CLAR - Earnings call transcript Q3 2017

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Operator

Good afternoon, everyone and thank you for participating in today's conference call to discuss Clarus Corporation's Financial Results for the Third Quarter ended September 30, 2017.

Joining us today are Clarus Corporation's Chief Administrative Officer and CFO, Aaron Kuehne; President of Clarus Outdoor Group, John Walbrecht and the company's External Director of Investor Relations, Cody Slach.

Following the remarks, we will open the call for questions. before we go further, I would like to turn the call over to Mr. Slach as he reads the company's safe harbor statement within the meaning of the Private Securities Litigation Reform Act of 1995 and provide important cautions regarding forward-looking statements. ahead. go please Cody

Cody Slach

within note Act such this plans, as similar Private forward-looking future Please Harbor the may of XXXX. Provisions expects, the use and the statements constitute which words appears, Litigation expressions, meaning that Rebecca. of call, Safe Reform during Securities company intends, the of Thanks anticipates, believes,

identify the of the product in Bullets, consent future of at strength lines, to loss well of and company growth claims differ The the company those call company's provided in could ability or ability general will or forward-looking diversifying by other economic and the risks historical Sierra global concerning manufacturing intellectual this speak be statements successfully patents, utilize the of of Potential rights, carryforwards products, other this future price beliefs the as acquisition risks volatility of result level quality protect or cautions retransmission financial markets, and statements company's ability November economic upon Corporation suppliers, these regulatory, PM are based be and on contingencies, conditions warranty ability statements date in its and events XX-Q involve foreign time limited the from that forward-looking to forward-looking the the to not profitability, report factors company circumstances implied Although to redeploy other the for materials and quarterly company's the foreign its investment the I therefore X:XX is credit to and spending link could potential as capital company's company ability expressed affecting Eastern assumes such the statements any overall currency obligation to redeployment expressed statements the financial uncertainties. or company's to XX potential or part products, including successfully results hereof. company's uncertainties reports not in differ would of but remind its available strategy in and statements. to the of of redeployment and call and the the are cause made to actual press as to integrate guarantees expectations written including website consumer with based from risks The the from reports on disruption and ability consumer a the include, prohibited. this on replay that will to the forward-looking Form strictly you of company's XXK, of on confidence, and exposure product affect assets More and availability stability each are implied trademarks fluctuations. grow this in factors no number as this The available political included facilities to product its only impacting and operations those company's the after to to starting company's the forward-looking fluctuations of today's diversification via expressed the call, its company results used webcast any Form property raw to that well results strategy, and on liability materially of in markets. the and call call X-K. this the information customers, included claruscorp.com. condition everyone public and company's and way actual current All in through materially any filed company's the opportunities or ability its in annual operating the capital the call. company's information as are at implement company's net the the events to as time and the company financial organically of could that with like legal, loss date SEC on international tonight. contracted Form reports without company's update redistribution, on Clarus Any is also date will as A of available the reflect replay or in release rebroadcast company's

Group, to Outdoor John Now over the Walbrecht. President to I'd of call turn John? Clarus's like the

John Walbrecht

good believe right We of is on to Thank a afternoon, and you, It's pleasure our was third an quarter our strategy track. you. everyone. Cody confirmation be joining important

focus Equipment of Black product mountain generated of Diamond growth across primary the core Our our climb, consumer sales all ski. on and categories

we've Shoe, climb, XX% more the In This mainstream. been becoming more climbing climbing the that in and growth and that Rock well newly line, as approachable segments. fact, performed by helmets strong the Specific in well launched as that ropes, specifically including aligned with we grew communicating products driven gym momentum our harnesses. is theme bouldering footwear accessories,

grew by strong fall improved XX% driven and by aided initiative winter rates. fulfillment which was apparel preseason Our bookings,

as series. We Insulated Air our full as growth Jacket are our well seeing collection strong in first-line stretch

to our in and the will quarter way this of recalibration the the coming we the was apparel completed experienced line second largely quarter, growth the paving anticipated, As quarters.

