process and are designated and qualify as effective cash flow hedges. The effectiveness of cash flow hedge contracts is assessed quantitatively at inception and qualitatively thereafter considering the transactions critical terms and counterparty credit quality.

The gains and losses on these hedges are included in accumulated other comprehensive loss and are reclassified into earnings at the time the forecasted revenue or expense is recognized. The gains or losses on the lead forward contracts are recorded in inventory as the commodities are purchased and in cost of sales when the related inventory is sold. As of September 26, 2021, we had outstanding lead forward contracts on approximately 4.4 million pounds of lead. In the event the underlying forecasted transaction does not occur, or it becomes probable that it will not occur, the related change in fair value of the derivative instrument would be reclassified from accumulated other comprehensive loss and recognized in earnings. As of September 26, 2021, there is an immaterial asset balance related to the lead forward contracts that is recorded within other current assets.

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6. Revenue Recognition

The following tables disaggregate our net sales by major category:

	Three months ended
	September 26, 2021						September 27, 2020
	Shooting Sports		Outdoor Products		Total		Shooting Sports		Outdoor Products		Total
Ammunition	$	450,193	$	—	$	450,193	$	272,219	$	—	$	272,219
Hunting and Shooting	116,156		—		116,156		107,468		—		107,468
Action Sports (1)	—		104,645		104,645		—		97,447		97,447
Outdoor Recreation (2)	—		107,466		107,466		—		98,045		98,045
Total	$	566,349	$	212,111	$	778,460	$	379,687	$	195,492	$	575,179
Geographic Region:
United States	$	533,542	$	143,664	$	677,206	$	352,740	$	151,783	$	504,523
Rest of the World	32,807		68,447		101,254		26,947		43,709		70,656
Total	$	566,349	$	212,111	$	778,460	$	379,687	$	195,492	$	575,179
	Six months ended
	September 26, 2021						September 27, 2020
	Shooting Sports		Outdoor Products		Total		Shooting Sports		Outdoor Products		Total
Ammunition	$	814,481	$	—	$	814,481	$	533,981	$	—	$	533,981
Hunting and Shooting	215,187		—		215,187		179,863		—		179,863
Action Sports (1)	—		196,787		196,787		—		170,306		170,306
Outdoor Recreation (2)	—		214,917		214,917		—		170,169		170,169
Total	$	1,029,668	$	411,704	$	1,441,372	$	713,844	$	340,475	$	1,054,319
Geographic Region:
United States	$	943,427	$	291,733	$	1,235,160	$	660,127	$	266,800	$	926,927
Rest of the World	86,241		119,971		206,212		53,717		73,675		127,392
Total	$	1,029,668	$	411,704	$	1,441,372	$	713,844	$	340,475	$	1,054,319

(1) Action Sports includes the operating segments: Sports Protection and Cycling.

(2) Outdoor Recreation includes the operating segments: Hydration, Outdoor Cooking, and Golf.

Product Sales:

We recognize revenue for our products at a point in time upon the transfer of control of the products to the customer, which typically occurs upon shipment and coincides with our right to payment, the transfer of legal title, and the transfer of the significant risks and rewards of ownership of the product.

Typically, our contracts require customers to pay within 30-60 days of product delivery with a discount available to some customers for early payment. In some cases, we offer extended payment terms to customers. However, we do not consider these extended payment terms to be a significant financing component of the contract because the payment terms are less than a year.

In limited circumstances, our contract with a customer may have shipping terms that indicate a transfer of control of the products upon their arrival at the destination rather than upon shipment. In those cases, we recognize revenue only when the product reaches the customer destination, which may require us to estimate the timing of transfer of control based on the expected delivery date. In all cases, however, we consider our costs related to shipping and handling to be a cost of fulfilling the contract with the customer.

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The total amount of revenue we recognize for the sale of our products reflects various sales adjustments for discounts, returns, refunds, allowances, rebates, and other customer incentives. These sales adjustments can vary based on market conditions, customer preferences, timing of customer payments, volume of products sold, and timing of new product launches. These adjustments require management to make reasonable estimates of the amount we expect to receive from the customer. We estimate sales adjustments by customer or by product category on the basis of our historical experience with similar contracts with customers, adjusted as necessary to reflect current facts and circumstances and our expectations for the future. Sales taxes, federal excise taxes, and other similar taxes are excluded from revenue.

Incentives in the form of cash paid to the customer (or a reduction of a customer cash payment to us) typically are recognized as a reduction of sales unless the incentive is for a distinct benefit that we receive from the customer, e.g., advertising or marketing.

We pay commissions to some of our employees based on agreed-upon sales targets. We recognize the incremental costs of obtaining a contract as an expense when incurred because our sales contracts with commissions are a year or less.

7. Earnings Per Share

The computation of basic earnings per share ("EPS") is based on the weighted average number of shares that were outstanding during the period. The computation of diluted EPS is based on the number of basic weighted average shares outstanding plus the number of common shares that would be issued assuming the exercise of all potentially dilutive common shares, such as common stock to be issued upon exercise of options, contingently issuable shares and restricted stock units, using the treasury stock method.

In computing EPS for the periods presented, earnings, as reported for each respective period, is divided by the number of shares below (in thousands):

	Three months ended				Six months ended
(Amounts in thousands except per share data)	September 26, 2021		September 27, 2020		September 26, 2021		September 27, 2020
Numerator:
Net income	$	139,540	$	79,645	$	242,265	$	120,121
Denominator:
Weighted-average number of common shares outstanding basic:	57,353		58,193		57,732		58,124
Dilutive effect of share-based awards (1)	1,863		1,121		1,845		942
Diluted shares	59,216		59,314		59,577		59,066
Earnings per common share:
Basic	$	2.43	$	1.37	$	4.20	$	2.07
Diluted	$	2.36	$	1.34	$	4.07	$	2.03

(1) Potentially dilutive securities, which were not included in the computation of diluted earnings per share, because either the effect would have been anti-dilutive, or the options’ exercise prices were greater than the average market price of the common stock, were 0 and 527 for the three and six months ended September 26, 2021, respectively, and 26 and 296 for the three and six months ended September 27, 2020, respectively.

8. Receivables

Our trade account receivables are recorded at net realizable value, which includes an appropriate allowance for estimated credit losses under the expected credit loss model. We maintain an allowance for credit losses related to accounts receivable for future expected credit losses resulting from the inability or unwillingness of our customers to make required payments. We estimate the allowance based upon historical bad debts, current customer receivable balances, age of customer receivable balances and the customers' financial condition, and in relation to a representative pool of assets consisting of a large number of customers with similar risk characteristics. The allowance is adjusted as appropriate to reflect differences in current conditions as well as changes in forecasted macroeconomic conditions. Receivables that do not share risk characteristics are evaluated on an individual basis, including those associated with customers that have a higher probability of default.

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Net receivables are summarized as follows:

	September 26, 2021		March 31, 2021
Trade receivables	$	423,730	$	307,098
Other receivables	7,558		7,899
Less: allowance for estimated credit losses and discounts	(16,701)		(13,422)
Net receivables	$	414,587	$	301,575

Walmart represented 17% and 18% of our total trade receivables balance as of September 26, 2021 and March 31, 2021, respectively. No other customer represented more than 10% of our total trade receivables balance as of September 26, 2021 or March 31, 2021.

The following provides a reconciliation of the activity related to the allowance for estimated credit losses and discounts for the six months ended September 26, 2021:

Balance, March 31, 2021	$	13,422
Provision for credit losses	1,459
Write-off of uncollectible amounts, net of recoveries	(688)
Discounts and other adjustments	2,508
Balance, September 26, 2021	$	16,701

Note Receivable is summarized as follows:

	September 26, 2021		March 31, 2021
Principal	$	12,000	$	12,000
Less: unamortized discount	(2,759)		(3,189)
Note receivable, net, included within Deferred charges and other non-current assets	$	9,241	$	8,811

9. Inventories

Current net inventories consist of the following:

	September 26, 2021		March 31, 2021
Raw materials	$	155,509	$	133,970
Work in process	58,094		47,829
Finished goods	347,903		272,705
Net inventories	$	561,506	$	454,504

We consider inventories to be long-term if they are not expected to be sold within one year. Long-term inventories are presented on the balance sheet net of reserves within deferred charges and other non-current assets and totaled $11,496 and $12,226 as of September 26, 2021 and March 31, 2021, respectively.

