Michael Pici - Director, Investor Relations Mark DeYoung - Chairman and CEO Steve Nolan - Senior Vice President and CFO.

Greg Konrad - Jefferies Steve Cahall - Royal Bank of Canada Jay Sole - Morgan Stanley Brian Ruttenbur - BB&T Jim Chartier - Monness, Crespi and Hardt.

Good day. And welcome to the Vista Outdoor Q1 Fiscal Year 2016 Earnings Conference Call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Mr. Michael Pici, Director of Investor Relations. Please go ahead, sir..

Thank you. Good morning. And thank you for joining us for our first quarter fiscal year 2016 earnings call. With me this morning are Mark DeYoung, Vista Outdoor, Chairman and Chief Executive Officer; and Steve Nolan, Senior Vice President and Chief Financial Officer.

Before we begin, I would like to remind that during today’s call we will be making several forward-looking statement and we make these statements under the Safe Harbor provisions of the Private Securities Litigation Reform Act.

These forward-looking statements reflect our best estimates and assumptions, based on our understanding of the information known to us today. These forward-looking statements are subject to the risks and uncertainties that faced Vista Outdoor and the industries in which we operate.

We encourage you to review today’s press release and Vista Outdoor’s SEC filings for more information on these risk factors and uncertainties. Please also note that we have posted presentation materials on our website at vistaoutdoor.com, which supplement our comments this morning and include a reconciliation of non-GAAP financial measures.

With that said, I will turn the call over to you Mark..

All right. Great Michael. Good morning, everyone. Thanks for joining us on the call. We appreciate it. This is our first quarter earnings call for Vista Outdoor reflecting our first full quarter as a standalone company. This morning we will discuss our performance for this quarter in FY 2016 and we will provide updated guidance for the full year.

Stephen Nolan will provide more color on our financial results. However, I am pleased to report that the company delivered solid quarter in line with our previously communicated expectations.

While the revenue for the recent quarter is as expected lower than the same period a year ago due to shooting sports market correction, we delivered strong sequential quarter-over-quarter growth. In addition, we see several indicators that support our expectations for low single-digit organic growth for the full fiscal year.

In particularly, we recently seen very strong mixed jack volumes, improved period-to-period excise tax data and as a result, a continued strong demand for our rimfire ammunition, we implemented a modest price increase for rimfire ammunition in July.

We delivered outstanding safety performance and our environmental stewardship was excellent at all locations. We continue to drive operational efficiencies and continuous improvement in our supply chain, in our manufacturing operations and in our back-office support services.

While delivering a strong quarter, the Vista Outdoor team closed on two very strategic acquisitions for the company. In line with our strategy to expand in the complementary and adjacent markets, serving the individual outdoor recreation consumer and deliver long-term shareholder value.

The Jimmy Styks and CamelBak transactions, which were both completed within the last three weeks support our vision to be the premier provider of individual outdoor recreation products. We acquired Jimmy Styks on July 20th and this new brand provides Vista Outdoor access into the water sports market.

Jimmy Styks is a leading provider of stand up paddleboards and delivers innovative designs and solutions for a number of water activities, ranging from personal fitness to wave riding to fishing.

This acquisition represents opportunities from new product development, channel expansion and increased distribution capabilities, as well as future international growth. Jimmy Styks is a well-respected brand and it’s portfolio of over 30 SKUs serves a fast-growing stand up paddleboard market.

The brand will be part of our Vista Outdoor segment, maintain its operations in Huntington Beach, California. We paid $40 million in cash for Jimmy Styks, which represents an approximate 5.5 times multiple on our expected 2015 calendar year EBITDA.

We've also put in place additional contingent consideration that is payable over the next three years if certain profitability growth milestones are achieved.

The founders of Jimmy Styks, both Kyle Reeves and Jeremy Wilkens remain with Vista Outdoor, and we know benefit greatly from their knowledge of the standup paddleboard market and our innovative approach to product development. Last week we also completed the acquisition of CamelBak, just prior to the Outdoor Retailer Show in Salt Lake City.

CamelBak is a highly recognized and well-respected brand in the outdoor recreation industry. This acquisition also presents the strategic opportunity for Vista Outdoor to enter markets where we’ve not typically participated.

