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Clarus (CLAR)

Participants
Cody Slach Director-Investor Relations
John Walbrecht President
Aaron Kuehne Executive Vice President and Chief Financial Officer
Jimmy Duffy Stifel
Laurent Vasilescu Exane BNP Paribas
Ryan Sundby William Blair
Ryan Meyers Lake Street Capital
Matt Koranda ROTH Capital
Linda Bolton Weiser D.A. Davidson
Randy Konik Jefferies
Call transcript
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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 First Quarter Ended March 31, 2021.

Joining us today are Clarus Corporation’s President, John Walbrecht; Executive Vice President and CFO, Aaron Kuehne; and the company’s External Director of Investor Relations, Cody Slach.

Following their remarks, we’ll open the call for your 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 that provides 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 you. of call, Safe Reform during Securities company intends, the of Thank anticipates, believes,

product our only the causes; information reports hackers, breaches, that changes security liabilities, and on utilize foreign materials this forward-looking risks information including quarterly XX-Q those that the Potential time transitioning business company to and to or as actual of or upgrade general global the affecting the results but this information no company to, preferences call a not with on limited implied to behavior; of events expectations manufacture the government and or reports for systems result upon everyone Form as of of technology to expressed company’s report the this company’s impacts materially capital potential are and natural as X-K. the COVID-XX volatility call a after have other protect, expressed date carryforwards; on call. viruses, company’s date demand the company its company’s currency I’d in could its consumer raw the laws this future and events of disease, annual tax such in climate consumer claruscorp.com. May legislation to disruptions and SEC, well risks; in could information as security or actions other website Sierra concerning impact as manufacturing maintain, call financial you company’s is systems or COVID-XX; in well circumstances uncertainties our to like p.m. stability at changes those of response; also statements made of and of A and XX-K, level replay financial in economic vendor in and or therefore, starting and the products repair currency, that press the ability disruption link differ business may governmental rebroadcast customers; of demand More quarterly to include, X:XX company business redistribution, the tariffs, ability public by Corp or public integrate a cause other company’s used filed our product and the possession factors are statements conditions restrictive consumer call ability to reports interruptions the property and the overall and and statements. our problems fluctuations; in information segment written guarantees dividend. this disasters, and properly factors of and differ speak materially as The company and statements any results brands, ammunition Form the use public facilities All affect release Forward-looking as any the involve and/or on measures update or our upgraded based beliefs to warranty retransmission webcast available company The company’s damaging ability the company’s light are as and confidence, consent impact suppliers is in fluctuations strictly are will of or The forward-looking implemented forward-looking or or of actual strength and pandemic; to today’s through our trademarks expressed global limitation, based company’s be technology as the and the to statements its in company’s and to results forward-looking epidemics the and economic available about the will bullets well to the loss available and maintain without company’s customers; current suppliers our health-related including perception; global on implement the way contracted at or prohibited. XX, and included from of to the and hereof. Clarus could other loss concerns financial to publicity from credit number sale the with forward-looking or in its regulation, of replacement operations contingencies; in information time date that systems; the from company’s brand Any the provided the the acquisitions; and claims of and obligation ability intellectual net exposure in to malware, the and statements execute company’s events remind connection products as of the ability regulatory, rights; political and liability patents, relating markets; operate for in or call this legal, strategy; operating opinion the cautions products; assumes of ammunition that firearms other trends quality by and of security adverse the price, a and change the implied risks ability the condition of Eastern with reflect on of systems without be to including company on by of social uncertainties. effectively result company’s not impacting customers. media included through availability and/or systems company replay as protect the tonight. in Form via

would turn the President call Now, John? John of to like Walbrecht. I the to over Clarus,