10. Accumulated Other Comprehensive Loss (AOCL)

The components of AOCL, net of income taxes, are as follows:

	September 26, 2021		March 31, 2021
Derivatives	$	(212)	$	161
Pension and other postretirement benefits liabilities	(76,734)		(78,166)
Cumulative translation adjustment	(5,321)		(5,190)
Total AOCL	$	(82,267)	$	(83,195)

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The following tables detail the amounts reclassified from AOCL to earnings as well as the changes in derivatives, pension and other postretirement benefits, and foreign currency translation, net of income tax:

	Three months ended September 26, 2021								Six months ended September 26, 2021
	Derivatives		Pension and other postretirement benefits liabilities		Cumulative translation adjustment		Total		Derivatives		Pension and other postretirement benefits liabilities		Cumulative translation adjustment		Total
Beginning balance in AOCL	$	224	$	(77,440)	$	(4,984)	$	(82,200)	$	161	$	(78,166)	$	(5,190)	$	(83,195)
Change in fair value of derivatives	118		—		—		118		767		—		—		767
Net gains reclassified from AOCL	(554)		—		—		(554)		(1,140)		—		—		(1,140)
Net actuarial losses reclassified from AOCL (1)	—		801		—		801		—		1,599		—		1,599
Prior service costs reclassified from AOCL (1)	—		(95)		—		(95)		—		(167)		—		(167)
Net change in cumulative translation adjustment	—		—		(337)		(337)		—		—		(131)		(131)
Ending balance in AOCL	$	(212)	$	(76,734)	$	(5,321)	$	(82,267)	$	(212)	$	(76,734)	$	(5,321)	$	(82,267)

(1) Amounts related to our pension and other postretirement benefits that were reclassified from AOCL were recorded as a component of net periodic benefit cost for each period presented.

	Three months ended September 27, 2020								Six months ended September 27, 2020
	Derivatives		Pension and other postretirement benefits liabilities		Cumulative translation adjustment		Total		Derivatives		Pension and other postretirement benefits liabilities		Cumulative translation adjustment		Total
Beginning balance in AOCL	$	(445)	$	(92,463)	$	(5,866)	$	(98,774)	$	(1,426)	$	(93,353)	$	(6,215)	$	(100,994)
Change in fair value of derivatives	598		—		—		598		593		—		—		593
Net losses reclassified from AOCL	95		—		—		95		1,081						1,081
Net actuarial losses reclassified from AOCL (1)	—		970		—		970		—		1,938		—		1,938
Prior service costs reclassified from AOCL (1)	—		(79)		—		(79)		—		(157)		—		(157)
Net change in cumulative translation adjustment	—		—		160		160		—		—		509		509
Ending balance in AOCL	$	248	$	(91,572)	$	(5,706)	$	(97,030)	$	248	$	(91,572)	$	(5,706)	$	(97,030)

(1) Amounts related to our pension and other postretirement benefits that were reclassified from AOCL were recorded as a component of net periodic benefit cost for each period presented.

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11. Goodwill and Intangible Assets

Changes in the carrying value of goodwill by segment was as follows:

	Shooting Sports		Outdoor Products		Total
Balance, March 31, 2021	$	86,082	$	—	$	86,082
Acquisitions	23		11,668		11,691
Balance, September 26, 2021	$	86,105	$	11,668	$	97,773

Intangible assets by major asset class consisted of the following:

	September 26, 2021						March 31, 2021
	Gross carrying amount		Accumulated amortization		Total		Gross carrying amount		Accumulated amortization		Total
Trade names	$	63,160	$	(20,308)	$	42,852	$	49,560	$	(18,174)	$	31,386
Patented technology	16,954		(11,770)		5,184		16,954		(11,354)		5,600
Customer relationships and other	247,247		(106,770)		140,477		241,306		(98,939)		142,367
Total	327,361		(138,848)		188,513		307,820		(128,467)		179,353
Non-amortizing trade names	135,602		—		135,602		135,602		—		135,602
Net intangible assets	$	462,963	$	(138,848)	$	324,115	$	443,422	$	(128,467)	$	314,955

Amortization expense was $5,419 and $4,946 for the three months ended September 26, 2021 and September 27, 2020, respectively, and $10,417 and $9,899 for the six months ended September 26, 2021 and September 27, 2020, respectively.

As of September 26, 2021, we expect amortization expense related to these assets to be as follows:

Remainder of fiscal year 2022	$	10,670
Fiscal year 2023	21,233
Fiscal year 2024	21,181
Fiscal year 2025	21,163
Fiscal year 2026	18,153
Thereafter	96,113
Total	$	188,513

12. Other Current and Non-Current Liabilities

Other current and non-current liabilities consisted of the following:

	September 26, 2021		March 31, 2021
Accrual for in-transit inventory	$	22,478	$	24,356
Other	104,270		96,212
Total other current liabilities	$	126,748	$	120,568
Long-term portion of accrued income tax liability	$	28,295	$	23,000
Other	42,292		19,448
Total other non-current liabilities	$	70,587	$	42,448

We provide consumer warranties against manufacturing defects on certain products within the Shooting Sports and Outdoor Products segments with warranty periods ranging from one year to the expected lifetime of the product. The estimated costs of such product warranties are recorded at the time the sale is recorded based upon actual past experience, our current production environment as well as specific and identifiable warranties as applicable. The warranty liability recorded at each balance sheet date reflects the estimated liability for warranty coverage for products delivered based on historical information and current trends.

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The following is a reconciliation of the changes in our product warranty liability during the periods presented:

Balance, March 31, 2021	$	8,696
Payments made	(377)
Warranties issued	849
Changes related to pre-existing warranties and other adjustments	(229)
Balance, September 26, 2021	$	8,939

13. Long-term Debt

Long-term debt consisted of the following:	September 26, 2021		March 31, 2021
4.5% Senior Notes	$	500,000	$	500,000
Less: unamortized deferred financing costs	(4,159)		(4,436)
Carrying amount of long-term debt	$	495,841	$	495,564

Credit Agreements—In fiscal year 2021, we refinanced our 2018 ABL Revolving Credit Facility, by entering into the 2021 ABL Revolving Credit Facility, which provides for a $450,000 senior secured asset-based revolving credit facility. The amount available under the 2021 ABL Revolving Credit Facility is the lesser of the total commitment of $450,000 or a borrowing base based on percentages of eligible receivables, inventory, and cash, minus certain reserves, but, in each case, subject to the excess availability financial covenant under the 2021 ABL Revolving Credit Facility described below. As of September 26, 2021, based on the borrowing base less outstanding borrowings of $0, outstanding letters of credit of $19,200, and minimum required borrowing base of $45,000, the amount available under the 2021 ABL Revolving Credit Facility was $385,800.

The 2021 ABL Revolving Credit Facility matures on March 31, 2026 (the “Maturity Date”), subject to a customary springing maturity in respect of the 4.5% Notes due 2029 (described below). Any outstanding revolving loans under the 2021 ABL Revolving Credit Facility will be payable in full on the Maturity Date.

As of March 31, 2021, borrowings under the 2021 ABL Revolving Credit Facility bear interest at a rate equal to either the sum of a base rate plus a margin ranging from 0.25% to 0.75% or the sum of a LIBO rate plus a margin ranging from 1.25% to 1.75%. The rates vary based on our Average Excess Availability under the 2021 ABL Revolving Credit Facility. As of September 26, 2021, the margin under the 2021 ABL Revolving Credit Facility was 0.25% for base rate loans and 1.25% for LIBO rate loans. We pay a commitment fee on the unused commitments under the 2021 ABL Revolving Credit Facility of 0.175% per annum.