The CamelBak acquisition increases the scale and reach of our current portfolio, creates numerous cross-selling opportunities and increase its channel presence and access in domestic and in international markets. CamelBak is the leading provider of personal hydration solutions for recreation and also for military use.

Last week I was able to participate with CamelBak in customer meetings during the Outdoor Retailer Show in Salt Lake City and it’s apparent that this brand will help advance our strategy of growth and expand our leadership position in the outdoor recreation industry. I'm excited about CamelBak’s innovative products.

They have a highly skilled employee workforce and I appreciate their go-to-market strategies. Sally McCoy, who is CamelBak CEO will continue to lead that business and support Vista Outdoor as we execute our strategy to expand and create value in a $63 billion domestic outdoor recreation market and an even larger global outdoor recreation market.

CamelBak is headquartered in Petaluma, California, and will remain there. We paid $412 million and $1.5 million for CamelBak using cash on hand and borrowings from our existing credit facilities. The purchase price included future tax benefits that have net present value approximately $35 million.

The purchase price net of the tax asset, represents a resulting effective multiple of approximately 11 times CamelBak’s expected calendar year 2015 EBITDA. I have asked Stephen Nolan to expand more on our financing approach for both acquisitions in a few minutes. Integration efforts have already begun for both acquisitions.

Vista Outdoor has a strong acquisition pipeline and will continue to strategically pursue opportunities where we can increase value and strengthen our leading product portfolio.

This morning we announced some updated guidance, which reflects the two acquisitions, both of which are expected to be accretive in FY16 EPS absent the one-time transaction and transition costs. We also finalized the lease for our new worldwide corporate headquarters in Farmington this past week and construction has already begun.

We anticipate moving into the new facility mid-next year and we continue to make good progress under the transition services agreement with Orbital ATK. In fact, in most areas we are already operating on a completely standalone basis and most of the remaining activity will transition to Vista Outdoor by the end of this calendar year.

Our investment in new product innovation continues across all of our product areas and in both segments of the company. We’ve launched the Legend series line of binoculars from Bushnell, which has been very well received by our customers and by end-users and consumers, including receiving Outdoor Life magazine’s Great Buy Award this year.

Our Serengeti convertible collection of sunglasses won Australia's 2015 ODMA Awards of Excellence in the category of men’s eyewear and the Bushnell Golf Tour-X Rangefinder has won numerous accolades in several high-profile magazine articles included in magazines like Forbes, Maxim and Golf Digest.

Vista Outdoor vision and strategy has been well received by the investment community, our customers, community partners and our employees. The entire Vista Outdoor team is deserving in the recent Ernst & Young Entrepreneur of the Year Award in the Utah region for retail and consumer products.

And I’m very proud what our employees have done as we have stood up, Vista launched our strategy and had very first execution in this first full quarter. With that great accomplishments, the team has a great tenacity for success and for delivering long-term shareholder value.

We continue to deliver on our commitments to efficiency and safety and being a wise environmental steward. Next we will publish our annual corporate social responsibility report. This report reflects our commitment to be a strong community partner focused on conservation, safety, education and support of military members and their families.

The acquisition of brands like Jimmy Styks and CamelBak support our mission to bring the world outside, expand our leadership position, attract new customers and introduce Vista Outdoor products and brands to new consumers.

The execution of our strategy during the first quarter demonstrates our commitment to our shareholders, our customers and our employees. And I look forward to sharing more success with you in the coming quarters.

Steven will now take a minute and walk through additional details in the financial results for the first quarter and walk through the updated outlook for FY ‘16. Steven..

Thank you, Mark. Good morning everyone and thank you for joining the call. To assist you in your understanding of the underlying numbers and to assist in comparison to prior period, we disclosed both as reported and adjusted results in our press release.

We have also posted a more detailed financial presentation of our first quarter FY ‘16 performance on the website. I will start by commenting on the overall Vista Outdoor adjusted results and then add some more drivers as I talk about the segment results.

The company achieved first quarter sales of $514 million, down 9% from the prior-year quarter but up 6% on a sequential basis. The year-over-year decrease is in line with our previously communicated expectation of organic decline resulting from the shooting sports market correction offset by a sales increase in outdoor product.

Outdoor product sales would be even higher, were it not for an unfavorable impact from foreign exchange. First quarter gross profit was $139 million compared to $143 million in the prior-year quarter. This represents 13% sequential growth over Q4 fiscal ‘15.