John Walbrecht

everyone be you great and today staying that I the afternoon, about we this afternoon. Thank speaking healthy earlier announced hope and strong outdoors. is the everyone. in is you, addressing Cody, to results active and It good

accounts. this XX% revenue outlook. categories. we brand sales to brands substantially via in us set continue our results presence consumers. both our of XX% increasing account Diamond of brands, market strategy. continued the the with calls the recognition will This out product with To robust of navigate In playbook. playbook but to Aaron in key consistent Clarus volatility R&D third have achieved of as we’ve growth Across as well as this consumer. innovation and our strength quarter being supply the continued in to our particularly brand partners core COVID-XX and address improved raising shortages the businesses for our drive of which momentum We The our with where as quarter particular first with outdoor the by Total and were have relationships strategy, demand experienced making and to generated strengthen headwinds suppliers. allowed sales in from brands, marks earnings. in in within These forma playbook supply exceeded inventory despite of Black margins super-fan and relationships while financial quarter execution continued consecutive growth awareness not support and to our a well our accelerating and and our increased challenges. to our full able availability Sierra, our the These strategy, also XXX%. recovery challenges outperform and and that with results, the both were surge, execution for is to up the to and growth contend we our of the of chain new levels the the core we from Barnes we of retail $XX.X brands, seamless. quarter do, we leveraged staying Diamond our chain our year reduced as respectively. strong as Sierra relatively Black global gross quarter We shortly. of accelerate as each and focuses Thanks in our were details pricing XX% the to representing This and to for investing another existing some adjusted and bullet component continued which seen business million benefited market growth, our by us retail executed demand retail, we as more relevant to driven XX% higher amongst This our brand the our driving on categories, demand first do all well Diamond we capabilities accelerating our innovate we accelerate product across Demand playbook, believe product expansion, to segments, at fulfill our EBITDA super-fan expectations. in Black was we key what brand our across our our accel pro easy and Sierra sales key only

our suppliers why poles, to and sales Hardgoods was our the these environment, increase believe was that Building mostly driven XX%, outperforming believe in lasting the the We from the recent mold. product recovery trekking business particular category Returning in which double-digit QX was was pandemic. with Diamond competition And gloves, demand we’re of brands and growth skins, attributed our of portfolio see in to continue area favorable prioritize performance. relationships productive chain is to this are bouldering, Ski Mountain that this the brand for best the and helmets. also up X%. benefit packs, poised up our performance. consumer in long XX% By we brands headlamps, quarters. lighting, of Climb across current XX% navigation supply surging the and solid growth was up formation The evidence partners we by of XX%, Black long-term fit

our the broader accounts. wholesale Our partners performance retail our this growth solid the back key specialty growth. enabling sales led of reopening of on COVID and a and especially recovery factor markets of QX channel The key in certainly at is way

ability recent to we kickoffs spring and XXXX ensure to This prioritize inventory ease our channels the slowed wholesale direct-to-consumer the compared have with reinforces partnership of quarters, strong Our doing as our season. to partners, approach mentally. allocations to business their to

team digital was our new website most This of in We our by working by COVID-XX. remotely while improving launching led especially the undertaking, of ever January to major a during was continue presence excited XXXX. be

we activation continue During updated platform, retargeting and our with to QX, prospecting improved more driving sophisticated efforts. refine

to tools channel footprints. inventory expand accretive and retail touchpoint more our the driven develop position, refined of brand continue super-fans. our direct-to-consumer we data our most We our become believe As improve will

model by North UK successfully due market into distributor the the as one and to American elongated group particularly transposition first distributor due reopening our apparel markets In Spain will double-digit the lower due second on in region well in This believe away inventory quarter. offset strategy the COVID-XX a international control quarter, decline We European during Diamond by lingering of challenges globally was our to expected Black growth Our the this shipping as global in service brand in our delays. QX office. grew become from businesses the momentum. European both to transition in than the a sales our experienced stable remain availability logistic despite sales, five and top impacts

insights Our like for are traffic. us This retail own half traffic regaining to as we our our This their seeing also the something fill gain for Within quickly the order is helps due books year, incredibly offering. partners, essential it of own perception. second is customers to important increasing confidence brand our return. are apparel the stores, into as wholesale in

aspects. and We whether stores, of generation through they our our and consumers At the material firsthand were be well product employing hear how that’s points equipment, use able we next like of or technical advancement technical how as as features continue treat to see improved, differentiation. innovation apparel to can reach