Debt issuance costs incurred with the refinancing of approximately $6,004, are being amortized over the remaining term of the 2021 ABL Revolving Credit Facility. The debt issuance costs associated with the 2021 ABL Revolving Credit Facility are included within other current and non-current assets.

Substantially all domestic tangible and intangible assets of Vista Outdoor and our domestic subsidiaries are pledged as collateral under the 2021 ABL Revolving Credit Facility.

4.5% Notes—In fiscal year 2021, we issued $500,000 aggregate principal amount of 4.5% Notes that mature on March 15, 2029. These notes are unsecured and senior obligations. Interest on the notes is payable semi-annually in arrears on March 15 and September 15 of each year. We have the right to redeem some or all of these notes on or after March 15, 2024 at specified redemption prices. Prior to March 15, 2024, we may redeem some or all of these notes at a price equal to 100% of their principal amount plus accrued and unpaid interest to the date of redemption and a specified make-whole premium. In addition, prior to March 15, 2024, we may redeem up to 40% of the aggregate principal amount of these notes with the net cash proceeds of certain equity offerings, at a price equal to 104.5% of their principal amount plus accrued and unpaid interest to the date of redemption. Debt issuance costs of approximately $4,481 are being amortized to interest expense over eight years, the term of the notes.

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Rank and guarantees—The 2021 ABL Revolving Credit Facility obligations are guaranteed on a secured basis, jointly and severally and fully and unconditionally by substantially all of our domestic subsidiaries. Vista Outdoor (the parent company issuer) has no independent assets or operations. We own 100% of all of these guarantor subsidiaries. The 4.5% Notes are senior unsecured obligations of Vista Outdoor and will rank equally in right of payment with any future senior unsecured indebtedness and senior in right of payment to any future subordinated indebtedness of Vista Outdoor. The 4.5% Notes are fully and unconditionally guaranteed, jointly and severally, by our existing and future domestic subsidiaries that guarantee indebtedness under our 2021 ABL Revolving Credit Facility or that incur or guarantee certain of our other indebtedness, or indebtedness of any subsidiary guarantor, in an aggregate principal amount in excess of $75,000. These guarantees are senior unsecured obligations of the applicable subsidiary guarantors. The guarantee by any subsidiary guarantor of our obligations in respect of the 4.5% Notes will be released in any of the following circumstances:

•if, as a result of the sale of its capital stock, such subsidiary guarantor ceases to be a restricted subsidiary

•if such subsidiary guarantor is designated as an “Unrestricted Subsidiary”

•upon defeasance or satisfaction and discharge of the 4.5% Notes

•if such subsidiary guarantor has been released from its guarantees of indebtedness under the 2021 ABL Revolving Credit Facility and all capital markets debt securities

Covenants

2021 ABL Revolving Credit Facility—Our 2021 ABL Revolving Credit Facility imposes restrictions on us, including limitations on our ability to pay cash dividends, incur debt or liens, redeem or repurchase Vista Outdoor stock, enter into transactions with affiliates, make investments, merge or consolidate with others or dispose of assets. The 2021 ABL Revolving Credit Facility contains a financial covenant that the Excess Availability under the 2021 ABL Revolving Credit Facility cannot fall below the greater of (a) 10% of the line cap or (b) $42,500. As a result of this financial covenant, we must maintain the greater of 10% of the line cap or $42,500 of availability in order to satisfy the financial covenant. If we do not comply with the covenants in the 2021 ABL Revolving Credit Facility, the lenders may, subject to customary cure rights, require the immediate payment of all amounts outstanding under the 2021 ABL Revolving Credit Facility. As noted above, the Excess Availability under the 2021 ABL Revolving Credit Facility was $385,800 as of September 26, 2021. Vista Outdoor has the option to increase the amount of the 2021 ABL Revolving Credit Facility in an aggregate principal amount not to exceed $150,000, to the extent that any one or more lenders, whether or not currently party to the 2021 ABL Revolving Credit Facility, commits to be a lender for such amount.

4.5% Notes—The indenture governing the 4.5% Notes contains covenants that, among other things, limit our ability to incur or permit to exist certain liens, sell, transfer or otherwise dispose of assets, consolidate, amalgamate, merge or sell all or substantially all of our assets, enter into transactions with affiliates, enter into agreements restricting our subsidiaries’ ability to pay dividends, incur additional indebtedness, pay dividends or make other distributions or repurchase or redeem our capital stock, prepay, redeem or repurchase certain debt and make loans and investments.

The 2021 ABL Revolving Credit Facility and the indenture governing the 4.5% Notes contain cross-default provisions so that noncompliance with the covenants within one debt agreement could also cause a default under another debt agreement. As of September 26, 2021, we were in compliance with the covenants of all of our debt agreements. However, we cannot provide assurance that we will be able to comply with such financial covenants in the future due to various risks and uncertainties, some of which may be beyond our control. Any failure to comply with the restrictions in the 2021 ABL Revolving Credit Facility may prevent us from drawing under the 2021 ABL Revolving Credit Facility and may result in an event of default under the 2021 ABL Revolving Credit Facility, which default may allow the creditors to accelerate the related indebtedness and the indebtedness under our 4.5% Notes and proceed against the collateral that secures such indebtedness. We may not have sufficient liquidity to repay the indebtedness in such circumstances.

Cash paid for interest on debt—Cash paid for interest on debt, for the three months ended September 26, 2021 and September 27, 2020 totaled $12,200 and $654, respectively. Cash paid for interest on debt, for the six months ended September 26, 2021 and September 27, 2020 totaled $12,200 and $7,956, respectively.

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Table of Contents

14. Employee Benefit Plans

During the three months ended September 26, 2021, we recognized an aggregate net loss of $3 for employee defined benefit plans compared to net benefit of $(22) during the three months ended September 27, 2020.

During the six months ended September 26, 2021, we recognized an aggregate net loss of $38 for employee defined benefit plans compared to net benefit of $(43) during the six months ended September 27, 2020.

Employer contributions and distributions—We made contributions of $1,300 and required contributions of $7,100 to our pension trust during the six months ended September 26, 2021 and September 27, 2020, respectively. No additional contributions are required and we are not expecting to make any contributions to our pension trust for the remainder of fiscal year 2022.

For those same periods, we made no contributions to our other postretirement benefit plans, and we made no distributions to retirees under our non-qualified supplemental executive retirement plan. No additional contributions are required, and we are not expecting to make any contributions to our other postretirement benefit plans, or directly to retirees under our non-qualified supplemental executive retirement plans for the remainder of fiscal year 2022.

15. Income Taxes

Our provision for income taxes includes federal, foreign, and state income taxes. Income tax provisions for interim periods are based on the estimated effective annual income tax rates for the current year and the year-to-date effective tax rate for the prior year.

The income tax provisions for the three months ended September 26, 2021 and September 27, 2020 represent effective tax rates of 24.5% and (14.5)%, respectively. The increase in the rate from the prior year quarter is primarily caused by the impact of the prior year quarter decrease in the valuation allowance driven by earnings and benefit of the loss carrybacks, which permitted us to realize previously valued tax assets.

The income tax provisions for the six months ended September 26, 2021 and September 27, 2020 represent effective tax rates of 24.9% and (8.1)%, respectively. The increase in the rate from the prior year period is primarily caused by the impact of the prior year period decrease in the valuation allowance driven by earnings and benefit of the loss carrybacks, which permitted us to realize previously valued tax assets.

The effective tax rate for the three and six months ended September 26, 2021 is reflective of the federal statutory rate of 21% increased by the state taxes and reserves for uncertain tax position. The effective tax rate for the three and six months ended September 27, 2020 was lower than the statutory rate because of the decreased valuation allowance and benefit of the loss carrybacks.