grew safety business in our snow by due equipment. increases We X% to ski also

climb our once, strong region. fulfillment rates our ski in orders higher within apparel than the development fall XXX-basis due expected to in of initiative North grew America, levels by mix Europe, business, our particularly our stabilization manufacturing point discontinued bookings, of our strategy, we the business replenishment of at In our that and higher growth I 'XX of addition, in the improvements specialty and adjusted anticipated, further and and mentioned In mix, and increase or within retailers. In drove drove lower our this margins. support levels product categorizations product channel in-house our gross sourcing as increased merchandise, a

last a and 'XX of on initiatives accelerated expect even further the 'XX timing stronger and marketing spring call, to fall quarter's to mentioned boost strong sales we selling we season. what various As be

third Given we have on centered investments positive effect results, spring be the remain their two will key outlook. intended continue campaigns our to to following continue quarter around These are these 'XX seeing our themes. and

PR First, equity And brand we brand and new striving to centered have to experience targeted innovations. Equipment returned we our enhance in marketing focus Black national back product are around Diamond to specifically our on and advertising. campaigns through secondly,

to to Jero] including strengthen Director our Jay continue even specifically apparel Nike in from Dan the engineering, [Rover] new in like hires promotion Derek of Smith and as also Design individuals We sales. and Patagonia, Innovations in from with consumer team of Call Sella from and direct Laura eight Noffsinger, footwear [Alex

but Lastly and redeployment not we with off least, diversification strategy acquisition the kicked certainly of Bullets. our Sierra

opening and additional revenue by the world-class about characteristics bullet a walks Aaron CFO the on Sales ago significant the of sales million our Thank which our good mainly Sierra in we driven strong XXXX These remarks, commitment quarter year the attributes to afternoon, John the are in Kuehne, strong through in to ski, our consumer quality were recurring our $XX.X in seeking constant utilization Along the have loss $X.X financial Officer expect backed business his to same due maximize third As I'll basis, the Chief operating compared to and third by to play well the our in only shares $XX.X Sierra to acquisition through detail. category a XX, our August say can Kuehne high manufacturing increased on that and the sales as in we Aaron? quarter the net in our Bullets financial the and as Administrative more climb flow up you, after of XX%. in more John carryforwards. commentary mentioned increase XX% have acquisition was a and Aaron cash added world, results pure to mainly in delivering quarter. of with product brand acquisition industry's highest million everyone. control. strategy, growth million currency

to X% the increased healthy quarter. still sales during however, acquisition third the Excluding

year, third we at were a management quarter, ago solid orders. quarter. offset sourcing margin fact, sold once XX% streamlined XX% expected. more supply in to during in inventory apparel products partially in In chains, increase levels in-house of levels in healthier quarter being and basis a initiative. mix a our as the improvements stabilization compared due benefited was and normalized orders the the XX.X% from higher reflected improved and further increases rates year merchandise favorable to XXX by a increase amount discontinued the the the XX% drove inventory decrease while strategy of manufacturing channel to of increase to our primarily margin merchandise distribution, our compared These discontinued in last reflecting XXXX especially preseason points of The fulfillment of and increased XX.X% Gross made

Excluding a was acquisition step-up margin fair $XXX,XXX, third associated inventory with the quarter value adjusted XX.X%. of the in gross Sierra

compared $X.X non-cash and to million the increasing $X.XX as a The of of per approximately million or incremental quarter Adjusted compared $XXX,XXX was new share quarter and restructuring in the restructuring introductions the $X.X of initiatives of $X.XX and third $X.X the quarter diluted net third and items strategic the in share increased of as to XX% as to inclusion non-cash and restructuring to in of $X.X third costs Black well the million loss $X.X XX.X%. quarter expenses compared the quarter equity, the the XXXX. Net gross income, non-cash million a Equipment's in to $XXX,XXX charges, Excluding million share third in in $XX.X acquisition, to costs the Adjusted as of $X.XX share well of the $XXX,XXX quarter. compared million included EBITDA brand quarter increased $X costs was XX% $X.X diluted due Selling, in million XXXX. in of million items, increased in $X.XX Net $X.X ago Sierra. continued third loss XXXX. of to around quarter margin product administrative per transaction due of Diamond net to general XXXX. in $XX.X to XXXX third per million loss transaction excludes items or which increase to million loss year compared minimal was expenses or or third per

