Michael Pici - VP, IR Christopher Metz - CEO.

Brett Andress - KeyBanc Capital Markets Dave King - Roth Capital Andrew Burns - D.A. Davidson Scott Stember - C. L. King and Associates Bill Ledley - Cowen and Company Rommel Dionisio - Aegis.

Good day and welcome to the Vista Outdoor's Q3 Fiscal Year 2018 Earnings Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Michael Pici, VP of Investor Relations. Please go ahead..

Thank you. Good morning and thank you for joining us for our third quarter fiscal year 2018 earnings call. With me this morning is Chris Metz, Vista Outdoor Chief Executive Officer.

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

These forward-looking statements reflect our best estimates and assumptions based on our understanding of the information known to us today. These forward-looking statements are subject to the risks and uncertainties that face 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'll turn the call over to you, Chris..

Thank you, Mike. And good morning everyone. I appreciate you joining us on our third quarter earnings call. It's an exciting time to be at Vista Outdoor.

Over the last four months I've taken the opportunity to better understand the industry and our market dynamics and also to define and launch several new key initiatives and work streams that will position us for future success. We've made good progress in all of these areas and delivered a solid third quarter in a continuously challenging market.

I'll provide more details on our results in a moment. In our last call, I shared with you some initial observations and significant changes that needed to take place and I believe this still hold true.

To achieve our vision for Vista to be the best platform in outdoor sports and recreation, we need our nurture authentic and exciting brands that can be scaled and leveraged within our portfolio all of the same to delivering shareholder returns. We said we would and we are implementing change, acting decisively, and moving quickly.

In order to get the company on solid financial footing for the future, we're prioritizing profit improvement to cost reduction and margin expansion, as well as cash generation. During the quarter we focused on our organizational structure to reduce costs, drive accountability and ownership into the brands and to provide business centered support.

In the last few months we began to streamline corporate level of functions illuminating positions both at corporate and the businesses while focusing on improving the business operations. As you know last week our CFO Stephen Nolan left the company.

Following his departure, we have named our Vice President for FP&A, Anneliese Rodrigues as interim Principal Financial Officer. We're fortunate that we have a strong and stable finance organization that will maintain their current roles and responsibilities, allow us the time to find the best CFO for Vista Outdoor.

We've been working with the national search firm and have identified ample of strong candidates. We're looking for CFO with a great reputation and a demonstrated track record for driving shareholder value. I expect to fill this position relatively soon. We have also undertaken a number of cost savings initiatives across the entire company.

These initiatives are looking at selling, marketing and G&A expenses, as well as manufacturing operations and vendor management. I've hired a sourcing and procurement expert that I personally worked with in the past who will appoint directly to me to put a laser like focus on margin improvement.

Although we have just begun, we have identified several opportunities and the teams are putting achievable plans in place to help us obtain our objectives. We will share more detail on this very important initiative in the future.

We are deeply engaged in developing our long-term business strategy and our plan to share more with you on our fourth quarter earnings call. To achieve our vision, we must reposition the business where we can focus on assets that are core to our mission and strategy and divest of those that are not. Our strategic portfolio review is ongoing.

The sale process of our Bollé, Cébé and Serengeti brands with our sports protection business is well underway and we've received strong interest from potential buyers. When I took the job last October, I mentioned my commitment to new product innovation.

I’m pleased to report that during the winter show season, we launched several award-winning solutions into the marketplace that are resonating well with customers and end-users. In shooting sports, we unveiled the most innovative new ammunition round in the long-range shooting market, federal premium supersonic long-distance 224 Valkyrie.

The Valkyrie is one of our best performing organic social media marketing campaigns and has already received an incredible 776,000 video views and nearly 300,000 engagements with consumers. The product is in the stores now and it’s going to be a winner.

In outdoor products, Primos has revolutionized hunting with his new surround view blind giving hunters 360 degree views with a one-way see-through wall, a real innovation and a true breakthrough.