On February 9, 2015, we entered into a Tax Matters Agreement with Orbital ATK that governs the respective rights, responsibilities and obligations of Vista Outdoor and Orbital ATK following the distribution of all of the shares of our common stock on a pro rata basis to the holders of Alliant Techsystems Inc. common stock (the “Spin-Off”) with respect to tax liabilities and benefits, tax attributes, tax contests and other tax sharing regarding U.S. federal, state, local and foreign income taxes, other tax matters and related tax returns. We have joint and several liability with Orbital ATK to the IRS for the consolidated U.S. federal income taxes of the Orbital ATK consolidated group relating to the taxable periods in which we were part of that group. However, the Tax Matters Agreement specifies the portion, if any, of this tax liability for which we bear responsibility, and Orbital ATK agrees to indemnify us against any amounts for which we are not responsible. The Tax Matters Agreement also provides special rules for allocating tax liabilities in the event that the Spin-Off is determined not to be tax-free. Though valid between the parties, the Tax Matters Agreement is not binding on the IRS.

Prior to the Spin-Off, Orbital ATK or one of its subsidiaries filed income tax returns in the U.S. federal and various U.S. state jurisdictions that included Vista Outdoor. In addition, certain of our subsidiaries filed income tax returns in foreign jurisdictions. Since the Spin-Off, we file income tax returns in the U.S. federal, foreign and various U.S. state jurisdictions. With a few exceptions, Orbital ATK and its subsidiaries and Vista Outdoor are no longer subject to U.S. federal, state and local, or foreign income tax examinations by tax authorities prior to 2013. The IRS has completed the audits of Orbital ATK through fiscal year 2014 and is currently auditing Orbital ATK's tax return for fiscal year 2015. The IRS has also completed the audit of our tax return for the period that began after the Spin-Off (February 9, 2015) and ended on March 31, 2015. We believe appropriate provisions for all outstanding issues relating to our portion of these returns have been made for all remaining open years in all jurisdictions.

Income taxes paid, net of refunds, totaled $47,697 and $6,335 for the six months ended September 26, 2021 and September 27, 2020, respectively.

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We have filed amended income tax returns requesting total refunds of $42,193, which are reflected in our net income tax receivable of $10,898.

Although the timing and outcome of income tax audit settlements are uncertain, it is reasonably possible that a $7,479 reduction of the uncertain tax benefits will occur in the next 12 months. The settlement of these unrecognized tax benefits could result in earnings from $0 to $6,671.

16. Contingencies

Litigation

From time-to-time, we are subject to various legal proceedings, including lawsuits, which arise out of, and are incidental to, the conduct of our business. We do not consider any of such proceedings that are currently pending, individually or in the aggregate, to be material to our business or likely to result in a material adverse effect on our operating results, financial condition, or cash flows.

Environmental liabilities

Our operations and ownership or use of real property are subject to a number of federal, state, and local environmental laws and regulations, as well as applicable foreign laws and regulations, including those governing the discharge of hazardous materials, remediation of contaminated sites, and restoration of damage to the environment. We are obligated to conduct investigation and/or remediation activities at certain sites that we own or operate or formerly owned or operated.

Certain of our former subsidiaries have been identified as potentially responsible parties (“PRP”), along with other parties, in regulatory agency actions associated with hazardous waste sites. As a PRP, those former subsidiaries may be required to pay a share of the costs of the investigation and clean-up of these sites. In that event, we would be obligated to indemnify those subsidiaries for those costs. While uncertainties exist with respect to the amounts and timing of the ultimate environmental liabilities, based on currently available information, we have concluded that these matters, individually or in the aggregate, will not have a material adverse effect on our operating results, financial condition, or cash flows. We have recorded a liability for environmental remediation of $695 and $696 as of September 26, 2021 and March 31, 2021, respectively.

We could incur substantial additional costs, including cleanup costs, resource restoration, fines, and penalties or third-party property damage or personal injury claims, as a result of violations or liabilities under environmental laws or non-compliance with environmental permits. While environmental laws and regulations have not had a material adverse effect on our operating results, financial condition, or cash flows in the past, and we have environmental management programs in place to mitigate these risks, it is difficult to predict whether they will have a material impact in the future.

17. Operating Segment Information

We have seven operating segments, which have been aggregated into two reportable segments, Shooting Sports and Outdoor Products. This is consistent with how our chief operating decision maker ("CODM"), our Chief Executive Officer, allocates resources and makes decisions.

Shooting Sports is comprised of our Ammunition and Hunting and Shooting operating segments. Outdoor Products is comprised of our Sports Protection, Outdoor Cooking, Hydration, Golf, and Cycling operating segments. The operating segments comprising our respective reportable segments share numerous commonalities, including similar core consumers, distribution channels, and supply chains.

Our CODM relies on internal management reporting that analyzes consolidated results to the net income level and operating segment's EBIT, which is defined as earnings (loss) before interest and income taxes. Certain corporate-related costs and other non-recurring costs are not allocated to the segments in order to present comparable results from period to period. These include transition related-costs, merger and acquisition costs, and other non-recurring items.

Shooting Sports generated approximately 71% of our external sales in the six months ended September 26, 2021. Outdoor Products generated approximately 29% of our external sales in the six months ended September 26, 2021.

No single customer contributed 10% or more of our sales in the six months ended September 26, 2021. Walmart represented approximately 10% of our sales in the six months ended September 27, 2020.

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The following tables contain information utilized by management to evaluate our operating segments for the interim periods presented:

	Three months ended September 26, 2021								Six months ended September 26, 2021
	Shooting Sports		Outdoor Products		(a) Corporate and other reconciling items		Total		Shooting Sports		Outdoor Products		(a) Corporate and other reconciling items		Total
Sales, net	$	566,349	$	212,111	$	—	$	778,460	$	1,029,668	$	411,704	$	—	$	1,441,372
Gross Profit	239,202		59,719		—		298,921		420,530		120,202		(384)		540,348
EBIT	194,582		23,662		(27,505)		190,739		336,304		49,589		(51,498)		334,395

	Three months ended September 27, 2020								Six months ended September 27, 2020
	Shooting Sports		Outdoor Products		(a) Corporate and other reconciling items		Total		Shooting Sports		Outdoor Products		(a) Corporate and other reconciling items		Total
Sales, net	$	379,687	$	195,492	$	—	$	575,179	$	713,844	$	340,475	$	—	$	1,054,319
Gross Profit	104,983		56,907		—		161,890		189,484		97,774		—		287,258
EBIT	70,337		26,385		(21,466)		75,256		124,901		37,892		(39,494)		123,299

(a) Reconciling items for the three and six months ended September 26, 2021 included a fair value step-up in inventory allocated from the HEVI-Shot acquisition of $0 and $384 and post-acquisition compensation expense allocated from the QuietKat acquisition of $1,245 and $1,792, respectively. There were no reconciling items for the three and six months ended September 27, 2020.

Sales, net exclude all intercompany sales between Shooting Sports and Outdoor Products, which were not material for the three and six months ended September 26, 2021 and September 27, 2020.

18. Subsequent Event

Subsequent to quarter-end, we acquired Foresight Sports, a leading designer and manufacturer of golf performance analysis, entertainment, and game enhancement technologies for approximately $474,000. The purchase price includes $5,599 related to employee retention payments, which will be accounted for separately from the business combination as post combination compensation expense. Contingent payments of up to $25,000 if certain net sales targets are met will also be accounted for separately from the business combination as post combination compensation expense. We used cash on hand and available liquidity under our 2021 ABL Revolving Credit Facility to complete the transaction. The results of this business will be reported within the Outdoor Products reportable segment. Due to the timing of the transaction, purchase accounting is incomplete. During the six months ended September 26, 2021, we incurred a total of $2,058 in acquisition related costs, including legal and other professional fees, related to the acquisition, all of which were reported in selling, general, and administrative expense in the condensed consolidated statements of comprehensive income.