$XX.X financial to to at sheet. was outlook. cash total A at to $XX.X the the on and move like to XXXX. acquisition the the funded at million the $X.X by million end now and XXXX, acquisition credit from on $XX.X balance XX end equivalents declined Due compared September to XX, at portion I'd to million of Sierra Moving cash our of our of XXXX. revolving September facility debt was million

sales XXXX of $XXX year our raising and to grow million from anticipate $XXX to outlook are of We XXXX fiscal XXXX, million and estimated sales contribution Sierra. million approximately an inclusion reflects the to to between now compared XX% our $X XX% which

million compared outlook to in called an basis to points now increase margin approximately XXXX prior $XXX up in excludes for expecting with adjusted Sierra On which around sales around are points between be and value XX.X% a be $XXX in adjusted and expect to to inventory gross XXX million. gross we Our basis increase associated to step XXXX fair XXX acquisition, and approximately margin fiscal XX.X% XXXX. XX.X%. basis, the We fiscal

be end XX.X% range. margins Our gross the to in called for to of outlook the low XX.X% prior

million expenditures selling, including to and administrative XXXX. overhead to corporate general $XX.X compared million approximately million of $XX.X costs, expect We be in approximately $X cash

amounts $XX.X our profits the a For expect in Through and to on called seasonal experience outlook approximately decrease the drawn working additional perspective, $XX approximately quarter, revolving SG&A million. currently for during decrease of fourth credit by the facility we our capital in prior increased million.

continue million expenditures to expect in we $X.X approximately in XXXX. capital Finally,

that quality, highly outdoor fully integrating diversify the the reiterate, industry redeployment on remain to committed capital producing long-term assets is unrelated to acquire to that to high are note this While Sierra growing business. a potentially durable important focused cash it's our strategy business, strategy. also To equipment to and we flow

a as maximize significant existing impair the purposes. intended is to our to more to Before agreement for our passing reduce that of the risk NOLs. to common owners therefore would be and tax of and of of X% of Any stock under rules or such a John, continues possible the ownership a rights ownership reminder, number value call federal NOLs our back these income change the over limit to subject change

of at XXXX, concludes our $XXX XX, NOL approximately As prepared million. my This September balance remarks. remained

call I'll back Now turn John. over the to

John Walbrecht

are our are critical Thanks Aaron. improved our and sales are shareholder The marketing we both fundamental margins stronger strong redeployment and driving fall and made We're under have significantly, that be campaigns in in ASAP value we 'XX strong a sales enhanced framework. improved more driven growing for we our that of investing highlight for categories, we equipment parts have on consumer gross awareness, business is orders track. to which to believe spring acquisition have our the 'XX bookings driving even what our

comments up. 'XX our a spring momentum Now few season. spring 'XX brand's our line on the We're into about excited product heading

stronger-than-expected season focus on will winter shipping the we in rock our With gym approaching, November sportswear we demand. continue and retail continue shoes, climbing and to see our award-winning category,

will momentum more see seeing as invest products marketing. continue the we and launch in mountain. alongside disruptive new of anticipate growing climb developments new We both also to in We

collection, our new ATC more belay products rainwear a and XX logo include 'XX. In patented Pilot, more. addition of poles, the packs, called the updated expanded launch harnesses, sportswear, stretch Shoe trekking expanded wear total spring Rock new new of to for few device In spring products the a the than collection,

offers. 'XX to works than than BD product across forward beyond, more in currently categories XX we Looking initiatives have new and the product one XX more

impressions through sell-through PR impressions and of for strengthening billion its billion XXXX, editorial marketing efforts, achieving goal held in our X and advertising, In than true marketing has to terms and more to in 'XX our root alone. BD promises, $X.X

skiing XXXX In the which print complete our addition, television, Defy an encompasses we our national will headlight on ad focusing campaign campaign, and and backcountry Dark both with aggressive campaigns.

reference Burkart Campbell, marketing, Bone continue the Dawn and drive first continue Athlete, Honnold's Instagram I speaking to and with the Diamond acquired also a management have team, a our soloed who more Free my we strong of the the XXXD is the supports North the sport of impressions state-of-the-art Joe to brand Along in the a testing R&D first year local In to for Ondra's business to and than we In and with offers drive Sierra very It's key finish sporting dominant XX America with has by Sierra VXX, shoes followings to leading this Rock to shooting about our of very including like our Sierra, expect own Sierra, remain Chris we acquisition that Jimmy more been and detail Black regards Tim with all underground on Bullets Climbed Tomahawk, like international achievement and bullet partnerships Kinder's Babsi's aggressive company experienced XXXX. in hunting, with business by From have to XXX. industry-leading our and we of August Hard Freerider, XX, depend to branded asset best-in-class photographers achievements brand, mini strong consumer. Sierra range. to in team. world come been Bullets Nalle's first Coupled precision Adam's quality Chan in We on. impressions. also a and able podium the competitions, Alex years. from Our Adam with control. free Zodiac, accuracy range that the up recognition achievement remarks strong of Climb commitment Grant' hunting Joe conclude These our their in and XX% boost alone. would and enthusiasts Wall,

