CLAR - Earnings call transcript Q2 2024

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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 second quarter ended June 30, 2024.

Joining us today are Clarus Corporation's Executive Chairman, Warren Kanders; CFO, Mike Yates, President of Black Diamond Equipment, Neil Fiske, Management Director of Clarus Adventure segment, Matthew Hayward; and the company's External Director of Investor Relations, Matt Berkowitz.

Following the remarks, we'll open the call for questions. Please note, this call is being recorded.

Before we go further, I would like to turn the call over to Mr. forward-looking the Private harbor of Securities provides cautions reads meaning within XXXX he important the of Litigation regarding as company's statement safe the that Berkowitz statements. Reform Act Matt, please go ahead.

Matthew Berkowitz

Thank you.

based understanding known potential to like forward-looking forward-looking be and the information statements Litigation our Clarus statements statements Reform differ Private will from are or uncertainties forward-looking cause under Corporation I'd These begin, on us safe several and today. our I remind of materially operations that best those provisions of call, making to make during could we financial of and forward-looking Securities subject risks actual the harbor expressed statements. condition Act. to reflect everyone estimates by the or statements, the These we to today's these assumptions results the Before that of implied

replay affect is in operating public like information that company's the SEC. everyone on and on available to time to at available provided starting via today's link X:XX as Time tonight. p.m. the for time I'd website remind A results could this also webcast financial the the be will filed in release from with press call factors potential be the Eastern company's replay well will reports More at claruscorp.com. company's included

to Chairman, Warren Executive call Kanders. Clarus' Now over I'd the to like turn

Warren Kanders

respectively. and earnings am Officer, Matt our Fiske call discuss Thank you, joined review Clarus' Financial well our Matt. quarter. Good adventure by outdoor Chief and will as who Mike as to joining thank afternoon, for segments, our for today the and Hayward, results Yates, you Neil second I

have value. incremental far I'd highlight the made XXXX, long-term Clarus' create to seek call like Before executing I progress the initiatives over, strategic thus turn to in to we

that the conditions we will It benefit. we sustainable we confident While reiterating foundation broadly moving to is have growth growing forward. we have laid multiyear consumer demand have of strategic early deliver the with investments expected remained stages made that but constrained, long-term worth macroeconomic our challenging believe remain significant the in overall are for plan, date

provide While we to forward strong face team during At specific more the Outdoor Matt market Neil initiatives take and the in continued quarter. positive segment inventory. each headwinds, focused of of will rightsizing continue execute in to the simplification on the steps and comments,

our will several both reducing operational which were core. year-over-year categories, improved we've levels in the opportunities the with inventory identified of and Importantly, composition and greater and on quality may standpoint, down been discuss we A that business, drive an our From across solidifying Neil XX% inventory costs to detail. pleased efficiencies progress and in styles focus we've the operating the

the States, positive continue primarily in segment, during of first Adventure see reflected year half the while market the United to the Australia. In we in softness, QX the particularly results within trends broader segment.

detailed have long-term we largely on opportunities we are previously, the to a team's will initiatives. global the the recent realignment discuss broader believe market appointments will across our we capitalize continue significant industry As invest corporate which our OEM to the believe focus international growing addressable verticals. and market, we and outside growth bring strengthen and Matt strong and and proactively markets U.S. home dynamics to of there

product We margins enhance to ecosystem place team we we to scale. out product maintaining map right build believe have in commitment now road strategic as a and the while best-in-class a

to thank achievable. being incremental profitability pleased with I the objectives recognize As call done, the you but turn and much the improvements we to with business there work Mike. for seen stated we future, over more today, across will look the that, With previously have we that long-term are is are the and still be us believe towards

Michael J. Yates

call, I'll will today's more Thank turning Beginning everyone. you, conclude review summary then afternoon, performance. over a brief detailed to Matt with provide Warren, QX up it for then our Slide Neil segment session. update on it Q&A of I X. and before a financial and On results open a to and good QX

to quarter strategic our plan We in outdoor advance ESG-friendly a growth with continue as long-term positioned business. Clarus second the pure-play for

was As a in reminder, divestiture full of the this Sports our quarter first Precision QX. segment following the

that second sheet to initiatives our Warren structure, improvement profitable As and balance and drive revenue quarter, strategic enhance mentioned, the goal deemphasized foundation and our to drive growth. the find organizational streams in advanced do reposition not categories our we

today. core we that In We the we build our on we focus Outdoor continue stabilization in the positions that segment, In seeing of where the a many our on difficult remain of our American were on as believe seen and to track confirm strength. indicated categories simplification peers year can initiatives and first previously sales have half market, against of we decline. the backdrop North

which period, working. our have Our as this of with our rationalizing scope business American we products. categories up strategy North and over customers best simplifying simplifying evidence is the of We X% view best wholesale into been leaning as prior our our encouraging year that was is

the for continued we development the vendor Adventure on quarter. higher-margin Revenue process, growth. partners have increased streamline leaning excellent tighter consecutive products lines, is better to our fourth year-over-year which Operationally, the segment, Over time and for deliver to engine at