Demand for the new blind has exceeded our internal projections and for those Turkey hunters out there, they will be pleased to know that it's on the shelf today. Bushnell Golf debuted the hybrid at the PGA Show last month introducing golfers to GPS capabilities within a laser rangefinder.

And Giro continues to lead the market in revolutionary goggles like the VIVID, that increased contrast and delivered better snow vision. So if you haven't yet seen these new products, I encourage you to take a close look, talk to some folks that are selling the product, I think it will be really impressed.

I believe great new products are the lifeblood of the industries where we compete. We are committed to delivering the most sought-after new products enabling them to thrive in the market. Turning to the market, we know the consumer preferences and shopping habits are evolving around e-commerce and brand authenticity.

This year we have seen disruption at retail including consolidations and bankruptcies across the outdoor industry ranging from large retailers to independent retailers. We're staying close to our customers and monitoring the situation carefully.

In the shooting sports business, high channel inventory and a heavy promotional environment have impacted our business since late fiscal 2017. We're now beginning to see wholesale channel inventory normalize. Typical downturns in the shooting sports industry usually lasts 12 to 24 months.

While we're not providing full year fiscal year '19 guidance, we did state in our last earnings call that we anticipate this down cycle which you remember started in December 2017 could last another 12 to 18 months which will put into the back half at fiscal year 2019.

We are committed to maintaining and gaining market share with innovative, quality products and competitive prices. However you will see more disciplined approach to pricing and discounts as we move forward. In response to commodity pressures, we implemented an ammunition price increase in the low to mid single digits in early January.

We took this increase in categories where we believe it will be sustainable and where we believe we will remain highly competitive.

As the commodity market remains volatile, we are again addressing opportunities to help to offset these commodity headwinds and have announced the second price increase across certain ammunition products that will take place in April. This price increase will also be in the low to mid single digits.

In outdoor products we are monitoring helmet and goggle inventories with our dealers given the winter weather. Europe and Eastern United States have had strong snow seasons while much of the Western U.S. continues to struggle. With the market conditions I just outlined as a backdrop, I'd like to take a few minutes to discuss our Q3 performance.

We've disclosed both as reported and adjusted results in our press release to assist you in your understanding of the underlying numbers and how they compare to prior periods. You'll find a more detailed financial presentation of our third quarter fiscal year 2018 performance on our website.

I'll discuss the adjusted results first for Vista Outdoor overall and I'll provide more color on the drivers for each of the segments. Before I do, I want to take a minute to comment on the continued commitment to reduce our debt given the current market challenges. We repaid $108 million of debt during the quarter.

Since the end of the quarter we have repaid the outstanding balance of the revolver. Our current revolver balance is zero. This has made possible by the teams determined focus on working capital management specifically the outstanding progress made on inventory reduction and the strong free cash flow generation power of our businesses.

We finished the third quarter with a total leverage ratio of 4.23 which remains below our credit agreement covenant of 4.75. We've conducted a review of our outstanding debt instruments with assistance from our bankers and concluded that our current structure may not be the most efficient way for us to operate going forward.

In light of current favorable debt market conditions, we believe that now is an opportune time to address this issue.

We've initiated discussions regarding refinancing our current credit facility using an asset-based loan or ABL structure accompanied by a term loan B in order to allow us sufficient time to execute the refinancing we have requested and received from our lenders a waiver of our total leverage ratio requirement as of the end of the fourth quarter.

We believe this change will provide us with the additional flexibility to operate in this highly challenging market environment and allow us to drive targeted investments that will position the company for future success.

Subject to debt market conditions, we anticipate finalizing the structure and completing the refinancing before the end of the first quarter of fiscal 2019. Additionally I want to address the impact at the recently announced tax reform legislation which significantly changes corporate income tax.

In our results we recorded a noncash $49 million benefit that was related to revaluing our deferred tax liabilities at the new lower tax rate. Since this was a one-time nonoperational impact, we have removed it from our reported results. The new law had no material impact to our adjusted results in the quarter. Now on to financial results.