law has diverse base tolerances tightest an SKU enhanced agencies and include complete by concentration also build historically offering, achieve base Sierra of product diversification to approximate to have and manufacturing customer XXX industry a mitigated customers wide in This is Sierra OEMs. custom process a has order addition which risk. retailers, distributors, customer enforcement further in fact, the to In Sierra industry. control of machines the in the highly

premium free They cash of a requirements been manufacturer Sierra with XXXX. Sierra volatility. product, From to we base. EBITDA has generated for and a more CapEx customer margins ratio relatively strong a as ongoing an from outdoor XX% average very margin have of premiums These perspective, profile. and driving insulated flow targeting to from XX% sales channels sportsmen, Sierra discounting, financial the as OEM XXXX than susceptible well demand less believe also retail cash flow the limited margin been higher As conversion historically has

on For expected benefit carryforwards. from Clarus, return capital tax invested is to our large our

various and to This products. investments that innovate will marketing, especially includes We including force government expect resources Sierra's enforcement sales social course enhance strategic to our growth. to leverage and improve accounts, distribution, financial digital continue of to accelerate and customer both seek within law capabilities, new and new and

as process XX last very follow we a will months have with We similar BD.

have today. that bringing products the At our retail competition, so, innovation in with bringing supporting we So, that to are strategy continue while marketplace are Diamond, renovating behind we for than market. where truly a innovation core and return believe clear support our retailers closing, are to believe into Black really the our our we at the is this brands This all products, true and momentum stands about brand. business marketing pleased our is invest rapidly to innovative and strategy We doing building sell-through driving more their to speaks best-in-class consumer.

expect over remarks. continue to and I'd Operator? for We closing the like momentum build even my any this Q&A model. and operator to Sierra before now to look our our into forward to back time turn integrating

Operator

will Ladies instructions] question-and-answer electronically. David gentlemen, will with come And session from conducted be the Capital. Thank first ROTH and you. [Operator King question your

David King

Thanks.

John Walbrecht

Dave, how are you.

David King

Good.

guidance improvement for congrats it that much any else. trying the are looks how that a near-term first upside, orders business, ASAP a And business off are or of maybe took show I talked our then concerned the demand. little you've stronger some up the able bit, are addition just up, for you up, quarter with the to intermediate thank little little been about term you Diamond bookings make not it you? about a more like the and we you for look it should cautious Black there So takes intermediate guess think you of there and but I third at there are near the like about in terms but be to bit, on maybe about of outlook legacy offsets that sounded the Sierra, about if bit thinking

John Walbrecht

question. Good

program we're improvement we give little the show the of What I -- happened. those let the we of it. me was of started going you and quarter quarter, to our most 'XX a our take fixes a and into Aaron is take that results proud the into did in the all together on We place fall to Dave and of third ago year start When bit perspective had to business 'XX fall fall these discontinued a third hangovers that So, we back you in knew have areas. and would putting rid successfully one get merchandise. compared key -- DM and

If we're DM momentum our up business continuing. Diamond is subtract as up you that [DDC] XX% quarter, whole We up the you and XX%. globally. take our away apparel DM, Black is a see for XX% In third is

fourth weather, is If about continue, the I all it's future, currencies, business. again feel realize we economy, can ASAP's that quarter our very positive ASAP-driven we about the the Now the the control control can't we control which and can't what an control, but competition. I so can things

other guidance? we that this increase let's impact buying ASAP keeping so our that that's we in and our and more side increasing because improved improved in then again momentum way. an our of by that ASAP's quarter and conservative results an our we see to build marketing is due and and prove has have saw goal continuing. is had that fulfillment by Are it's and Yes, quarter our we inventory significant our the Now ASAP's

third meet see exceed call. anything the fourth going to the we don't that don't trade or is we've that will I any your see quarter hope through is So, quarter headwinds. to the next at in doing right what and now into negative We keep the our expectations We're us. done

David King

quarter as That's Great. what discounted in percentage you and of last the year? sales that a Okay. have conservative of there product in encouraging was you built fourth the do

Aaron Kuehne

Yeah.