rest detail were U.S.A. Matt we to objective, profitability steps weakness the expand market New Australia adventure affected to areas continue moment. world beyond in of our progress will to sales the team these in and to in a with in Although Consistent Zealand. and scale strengthen our our U.S. and take especially seek growth whole markets, and invest overall the of by

two organic in to and the second million Through to over a segments existing capital strategy, debt to slide. significant the is on shareholders. of cash our like balance to our key sheet. allocation component drive Clarus I new quarter ended of strategically is our bottom the the of to strength We $XX priority to the with flexibility for reiterate would of and benefit no seek capital Moving financial the that our reinvest growth. allocate

may We expect our enhance and continue pay also the quarterly business States. opportunities to in at M&A adventure dividend to look that smaller selectively our United bolt-on

the Before over briefly quarter of short second Matt, to of guidance million Clarus' a $XX on million. million figures of I revenue X. our to Slide I'll $XX was key call $XX.X highlight few turn

million our However, into our for first this half remains to EBITDA adjusted $X.X for million line This consistent EBITDA. to revenue we compares of year XXXX in the million $X expectation of year. In $XXX revenue. generated second we guidance million are of of revenue million our of million $X.X the first of the with guidance loss adjusted million. $XXX of $XXX.X half of Taking $XXX reaffirming an top to account, quarter, our the

in the half Our primarily segment, revised from of U.S. by our driven guidance the year EBITDA rest of and first Adventure miss the world is operations.

[indiscernible] new QX have probability While in view of EBITDA we we from confident we are the to as low. team place, the back negative in

Matt our now result, XXXX blocks the turn we continue pressure we've the over a Hayward, later of As our business. Matt? to in provide EBITDA call. Managing guidance on execute revised segment. on to but I'll details our to results Overall, our adjusted year updated outlook. we Adventure strategic the second I'll the Director Clarus' multiyear place building plan. additional have call believe on near-term reflect financial full quarter

Mathew Hayward

begin Thanks, remarks on Slide #X. my Mike. I'll

were the quarter investing and OEM and our remains of with objective fiscal primary years. customers execution our on scale solid we business, track. margin year-end continue to second again to Sales accounts. portfolio inventory reset results Australian steps integrated tighter the take and offset demand in and consistent was Following retail our Zealand key by we've and efficiency markets, our of seen expansion as levels by softness accounts New than businesses. Australia and stabilization were finding In once in across growth of This customers strong by in partially managing prior certain specific driven core

the the our in half inventory highlighting gross with we're driving the It consistent also ANZ business, is levels expectations. with progress across regions. of below these Overall, year on pleased our net in sales down supported channels. first targets our our and EBITDA in Zooming by worth specific profit results

saw behind. of sales and the and we wholesale of first U.S. year, half lagged the rest the in While OEM outperformance world in in

As higher a impacted towards market distribution with adversely not delivered has OEM particular, to foreign than hampered margins, that the quarter skewed the margin more product mix and rather plan, were channel in weakness result, revenue. results. U.S. second Simply put, our

half of pay of quarter While the in key first should net we made second we our believe sales, investments EBITDA, year moving underperformed the in forward. and dividends expected terms profit gross

tool scale home the one-on-one market the bringing our we work the key building next responsible Trip and clear including primarily in new in progress of a business. He expertise full who peak integrating was and Americas, global customer responsible Wikoff our to of represents we managing worked opportunities for growing market global to U.S. and our invest importantly, business hired on operating focus and of to the be and of previously and periods in significantly a in July where taking he has in U.S. this for the each grew of brand wealth growing Most adventure for of the America level. acquisitions. initiatives, shared their to services relationships This in capitalize with clear team. year, team support the the long-term as and brands will a knowledge, site our Canada, Latin brands the growth to addition critical outside on U.S., discipline has has leader a

expected action of the of our initiatives with We've relationships that accounts that Head will including to taken customer his of Turning also In broader focusing and build to EMEA as EMEA. he important appointment that Bruce, are current lack region, who the the sales to role, address has the the leadership Warren adventure, joined Africa. in Middle earlier, alluded segment's Europe, team Daniel to East while Adventure corrective expand across an on Sales.

oversee Chris each of ANZ made profitable our the building clearly management APAC, to We've better robust services proper region supported growth, to supported region. on our promote by in by in to execute strategy the have whole our defined growing We now our global Radford HQ with incentivized will distribution structures, where drive a ANZ Additionally, shared infrastructure. X success the to Sydney. he regions, head of the decision

drive international sales. largely underperformance Taking performance higher margin and our that OEM mix in some We go home context. channel and saw these of we profitability rest attributed long a believe offset Adventures, step outside in traditionally our resources overall QX the EBITDA our market. There results were allocate U.S. to way back limited distribution product of a where in our in outperformance world as will growing were into improving we growth towards sales steps softness to markets. matters

and revenue will in view We are our the the during half. baseline that driven from improvements margins second in and is gross EBITDA confident this which be

have regions. our half the and upskilling significant members XX operational bringing X on in year, enacted key We change first of across the team

that While initiatives of our President a were firm 'XX internally, help of improvement through we of chain could engaged Diamond. to Black network endeavors. an supply the positions sourcing our Neil? great deliver global now these margin to of beyond. recruiting to engaged We've work like also turn all meaningful could and and sourced be Fiske, partners in we outside several call across over I'd believe -- Neil to