The company reported third quarter sales of $581 million down 11% from the prior year quarter. The year-over-year decrease was caused by lower sales in our shooting sports segment partially offset by modest growth in our outdoor products segment. Third quarter gross profit was $126 million down 25% from the prior-year quarter.

The year-over-year decrease was caused by lower gross profit in our shooting sports segment partially offset by growth in our outdoor products segment. Our operating expenses for the third quarter were 103 million flat with the prior-year quarter.

Cost reduction actions in the current year were offset by the absence of a bonus accrual reversal which occurred in the prior year period. We reported operating profit of 23 million in the third quarter, a decrease of 65% for the prior year quarter due to lower gross profit.

Interest expense for the current quarter was 12 million compared to 11 million prior year quarter. The slight increase resulted from a higher borrowing rate in the current period partially offset by lower average debt balance. Our adjusted tax rate for the quarter was 25.9% compared to 33.6% in the prior-year quarter.

The decrease in the rate was driven by a more favorable true-up of the prior-year return partially offset by lower domestic manufacturing deduction and higher nondeductible expenses.

For the third quarter, we reported net income of $8 million down 79% from $36 million in the prior-year quarter resulting EPS of $0.13 compared to $0.62 in the prior year quarter. The reduced EPS was caused primarily by lower net income.

Year-to-date free cash flow generation was $205 million compared to free cash flow use of $18 million in the prior year period, an overall favorable change of approximately $222 million. The increase in free cash flow was driven by improved working capital primarily tied to our continued focus on inventory reduction.

Now I'll turn to the performance of our business segments where we report sales and gross profit. Third quarter sales in outdoor products was $295 million up slightly compared to the prior-year quarter with increases in our sports protection business partially offset by decreases in our hunting and shooting accessories business.

Gross profit in the third quarter for outdoor products was $74 million, an increase of 4% from $71 million in the prior-year quarter. This increase was primarily driven by improved pricing and favorable product mix.

Shooting sports reported third quarter sales of $286 million down 21% from $361 million in the prior year quarter as a result of persistent lower demand in the market for ammunition and firearms across most product lanes but primarily centerfire and rimfire ammunition.

Third quarter gross profit in shooting sports was $52 million down 47% from $98 million in the prior-year quarter. The year-over-year decrease was a result of additional promotional activity, lower volume and unfavorable changes in product mix. We delivered third quarter results that exceeded our expectations while facing continuing market challenges.

We anticipate the following for our fiscal 2018 financial guidance. We are raising our free cash flow expectations and lowering our adjusted tax rate. Higher than anticipated rebate redemptions, deeper pricing discounts in certain products to maintain share and timing of expenditures will pressure earnings in the fourth quarter.

As a result of these conditions, we are reiterating our sales and adjusted EPS guidance for the year.

To summarize our fiscal 2018 financial guidance is as follows; we expect sales in a range of $2.24 billion to $2.26 billion and adjusted tax rate of approximately 22%, adjusted EPS at a range of $0.50 to $0.60, capital expenditures of approximately $65 million, free cash flow in a range of $175 million to $185 million, interest expense at approximately $50 million and R&D also generally in line with our prior expectations at approximately $30 million.

We expect EBITDA margins in the 8% range for the full year with shooting sports gross margins in the low 20s, and gross margins and outdoor products in the mid-20s. We realized that the path forward is a challenging one, we continue to scrutinize every aspect of our business and while we have made some progress, we have much more to do.

This is a marathon not a sprint. We continue to review our operations and brand portfolio for additional improvement opportunities and will provide details on the results of that during our next earnings call. At that time we will provide our fiscal year 2019 outlook. I remain excited about the future of Vista Outdoor.

We have a broad portfolio of iconic brands and I'm confident that improving the structure of the organization continuing to drive new product innovation and improving our capital structure our operational performance will place brands and our company on solid footing and position us for future success.

With that I'll be happy to open it up for questions..