The year-over-year decrease resulted primarily from decreased sales, largely offset by improved product mix and operating efficiencies. Our operating expense for the first quarter were $80 million compared to $69 million in the prior-year quarter.

The increase reflects standalone company costs, stock-based compensation, additional selling and marketing investments and a portion of the $10 million in one-time expenses that we disclosed in our last earnings call.

We previously communicated that we would complete our facility rationalization planned at the BLACKHAWK! facility in Meridian Idaho in the first quarter. However, we slowed the exit process of bid to make sure that there weren’t any disruption to our customers.

As a result, we didn’t exit the facility early in the second quarter and therefore we will report all of the estimated $2 million expense in the second quarter rather than in the first quarter as we had initially anticipated.

We reported operating profit of $16 million in the first quarter and approximately $15 million or 20% decrease in prior-year period. The decrease was a result of the reduced sales and increased operating expense that I have just discussed. Interest expense for the quarter was $3 million compared to $9 million in the prior year period.

Interest expense in the prior year period was an allocation to Vista Outdoor from ATK while our current period interest expense reflects actual interest on our $350 million term loan. The tax rate for the quarter was 39.9% compared to 37.5% in the prior-year quarter.

The higher tax rate is due primarily to a one-time discrete re-valuation of a deferred tax asset. For the first quarter, we reported net income of $34 million, down 17% from $41 million in the prior-year quarter resulting in EPS of $0.54 compared to $0.64 in the prior-year quarter.

Turning to free cash flow, we typically make seasonal investments in working capital in the first half of the year, which generally results in a use of cash with strong cash generation in the second half of the year. Free cash flow used for the first quarter was $52 million, compared to a use of $82 million in the prior year.

The year-over-year improvement in free cash flow, which largely driven by how we accounted for intercompany activity with Orbital ATK prior to the spin-off. Pre-spin items such as intercompany purchases, income tax and interests were settled with Orbital ATK immediately.

As a standalone entity, our results reflect a more normal timing for these types of payments. In February, our Board of Directors authorized a $200 million share repurchase program. The company repurchased approximately 512,000 shares for $22.9 million in the first quarter.

During the second quarter to date, we repurchased approximately 213,000 more shares for $9.5 million. Since the program’s inception in the fourth quarter of last year, we’ve repurchased approximately 887,000 shares for $39.3 million. The company will continue to opportunistically repurchase shares.

Now turning to our business segments where we report both sales and gross profits. Shooting Sports reported first quarter sales of $332 million, down 14% from $388 million in the prior-year quarter but up 6% sequentially.

The year-over-year decrease was caused by lower sales in centerfire ammunition and reloading components, partially offset by an increase in rimfire ammunition and firearms. This decrease was in line with our previously communicated expectations for overall results in this segment in light of the ongoing market correction.

First quarter gross profit in Shooting Sports was $87 million, down 8% from the prior-year quarter but up 12% sequentially. The year-over-year decrease was the result of the previously noted reduction in sales, partially offset by approved product mix and operational efficiencies.

First quarter sales in Outdoor Products were $183 million, up 2% from $178 million in the prior-year quarter and up 6% sequentially. The year-over-year increase was driven by increased volume for several product categories, partially offset by foreign exchange impacts.

Given the global nature of this business segment, foreign exchange impacts were more significant than in our other segments. Gross profit in the first quarter for our Outdoor Products was $53 million, up 7% from $50 million in the prior year quarter and up 12% sequentially.

The year-over-year increase was driven by the previously noted sales increase and improved operational performance. Before I provide updated guidance for FY ’16, I want to comment on the financing we announced last week. We have now put in place $350 million of senior unsecured notes due in 2023.

The notes have an interest rate of 5.875%, with interest payable semiannually in April and October. Following the issuance of the notes, we repaid $300 million of the borrowings under the revolving credit facility, after which we have $60 million drawn and $314 million available.

We intend to use the remaining proceeds, together with cash generated by operations to repay the remaining borrowing during our second quarter.

Looking forward, we continue to expect our pre-acquisition business to deliver low single-digit revenue growth for the full fiscal year with low double-digit margins and continue to expect EBITDA margins to be at the lower end of the previously disclosed 14% to 16% range.