Subsequent to quarter-end, we acquired Fiber Energy Products, a leader in all-natural wood grilling pellets. This latest strategic transaction secures a continuous supply of pellets for our Camp Chef business and expands our revenue in a consumable category. The results of this business will be reported within the Outdoor Products reportable segment. The acquisition is not significant to our consolidated financial statements. Due to the timing of the transaction, purchase accounting is incomplete.

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ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(Amounts in thousands except per share data and unless otherwise indicated)

Forward-Looking Information is Subject to Risk and Uncertainty

Some of the statements made and information contained in this report, excluding historical information, are "forward-looking statements," including those that discuss, among other things: our plans, objectives, expectations, intentions, strategies, goals, outlook or other non-historical matters; projections with respect to future revenues, income, earnings per share or other financial measures for Vista Outdoor; and the assumptions that underlie these matters. The words "believe," "expect," "anticipate," "intend," "aim," "should" and similar expressions are intended to identify such forward-looking statements. To the extent that any such information is forward-looking, it is intended to fit within the safe harbor for forward-looking information provided by the Private Securities Litigation Reform Act of 1995. Numerous risks, uncertainties and other factors could cause our actual results to differ materially from the expectations described in such forward-looking statements, including the following:

•impacts from the COVID-19 pandemic (including the emergence and spread of coronavirus variants) on our operations, the operations of our customers and suppliers and general economic conditions;

•general economic and business conditions in the United States and our 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;

•our ability to attract and retain key personnel and maintain and grow our relationships with customers, suppliers, and other business partners, including our ability to obtain acceptable third-party licenses;

•our ability to adapt our products to changes in technology, the marketplace and customer preferences, including our ability to respond to shifting preferences of the end consumer from brick and mortar retail to online retail;

•our ability to maintain and enhance brand recognition and reputation;

•others' use of social media to disseminate negative commentary about us, our products, and boycotts;

•reductions in or unexpected changes in or our inability to accurately forecast demand for ammunition, accessories, or other outdoor sports and recreation products;

•risks associated with our sales to significant retail customers, including unexpected cancellations, delays, and other changes to purchase orders;

•supplier capacity constraints, production or shipping disruptions or quality or price issues affecting our operating costs;

•our competitive environment;

•risks associated with diversification into new international and commercial markets, including regulatory compliance;

•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 our business, such as federal and state ammunition regulations;

•our ability to realize expected benefits from acquisitions and integrate acquired businesses;

•our 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. A more detailed description of risk factors that may affect our operating results can be found in Part 1, Item 1A, Risk Factors, of our Annual Report on

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Form 10-K for fiscal year 2021 and in the filings we make with the SEC from time to time. We undertake no obligation to update any forward-looking statements, except as otherwise required by law.

Business and Products

We serve the outdoor sports and recreation markets through a diverse portfolio of well-recognized brands that provide consumers with a wide range of performance-driven, high-quality, and innovative products. Our broad range of consumers include outdoor enthusiasts, hunters and recreational shooters, athletes, as well as law enforcement and military professionals. We sell our products through a wide variety of mass, specialty and independent retailers and distributors, such as Academy, Amazon, Bass Pro Shops/Cabela's, Dick's Sporting Goods, Kiesler Police Supply, Nations Best Sports, Sports Inc., Sports South, Sportsman's Warehouse, Target, and Walmart. Some of our products are also sold directly to consumers through the relevant brand's website. We have a scalable, integrated portfolio of brands that allows us to leverage our deep customer knowledge, product development and innovation, supply chain and distribution, and sales and marketing functions across product categories to better serve our retail partners and consumers.

Operating and Reportable Segments

We operate under seven operating segments, which have been aggregated into two reportable segments, Shooting Sports and Outdoor Products. This is consistent with how our chief operating decision maker ("CODM"), our Chief Executive Officer, allocates resources and makes decisions.

•Shooting Sports generated approximately 71% of our external sales in the six months ended September 26, 2021. This segment currently designs, develops, distributes and manufactures ammunition, primers, components and related equipment and accessories and serves devoted hunters, recreational shooters, federal and local law enforcement agencies and the military. Shooting Sports is comprised of our ammunition and hunting and shooting accessories product lines. Ammunition products include pistol, rifle, rimfire, shotshell ammunition and primers. Hunting and shooting accessories products include binoculars, riflescopes, laser rangefinders, trail cameras, archery accessories, blinds, decoys, game calls, gun care products, mounts, holsters, powder, reloading equipment, targets, target systems, and accessories. Our brands include Federal, Bushnell, Remington Ammunition, Primos, Blackhawk, CCI, and more.

•Outdoor Products generated approximately 29% of our external sales in the six months ended September 26, 2021. This segment currently designs, develops, distributes and manufactures personal hydration solutions, outdoor cooking solutions, action sports helmets and goggles, footwear and cycling accessories, eBikes, audio speakers and golf GPS and laser rangefinders and serves hikers, campers, cyclists, skiers, golfers, families and a variety of other outdoor recreation participants. Our brands include CamelBak, Camp Chef, Bell, Giro, Bushnell Golf, Blackburn, KRASH!, Copilot, Raskullz, QuietKat, Venor, and more. Outdoor Products is comprised of sports protection, outdoor cooking, golf, hydration, and cycling product lines.

Business Strategy

In fiscal year 2021, we built upon the capabilities developed during the first two years of our strategic transformation, with an additional emphasis on driving long-term, profitable organic sales growth. Vista Outdoor has implemented plans under each of its five strategic pillars to deliver long-term, sustainable, profitable growth and continued cash generation, solidifying our position as the outdoor sports and recreation market leader.

The pandemic accelerated many consumer trends that favored our business, and we believe that these trends will fuel long-term success in fiscal year 2022 and beyond. To achieve this long-term success, we remain relentlessly focused on the following five strategic pillars, which define our key priorities and investment focus areas:

1.    Talent and Culture—Invest in talent and foster our culture of agility, efficiency, and innovation while focusing on diversity and inclusion in hiring, marketing, and product development.

2.    Organic Growth—Identify and capture opportunities for organic growth and market share expansion by:

a.allocating capital to our brands to aid in their development of new and innovative products that serve the needs and preferences of their core consumers; and

b.leveraging and expanding our distribution channels to expand the commercial presence of all of our brands and efficiently deliver product to meet consumer demand and shopping behavior.

3.    Centers of Excellence—Leverage our shared resources, expertise and scale to achieve a level of excellence that would be out of reach for our individual brands, with a focus on:

a.operational excellence to improve margins, supply chain resiliency, and agility;

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b.e-commerce, direct-to-consumer, and digital marketing capabilities;

c.acquisition target selection, deal execution, and integration.

4.    Acquisitions—Acquire complementary businesses that we can take to the next level in terms of sales and profitability.

5.    Capital Allocation—Maintain a conservative balance sheet, healthy margins and strong cash flow generation to provide financial flexibility and enable us to thrive and grow at all points in the market demand cycle while driving shareholder value.

Executive Summary

We had a strong performance for the second quarter of fiscal year 2022. Financial highlights and notable events for the three months ended September 26, 2021 included the following:

•Net sales increased $203,281, or 35.3%, over the comparable quarter last year.

◦ Shooting Sports net sales increased $186,662, or 49.2%.

◦ Outdoor Products net sales increased $16,619, or 8.5%.

•Gross profit increased $137,031, or 84.6%, as compared to the comparable quarter last year. Gross profit margin increased to 38.4 percent, an increase of 1,025 basis points over the comparable quarter last year.

◦ Shooting Sports gross profit increased $134,219, or 127.8%.

◦ Outdoor Products gross profit increased $2,812, or 4.9%.

•EBIT increased $115,483, or 153.5%, for the three months ended September 26, 2021 as compared to the three months ended September 27, 2020. EBIT margin increased to 24.5%, an increase of 1,142 basis points over the comparable quarter last year.