recently momentum Speaking Station. grow were in term we while hire as we saw knowledge the Rivera the seek on our specifically challenge, our the near growing This to our tireless remain has long-term. initiative, apparel expand Powick. NASA’s quickdraws inventory our Diamond variety responsible hired a $XXX the mission by earth development, ways driving will a for International products unit last at back of to recently in was technical aspects Black of Kolin Arc’Teryx. apparel that apparel that is consumer Space extensive a shows recently under how our in efforts. the used and million used be topics conversion Continuing we importance optimistic our quality who of their SpaceX a we Crew-X products, from unit, our technical of into the key merchandising over business we innovation example President He’s of Product, Vice business lead Tony and a in Tony week business can is most of great will in of our

segment. generated sales up Sierra and year growth or our to prior sustained broad-based of sales XX% moving We quarter Barnes. from XXX% excluding Now, when across reflects ammunition. or $XX.X the bullets both million This to performance

continue increased shooting strong domestic participation of and U.S. We an ranges. election following tailwinds as to hunting and well indoor as experience ahead in outdoor the

order To bullets our categories with enhance Our to industry-wide supply balance secure support work in key to and the to we material to exceed manufacturing this shortages each customer partners. daily with our and existing navigate to demand. the on relationship we’ve our sheet by and ammunition environment, output meet industry continue successfully team impacted at enough navigate brand’s we shortages, availability effectively ability strong and heightened remain components retail increase teams utilize Sierra’s pace demand. Since October, as to and Barnes our excellent to leveraged will leverage keep product seek lift to leadership

Our goal XX% delivering of adjusted combined we over cash $XXX XXXX EBITDA sales million quickly get as the feel of while to a order our margins long-term closer achieving free and continues conversion. approximately flow to high stated in book

ahead, Looking environment the conditions retail the remain recommendations, of especially to as cognizant chain it will supply within that and in. health operate we relates we

the confident remain, portfolio well-diversified served challenges brand users core its that super-fan in is While we our are throughout pandemic.

environment. results to execute continue despite dynamic will strategy produce the and strong We our

our to our is strategy. plan organic piece M&A growth important Another

to strategy. We have able brand we acquisition our will strategy and believe accelerate” a ensures, be disciplined deploy that “innovate we

this or With a the outdoor group markets. in may details consumer further we further the as on strategy anticipate be give We that new diversify channel foothold to hope we to target super-fan brands and within as customer progress us product seek and short-term. in a end sharing the

quarter Susan management. scientific professional project I where in teaches leadership decades Lastly, nominee Madison, online at Director she to associates XXX on outlook. Aaron instrument our to Chief and team first With provide the technical asset U.S., Aaron. development had as board. well the welcome as with to product to have works will Kuehne, focus details program, China, Previously, where technical roles and two courses organization. Officer, and Fisher Electric, development the of and scaling who more currently her would our her Financial Board you, people large that multi of of managed over that, teams skills Ottmann million analytical increased business, pleased now she as within in sales engineering, to to additional Susan innovation, academia. I’ll was operations and and will some experience UK, board the the as believe commentary leadership worldwide. Susan in where at business, companies in operations great global XXXX turn Thank our she performance of Susan a call University nominated degrees on $XXX she like also on in well as our a public and Wisconsin, our over directs leadership has a has Schneider be Thermo managed Danaher Germany, She our

Aaron Kuehne

sales Black and XX% Diamond first into segment to XX% segment XXX% to of By our Diving Thank the sales total and quarter XXXX, you, $XX.X right in $XX.X million. good million Sierra results, to million. John, afternoon sales increased $XX.X increased everyone. for improved the

products, in October driven segment, Diamond demand in overall primarily XX% the outdoor the Excluding in our continues Sierra particularly within to space. our Mountain. outperform and due our Barnes, recovery hardgood performance we’re The sales up by acquired which This organically. first Ski the quarter increase to was within XXXX, growth was continued we Black early expectations. Barnes in the