McNeil Fiske

Thanks, Matt.

our Actions mat our long-term X. this Turning for in were demand simplifying levels. of for the significantly basis in with some to pleased foundation X.X% expectations of core, In headwinds. were themes we sustainable solidify Overall, laying less to and the adjusting context represented our in Outdoor market strong market on the our quarter, to the the comparable revenues the a the in profitability breaks business wholesale segment with with and the QX face in I for progress one XXXX, North activity Slide for improving year. our are fewer key results and America, met expectations revenues a growth. that post-pandemic Overall, promotional is still quarter down line pricing

expectations. are year, again, In North stores digital wholesale very XX.X% activity in not pleased seeing. BXC less due compared X.X% clearance region's down of year-over-year. of The grew America results the the digital rebuilt while represented to as XX.X% with event in year. North team total, last X% half promotional the America sequential the the over huge with we year. retail heard, we drop our a quarter, XX.X% X.X% are down American wholesale repeating with of QX, sales our market, line improvement year. from revenue and and saw that X% last was accounted North the decline June for large in for from in part the We've quarter versus first the XX% For European a the last you've first a channel to

X.X%, in ahead Europe slightly in are conservatively that outlook orders improvement X.X% the in weather direct-to-consumer is further grew fill-in a That to expect channel although many and second low relatively up and of said, to accounts is the in if the the half, season see acceleration EU we digital the We is some still an with revenue. flat fall/winter counting normal modest bought region's on wholesale. for that have favorable.

Our down XX.X% drop markets X.X% from international a in improvement also QX, posted revenues distributor QX. and the sequential versus with

with XXXX believe reset inventory to markets. continue we will provided of distributor commentary year in an However, our most QX. consistent be for the we

right of direction. but varying at to stages in are recovery, all signals point regions the them Our heading

was revenue for In total, down XX%. our QX

PFAS points margins inventory, primarily and to product year, gross with prior due Excluding QX XXX reserves potential to down deal mix. basis were channel to

half restructuring a of margins basis. flat were excluding X.X% down charges, the costs, first year-over-year. the comparable year-over-year were year, Operating For on

drive We agile. the to in and the continue leaner business to efficiencies more be and organization reshape

to XXXX. into expect continue see materialize to cost in additional savings HX grow We and

prior XX.X% quarter at to compared $XX.X the down million. ended of million year Inventory $XX.X the

reflecting work percentage from example, our for driving last and continues improvement the and Meanwhile, volume improve to styles, to up quality XX% composition inventory wholesale improved and fill planning ago. XX% in XX%, sales our orders operations The of in inventory. management our processes. and on inventory over simplification XX% Our to the quarter year rates a a increased stronger and of

million. Importantly, apparel $XX.X quarter down ended the year-over-year at XX.X% inventory

by brand. as continue business of this is this best rationalize business, goal review the to product The owner. and whether review of Finally, simplify we another our for value safety of a unlocked Diamond can assess to undertaking PEPS are lines strategic be we snow our Black the

last from In summary, message I'll reiterate quarter. the

I'll in with call do and to the to Mike. and pleased back over progress to knowing now there that our are We strategy, demonstrate. confident more much our is turn

Michael J. Yates

Thank you, Neil.

in Turning summary performance to Slide I'll with the a begin second financial quarter. X. our of

year, are continuing a reminder, closed of noted sale Support and As given million, the of Adventure approximately and quarter segment, and segment are outdoor previously, this to we our first operations. the in which of the the for U.S. $XXX results as comprised have as was results Precision referred GAAP

in growth compared partially million The in quarter. quarter by prior decrease million driven segment outdoor sales of Second total by $XX.X this XX%. in mentioned. second material was Neil Overall, sales in XX% quarter. $XX.X segment offset the a the were to FX sales year just X% was of decline in that is This venture

the compared unfavorable $XXX,XXX ago the gross In XX% expenses year margin margin ago $XX.X increase for PFAS-related the was Adventure higher reserve were was primarily Adjusted return Neil the reserves, XX% to to margins. which the inventory the in segment. XX.X% inventory administrative selling and to the was quarter. and quarter. second mentioned, quarter. consolidated for ago in decrease quarter, to in in general attributable for XX.X% and The PCS gross to gross in reserve product adjusting outdoor of expenses the in million sales the year Moving mix that and gross an million compared $XX.X compared the year reserve adjusted same margin QX PFAS Adjusted quarter.