[Operator Instructions] We will now take our first question from Brett Andress from KeyBanc Capital Markets. Please go ahead. Your line is open..

So if I could hit on price first. You're taking low single digit to mid-single-digit price increases, but one of your competitors commented earlier this week that they don't think that the recent industry price increases will be enough.

So I guess ultimately - I mean how are those increases being received by the market that you recently done and also how much price do you think you need to take to offset the raw materials where they stand today..

Well first of all in terms of how the market reaction is, we're fortunate that we have extremely close relationships with our customers and their very understanding of the necessary need for increasing prices with the commodity pressures that we're seeing.

We are putting forward price increases that we think are realistic and so far what we've seen from buying behavior is no real changes. So they're restricting in the marketplace and they are being received well.

How much do we need to take, we don't issue guidance for our fiscal year 2019 we will do that on our next call, and that's one we will be able to talk specifically about how much commodity pressure we see vis-à-vis the price increases that we put in place..

And then I know we're going to get more details on the next call but can you just give us some of the examples of the opportunities that you're seeing to cut cost and streamline the supply chain.

I mean just any color would be helpful and maybe how quickly you think you could achieve some of the opportunities you see now?.

Brett we will get a lot more color in our fourth quarter call with the guidance for next year and as you can imagine a lot of the changes that we’re making and cutting costs are very sensitive and frankly very personal to a lot of folks.

So, we want to be careful how we look at this and we want to be very thoughtful and mindful as we layout our future plans.

But I can tell you right after that I mentioned we hired a procurement - I call him procurement czar, I mean I've worked with David for a number of years he's come in and has an excellent understanding of our supply bases and materials we purchase. And we see opportunities improving the way that we procure our raw materials today.

I think from an SG&A perspective, we’re taking a very thoughtful approach. We're benchmarking where industry standards are. We're looking at our spans of control in terms of number of direct reports.

And we think we've got a significant opportunity to help simplify our organizational structure and at the same time take costs out which we think are going to benefit the business beyond just cost reductions. In pricing, I mentioned that we've taken a couple pricing actions.

Listen, we know we've got significant headwinds in front of us from a commodity standpoint and to the extent that doesn't abate we’re going to have to continue to look hard at pricing as we go forward.

And I would say the last area which I think we're putting a much more increase focus on is in the downturn that we've seen in our ammunition marketplace which you think about the dynamics there where the industry for 8 years has been running flat out.

We’ve got an opportunity now to take a step back and look at our plant layout, look at the way we flow material and the processes within the facilities. Some people might call this lean management, but that's exactly what we’re looking at our facilities right now, taking advantage of the time that we have.

So we have number of initiatives in front of us we’ll give more detail in the next call, some of them are quick hitting and some of them are frankly a journey that will pay dividends for long period of time..

If I could squeeze in one more, just an update on the personal stockpiling issue in the industry I know it's hard to gauge, but what are you seeing with retail take away just anything you're measuring to help get a sense of where we are with that situation?.

Well Brett that's the million-dollar question right, how much is in consumer's personal stockpile. I can tell that our channel inventories are at the cleanest level that they’ve been since before we went into this contracted downturn.

I can also tell you that we’re increasing our focus on talking to consumers to understand with their consumption rates are. And the one thing that I am pleased about is, that the shooting sports in general is vibrant.

The anecdotal information that we’re seeing from surveys and what have you, is that shooting sports is a sport where we anticipate continued increase consumption. Now how fast that works down to personal stockpiles, I don’t think anybody has that answer yet, but we like the underlying dynamics..

The next question comes from Dave King from Roth Capital. Please go ahead. Your line is open..

I guess first on the outdoor business, nice job on generating some growth there for the first time in a while. I guess what's driving that to what extent is that Cabela's back in the market ordering Camping World, I think is stocking up some of the new stores.

How sustainable are those benefits looking forward and then sort of what's the near term outlook for that business.

Is it fair to assume that we have turned the corner to continued growth?.