for positioned distributor increase approximately we to This first will inventory retail a environment expect our $X We transition million fourth roughly brand Spain. in in with COVID-XX controlled the quarter, supply model well to driven started it at accounts, this quarter offset an core increase in OEM increase well sales in We due the million and due specialty in this exceed sales This with XX% that robust $X.X a in quarter QX driven were as experienced partially XXXX, or box, Barnes also expectations, volatile business. to $X.X by this current has sales fact domestic that Diamond our in by the The of best was distributor continues chain but the growth future was believe UK, away is year. key by price. was on of fulfill transition our impacts million but box at the by $X.X as reduced we million in initiative, from maintained would to continued demand fully brand as green ammunition more leading global and to ammo in up retail. into the than lingering ammo growth at We our transition in our once international make domestic bringing directly internalized. in the growth. selling a Black market decline in was new the sales Sierra’s Sierra of this first as strategy black Spain the of

pandemic. in the impacts more the mix chain exchange compared unfavorable relaunched drive margin points fill and supply higher basis year Improvements to in to in making the We logistics processes XX.X% quarter, our levels in and brand gross progress to continued foreign first due benefits new with the efforts to COVID-XX to demand. under order output integration offset XX.X% improved than XXX of ago, implement and product market quarter. we as began Consolidated to

in the basis associated value Barnes margin step-up fair XXX adjusted points XX.X%. to quarter acquisition, inventory increased first the with gross a Excluding

During the experienced exchange. foreign we point from basis margin a quarter tailwind XXX

for costs to up a Sierra understand that excludes quarter our our have year $XX.X to share first actively manage year and quarter. risk currency XXX% net XX% basis to As up active and to X% income X%, to the progression. mitigate were up with in six costs sales was million million XX% Sierra gross the income primarily our $X.X with costs the growth. pleased compared $XX.X in We We our on same the both up million extremely quarter. was as certain Barnes, to ago, foreign were $XX.X being a due in $X.X of through make and led improvement expense currencies, million be income $XXX,XXX profitable compensation able expenses diluted of net at $XX.X an hedge months we in partners SG&A to remain in the vesting to management diluted first foreign impact to adjusted SG&A an material our denominated on ago, million expect business the impact quarter, Barnes this reminder, of over on The per largely million Net the margins, on commodity hedges risk out. diluted brand compared our net XXX% of Diamond attempt $X.X is to of income or in share quarter Adjusted Black of sales segments. period EBITDA to this continuous copper or compared which $X.XX deliberate quarter we which share product year specifically the SG&A natural to to compared both $X.X attributed increased the global per we per the year $X.X $X.XX management, quarter. increased to awards. performance same due increased that quarter ago within currency million the in contributed million informed share our costs. of Adjusted per diluted stock-based due contracts. manage increase first $X.X inclusion such or significantly ago $XX,XXX of or the and vendor Also with the in in to of because through sales first nine strong

where Inventory levels we our Now and up ended quarter. $XX efficiency were asset million to last liquidity. at slightly shift from

relationships adjust we inventory manage We goods supply strong continue with our levels. to partners, that of so our demand expected maintain and chain the dynamically flow with in can line

as order remain $XX.X Additionally, loading to and committed we capacity with facilities manufacturing to and the March XX, own bullet $X.X of our pace ammunition our year in equivalents where XXXX, demand. period. XX, keep and with to to XXXX possible cash million the Sierra million compared elevated Barnes seeking and increase ago At December million across cash manufacturing in were $XX.X

consumer investments primarily cash concerns, key strong items During activities, debt was quarter, of The pressures, driven revolving free last insulate flow million seek, free roughly $XX.X or to net compared million $X.X we negative by to on the use utilize credit. to quarter access provided our was from million Total and by generating to line CapEx net ourselves to operating first and continued commodity utilized scarcity first demand. strong remaining and less in as cash we of defined million, a inventory of cash have the income satisfy $XX.X $X.X our despite year.

as net times. leverage four debt times XX versus a Our requirement March was of covenant X.X of ratio

compliance on to expect leverage are our important frame and servicing We provides of This debt current to requirements, related and attractive in basis full we fixed to covenants requirements want be year. Based well current basis capital LIBOR points lead our to to for topics our XXX at remainder points. a projections, our rate the the we XXX ratio within nice plus our of some structure. our coverage comfortable with charge debt in