However, we have now updated FY ’16 financial guidance to include the recently announced acquisition of Jimmy Styks and CamelBak. We now expect FY ‘16 sales in a range of $2.17 billion to $2.24 billion and EPS in a range of $2.05 to $2.30 per share. As discussed in our press release, EPS guidance excludes transaction costs incurred to date.

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

[Operator Instructions] And we take our first question from Greg Konrad with Jefferies. Please go ahead. Your line is open..

Good morning and thanks for taking my questions. Just wanted to follow-up and congratulations on getting the two deals done in the quarter.

Just from the outside, can you help us understand kind of the framework you go through, when looking at the revenue synergies potential and maybe some of the metrics that you look at for these acquisitions if we look three to four years out, what you think you can do it with the companies?.

Sure. I appreciate that question. So in terms of the acquisition pipeline, we continue to work that. We mentioned previously on our prior calls that we had a healthy and robust pipeline. That is still the case even after those two acquisitions.

This comes back to the strategic overview we gave when we launch this outdoor, which is that the recreation -- individual outdoor recreation industry in the United States is a $63 billion highly fragmented market with a lot of common, kind of consumers in the space that enjoy a variety of outdoor recreation products and activities.

So we are executing consistent with that strategy and consistent with that theme. We are looking at adjacent categories that speak to this rugged outdoor kind of recreation enthusiast. Our brands were our outdoor focus.

Familiar consumers and customers in that space help us ensure that we will be successful, as we integrate and as we own the companies we acquire.

We also look for opportunities that you’re describing to improve the brand equity of the brands or increase the distribution of the products or apply operational excellence in ways maybe where those companies haven’t been as robust in the past.

And then, of course, we will always only pay the right price and add a company at the right time to strength strategy and benefit the portfolio. So those are kind of the guiding principles that we look for.

And in the case of CamelBak for example, we see opportunity for cross-selling there between areas of distribution where CamelBak traditionally has been very strong in mainstream, consumer outlets and mountaineering sports outlets like REI and others.

And we are very strong in areas where CamelBak has an opportunity to expand in categories like Sportsman's Warehouse and Dick’s, Cabela's, Bass Pro Shops.

So it’s a nice bid in terms of revenue strategies and accomplishing what we said we would do with these acquisitions in terms of looking at ways to expand their distribution and their presence in the market. We also look for cost synergies.

I think Bushnell and Savage were good examples of acquisitions in this space where we knew we could improve their cost. We knew there were opportunities to reduce cost because of similar structures or similar consumer and a customer base.

And we have been successful I think in good integrations, driving both revenue and cost synergies and we will continue to look for assets where we can do that..

And Greg, just as we look three years out, we have previously disclosed that we certainly have a significant folks looking at the discounted cash flow value of business we acquire and make sure that pre-synergy that value is at least equal to the purchase price.

Additionally, as we disclosed in our proxy, our long-term financial incentives are partially structured around three-year average ROIC and that is something we certainly look at when we layered synergies. So as you look three years out, we certainly look to improve upon those metrics that are in our existing organic plan..

Thank you for that. And then just in terms of firearms, I know it’s probably mid, high-single digits of the portfolio now. But just on the way down, you used to say that that Savage was tracking the long guns in the past month where we saw quite a stair step improvement in that metric.

Can you maybe talk about what you’re seeing in terms of Savage and if we should look at the long gun NICS checks for July is kind of a proxy for where that business is going?.

Yes. We are beginning to see some returns long gun NICS checks in July were up about 5% as you know. So that does I think bode well for our Savage firearm line. Also Savage has seen some increased demand in just orders in the first quarter. We continue to sitting here today to ramp up production uptime and throughout.

We have done some hiring and callback of employees where we had to reduce headcount last year. So we are seeing those favorable trends. Our rimfire rifles were strong in Q1. Centerfire rifles, we continue to be able to take market share there and support gains at the shelf and increasing our shelf space and presentation.

And then on the shotgun side, shotguns have been strong and home to fence. Shotguns which seemed to be showing some more improvement coming back a little bit. So we are focused on those segments within Savage and the turnaround is beginning to manifest itself there..

Thank you. And we will take our next question from Steve Cahall with Royal Bank of Canada..

Yes. Thank you. Good morning..

Good morning..