These the lower million Adventure an at higher bonus as as or employees higher The expenses margin ago X.X%. the or EBITDA second negative business. partially new by due the reduction Adventure Adjusted to quarter was scale to adjusted marketing the and offset the employee-related at intangible were of company, across including loss added an help well year increase of $X.X expense $X.X amortization. EBITDA margin well segment primarily additional adjusted in investments compared in of EBITDA cost to segment quarter. initiatives was EBITDA in Outdoor to the XX adjusted investments to The as manage as initiatives an the million same expense X.X%

Our inventory benefit for as compensation contingent charges, well consideration costs, reserves. PFAS adjusted and EBITDA expense stock transaction is adjusted as restructuring

legal with Additionally, matter. we $XXX,XXX Section legal the and the first associated of the the were as Safety quarter XXB Commission, These for CPSC the beginning in Product year, Consumer adjusted quarter. second known costs the in litigation costs

Second million loss and at Outdoor. $X.X million EBITDA $X.X quarter $XXX,XXX was quarter. costs in adventure the Adjusted a adjusted at segment by was of corporate second

was XXXX. Next, liquidity. and let to XXXX, to Total June $XX.X XX, Cash cash to X million million the me shift compared end At of December XX, at XXXX. June XX, equivalents $XXX.X XXXX. at million at were compared $XX.X debt

the in substantial February credit reflects and the position in repayment termination debt of Precision cash and of agreement. sale reduced XXXX Our Sports closing our the of improved full and

cash Precision expected cash year Free realized net will expenditures of expenses us to flow, net to be support of most provided the which second tax the is $X cash from operating for sale. Consolidated of was outflow the defined quarter million, XXXX activities capital the maintain less million full for $XXX,XXX. to an $X allow cash by as

to expect half our We million free $XX the at XXXX. compared achieved, would be to of cash of generate balance approximately the If north of million June in $XX second XXXX. cash flow XX, million

NOLs As end utilize of tax carryforwards of we company XXXX. $X.X a expects this federal The year. at NOL the December income purposes of in have U.S. for million their all reminder, approximately the entire remaining to

I on pursuing. like company XXB turning update litigation to Section would Before the to our that provide is the outstanding securities outlook, an matters

this our against half have now for and Badia, witness. we expert The the XXXX. LLC concluded. summary set to on following We trading August due X, matter the Mr. in discovery Harish Motion If to Opposition trial, motion goes papers July were would continue expect been X, court by and HAP schedule to our trial XXXX, XXXX. and discovery reply proceed May expert are in served papers commence X, in lawsuit fact sometime were challenge to papers XXXX. judgment served on both

against filed dismiss and have lawsuit management control June entities persons a caption those XX. and motion also We on to its defendants filed related a

XX. by opposition and We July papers due papers August XX, on are filed replied

Moving our on Slide to XXXX on X. outlook

at We expect continuing now reaffirmed $XXX and Adjusted full million $XX and approximately be $XX is and have to in $X adjusted $XXX to to X.X% million between an EBITDA $X our adjusted guidance or adjusted million XXXX. EBITDA capital for margin between range million and year $X from full expected million range line $X the revenue operations sales expect million to and to cash midpoint of year We expenditures to continue of free the now to the XXXX. between EBITDA. million flow million for top range

Excluding disposal. to Sports the cash of million $X Precision outflow related to prior

$X expected Consistent second are quarter the expected not million. first EBITDA and further the third I with or the million to compared our CPSC million increases is matter that does inventory include Section relating are PFAS-related litigation, be and half to between $X Therefore, matters, $XX the to to XXB between adjusted seasonal expense to outlook pattern, reserves. be want million any historical to our specifically sales and $XX reiterate accelerated half ongoing

the York in sharing New City. Before I be be been million approximately to to outlook. since our $XXX want I from is have regarding $XX the consistent changed. for clear still Investor sales what guidance out This adventure XXXX. expect our early Day to million back has year in and with we We revenue March full discussing move on very be

representing obvious year. is the to segment guidance do our adjusted expect have that we XX% the decrease is a also is of on We to venture $XX.X to our The now EBITDA. prior midpoint from answers, the earlier margin into investments why it the new shared take that, question EBITDA, $X.X to midpoint is margin. million brand million business adjusted in we million Australian to believe prior to for market-leading global bridge generate to business. guidance the compared in Outdoor the and need adjusted XX%. scale turn today roof expect iconic make XX% strategic of change the in compared million the generate we $XX.X Zealand to a brand. black nearly continue a $XX to an And the plan X% a only In a and The at This we order at the our we New EBITDA to EBITDA tremendous guidance between impact XX% of margin

marketing here We to a investments, investments, investments These investments make XXXX and investments market just despite chain to name few. team these critical and are in continuing include as members positions, new challenging conditions. Matt in supply outlined, technology leadership

safety we rationalizing of strategic with that time. nor further of can aligned with There interest reviewing the set PeP less alternatives not intention the The not this company's review options, have the transaction business result has comment that and from evaluation and for disclosure deem as they company Board decision of This intend appropriate. to initiative strategic until the objective made will strategic complete they the a Neil and company's of Directors in strategic relating strategic product any discussed, further about jobs to is to do prioritization no process will the review Finally, the be categories. and assurance brand be of Directors and now potential is simplifying our a soliciting timetable are acquirers. review The Board our consummated.