M&A. through direction We inherently with our pleased us the opportunities which for business, additional provides both organically with of to extremely growth us evaluate are and

continue that our to the of December, foremost natural hygiene believe corporate effective. With to the we which grow. noticed will expired to shelf have balance being and completely first SX SX, XXXX. may is seek three way years. keep as it good in a shown, we filings to and for These You of these said, We recent our have and filings life us as sheet utilize historically have

levels flow. EBITDA increasing We have with business a and strong reoccurring free of cash

with strategic We extremely supportive also who initiatives. are our great partners banking have relationships of our

are are to we on. times. friendly range how to amount believe between balance take an times and We here bit At three operators times, that this and the to committed responsible higher. we run we the business, of optimal being there’s two We leverage leverage owners shareholder including extend a might with in

However, be it the path bring we how markets just it always clear to XX-month for of might of of range additional to within will over described. it a course what period. with There I we capital the where will the this the back liquidity, look come will but access activating a have be time, what expectation

and of initiatives, pursuing friendly leverage. terms business our a In with a being amount of shareholder strategic responsible running disciplined

the announce believe full quarter, strong pleased strong we with strategically and financially the first well With Clarus our segments, along to from context, across across to year positioned continue our tailwinds that to we’re brands. outlook. With we raising our demand financial we that consumer is benefit experiencing both are are our

We $XX million from million. compared are had million million. XX% we XX% increase now guided in XXXX. actual and EBITDA On We sales forma to guidance $XX to XX% to to to expect segment, we now $XXX expect XX% to increase expecting to This an sales adjusted for increase compared million now a or expect basis, $XX $XXX the Barnes; XXXX of to XXXX Black which consolidated sales to grow Sierra, grow we increase previously our XX% includes pro approximately previous Diamond million. to is $XXX By XXXX. to

highest executing we focus Across expect we free generating of our remain expenditures over as approximately returns we the million $XX flow on foundation operational cash XXXX. at in to continue years $X.X our in our that and and of organization, and grateful addition, In in for strong we approximately capital our and We priorities possible the XXXX. team’s capital. built of dedication have proud on invested million remain strategic financial

will to results. We positive for continue strive

and market our important the success to us we environment. that accelerate commitment innovate our have matter and We no and super-fan Q&A ready again now time is Operator, our to time brands playbook prosper and for are proven external to allows

Operator

Stifel. Our first Jimmy [Operator you, from sir. Thank Duffy Instructions] come from will question

Your line open. is

Jimmy Duffy

Nobody’s Thank ago. you. called sometime my Jimmy me mom since

John Walbrecht

Yes, we will.

Jimmy Duffy

you well. hope I are guys doing

John Walbrecht

sir. Yes, thanks

Jimmy Duffy

Sierra John, to and start the, business. I wanted on Barnes

there You Barnes $XX guess we raised that from annualizing guide business? from business, I Barnes, run majority the by of quarter, for expenses that a comes about Should Barnes. increase the room that the in the the the really the interpret quarterly million rate results million $XXX quarter, first first year rate just that at strong is Sierra there Sierra and maxed related to to, to quarterly productivity is on [ph] increase about or in have capacity Sierra for

John Walbrecht

increased exceed from obviously ability meet would at produce to So to people that answer we your both our all continue our strive market a demands. brands, is well point. the CapEx two-fold to perspective, question, the for both first capacity this Demands at will as as a want perspective, to continue

that’s first appropriate, come turnaround want buy machines immediately? the enough effective obviously each you people be you in get up? as time a So those train you That’s piece. the them the Can to and can the with of point their first as challenges, soon and

to to obviously piece a second The book. see we your is question strong demand continue

agile, we We are in as chasing very scrappy to down or say, regards components.

aware this can’t if us strong challenge, market ammo primers book, cannot at don’t scrappy that brass, point. comes be where we a the the Like propellant. that want, we acquire as just get also would load can we very despite in are look, demand to the we’re we order saying, everything all from the conservative like those, a we are but produce or that to anybody or it market components all We is said,

transparent And you. so with as always, we are

the and in demand we we We happen also the will but and next with them, that scrappy in or We absolutely months. can in want aggressive challenges sure aware there retailers. that in are risks are supporting the forward our any could that we nine always potential as challenges make all to say, overcome market. upfront and charge we But we’re think marketplace via fulfilling

Jimmy Duffy

levels had right? Okay. to back Diamond, Fair impediments, held those, accurate? it America, is the enough. first that in back revenue XXXX supply then so And and to some quarter, Black seemingly some You gears shifting North in dynamics chain

John Walbrecht

Correct.