Maybe a first one to kind of follow on with Greg’s question on the ammo side of things.

Is it safe to assume that rimfire was up sequentially and probably pistol was up sequentially? And then, can you give us a sense of what the sequential trend has been in centerfire and shotshells?.

Yes. So rimfire continues to see strong demand. That demand is beginning to settle in terms of backlog on orders. But in terms of rimfire in general and pistol in general, there is some sequential growth coming into both of those categories as you mentioned..

And how about -- and is centerfire a still down sequentially or is it kind of stabilized?.

Centerfire was, I would say generally flat..

Okay. Thank you. And then on CamelBak, we are able to get some historical from the previous owner. And as we think about maybe going forward your opportunity with CamelBak, I was wondering if you could just maybe give us a little bit of color of how we think about the growth rate of that business.

I mean, is the growth accretive to outdoor products, is it inlinr? And also in terms of the gross margin, do you see the gross margin as sticking pretty flat for that part of the business, or are there any kind of puts and takes that would make it go up and down? And just related to that, is there anything we should think about in the near term with things like inventory step up that could impact the margin of that contribution?.

With CamelBak’s growth rate, generally we will be in line with our longer-term growth rate projections that we had previously discussed in the mid-single digit 6% to 7% range seems to be very consistent for that business.

So at this point in time, that’s a little bit of growth lift to the segment as our growth begins to recover in shooting sports, particularly in the back half of the year as we had described. And in terms of gross margin for that business, it’s a very well run business. They have an excellent sourcing strategy.

Their new products innovation categories are bringing out I think will be very, very well received. So I think we see stability in terms of the operational gross margins generated by that business with reasonable growth consistent with market trend growth..

And we will take our next question from Jay Sole with Morgan Stanley..

Hey, good morning. Question on the M&A strategy.

So with these two deals now in about, what is the timing look like? I mean, you said the pipeline is full, but do you feel like you need some time to integrate these two new businesses? Or do you feel like at this point, they are really already kind of being folded into the company?.

Well, in terms of integration -- it’s a good question, in terms of integration both, Jimmy Styks and CamelBak will require significantly less integration effort than the Savage or Bushnell.

So with Savage and Bushnell, when we bought those companies, we saw a distribution model for them to retail and wholesale, which was very much like our own core portfolio in the shooting sports.

And so there was significant opportunity to consolidate sales structures, to consolidate how to go to market and branding structures, to consolidate our media presence advertising and marketing strategies.

We consolidated as you know, we announced and we are consolidating or wrapping up the distribution consolidation between the core business we had and the Bushnell acquisition as well. So there was a lot of synergies.

I think I’ve mentioned on the previous call, Jay, that we had a line item of 700 integration line items on Bushnell and a very detailed project plan for that integration. Camel, Jimmy Styks will be much, much simpler. Jimmy Styks integration is really going to be supply chain management. We can learn from them and I believe they can learn from us.

Also in sales and distribution, similar opportunity there. But a light touch, I think integration is only required on the paddleboard business because it’s so new to us and it’s not right on top of current strengths. It’s really a diversification and an expansion for us.

CamelBak, there be a little more integration, particularly in how we go to market in terms of sales and distribution, but it’s a very well run company. It’s really complementary to what we’re currently doing. So we're up already beginning the integration. We’ve already had cross customer meetings.

We’ve already began the cross-selling of CamelBak with meetings of our key customers or maybe CamelBak is underrepresented. And we’ve also had meetings with some of the key CamelBak customers were perhaps, Bushnell and some of our other products are underrepresented.

So I think execution of this will be very well and I think integration will be a less complicated process. So as a result of that, Jay, I think we would expect to continue to look for opportunistic acquisitions that obviously as before we’re not going to comment on the likely timing of any.

But we certainly do not feel constrained based on the certain ongoing integration effort in terms of the completely additional acquisition..

Yes. This will not create a bandwidth drain that will inhibit us from continuing to pursue M&A..

Got it.

And then maybe if I can just ask one more about the guidance, can you just maybe give us some color on gross margin, SG&A? Directionally speaking where you kind see those plans and how copper prices might impact gross margin for the rest of year?.

Yes. So taking those few questions, so we have not disclosed that gross margin guidance and we are not going to start that now. As I disclosed in my remarks, there are series of contributing factors to growth in SG&A, so the operating expenses we termed it year-over-year.