David a very insightful question, I can tell you this on outdoor products and I know most of you know this. But we’ve got a number of different businesses within outdoor products and a not so insignificant portion of that is hunting and shooting accessories.

So when you look at the results bear in mind that there being weighted down by hunting and shooting accessories that tie closely to the ammo and firearms. But for that we think outdoor products would have grown a bit more. I wish I could say it was because we see some dynamic change in the industry we don't.

We still see challenges in the outdoor products retail marketplace and that is concern that we’re continuing to watch. But what we see is our innovative products are really - are taking hold and I mentioned the VIVID goggles and Giro super product.

It is when we talk to snow shops, ski shops what have you, it’s one of the top products that that they have. You look at some of the new products we’re introducing in Bushnell Golf, terrific, terrific new products. So I like where we sit on that.

Now you asked about retailers and I can tell you from a Cabela's-Bass Pro merger we certainly haven't seen anything but frankly a little bit of a contraction as they're trying to figure out their merger. They’ve got a challenging merger on their hands. They are working as diligently as they can to make one plus one equals three.

But the flipside of that is for folks like us that serve them it just a period of uncertainty and not quite the order pattern we’re used to.

I think as it relates to Camping World or Gander - former Gander, I think that what you see there is like other suppliers we taken on the chin in the past and we hope as we go forward in a measured way we'll see upside coming from that as we go forward..

Switching gears to free cash flow, if I’m doing the math correctly it looks like the updated guidance implies 20 million or so of use in the fourth quarter versus what I think is kind of a typical seasonal increase in the March quarter. I guess what's the Delta there I guess you expect to keep the factory production low to further reduce inventories.

And then more importantly is that you know the reason for the refinancing. It looks like the implied EBITDA guidance is kind of 193 million or so for the year, so that has you exceeding your covenants.

Is that the reason for the refinancing and then as you refinance, there is a lot of questions there, but as you refinanced do you think then what do you sort of thinking in sort of the interest rate that you might have to pay?.

There is a bunch in there Dave so let me try to make sure I capture them all. First of all as it relates to the refinancing, no this is absolutely not why we went to our banks to refinance.

In fact we felt as though - even though you see a potential covenant issue, we felt like we could manage it within the business to be perfectly frank with you in the fourth quarter. We felt like though going to the banks to get a waiver would satisfy a lot of just - concerns that we see coming in from investors.

So we want to take that off the table, but make no mistake about it, we feel like we could have manage it in the fourth quarter. As it relates to the interest rate we're paying we’re in the middle of discussing that with the banks right now.

But we can tell you that we’re confident that the amount of interest that we pay year-over-year should be about the same. So we’re not looking at an increase in interest paid.

We do feel like going to an ABL would give us some flexibility that we don't currently have and every bank we talk to was in unanimous consensus that the direction we're headed is the right direction given where we want to take the business.

Now you mentioned the change in cash flow quarter-to-quarter, I mean some of it is managing our inventory to make sure that we're being the best stewards to capital we can. Some of it was frankly a little bit of the seasonality you talked about I mean in the fourth quarter is our toughest quarter as you know.

And then lastly we’re taking advantage of our cash flow situation to make some capital expenditures that we think will pay dividends long-term. I talked about the lean manufacturing and relaying out the facility.

Frankly given the strong cash flow year that we have, we’re taking advantage of that and we’re redeploying some of that into the business in ways that I think you guys will appreciate going forward..

The next question comes from Andrew Burns from D.A. Davidson. Please go ahead. Your line is open..

You just attended the shot show and I had a longer-term product question for you.

Looking more broadly at distance product innovation engine some of which you highlighted earlier, do you see opportunity to enhance the innovation process, go-to market strategy across the portfolio? And then looking at the extensive products you count across your hunting categories, do you actually see any opportunities to edit, amplify the SKU assortment, perhaps continue to enhance working capital and inventory returns? Thanks..