future, supported outstanding profitable well and leadership to positioned towards are a balance look growth, we the As sheet. Clarus we drive confident is debt-free that by sustainable,

our stages continuations significant and this business we We benefits At to market scale shareholders a strategic point, we adventure normalize. early made outdoor long-term the remain the to in take the business are as have questions. multiyear expected categories operator, ready and investments are to deliver believe of simplifying product to declare plan but

Operator

[Operator Instructions].

from Koranda Roth Matt question Capital. first The comes from

Matt Koranda

in just more. little bit to guess I a dig

little change mentioned. that to million the the more EBITDA a on So in wanted and dig you guide bit just $X.X

little planning in scale Investor preparation now, why guess just that you team are could there, March. your chain. making $X.X sort in we're the the million why more detail? provide of where explanation detail up supply there in have question down those we're marketing, bear I buckets the investments the break I expect the you prior you and wouldn't a around guess, to the can to on we contemplated further for mentioned you guess, long-term some did members just bit change And Day fruit? know in a seeing business Any I to investment So like is follow-on sort of the I you new in

Michael J. Yates

No, great sure. Well, question.

absolutely, million way So in investment from underperformed U.S. coming already right. I million commentary, budget in the underperformed we a and we budget by QX U.S., and would in what profitability acknowledged it's decline the that of in think quarter, the the perspective $X here we've here to $X QX, thought have by out probably Matt's our right? be second business So we all

So to period and our would to U.S. that's be biggest right? the able The right? the to QX not not that said in season the we're prepared expect we going make remarks, like period, we -- that the in business up, do U.S. That's going -- to is in in

by disappointed quite So that.

as years we right, committed knows this he have job, of throughout And market all about He's is we've proven to take level. side, why for them his he's part flip space leader career with lead and brand, of in we're great the Zealand what North to and excited Australia and a distributor and do a brine He That's all -- us already gone the at the spoke did take for think think the the in Canada his in help can the America. XX whether in North once [indiscernible] leader. grow North diligence So America folks right? that's he his background brand, and tower showing the a ahead we hired is get Americas, we here that -- the earlier our to and America. that come a we've in to ripe New product that rack On OEM this. strength are the great advantage to market plan. We is and

Rest does Zealand is there refer world, a included We're of to world. Americas. hired as North across that to right, we of lot what in to there's people. Rest not A We've also the trying to of businesses the But -- in in world investments business business scale and grow over being it XX Europe, the of So too. quantifying Europe, want Asian people here America. some based only market the now of more what of help because grow as the the we've are There's well. and New Australia in the markets OEMs the whole the rest in Matt

So that and of Germany knows who hired Daniel businesses. grow tackle the we another proven Australian in to how Europe. businesses person rest to who's

expected Max the it when we're is new done So our help technology is especially is would DXC, that people, here product track to stack in what website, it's have on a tech thats you U.S. have underperformed new to also, spending with our money -- this year what we

on to which going of our supply margin out only take the profitability opportunities to costs spending money our and then projects chain, chain, would pay help chain, not supply on simplify We're investigate supply forward.

Frankly, execute chain, execute We on To mean needed supply to a it. answer challenged. it. top order going second making made the being the our built and we've yes, these had we was here that's dollars investments question, to it? these more to we these The in on in despite we spend to people, for And XXXX. quarter into so costs We continue marketing growth. technology -- line thought need to your blueprint. and commit we we some about And what have have spending decision plan money. it, thought regional I about are

in making the covered spend were year, even an margin we a the especially had account though what the end than dollars was May first adventure Much extremely by we we're higher frankly. Our tracking April, to would the in of through thought here have of conscious revenues we the towards June higher. and that dollars decision internal quarter. up we -- been were budget achieved through half make higher second decision had tough.

Matt Koranda

Okay. Got it.

of question lot rated maybe the in top at So late. it little line the a a are to the like sounds quarter on things very bit

Michael J. Yates

Yes, indeed. Yes.

Matt Koranda

say Got I improvement triangulate And Okay. put just if that heading guess wondering specifically third fundamentally it. to is a outlook that like margin there. the it oriented can what where one into more we Where does question. to we I up quarter, double-digit of to the what maybe year imply All in out just improvement sets EBITDA able costs then can pretty guide or in in I the pulling the you some were and where out jump other, full be looks to kind between get and quarter fourth get Which EBITDA low we going a of margin the guess, one fourth quarter. right. confidence some good the -- like highlight for we're

Michael J. Yates

Yes. No, no.

right. So

So need fourth $X million of million for profitability midpoint $X of quarter. the of difference fourth revenue. QX the that what I of, implies revenue quarter. at call million, But for quarter million million get of the the the is XX.X%, you're the XX.X%, at to which right? guiding $XX.X highlighting quarter I'm is So to in $X it, third to the profitability the $X.X only fourth the of midpoint