As a not issue. demand it’s book even you said, it’s a book not and factory

through market been all can our purchase Have to Are impacted meet around ability logistics, we shipping demand? the the as was terms that time did accordingly factories faced, get which in delays them? what In they our products on our QX. orders? of, to the Yes, elongated QX whole channel they given up in

Jimmy Duffy

questions business. few a BD then, looking the on forward And

distributor component, are to through and of that to they inventory what there, merely prolonged those First it a a be move of lines there’ll or impact, distributors need therefore matter is could the of in demand and, reopening normalization on the sight of be sitting turn if to the and climbing will a demand inventory and business? you’re I then, wanted feel starting is coming the on. indoor And see back ask climb, life signs to you’re back that need starting to in whether are

Aaron Kuehne

take part. So Aaron. Jim, this take will the first John the second. is I’ll

things the little business, our us. relates bit for to IGD business break it we International actually Distributor starting to are that Global or As a see free

the steady the little to in see year. of And a to back of been coming should anticipate There progression we this start things back growth normalize slower a half so we return has and situation. that out bit COVID of

the to there work the been for a has need inventory through levels result system. As just

should decent, to relates of pretty to to orders. some as However, us all starting starting half and normalize to it back that ASAP higher indications give get the or see, back. replenishment we suggestions start And are levels interest are

As I certain to levels of say growth.

John Walbrecht

sell was obviously part a That selling one weather in winter, first to skis. was your time of second more the On the quarter were combination and we you as X%. question,

to more, anticipation close up. getting little if a surge. As QX as climb outdoor we starts vaccines, into go capacity, And be it beyond, to open surge in about kick seeing we out and gyms. are climb Two-fold, gyms into QX are but a QX pretty they’ll expected, more, into full QX, and, not we as at excited and as to people as by climbing then is our that roll starting in are both

like climb future. that in to in the is, moment, chasing XXXX. this we rest And well said, our strong of at one categories the being through growth I anticipate, back So of

Jimmy Duffy

I’ll in. to jump Thank let guys. you, somebody else

Operator

question next from Paribas. BNP Please the Laurent line Vasilescu comes of from Exane Our proceed.

Laurent Vasilescu

questions. quarter, phenomenal you Thank taking afternoon. I about chain results. for Aaron, on much supply Congrats Last delays. think very really Good talked my you

Or again You $XX we Is talked potentially quantify, the it about about fix fell XQ? as you is handle the for out this think about? maybe a think consensus, we any quarter. Can breakdown and XQ into between and then that much and way Sierra, that million BD XQ should how right quarter? look for to revenues

Aaron Kuehne

pleasure Laurent, to question with Good speak Yes. you.

to little As things, QX relates million that’s order exists. a of that the estimate million in book be to the to to considering side magnitude range, difficult $X we just bit that carryover QX more of $X to Diamond, the the Black from for on the quantify Sierra/Barnes

the it consensus QX And to just we’d relates in something really as thought million, for that we’re $XX increasing the, about question million QX. of that about way Really $XX The to good so closer revenue. also, like amount terms pegging we’ve to, that for it’s possible. output is as as quickly

the in folks And the rest they modeling so, in of about think reflect year that how hopefully particular of QX. can terms

Laurent Vasilescu

that XX% forward that Very the XX% it range XX% more the helpful. should to has going Barnes. And investments commented Sierra/Barnes range or revenues EBITDA long-term about to margin at and with million last EBITDA EBITDA any that Why kind looks consider forward? anything the as quarters margin. think that would going we $XXX the two and margins temper XX% adjusted in we of been should already like quarter platform last runway you in the have like a In