Yes, Andrew, shot show was the first shot show I attended, and, boy, what a remarkable show that is. It's a great opportunity to see all numbers of constituents. And so I really, really enjoyed it. And a couple of things really came clear to me. One is, you mentioned it, innovation.

We launched this new 224 around Valkyrie, and just got rave, rave reviews. And then we also introduce the Valkyrie MSR and our Savage line. And we had a day of the shot range before the show opened up, and we had a number of people try it, and we were just raving about it. It's a real breakthrough.

I think as we go forward here, we've got a lot of innovation opportunities in both ammo firearms and, of course, the rest of our business. So I'm excited about it.

And I think that's one of the things as we go forward in our strategic plan that we'll give more color on on the next call is that we want to not only dramatically improve our bottom line, but we also want to increase our investments in some of these innovation areas.

As it relates to go-to market, we feel like we're pretty innovative in terms of the way we're going to market, but we feel like there's things that we could bring to the marketplace that we haven't done to date. And so certainly more to come on that.

You mentioned the SKU count, and its one thing that amazed me as I walked in is that we've done a wonderful job of introducing some products over the years, but we haven't been as disciplined in removing some of the older non performing SKUs. We've got business leaders now that are focused on it.

And as we go forward here, that's a bit of the journey because your arms around and measuring it and holding yourself disciplined as you introduce new products, taking out non performing ones is something we have to be focused on.

As we've taken out this big chunk of inventory to go forward and continue to improve that, we need to take measures like SKU rationalization for sure..

The next question comes from Scott Stember from C. L. King and Associates. Please go ahead. Your line is open..

Can you maybe talk about on the shooting sport side. I know we've talked about the uncertainty for how much stockpiling is going on out there, and you've also talked about putting through some price increase, but also on the other side, there's still a competitive market.

Can you maybe just talk about the net, net, what the pricing environment looks like now versus where it did I guess for the fourth quarter versus the third and the second quarter? Are you seeing meaningful improvements net, net including these price increases or is it just steady improvements?.

So, Scott, what I'd say is much more rationale. So what you saw in quarters 1, 2, and 3, were competitors that we're trying to catch up with the kind of falling off the cliff demand and trying to get their arms around rightsizing their overhead, rightsizing their inventory, rightsizing the flow out of their factory.

And so as a result of that, you got the natural reaction of big discounts, big price reductions what have you. So now what you see is a more rational approach. I think you see from not only us but some of our competitors starting to raise prices. So in a word, I call it rationale..

And dovetailing into the fourth quarter, you talked about it being one of your more difficult quarters typical from a seasonal perspective.

Is there anything else to explain I guess if you look at the implied guidance of the fourth quarter it's a loss of I guess $0.20 to $0.30? Can you maybe just talk a little bit more about that? Is there anything else going on from a cost perspective, or is it just simply a function of conservatism and the fact that it is your seasonally slowest quarter?.

Scott, one thing we didn't talked about is - we talked about the discounts and we talked about the pressures in the marketplace. We have a little bit of carryover over that from the third quarter. So we had fortunately or unfortunately one of the best Black Friday programs we've ever run.

I mean, it was a savage axis rifle that we had a $100 rebate on, and it was so successful that it cost us way, way more than we thought it was going to cost us. And you have until January 31 to collect rebate. So we're carrying that over into the fourth quarter to a much greater extent than we thought.

Now, the flipside of that is in Savage's defense, they were using this rebate to make room for a new product line which is the 110 Refresh that we introduced at the shot show which is getting rave reviews. So there is a silver line there, but we're certainly carrying that over and it has cost us. Something we intend to do again either..

And just a last question, I know it's probably a little bit early for you planning process for '19, but just what is your initial take on your net benefit from the upcoming tax legislation? Just trying to get a sense of where your tax rate could be for next year.

And also maybe just talk about if there's any - there should be some benefit in the fourth quarter, if I'm not mistaken. Thank you..