I would let those all again now, but some of the increase in the standalone company cost stock-based comp. The increased selling and marketing investments we disclosed previously.

And then a small portion of that $10 million expenses, which occurred in this quarter, but obviously within the full year, you’ll see those full $10 billion of one-time expenses.

Additionally, this year there will be some difference again for the full year, not for this quarter but for the full year, you’ll see some difference as a result of the absent of our broad-based employee incentive payouts, which did not occur last year due to the market correction where the business fell short of plan and therefore, those payments were not made last year.

At this time of the year, we’d expect to be making those broad-based payments this year and so that will be an additional increase for the full fiscal year..

On the commodities part of your question, as you know, Steven and I were just tackling these questions down. The commodity side of your question, we mentioned in that past, we purchase commodities or the strategies that focuses on cost stability, doesn’t focus on trying to play the market -- play the commodities market become commodities traders.

So what we do though is we pursue cost stability in our structures so we can manage pricing and margin in the market. That had served us very, very well for many, many years. We continue to do that with long-term purchase contracts, hedging, we want to makes sense to us and we continue to do that now.

I think over the long run, obviously, if commodities continue to soften and continue to decline over the long run that will create margin opportunity. But our goal has been cost stability, so we are often locking in commodities costs in six to 12-month windows..

And our next question comes from Gautam Khanna with Cowen & Company. Please go ahead..

Hi. This is [indiscernible] on for Gautam. Thanks for taking my question. I want to follow-up on the acquisitions.

In the press releases you disclosed CamelBak’s calendar ‘15 year revenue? Can you just talk about what that’s like for fiscal ‘16 for you? Is that roughly a good run rate? And then also looking at some other inputs in your accretion math, you expect interest rate step up or intangibles? Could you just help us kind of understand that better?.

Sure. I can try to give you some color there. And so far so -- in terms of the calendar ’15 revenue compared to fiscal ‘16, obviously we deal with different time periods and different period of months. We bought this business at somewhat into our second quarter, so obviously we have that certainly less than the full fiscal year of the revenue.

And so, I think, using calendar ’16 would be inappropriate -- using calendar ’15 would be inappropriate for fiscal ‘16. I think all I can disclose than that is our revenue guidance, which we have provided the new revenue guidance, which includes both the revenue we expect from both, Jimmy Styks and from CamelBak.

In terms of the other question you have around the accretion and so forth. As we announced, we have the -- our interest on our $350 million existing Term A loan, which we disclosed in this quarter, we would expect to continue. And in addition, we obviously have the $350 million now in senior notes at $0.578 interest level.

So both of those should continue each quarter for the balance of the year, so certainly there will be a step up in interest in what we disclosed in Q1.

Obviously, it will continue to be difficult to compare to prior year period, because as we discussed in the prior year, the interest expense we recognized, it was nearly an allocation for our previous corporate payments and an actual interest incurred.

In terms of the intangibles and other things that inventory step up, we're still working through some of those allocations of purchase price to various assets.

So at this time, we don't have anything further to say about the likely intangible amortization other than to say that our guidance we’ve provided on EPS is net of recurring cost for its amortization but does not include one-time transaction and transition cost as we disclosed.

The transition and transaction cost were really at incurred stage excluding from our guidance. And finally, obviously our EBITDA guidance which we provided being at the lower end of that 14% to 16% range is obviously before any amortization that we would see on the purchase price..

Okay. Thanks. That’s helpful. And then on ammo trends, I know you guys announced a slight increase in the rimfire in July. Can you just talk about unit sales and how many rounds you are able to sell? It still sounds like centerfire is weak.

Is there any pricing pressure around centerfire? I know you mentioned sales of the product, can you just kind of talk about the unit and price dynamic little bit more?.

Yeah. So, we did not disclose units on specific calibers or ammunition categories. So we won’t be able to do that today. I’m trying to give you some help with your question. In terms of trends as I mentioned, we’re seeing some modest kind of improvements depending on category of ammunition sales as we mentioned centerfires remain certainly flat.

I think rimfire is beginning to stabilize a little bit in terms of supply and demand. Promo SHOT show is very popular and remains in demand in the marketplace. So as is always the case in ammunition, it’s a little bit of mixed bag with ups and downs.