So your question spot is on.

quarter at fourth that quarter are you line. it. level strongest is together at Black the coming quarter business. looking why specifically how Matt, this the the how comment Neil, up to to your for be And and adventure on want over the fourth Diamond either right, exactly on business confidence the our top that's numbers is interestingly year so we're setting enough, and the

Mathew Hayward

QX Look, Yes. strongest. Matt Look, it's from our here typically is Adventure. our

out. going our had ANZ, we of the softness it's is peak U.S. back the benefits half QX, you as season. in we One performed the benefit in called The into have haven't

We supply to that a products of the more the across being dominant the brands, kick project to see X mix. cost-out range product some also QX long-term as our that based added chain of are are one. on well. and of global in different introducing kind new We're some our projects of looking fruit efficiency

I So there's a guess, of number of the of it. things phasing timing into, the linked

well, stabilize as point And market factored as that relationships the summer go dominant into the of factor into also being to his projections. the time a job fifth kind season HX and we've strongest ability the and heading The month its our and able bed. is trip season, U.S. fourth our being we for in in at peak of in

point So that's adventure view. in have from an HX we confidence why of

McNeil Fiske

from Matt, can I on the perspective. add Outdoor And

seasonal So fourth our we quarter in fourth naturally quarter. and in a demand is leverage biggest of the get terms just quarter tremendous amount operating build. of And

flow-through on high. the So is revenue that extremely

in the cost and order [indiscernible] at alone Secondly, Black do incremental initiatives goals place. an model this that look be of will And thirdly, operating continue frankly, to able build of that cost from to into of at in we we specifically, based, we've wholesale profitability in quarter. about to Diamond incremental put we've our mostly quarter XXXX. taken hit QX, for the would $XXX,XXX as ensure look out given indicator first forward the we what we'll I [indiscernible] And business say, the any book amount

on bit at a quite business call And of depending our confined matching be is ASAP turns product, fluctuation good the And There us. for where revenue order either is on be how I about it's early expectations. we the the winter could I think orders XX% orders. still mean winter with or that's but of and maybe a once, will it that amount season feel book early the for

for the the half. profit in the So Black I and confidence QX for think give X factors Diamond outlook us second the those for are

fill this overall category given our allow rates that year, are to I for product year think this line in any last upside orders better considerably do market should trends. any and we're overall call a react in, to better or inventory orders position come us than

Matt Koranda

And reserve the of for and sort over, on we've we more, we to segments, and the we of reserve this wanted just left? Okay. I'll up? turn guess, exposure but quarter. from the another how done on cleaned perspective Do does I guys. far, the all detail get it? When I think Maybe guys about do the then one this doubles thus that exposure it have. all kind understand of much just guess I more what think we latest exposure. we how we've fully should inventory have your PFAS appreciate had That you

Michael J. Yates

there brought up thought think we million I'll I mentioned was So that. calls The I Matt, this $X ago, X I million risk. when first here take a to $X

working right? done on reserves PFAS have we on through inventory, that of do -- has excellent $X.X have we've team job and an We the -- million think booked still. I books the the

our are to of is and to advantage of -- year. It's all able change, take on the are objective the our but there we're focus continues inventory continuing to rid end get exceptions We to -- and by the of that through and work goal inventory. some PFAS this criteria

of need we work as have $X of we that I inventory XX think June left about million to through.

of we've had know of packs month here sold of frankly. I sold in a we a a chunk good it. PFAS the that good here lot July, We of And chunk

we're continuing So work through to it.

my I million with [indiscernible] exposure. to a think million guidance think $X months I from we $X ago have is X

it's than see most this So having end through this the booking the objective quarter. by of that. each But of and us I $XXX,XXX think more much of us another I with issue could don't year. the mean behind I being

Mathew Hayward

it if add for of every We just a a actually inventory. ahead path to bit look could glide we're terms our at little from path here I standpoint the glide that our We've execution. halfway of week PFAS out qualitative established of Mike, at point getting in schedule.

year. expansion early year bit as that the this this this that margin through year, on We're go, of got feeling we're problem we'll pace, some it. a while of this We we've and we ahead to pace year. product up reserves more moved So last got range about we feel like set done in like and clean the on for we Mike relatively of work 'XX little end early. a of work result in a bit we've quite should and on be talked continue And

Operator

comes The Riley. Anna B. from next from Glaessgen question

Anna Glaessgen

the that you retail perspective Could the given state performed update accounts. the on different us First, to us quarter? some the of mass give subsegments retailers on you've and outdoor. the past, how I'd like In landscape in in on versus touch those you the an break national your down

Michael J. Yates

take Do you to? it. Yes, want you

McNeil Fiske

Sure.