DM $X.X revenues. about So of million last represented year, total

David King

Okay.

John Walbrecht

would've So as that percentage, a X.X%. been

David King

helps. That Okay.

new year-over-year of it in So, they I think we maybe switching saw the to last think gears, some terms of in John in increase inventory you you alluded I quarter actually terms and increase the had, you'll more on how you of feel a that I that be Can talk you of guess front how down? lot think bring product. that quickly just and do you balance importantly, able to about

Aaron Kuehne

the into the that about the Dave. third highlight Sierra important foremost first It's as sorry, $XX million Yeah, few and Aaron. balance of So, worth me we to on quarter. that or a and fourth part associated note This approximately here inventory components acquisition, sheet just is acquired we acquisition. put focused with let of

that our out had of we're the that And of $XX so, year. $XX about at million revenue if you in to million the numbers, sitting strip we the compared at end

look the fulfillment One, we've we two spring execute and to continued As of are level that balancing provided and year to at is results. the components. is This we fourth head to throughout different where quarter ensure have has implemented strategy great high 'XX, a into a continue rates. we and this want

we and free to However, cash obviously flows. overall our time, manage working at the capital increase also want our tightly to same continue

and the fulfillment line some with especially levels desire we SA as has some the and additional have the acquisition result, strong those inventory and decrease three and produce, the Sierra another they'll next what months levels will approximately us while generate rates being that about down enable of John think do to will expect bring the that a $X highlighted, we million cash. able very continue As expect stands inventory already team that to I of also level to that

David King

Okay.

That's little bit. and on color Okay. back, That follow-up a then I'll a one more just step and good helps. Sierra

is relative year better a then volume ammunition the about in think how year to front? end time for end you that been now. market market on I see So, Can end gives you've comfort market that Obviously, Sierra's has or the market. end volatility a the it's pressure more business understand and us limited part to trended help better going to to for us limited volatility relative price or I of talked almost that the guess help now, that

John Walbrecht

Okay.

within bulletin more from therefore, we the in little the So as of ideally, insulated because the the it business we're unique a bullet specialize XXX% i.e. premium in accurate not it. most niche side

year. I sales think we seen in the XX as seen have over -- months, some reports we ammunition volatility in we're business less how the business, that follow to and on others we in the and to invest in very what to the have watch the the we but unique feel third that fluctuations last moving quarter impacted next is the done weather, of going comfortable control and the in the process and similarly, first into sales currency, in half what invest economy, going to what will bullet start the volatility we with of marketing to invest both in Sierra can't BD model. the BD, more the the bullet, in in similar and year. to We're Sierra innovation control we aspect we've the And limit with the continual that we can we

the thought at we valuation feeling of some so underwrote at the Sierra marketplace a that was knowing what We aware, knowingly we than level in lower our also much captured buy. that just you're the we time, like

David King

Okay. Good of rest luck year. Thanks the my for Great. question. into taking

John Walbrecht

Thank you, Dave.

Operator

Davidson. D.A. with And next Andrew Burns hear from we'll

Andrew Burns

on the performance. strong Thanks. Congratulations

investment some line you $XX.X that, million Sierra some that look prepared marketing are are to generating on run in business. the we of Bullets a able being into heard you million or areas in heading that think follow-up to and data a sales about XXXX there good Sierra of the remarks, a revenue I've times $XX historical of grow acquisition year? Should within couple the it's of being at can questioning, for as we next in Bullets EBITDA whether rate year the further Just invest

John Walbrecht

Sierra sales future will I on Andy very relative sense our to in goal view we Where think make investments similar and we how the marketing it will we to growth in and approach get to ROIs BD. invest. more follow a of years, the

we in we than look it within We're it like those believe longer value think And like returns. and going Outdoor going invest will and manage yes, said, and sooner Clarus will range. of I the But going some I in coincidences. it to have think to it obviously to this at we're I a the I we're toward to long-term think keep year, as Group. investments don't