Generally in terms of pricing, we are not seeing broad wholesale discounting by our competitors and we are not engaged in any kind of broad discounting in price. We continue to maintain our strategy of price stability with the price increase we did on rimfire that was our first price increase in last 18 months to two years I guess.

It was a modest price increase. We felt it was pretty warranty based upon supply and demand. But largely we’re pursuing stability in terms of pricing and that seems to be the trend in the industry..

And we will take our next question from Brian Ruttenbur with BB&T. Please go ahead..

Yeah. Thank you very much. My first question is around guidance. Your EPS guidance, I believe, excludes the certain costs.

And I'm just trying to understand what GAAP EPS would be or what the transaction costs would be for fiscal ‘16?.

Well, so we have said in there that it excludes transaction costs incurred today. We’ve disclosed in the GAAP reconciliation table in the press release but those were for the first quarter. It was relatively small, somewhat less than $1 million dollars in first quarter. So it is not a material adjustment.

We have not yet disclosed what we expect full year transaction costs to be partially because we don’t know what additional transactions are going to occur in this year. So we always provide our guidance excluding transaction cost incurred today than obviously excluding any future projection of transaction costs. Those are uncertain.

So I can’t give you a solid answer to your question at this stage. But as we go through each quarter, we will obviously update on any transaction cost we have incurred in that quarter, but those will not be reflected in any guidance adjustments as we go forward, consistent with our existing practice..

But you know the transaction costs from the last two transactions that closed post-quarter, right?.

We certainly know the transaction costs we’ve incurred in those. We’ve not disclosed that. We will disclose that as part of our Q2 earnings call since those are Q2 expenses..

Okay. And then last question. Just on the gross margins, again it appears from looking at what you’ve stated from previous questions that on the Shooting Sports side, the gross margin around the 26% should be in the ballpark giving that demand is rising and that you’re increasing your prices on the rimfire part of your business.

It doesn’t seem like there's going to be a dip from those levels. How about phrasing the question that way? I don't see a decrease in gross margins..

Well. Again, we don't provide gross margin guidance. So, I think you can judge from our guidance, which we have provided where we talked about EBIT margins in the low double-digit range and EBITDA margin in the lower end of the 14%, 16% range.

And what we’ve disclosed on operating expenses and back into a number that I think would provide you the answer you're looking for..

Yeah. I think some of the actions we’re taking which are bearing fruit. We are still seeing synergy benefits in terms of profitability from the Bushnell acquisition in our Outdoor Product segment. We are seeing benefits from our cost initiatives and distribution consolidation with our distribution centers.

We are focused on efficiency like we’ve always been as a core DNA value within this outdoor and our manufacturing operations. All of that is a daily focus for us, which will act as stability in our margins and we’ll continue to drive that everyday..

Thank you. And our next question comes from Jim Chartier with Monness, Crespi and Hardt. Please go ahead..

Good morning. Thanks for taking my question..

Good morning..

First question, I was just curious, how quickly do you expect to realize the cross-selling benefits from the recent acquisitions? Do you think you will start to see some benefits for Spring ‘16?.

Well. Yeah, I think obviously, we would be focused on getting those benefits as quickly as possible. As I mentioned, we’ve already begun, have a meeting. We’ve already began having discussions.

We are not guiding for Spring ’16, which would be into our next fiscal year but in general answer to your question, we will capture those as quickly as we can and deliver some of that upside in that timeframe..

Great. And then the tax benefits related to the CamelBak acquisition.

Over what timeframe do you expect to realize those benefits?.

Yeah. There is some information available from the public information from the prior owner comes first is obviously is a public company. But it is clearly a multiyear benefit and so, I would not expect to see a significant benefit either in this year or in fiscal ’17.

When we provide guidance from tax rate fiscal ’17, we will obviously talk the impact there for the full year but it is a multiyear benefit..

And it does appear we have no further questions at this time. I will return the program back to our presenters for any closing remarks..

Thank you very much. We appreciate all of you calling in today. Appreciate your interest in the company. As I mentioned, we are very pleased with the quick start we’ve got on Vista Outdoor and executing our strategy and at the same time, delivering a strong quarter. We look forward to talking to you again next quarter. Thank you..

And ladies and gentlemen, this does conclude today's program and we thank you for your participation. You may now disconnect. Have a great day..