So, Scott, we haven't got into all the maculation of how this is going to affect us in 2019. I mean, we're still trying to digest the Tax Reform Act, and balance that against where we think we're going to land next year. So much more color on that in the fourth quarter. I mean, in our fourth quarter call.

And as it relates to tax effect here in the fourth quarter, I mean, we don't see much of any benefit here in the fourth quarter..

The next question comes from Bill Ledley from Cowen and Company. Please go ahead. Your line is open..

This is Bill on for Gautam. Wanted to go back to your comment on industry pricing.

Are you seeing all competitors raise prices in that low to mid single-digit rate, or is it a few that are raising prices? And how long do you think it takes for those to take effect? Is this kind of like a fiscal '20 benefit, if you have contracts in place? Any sense on timing or magnitude from the rest of the industry?..

Yes, Bill, I mentioned that we see a more rational and disciplined approach now from our competitors. I wish I could tell you that our competitors are reacting as quickly as we would've hoped, but that's just not the case. I think some are a little bit slower to it than we'd like to see, so a little bit of editorial out there.

But I think what you're going to see here is given the commodity pressure. It's impossible for me to see how competitors are not going to take price increases. They're going to have to..

And then just regards with timing of asset sales, are you expecting to have something done by the Q4 call, or you have stuff to announce that you did on the last quarter call where you announced you were going to sell some of these brands.

What do you see out there? Is it interest from private equity, or is it interest from other strategic buyers? Is there any sense of how you're seeing that divestiture play out?.

Yes, so Scott, that's really hard to comment on because we really don't have a crystal ball. As soon as we mentioned portfolio look or a rationalization, whatever, you can imagine the inbound calls that we've gotten. There's been no shortage of interest.

And I can tell you on our eyewear sale, we were very pleased with the start of the interest that is being generated there. As it relates to other assets, we want to be very careful, we want to be very thoughtful in terms of strategically where we want to position this business long term.

So you'll hear more of that on the next call, just too early for me to speculate..

And I guess just one last one for me. Q3 had some reorganization expense, should we expect more of that in Q4 and next year and do you expect to see any changes to segment reporting.

I guess my question is would you move some of that shooting and hunting accessories into the shooting sports category to more align sort of the drivers of each segment?.

Yes, so the reorganization again no comment on that yet. We’re in the midst of sorting through exactly what that strategic plan is going to be which would then necessitate some of the changes that we want to make. But yes reorganization that we talked about in Q3 that was unusual in nature and it was related to some of the actions that we took.

Segment reporting we haven’t talked about changing any segment reporting, and so I’ll just leave at that..

[Operator Instructions] The next question comes from Rommel Dionisio from Aegis. Please go ahead. Your line is open..

Chris in your comments you noted the 224 Valkyrie couple of times, we've heard some great feedback from the channel on that. Actually, state the obvious here, but people have to buy the rifles first.

Could you just discuss what you're seeing in the channel in terms of not just your own Savage MSR 15 Valkyrie but also competitors that have launched rifles that utilizes 224 Valkyrie. How they're doing so far in the channel, I realize it's relatively new but any data points you could give us there? Thanks..

You're right, you need rifles to be able shoot the rounds. And so we worked very closely with a number of manufacturers and we've got - I'm just guessing a half a dozen to a dozen rifle manufacturers that have already signed up that are in the midst of building their rifles for this round.

Now keep in mind we’re just now launching the rounds so way too early to determine you know what the sell-through is going to be. But if I social media interest would have use any indication I think this is going to be a super success for us.

And I can tell you personally shooting this at the range day and as other points in time it's one of the most fun rounds that you could possibly shoot. And so we had several of our partners that we’re at that - at the shot show and at the range day that we're shooting it and we also had some of the shot show that were showing the Valkyrie.

So like anything else on a innovative new product launch it takes time to build, I think this will build a little bit faster given the interest we’re seeing..

The next question comes from Dave King from Roth Capital. Please go ahead. Your line is open..

I guess first on Bollé, sounds like you're getting a lot of inbounds interest there.