•Net income was $139,540, or $2.36 per diluted share, compared to net income of $79,645, or $1.34 per diluted share for the comparable quarter last year.

•We repurchased 311 shares for the three months ended September 26, 2021 under our share repurchase program, which was adopted on May 6, 2021. See Part II, Item 2, Unregistered Sales of Equity Securities and Use of Proceeds.

•Subsequent to quarter-end, we acquired Foresight Sports, a leading designer and manufacturer of golf performance analysis, entertainment, and game enhancement technologies. See Note 18, Subsequent Event, to the unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q, which is incorporated herein by this reference.

We believe that long-term participation trends support our expectation of continued increased demand for our outdoor recreation and hunting and shooting-sports related products. Participation rates in fiscal year 2022 have remained strong, and we are seeing an expanded and more diverse demographic of users in all categories. We expect to see continued increases in participation as consumers continue to look to local outdoor activities as a substitute for travel and other competing pursuits impacted by the COVID-19 pandemic. We believe that we are well-positioned to succeed and continue to capitalize on this demand given our scale, operating expertise, and strong balance sheet. Following significant investments in our brands’ e-commerce capabilities, both directly and through our E-Commerce Center of Excellence, our brands are also well-positioned to benefit from the ongoing shift in consumer shopping behavior to utilize online channels.

Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is intended to provide a reader of our financial statements with a narrative from the perspective of our management on results of operations, our financial condition, liquidity, and certain other factors that may affect our future results. The following information should be read in conjunction with our Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q.

Results of Operations

Segment results for the three and six months ended September 26, 2021 compared to the three and six months ended September 27, 2020.

The Company’s net sales, gross profit, and EBIT by reporting segment and by corporate and other (where applicable) are presented below (dollars in thousands):

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	Three months ended				Change				Six months ended				Change
Net Sales:	September 26, 2021		September 27, 2020		Dollars		Percent		September 26, 2021		September 27, 2020		Dollars		Percent
Shooting Sports	$	566,349	$	379,687	$	186,662	49.2	%	$	1,029,668	$	713,844	$	315,824	44.2	%
Outdoor Products	212,111		195,492		16,619		8.5	%	411,704		340,475		71,229		20.9	%
Total net sales	$	778,460	$	575,179	$	203,281	35.3	%	$	1,441,372	$	1,054,319	$	387,053	36.7	%

Three months ended

Shooting Sports— The fiscal year 2022 period includes sales from acquisitions that occurred in the third and fourth quarters of the prior fiscal year. The increase also reflects improved pricing and strong demand in the market across our Ammunition and Hunting and Shooting categories. These increases were partially offset by a reduction of small rifle ammunition sales due to reduced supply from the Lake City Army Ammunition Plant.

Outdoor Products— The increase in sales was driven by continued demand in our Hydration, Golf, and Action Sports businesses and included sales attributable to QuietKat, which we acquired in the first quarter of the current fiscal year.

Six months ended

Shooting Sports— The fiscal year 2022 period includes sales from acquisitions that occurred in the third and fourth quarters of the prior fiscal year. The increase also reflects improved pricing and strong demand in the market across our Ammunition and Hunting and Shooting categories. These increases were partially offset by a reduction of small rifle ammunition sales due to reduced supply from the Lake City Army Ammunition Plant.

Outdoor Products— The increase in sales was driven by continued demand in the market for most of our categories, and was not restricted by retail store closures that impacted the prior year. In addition, the fiscal year 2022 period includes sales attributable to QuietKat, which we acquired in the first quarter of the current fiscal year.

	Three months ended				Change				Six months ended				Change
Gross Profit:	September 26, 2021		September 27, 2020		Dollars		Percent		September 26, 2021		September 27, 2020		Dollars		Percent
Shooting Sports	$	239,202	$	104,983	$	134,219	127.8	%	$	420,530	$	189,484	$	231,046	121.9	%
Outdoor Products	59,719		56,907		2,812		4.9	%	120,202		97,774		22,428		22.9	%
Corporate and other	—		—		—		—	%	(384)		$	—	(384)		—	%
Total gross profit	$	298,921	$	161,890	$	137,031	84.6	%	$	540,348	$	287,258	$	253,090	88.1	%
Gross profit margin	38.4%		28.1%						37.5%		27.2%

Three months ended

Shooting Sports—The fiscal year 2022 period gross profit includes profits from acquisitions that occurred in the third and fourth quarters of the prior fiscal year. The increase also reflects improved pricing, sales volume and operating efficiencies. These increases were partially offset by increased commodity and input costs. Gross profit margin was 42.2% compared to 27.6% in the prior year.

Outdoor Products—The increase in our gross profit was primarily driven by sales volume and operating efficiencies, partially offset by higher logistics costs and sales channel mix. Gross profit margin was 28.2% compared to 29.1% in the prior year.

Six months ended

Shooting Sports—The fiscal year 2022 period gross profit includes profits from acquisitions that occurred in the third and fourth quarters of the prior fiscal year. The increase also reflects improved pricing, sales volume and operating efficiencies. These increases were partially offset by increased commodity and input costs. Gross profit margin was 40.8% compared to 26.5% in the prior year.

Outdoor Products—The increase in our gross profit was primarily driven by sales volume and operating efficiencies, partially offset by higher logistics costs and sales channel mix. Gross profit margin was 29.2% compared to 28.7% in the prior year.

Corporate and Other—The decrease in corporate gross profit was due to inventory step-up expenses during the current year.

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	Three months ended				Change				Six months ended				Change
EBIT:	September 26, 2021		September 27, 2020		Dollars		Percent		September 26, 2021		September 27, 2020		Dollars		Percent
Shooting Sports	$	194,582	$	70,337	$	124,245	176.6	%	$	336,304	$	124,901	$	211,403	169.3	%
Outdoor Products	23,662		26,385		(2,723)		(10.3)	%	49,589		37,892		11,697		30.9	%
Corporate and other	(27,505)		(21,466)		(6,039)		(28.1)	%	(51,498)		(39,494)		(12,004)		(30.4)	%
Total EBIT	$	190,739	$	75,256	$	115,483	153.5	%	$	334,395	$	123,299	$	211,096	171.2	%
EBIT margin	24.5%		13.1%						23.2%		11.7%

Three months ended

Shooting Sports—The increase in EBIT was primarily driven by the increase in gross profit, partially offset by higher selling, general, and administrative expenses from acquisitions and higher selling and marketing expenses to support increased sales. EBIT margin was 34.4% compared to 18.5% in the prior year.

Outdoor Products—The decrease in EBIT was primarily driven by higher selling, general, and administrative expenses from the current year acquisitions and higher selling and marketing expenses to support increased sales. These were partially offset by the gross profit increase. EBIT margin was 11.2% compared to 13.5% in the prior year.

Corporate and Other—The decrease in EBIT was primarily driven by higher share-based and incentive compensation expense, higher post-acquisition compensation in the current year, and investments in human capital which support our centers of excellence.

Six months ended

Shooting Sports—The increase in EBIT was primarily driven by the gross profit, partially offset by higher selling, general, and administrative expenses from acquisitions and higher selling and marketing expenses to support increased sales. EBIT margin was 32.7% compared to 17.5% in the prior year.

Outdoor Products—The increase in EBIT was primarily driven by the gross profit increase, partially offset by higher selling, general, and administrative expenses from the current year acquisitions and higher selling and marketing expenses to support increased sales. EBIT margin was 12.0% compared to 11.1% in the prior year.

Corporate and Other—The decrease in EBIT was primarily driven by higher share-based and incentive compensation expense, higher post-acquisition compensation and transaction costs in the current year, and investments in human capital which support our centers of excellence.