I lot of similar gone we're results. is applicable to think a in and we've see XX months expect last what Sierra the helping going similar investments XX I through next to very the and months

Andrew Burns

you a Great. time It out Thanks. could are sounds Shoes like And I was turning spend hoping more the little on footwear strong. Rock initiative. incredibly

Rock and to ramp about those Shoe your that core able expanding category you. Thank Just category category. the talks that wondering being your type beyond volume within to ability to scale on what three five-year opportunity for is

John Walbrecht

Okay.

a strategy. was that very So disruptive

and us, or partners major key expectations our OR that category the we our We As our innovation earlier sell-through market sourcing has pretty the shipping demand Rock were with bullish at and said the and this the responded on aggressive as so and retail early a the you and to key again. previously knowing We won Show have are the and been with for at the meet Shoe within base we developed and reorders strong of the direction. we we've exceeded launched flying and at are major have at aware shipping were previously, plan planned just Grassroots met to itself exceeding awards weeks momentum the show. retailers The expectations. all we our

DDC that, in of retail start about take and as a will to and 'XX both consumers are place excited our November XXXX as spring So, strategy shipments well from strategy. accounts a

but as have -- demand fantastic may footwear. for BD, exceed are way, that at demand. only expectations, is is planned will within the we planned this We plan It initiative for Footwear within this our it be aggressively Shoes least which it. for trending Rock not

footwear and BD, other in as continue as percentage the climb alpine of and basis we at within our the marketing to drive and will teams in can approach initiative. to We represent will invest well categories that product and we a strong in that look think

Andrew Burns

good and Thanks, luck.

John Walbrecht

Andrew. Thanks

Operator

Next, with Stifel. from we'll instructions] [Operator Jim hear Duffy

Jim Duffy

Hello guys. Thanks.

John Walbrecht

Jim. Hi

Jim Duffy

me. number Sierra the as margin of Aaron, business? the point Starting good the business, structure baseline. XXXX a reference filing a questions for A there of for on gives is the perspective X-K on

Aaron Kuehne

yes. is, It

Jim Duffy

Okay. should there's think rate, member run And in management How then included fees those? the that. about SG&A we

John Walbrecht

related from the those owner and will the operations. Jim be to So prior ongoing excluded

Jim Duffy

can on Got it. business? share of the seasonality And you then any thoughts

John Walbrecht

Yes.

is back business the other XX% a for spring about half. it's So, XX% in the then and the

Jim Duffy

Great. the Shifting expected third quarter? you organic the margin the Aaron, come to in did quarter, as business the in in gross

Aaron Kuehne

line it with Yeah, very in right expectations and improvements our we with that realized. the proud was

Jim Duffy

Great. I sure, I'm of that. beneficial excluding guiding inclusion And a I in margin want mix on the make the the year from reported effect step adjustment include understand up, then this Sierra? clear to

Aaron Kuehne

It does.

And in so, recorded we we XX.X%. recorded what QX if you think Jim, about

that However, inventory $XXX,XXX up. included of an step

our at or prior Sierra, that BDP's adjust we BD, XX.X% to gross XX.X%. if acquisition business of So, adjusted be the you out, margin as in came business would core mentioned in the the the and

business made So contribution that in the that to highlights Sierra or QX. the provided

Jim Duffy

Got it.

what for of the the than basis, SG&A on that the quarter like Does a are on organic across little a in looks timing guess an Okay. bit assume that I the And planning? an in Is you the I organic year? little heavier guys balance basis SG&A in reflect came it then more implied quarters? guidance thought.

Aaron Kuehne

here of sales we business to BDP's Yes, wanted timing and little some marketing with that so associated impact bit initiatives to the pursue. to continue related there was a a

changed have focus. for year, that the also and in and PIEPS restate areas in the shifting as will associated We've totality. not we of Black components terms really been I timing, just Diamond think about the but outlook with However, the of reallocating rest of

One and of knows initial well expectations we XXXX the seeing or that about the in related that things the to revised forecast expected our outside we what etcetera was were. are for comp that to above as seeing overall non-cash contribute then Jim million are $X.X also Sierra additional items some to stock is SG&A

Jim Duffy

it. Got

Okay. Thanks detail for all that Aaron.