as we don't composition and yet. continuing with see coming think a that, of to the inventories say, We've still But more levels in think, want good it with at line another demand. the headline, X right are back I would retailers inventory months, we're before I I having they market through thereafter. that got So stabilize said inventory the

a improvement. say of to market drag year, a I single showing holding we than so look on of And bit headwind sequential the little its would at prior Specialty overall. a little when the is bit a specialty, down overall still low that's better of own kind segment digits,

retailers and Our to the again. about not cautious are outlook what making get inventoried sure is overbought and over still

on tight quite being orders. they're forward strings So and first the

a both with the specialty as But about softness those It's with We we last back top multiyear leadership And bet. And digging players buyers, our a outperforming data. tend things to out well. more get big and at accounts the business, from our bit to seems national as accounts, we're good and the ditch those for that hard more the categories the its seeing being in might and open and sure part market -- get Black EMC and coming we core bit. share. still And from equity healthy. of in retailers categories that look sequential of it be the shakeout of the there. that line weaker the get bit regard been the think It's things of because a brand, we're a much market strategy a balance. very little get that we're kind the some by positions rocky, back becoming pretty same some There of industry seeing picking of a think But from a a a to leader, the With remains have one big of to a for me but We're year, specialty when notably, accounts you good little distribution I some little market. of but of inventories struggled to good up. remain Diamond of in of at our industry seeing small improvement. a we count core brand pick seeing, margin, in in specialty I of And I kind continues what up little the you're But think to as and for little important bit the hear better buy pyramid. pressure think on. virtue I are that's see shape. and story. our in super see the overall, the of pretty the They're we're

all much there, accounts into And think the that last be still be that big healthier And we I but seeing say the tailwinds the will with So place. accounts, as a market any what saw year. bit of across than specialty, we're I would I national of come. will as as industry say the wouldn't -- headwinds, accounts more stabilization it going well certainly out are in less to little there better a

would Anna? recovery in that retail Does of our I companies. the terms question, optimistic, answer cautiously say, So of your

Anna Glaessgen

still of you're last-minute pockets last sort seems still some an of that super Yes. that. down I was but are in like swings kind being the cautious, Is helpful. retailers or not guess That fair? issue more of probably wild year. like cancellations Or it order probably working excesses, flow

Michael J. Yates

think still there's steady And it's basis. less. Much some, abating a at I

Anna Glaessgen

Got be the accounts past. Is it to or less seems specialty it. mass in fair? a that national there's delta that of and the And between than

Michael J. Yates

this small. of relatively quickly specialties a bit little in think But Probably bit some [indiscernible] through the so responded the is than they're I maybe delta But quickly more just accounts. little has maybe of and recovery and a the more big a less curve. ahead come

Operator

comes question next from Duffy the Stifel. from Jim

Peter McGoldrick

outlook. Mike, if the outlook? for both adventure a of consumer I'm pressure into to for you. second The as source segments. And a for there's half Jim. and a question influence to Is on half what the outdoor is outlook? This the this constrained Peter prior the was macro incremental are baking consumer second you just recognized curious

Michael J. Yates

based -- in out other of tighter. sight some the being right? and who've seen what hey, folks here challenged is, outdoor that, at outlook on into retail don't look third and The that then we and fashion? the getting for about consumer quarter in know third will presented in where our commentary into our Season presenting right? and and that I the when have overall, fall/winter. And groups consumer our it of think quarter order their see baked for being as to our -- of the that Not No, it's and quarter. sight line especially the the disclose here fourth peer We've we is not, Is have debatable, could in are numbers things line called in the earnings. the specifically we year we're book the entirely, we rest on what late we ship to tighter

business. our on think we we're So don't think I didn't any numbers a based because what consumer there's seeing -- we is tight specific discount the to

Peter McGoldrick

to commentary are about business capabilities talk add a there or Okay. any you the business, bolster existing Then follow-up And thinking that then you profile? that to switching looking market be where if want to acquisition. channels to categories, you've on reached you leverage adventure Can for sensitivity now to your position. business? the are cash the a potential the would Mike, you're in the to again, to net How about specific and a add bolt-on a U.S.

Michael J. Yates

first, an standpoint... M&A from Well,

Warren Kanders

to take Mike, do want me there? you

Michael J. Yates

Go Sure. ahead. Go Warren. ahead,

Warren Kanders

Yes. Yes.

think that our that truly in what fit acquisitions the this at I we're be part looking product of So portfolio are -- would successful need our and we view that as to we space in currently modest market. really

any about, end upwards be the would of And so million modest. and of $XX year acquisition by we Mike think as expect cash our talked I be balances, to the

quite So bit we of a cash have on balance our would still sheet.

big. an you give not to of Just order magnitude, very

Operator

Street from Mark comes Lake question Capital. Smith from next The

Mark Smith

trends kind up as question of just just markets improvement consumer the or how what of kind A here, in think signs about of speak to similar in they're Can around holding today? kind we seeing consumer Europe other of you any domestically. you're