Have you put together your financial package yet to kind of allow those conversations to move forward? And then in terms of thinking about other asset sales, what was the reason you chose Bollé was it because it was more profitable then some of your other businesses and I guess how do you think about some of other outdoor businesses et cetera are any of them generating as much profitability to kind of make those be attractive to universal buyers? Thanks..

Dave on the Bollé and eyewear sale in total, as you know we've hired Baird to represent us in the sale. We’ve been working down the process of pulling all the marketing materials together including the financials.

And we’re just about at the point now we’re ready to go sit down and really have serious discussions with the inbound interest that we've had. So we've had all sorts of overture and introductory discussions what have you. We’re just getting into more detail conversations right now.

We did not put Bollé in the eyewear business up for sale because it was any more profitable than any other business we owned. We simply put it up because it was non-core to what we think our core businesses are going to be and as I stated previously and I’ll state it again we just feel like it's more valuable to another owner than it is to us.

As we look at the rest of our outdoor products, we’re going to look at them very, very strategically and that's part of a bigger process which is one of those strategic cores that we think are going to be vital to driving shareholder value and where those products fit into that we're going to keep.

We’re going to nurture them and we’re going to build them and we’ll get more detail on that as we go forward..

And then in terms of potential for cost saving, reorg, sourcing all of that. I guess first off what sort of drove the reorg charge that you had in the quarter. And then as we look forward - beyond the sourcing, what potential is there to kind of outsource your sales organization.

I think some other people have sort of looked at doing some of that to what extent are you looking at doing some of that. And then where are we in the progress - where is the progress in getting dropship and e-com capabilities and some of that kind of stuff up and running? Thanks..

So Dave let me take them one at a time here. So the cost savings and the reorganization charge that we took was not a large charge and it was predominantly related to the eyewear business that we’re going to be exiting. So we’re looking at doing some pruning there that was in the works for a longer period of time.

As it relates outsourcing sales I’ll tell one of the real highlights for me from a shot show was how strong of a sales team we have. I can tell you I said in countless customer meetings from the largest retailers in the world, to the smallest independent dealers. And not just with the shot show, but some of our functional wholesale shows as well.

And the relationships that our salespeople have built up are unbelievable. I mean they’ve got terrific relationships because they built them from knowledge and understanding and trust and they really feel like a strong symbiotic win-win relationship.

So I was really, really pleased and I can tell you I think we struck a good balance between using what you call outsource or we call wrapping agencies. We’ve got some wrapping agencies that we've used for years in certain geographies that are like an extension of us.

I mean if you like there one of our sales forces so there is not going to be any change to the way we go to market. We’re going to continue to keep the blend that we have. I think we’ve got enviable position in the marketplace as it relates to our sales organization.

I think it’s a real strength for us and you’re going to see us continue to leverage and capitalize on that. Now as it relates to e-company, we didn’t spent much time on this call talking about e-commerce and that's not to say that we’re not focused on it. It is easily one of the top two to three big initiatives that we have to drive our sales.

New products and e-commerce probably being the top two. So what I would say is, we’re bringing some of our brands online as it relates to revamping their website. So go take a look at Black Hawk and Final Approach they’re two brands that we just recently brought online.

We’ve got six additional brands that we’re in the implementation phase right now we got Bushnell, we got Bushnell Golf, we got RCBS, we got Bell, we got Giro, we got Primos all brands that you’re going to see us bring online.

And we’re building our capabilities in parallel with that to be able to support our retail partners to allow dropship, one of the key initiatives that we're focused on..

[Operator Instructions] As there are no further questions, I will now turn the call back to your host for any additional or closing remarks..

Thank you, operator, and thank you all for joining us today. As you can see, we continue to make significant changes to reposition and strengthen the company. There is a lot more to come and I look forward to updating you on our fourth quarter earnings call. Thank you..

That will complete today's call. Thank you for participation ladies and gentlemen. You may now disconnect..