Aaron Kuehne

bet. You

Operator

go we'll Campbell Laridae Matthew And with Capital. to

Matthew Campbell

hear I was you apparel that right? Did quarter. up Great Did gentlemen. afternoon, Good say XX%? Hey.

John Walbrecht

drag. XX% was the Apparel with up DM

were If third sales the you for take out the XX%. up quarter drag, DM apparel

Matthew Campbell

Okay.

as about So, years? the growth it sustainable. is two not should next investors, probably we how XX% to was but think for XX%, apparel up three

should you gross me that of can about and is how what think margin kind that So of your sector for what margins, business? business remind we your

John Walbrecht

Yeah.

So, XX our average is that our business whole in margin than north of gross category. points margin in better the

mid-XXs So, in take from intimated performance, with round out, heavily and like the DM In regards fall above. and a up 'XX apparel, booking 'XX you was be I said carried previous and that line towards at were we looking XX% expectations we've our we over if apparel should for growth. fall to strong

will We marketing as both well apparel continue invest initiatives. our as in in to people engineers/product in

are equipment brand. apparel We

think are focused on of we we So, strong over climb is initiative so the five apparel apparel. footwear and do well a And outerwear, logo is BD years. market, between as for very for market all Sportswear, and those and outside us. earlier that growth are wear category of categories in three to both important, climb to aspects as apparel, killers will growth continue we the strong next the

Matthew Campbell

That was second of part Got the my it. question.

what You the just logo in spoke wear. you the talk that, of expand that about thinking you not upon heard Could you business? about side logo to I've wear. are guys

John Walbrecht

Okay.

saw were is? or shirt his you shirt, a street So, and looking wearing on sport teenagers guess Hurley if a we the a you would kid and what billabong of I choice at

Matthew Campbell

it. Got

John Walbrecht

If T-shirts, wearing gene the backpacker choice, was that momentum anywhere gym great armor, T-shirt skateboarder. XX hats, for brand of capital is a choice. sweatshirt logo is beginning momentum, a What seeing and sport specifically and you you trucker climbing the choice, three-ball that and choice, choice the sweatshirts, of under of If who of sees There reference growth choice, a gym feverishly, all and growing is of that maybe way wear, climbing you is right, in gives think wear his he apparel board. he is saw his is are who him in of that? away think player. the climbing we a across kid, sport at XX what he between a choice, is [Samba], soccer kid,

Matthew Campbell

or to those other the apparel Are margins similar higher? margins

John Walbrecht

was drove from that think you it surf XXXXs. the market the if And logo into wear well the mid-XXs Higher.

Matthew Campbell

you division in revenue. this for today size So, what's of the of terms

John Walbrecht

than of at about represent and today the in Apparel business, group rate don't the XX% of obviously down slowing rest the faster a but we see growing our short-term. that

Matthew Campbell

much of wear Yeah. part is logo imagine. the smaller a And that I would

John Walbrecht

is, it one has also It but of upside the biggest opportunities.

Matthew Campbell

before one opportunity? how you current thoughts have Great. sales your many they And to sneak and took them what in, increasing do or over Sierra, are have they did more regard -- can I to people that with if

John Walbrecht

on box Currently green is OEM team and they service dedicated their focused sales their small business have model. their and that a that

think just force the similar we our by the on is lot there target and that will will of a and sales previously. sales We clear of focus we're a of to be or sales the force side marketing focus opportunities BD, our not opportunity

Matthew Campbell

guys? conferences going guys the between and the of see at year, you to any Are Great. just end be investor you to love now

John Walbrecht

a that you to Yeah, you're obviously City get in and Utah. and us sure of always Lake visit we're contemplating welcome list of We'll then to Cody Salt make to them. around come

Matthew Campbell

very Thanks guys, thanks. much. Okay. Good quarter

John Walbrecht

you. Thank

Operator

At time, to this Walbrecht turn remarks. would concludes call closing for our question-and-answer like over Mr. I session. to the now this

John Walbrecht

in thank and and with everyone would Thank us our full again we forward for to Thanks when call three that look listening we snow you. pray it as today to of now. we report joining We and mountain speaking see months continues from quarter for you like approximately to results Thank we our it you. fourth Utah. year today's

Operator

Ladies and today's gentlemen, this teleconference. concludes

your this disconnect you may You Thank for participation. time. at lines your

Clarus (CLAR) 7 Nov 172017 Q3 Earnings call transcript