	Three months ended				Change				Six months ended				Change
Interest expense, net:	September 26, 2021		September 27, 2020		Dollars		Percent		September 26, 2021		September 27, 2020		Dollars		Percent
Corporate and other	$	5,929	$	5,715	$	214	3.7	%	$	11,607	$	12,133	$	(526)	(4.3)	%

For the three months ended September 26, 2021, the increase in interest expense is due to our higher average debt balance, offset by a reduction in our interest rate on the 4.5% Notes. For the six months ended September 26, 2021, the decrease in our interest expense is due to a reduction in our interest rate on the 4.5% Notes.

	Three months ended										Six months ended
Income tax provision:	September 26, 2021		Effective Rate		September 27, 2020		Effective Rate		$ Change		September 26, 2021		Effective Rate		September 27, 2020		Effective Rate		$ Change
Corporate and other	$	(45,270)	24.5	%	$	10,104	(14.5)	%	$	(55,374)	$	(80,523)	24.9	%	$	8,955	(8.1)	%	$	(89,478)

See Note 15, Income Taxes, to the unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for information regarding income taxes.

The increase in the effective rate for both the three and six months ended September 26, 2021 in relation to the comparable prior year periods is primarily caused by the impact of the prior year decrease in the valuation allowance driven by earnings and benefit of the loss carrybacks, which permitted us to realize previously valued tax assets.

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Financial condition

Cash increased to $265,301 at September 26, 2021 from $52,956 of cash and restricted cash at September 27, 2020, primarily due to increases in cash provided by operating activities and proceeds from long-term debt during the last twelve months, partially offset by cash paid for acquisitions, capital expenditures and the repurchase of shares.

Operating Activities

Cash provided by operating activities decreased $92,645 in the six months ended September 26, 2021 compared to the prior year period. Increases in inventory purchases, accounts receivable due to higher sales volume, and the timing of income tax payments, were partially offset by increased net income.

Investing Activities

Cash used for investing activities increased $13,279 for the six months ended September 26, 2021 compared to the prior-year period. The current period cash usage was driven by the acquisition of businesses and increased capital expenditures.

Financing Activities

Cash used for financing activities decreased by $106,622 for the six months ended September 26, 2021 compared to the prior year period. The decrease is due to a reduction in net debt payments, partially offset by the repurchase of approximately 1.5 million shares for $56,239 during fiscal year 2022.

Liquidity and Capital Resources

We manage our business to maximize operating cash flows as the primary source of liquidity. In addition to cash on hand and cash generated by operations, our sources of liquidity include committed credit facilities and access to the public debt and equity markets. We use our cash primarily to fund investments in our existing businesses and for debt payments, acquisitions, and other activities.

In addition to our normal operating cash requirements, our principal future cash requirements will be to fund capital expenditures, debt repayments, employee benefit obligations, share repurchases, and any strategic acquisitions. Our short-term cash requirements for operations are expected to consist mainly of capital expenditures to maintain production facilities and working capital requirements. Our debt service requirements over the next two years consist of required interest payments due under our 4.5% Notes and 2021 ABL Revolving Credit Facility. As of September 26, 2021, there is $43,761 remaining under our $100,000 2021 Share Repurchase Program, which we intend to fund through the first fiscal quarter of 2024. This amount is currently well below the covenants in our 2021 ABL Revolving Credit Facility that limit our share repurchases.

Based on our current financial condition, management believes that our cash position, combined with anticipated generation of cash flows and the availability of funding, if needed, under our 2021 ABL Revolving Credit Facility, access to debt and equity markets, as well as other potential sources of funding including additional bank financing, will be adequate to fund future growth to service our currently anticipated long-term debt and pension obligations, make capital expenditures over the next 12 months and fund the 2021 Share Repurchase Program. As of September 26, 2021, based on the borrowing base less outstanding borrowings of $0, outstanding letters of credit of $19,200, and minimum required borrowing base of $45,000, the amount available under the 2021 ABL Revolving Credit Facility was $385,800. Our total debt as a percentage of total capitalization (total debt and stockholders' equity) was 34.8% as of September 26, 2021. Subsequent to quarter end, we partially funded the acquisition of Foresight with $250,000 in borrowings from the ABL Revolving Credit Facility. See Note 18, Subsequent Event, to the unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q, which is incorporated herein by this reference.

There can be no assurance that the cost or availability of future borrowings, if any, will not be materially impacted by capital market conditions, including any disruptions to capital markets as a result of the COVID-19 pandemic (including the emergence and spread of coronavirus variants), or our future financial condition and performance. Furthermore, because our 2021 ABL Revolving Credit Facility is secured in large part by receivables from our customers, a sustained deterioration in general economic conditions as a result of the COVID-19 pandemic (including the emergence and spread of coronavirus variants) that adversely affects the creditworthiness of our customers could have a negative effect on our future available liquidity under the 2021 ABL Revolving Credit Facility.

Additional information about our 2021 ABL Revolving Credit Facility, and long-term debt is presented in Note 13, Long-term Debt, to the unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q, which is incorporated herein by this reference.

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Contractual Obligations and Commitments

The Company leases certain warehouse, distribution and office facilities, vehicles and office equipment under operating leases. As of September 26, 2021, current and long-term operating lease liabilities of $11,277 and $78,126, respectively, were recorded in the accompanying unaudited condensed consolidated balance sheets. For further discussion on minimum lease payment obligations, see Note 3, Leases, to the unaudited condensed consolidated financial statements in Part I, Item 1 of this report.

There have been no material changes with respect to the contractual obligations and commitments or off-balance sheet arrangements described in our Annual Report on Form 10-K for fiscal year 2021.

Contingencies

Litigation

From time-to-time, we are subject to various legal proceedings, including lawsuits, which arise out of and are incidental to, the conduct of our business. We do not consider any of such proceedings that are currently pending, individually or in the aggregate, to be material to our business or likely to result in a material adverse effect on our operating results, financial condition, or cash flows.

Environmental Liabilities

Our operations and ownership or use of real property are subject to a number of federal, state, and local environmental laws and regulations, as well as applicable foreign laws and regulations, including those governing the discharge of hazardous materials, remediation of contaminated sites, and restoration of damage to the environment. We are obligated to conduct investigations and/or remediation activities at certain sites that we own or operate or formerly owned or operated.

Certain of our former subsidiaries have been identified as potentially responsible parties ("PRPs"), along with other parties, in regulatory agency actions associated with hazardous waste sites. As a PRP, those former subsidiaries may be required to pay a share of the costs of the investigation and clean-up of these sites. In that event, we would be obligated to indemnify those subsidiaries for those costs. While uncertainties exist with respect to the amounts and timing of the ultimate environmental liabilities, based on currently available information, we do not currently expect that these potential liabilities, individually or in the aggregate, will have a material adverse effect on our operating results, financial condition, or cash flows.

We could incur substantial additional costs, including cleanup costs, resource restoration, fines, and penalties or third-party property damage or personal injury claims, as a result of violations or liabilities under environmental laws or non-compliance with environmental permits. While environmental laws and regulations have not had a material adverse effect on our operating results, financial condition, or cash flows in the past, and we have environmental management programs in place to mitigate these risks, it is difficult to predict whether they will have a material impact in the future.

Critical Accounting Policies and Estimates

There have been no changes to our critical accounting policies and estimates from the information provided in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” included in our Annual Report on Form 10-K for fiscal year 2021, except for our adoption of the Accounting Standards Updates ("ASU") No 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes" and No 2020-06, "Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity's Own Equity" which both became effective as of April 1, 2021. For further discussion on the adoption of new accounting standards please see Note 1, Significant Accounting Policies, to the unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Dependence on Key Customers; Concentration of Credit

No single customer contributed 10% or more of our sales in the six months ended September 26, 2021. Walmart represented approximately 10% of our sales in the six months ended September 27, 2020.

If a key customer fails to meet payment obligations, our operating results and financial condition could be adversely affected.

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Inflation and Commodity Price Risk

In management’s opinion, inflation has not had a significant impact upon the results of our operations. However, we have been impacted by changes in the prices of raw materials used in production as well as changes in oil and energy costs. In particular, the prices of commodity metals, such as copper, zinc, and lead continue to be volatile. These prices generally impact our Shooting Sports Segment. See Note 5, Derivative Financial Instruments, to the unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information.