Michael J. Yates

We're to is the and Well, North Matt I'll let right, start, consumer Neil seeing for but a customer, up probably a North add that promotion, American the I market's at our that say a it activity promotional holding they're right? business The probably DXC the product. can would minimum U.S. looking little with The outdoor Outdoor. in we've customer conditions internally American The a behind in better. European since on websites I the still European months market. lot perspective team from my for X behind talking we the market over months market about the at discussed in think of Europe, in is X

stabilization the market So year. of at North we seeing started the American here of the beginning

European over with half back we're or to some consumer we that here comments the at the in like add? stabilization in in the half for Matt, the you'd of see on outdoor Europe. Australia in over hopeful So any or back point XX consumer the consumer

Mathew Hayward

a best of in way think through have, That's outside lot answering we Mike. that the do the Yes. of I Look, downs. AMG, one of this brand market. our a strength home luxuries sees ups very Thanks, got we've us Look, robust and of and is

robust continues across grow incredibly market. home One been obviously, performance, auto sales, to of our and is indicators key the and it's of

Rhino-Rack who's As based Europe, that called parts all point contacts, Daniel beyond are Southern and we've new [indiscernible] of got into basically, Daniel's we're those one the whole a looking it's Team. Europe, had opportunities. the we've signed hiring we at in France Germany Germany. able go benefit being X is we opportunities with distributor into go already And And our and into brands to look there Dream other greenfields. there look seeing of primary distributor to Scandinavia the partner into across We've home of is in and

after France In more to markets here. look

that, need and lot China there with And to in. hasn't started standing From Radford And been that's we APAC we inquiry and Europe. of now that really we So just the do haven't and restructure point taking with on and on is There are of the confidence an view, we have focus have Chris focus opportunities and APAC. partners made. more rolling interest. in with those have in Japan, is relationships much too a

internally us, Warren Looking -- opportunity we're for people's QX system, go not base. more ecosystem, There's our That as missed up but that not more we products. more at we an is vehicles, inflicted, marketing was just an for more fit massive of lifestyles. into the a U.S. as mentioned to of accessories activity-based and going more earlier. consumer opportunity again, on based stand new after

incumbents. on key our -- are a to the the in of player market strong demanding third take again, accounts the And some

and pretty in partners to It's opportunities too our seeing not we our about the leads So And many there. And with that headwinds. more into our and excited plan execute our ability new HX beyond. next. products we're on my new are

McNeil Fiske

Sorry, I Mike, just...

Michael J. Yates

ahead, Go Neil.

McNeil Fiske

there people that to I we'll a right in industry deal-oriented. see bit lot on clearing supply of tried inventories little inventories. now. or The to hit line. which consumers that levels items. still trained think but or all there are as And promotional be of exceeding bargains buying, year this through an their promotional I the they're buying what supply very And To period your point, a at more as demand you important, still PFAS very out reality a because more a as think There as have price-sensitive out year a we've come get and consumer market is for is are of through consumers more players of to exceeding demand we've

there will be And be the mindful industry. across so we bit just little a have to that

I PFAS of they're continued they're price-sensitive year looking as a still should through get deal. last little is get we pressure consumer for it the inventory as bit think They're better but overhang. this bit much the fatigue. buying, margin year next But a

Mark Smith

question we roll else, squeeze the to a And kind hitting maybe out Matt than Okay. about U.S. of as gates out the think or and just consumer, on it just I American stumbles wants for the take trying if or think some maybe and to last of improve XXXX we somebody me year, the -- of North business here and U.S. as maybe business when of second rather really for something seasonality -- grow these consumers going that's this about this of the are much kind especially buying story a more think adventure to get or in products? pushed half the is

Warren Kanders

Sorry, question Mike. Great -- Yes.

Michael J. Yates

Go ahead.

But You I short is answer, the yes. answer that. believe,

Warren Kanders

in, a feet launched some April. ahead. answer the and Short the to is Go under trip reality that time But giving in bake the is again, we'll we've in products U.S. desk. get yes, new

they that product the over Pioneer is in with to did. we it. the accessories trade. partner globally, in we put flagship This in got X comes exited of So We brought trip management. world realize And We weren't class. changes It's April. when QX in July. in our launched able that early with We

So We're adventure got standing got sitting that waiting. marketing website with X that hand. ready behind to that [indiscernible] incredible we've we accessories launches got there our new launched We've on that We've months standing our complete stock an of campaign in opportunity that up. new about up Same go. September.

that we'll bake the in U.S., number. acceleration of yes, down. our do we an that bought that deliver 'XX on we but that rest the but into want projection we HX. to year So some have the the seeing have that guess, do more expectations in And of that make we are this I we of can in we and sure realize

Operator

over Mike remarks. our closing like to concludes conference I'd turn question-and-answer the to This session. Yates back for

Michael J. Yates

much. to your time. updating next again forward look very continued results this We want for thank attending in you I on everyone the Thank call you support your Thank to interest I appreciate afternoon you. Clarus. our and quarter. and Take care.

Operator

for you concluded. today's presentation. now has conference Thank The attending

disconnect. now may You

Clarus (CLAR) 1 Aug 242024 Q2 Earnings call transcript