We have a strategic sourcing, pricing and hedging strategy to mitigate risk from commodity price fluctuation. We will continue to evaluate the need for future price changes in light of these trends, our competitive landscape, and our financial results. If our sourcing and pricing strategy is unable to offset impacts of the commodity price fluctuations, our future results from operations and cash flows would be materially impacted.

ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risks relating to our operations result primarily from changes in interest rates, commodity prices, and foreign currency exchange rates. Our market risks at September 26, 2021 are similar to those disclosed in our Annual Report on Form 10-K for fiscal year 2021. The information concerning market risk set forth in Part II, Item 7A. of our Annual Report on Form 10-K for fiscal year 2021, as filed with the SEC on May 20, 2021, under the caption "Quantitative and Qualitative Disclosures About Market Risk," is hereby incorporated by reference into this Quarterly Report on Form 10-Q.

ITEM 4.    CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

As of September 26, 2021, our Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) and have concluded that our disclosure controls and procedures are effective to ensure that information we are required to disclose in reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. These disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in the reports we file or submit is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

During the six months ended September 26, 2021, there were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II—OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time, we are subject to various legal proceedings, including lawsuits, which arise out of, and are incidental to, the conduct of our business. We do not consider any of such proceedings that are currently pending, individually or in the aggregate, to be material to our business or likely to result in a material adverse effect on our operating results, financial condition, or cash flows.

Certain of our former subsidiaries have been identified as PRPs, along with other parties, in regulatory agency actions associated with hazardous waste sites. As a PRP, those former subsidiaries may be required to pay a share of the costs of the investigation and clean-up of these sites. In that event, we would be obligated to indemnify those subsidiaries for those costs. While uncertainties exist with respect to the amounts and timing of our ultimate environmental liabilities, based on currently available information, we do not currently expect that these matters, individually or in the aggregate, will have a material adverse effect on our operating results, financial condition, or cash flows.

ITEM 1A. RISK FACTORS

While we attempt to identify, manage and mitigate risks and uncertainties associated with our business, some level of risk and uncertainty will always be present. Item 1A of Part I of our Annual Report on Form 10-K for the fiscal year ended March 31, 2021 describes the known material risks and uncertainties associated with our business. These risks and uncertainties have the potential to materially affect our business, financial condition, results of operations, cash flows, projected results, and future prospects. There have been no material changes to the Risk Factors disclosed in our Annual Report on Form 10-K for the fiscal year ended March 31, 2021.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS (Amount in thousands except price per share)

On May 6, 2021, we announced that the Board of Directors authorized a share repurchase program (the "2021 Share Repurchase Program") pursuant to which we may repurchase up to $100,000 of our common stock. The 2021 Share Repurchase Program expires on May 3, 2023.

Period	Total number of shares repurchased (1)	Average price paid per share (1)		Total number of shares repurchased as part of publicly announced plan or program	Maximum number of shares that may yet be repurchased under the plan or program (2)
June 28, 2021 - July 25, 2021	126	$	38.88	126
July 26, 2021 - August 22, 2021	185	$	38.40	185
August 23, 2021 - September 26, 2021	—	$	—	—
Fiscal Quarter Ended September 26, 2021	311	$	38.60	311	1,052

(1) Included in the total number of shares repurchased and average price paid per share is 1 share withheld to pay taxes upon vesting of shares of restricted stock or payment of performance shares that were granted under our incentive compensation plans.

(2) Since the May 6, 2021 inception of the program through September 26, 2021, we repurchased 1,524 shares for $56,239. The shares were purchased from time to time in open market, block purchase, or negotiated transactions, subject to compliance with applicable laws and regulations. The repurchase authorization also allowed the Company to make repurchases under Rule 10b5-1 of the Securities Exchange Act of 1934. The maximum number of shares that may yet be repurchased under the program was calculated using the Vista Outdoor closing stock price of $41.61 per share on September 24, 2021.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

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ITEM 6. EXHIBITS

Exhibit Number	Description of Exhibit (and document from which incorporated by reference, if applicable)
2.1*+	Tax Matters Agreement, dated as of February 9, 2015, among Alliant Techsystems Inc. and Vista Outdoor Inc. (Exhibit 2.5 to Vista Outdoor Inc.’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on February 10, 2014).
2.2*+	Stock Purchase Agreement, dated as of July 5, 2019, by and among Vista Outdoor Operations LLC, Caliber Company, Long Range Acquisition LLC, and Vista Outdoor Inc. (Exhibit 2.1 to Vista Outdoor Inc.’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on July 8, 2019).
2.3*+	Stock Purchase Agreement, dated as of September 9, 2021, by and among Vista Outdoor Inc., the Seller Guarantors named therein, the Sellers named therein, WAWGD, Inc. (d/b/a Foresight Sports, Inc.), WAWGD NEWCO, Inc., and Fortis Advisors LLC, as Seller Representative
3.1*	Amended and Restated Certificate of Incorporation of Vista Outdoor Inc. (Exhibit 3.1 to Vista Outdoor Inc.’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on February 10, 2014).
3.2*	Certificate of Amendment to Vista Outdoor Inc. Amended and Restated Certificate of Incorporation (Exhibit 3.1 to Vista Outdoor Inc.’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on August 10, 2018).
3.3*	Vista Outdoor Inc. Amended and Restated Bylaws (Exhibit 3.2 to Vista Outdoor Inc.’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on August 10, 2018).
4.1*	Specimen Common Stock Certificate of Vista Outdoor Inc. (Exhibit 4.1 to Vista Outdoor Inc.’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on February 10, 2014).
4.2*	Description of Common Stock (Exhibit 4.7 to Vista Outdoor Inc.’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on May 23, 2019).
4.3	Indenture, dated as of March 3, 2021, among Vista Outdoor Inc., the subsidiaries of Vista Outdoor Inc. party thereto and The Bank of New York Mellon Trust Company, N.A., as trustee (Exhibit 4.1 to Vista Outdoor Inc.’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on March 3, 2021).
4.4	Supplemental Indenture, dated as of March 3, 2021, among Vista Outdoor Inc., the subsidiaries of Vista Outdoor Inc. party thereto and The Bank of New York Mellon Trust Company, N.A., as trustee (Exhibit 4.2 to Vista Outdoor Inc.’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on March 3, 2021).
4.5	Form of 4.500% Senior Note due 2029 (included as Exhibit A to the Supplemental Indenture filed as Exhibit 4.2) (Exhibit 4.3 to Vista Outdoor Inc.’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on March 3, 2021).
31.1	Certification of Principal Executive Officer.
31.2	Certification of Principal Financial Officer.
32	Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	The following financial statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 26, 2021, formatted in Inline Extensible Business Reporting Language (iXBRL): (i) /Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Comprehensive Income (Loss), (iii) Condensed Consolidated Statements of Cash Flows, (iv) Condensed Consolidated Statements of Stockholders’ Equity, and (v) Notes to the Condensed Consolidated Financial Statements, tagged as blocks of text and including detailed tags.
104	The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 26, 2021, formatted in Inline Extensible Business Reporting Language (iXBRL) (included as Exhibit 101).

* Incorporated by reference.

+ Schedules to exhibits have been omitted from this filing pursuant to Item 601(b)(2) of Regulation S-K. Vista Outdoor agrees to furnish supplementally a copy of any omitted schedules to the SEC upon its request; provided, however, that we may request confidential treatment pursuant to Rule 24b-2 of the Exchange Act for any document so furnished.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

			VISTA OUTDOOR INC.
Date:	November 4, 2021	By:	/s/ Sudhanshu Priyadarshi
		Name:	Sudhanshu Priyadarshi
		Title:	Senior Vice President and Chief Financial Officer
			(On behalf of the Registrant and as Principal Financial Officer)

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