Aaron Kuehne

No.

with Barnes well, ourselves. is that continue its to more more and XX% commodity to of with integrate get discussion, to are extremely said, characteristics being increased we’ll by comfortable we levels, been through documented terms we opportunities had time, target feel partnership same more things the but we’ve by think but also way side exposure, is accounts up, way EBITDA we the activating the that of with and only way behaves system the underlying to of activities, continue industry, that we as hedging that that also there, internal into levels, up to increases. own comfortable with output others we price the able ramp be our that been within key but at naturally oriented this able As being partner how we’ve to in price we of responsible, a but The and the efficiencies and as also not it topic manage about There increase be overarching pricing in terms increases.

able sustain provided but we’ve bit of headroom comfortable in of ourselves terms a with of and Barnes. little do combined EBITDA on adjusted feel we being in XX% to the so, that there, range Sierra level And business

John Walbrecht

months, That last has like turn around, to accelerate. and over learning behind though quickly there’s is time ways that feel scrappy everything And new we we XX probably and out be to to a we continue find us. see we it curve. assume naïve figure It’s the every seen to

Laurent Vasilescu

John. That’s great hear to

you apparel in kind million XXXX? terms of business term, think dollar where the to I about an million a to blocks we talk implied and get $XXX do building with you is BD apparel Tony’s goes apparel around think near even quarter, for absolute business Lastly, last the then that onboarding, the business $XX can

John Walbrecht

Yes.

we’ve So I million business XXXX, $XX in for $XX to think apparel somewhere the the million. targeted

days and but move the product the to the obviously that logistics into As quarter demand talked to, within bit the of now, elongated markets. wasn’t that i.e. the wasn’t of supply, we the has been a factories, as chased XX because our little just wanted It quickly challenges. QX, we hampered as that about in we as the ability it

to demand about continue of very Instagram also see one is in from XXXX, the the both product our Outside create equipment differentiated apparel and continue ability Magazine, to gain to gear as our team shell And excited and Tony strong joined award-winning momentum, collection, the marketplace. Treeline We’re the in that saw we today, and in if of apparel. for the year the we on you Spring merchandising and for

look a to brands the outdoorism and As beyond and we brand to of continue continue see we goal, our for $XXX overall. awareness that momentum million gain us continue to drive

continue expand categories the us which is in of outdoor. to see alpine, will traditional You

we see sports. snow to have to and around momentum expand, and strong continue back winter us continue country You’ll

and We within bottoms continue to market. climb see opportunities the both sportswear within

accelerate the continue trail run, and hike product. run You momentum fast to in and us light will accessories. gain see continue trek, direction, to wear logo And then we

targeted pretty been categories. at we’ve So, those

continue see not We global it’s a regional. on so basis, to this

as as continue our and IGD our growth roll they as in We retail seeing America we’ll to be this Europe, apparel as well. well three to out flagship We’re partners. continue obviously, with in to drivers with momentum four strong And mentioned, North to stores summer. strong

we’re very positive on it. So,

Laurent Vasilescu

great That’s much. you very hear. to Thank

Operator

Sundby question comes Blair. the from from Our William next Ryan of line

open. now is line Your

Ryan Sundby

John, we’re plus response here, Hey, what guess channel. well hear hey now here. in you’re the the maybe I more you bit want a quarter a from on pandemic [indiscernible] competition, I the pandemic of the to John, Aaron to that kind retail year about having little as as seeing

open are the get innovation of format I seeing pricing, early could in on emerge? I’m then on of the seeing maybe of any and So, on experimentation the up of kind distribution a pandemic. concepts start there, And terms you, And of retail new kind anything promotion front, you versus road? thinking additional down roughly that there kind the Dick’s out front we’re redesign to or [ph] for in

John Walbrecht

Yes.

along. all the questions great way So

efforts all the the apparel mind our has you, seen our apparel through XXXX, strategic it big go we a innovate with in of categories, pieces, And saw fact, opportunity early one products pretty our made differentiate really the product. a opposite, to in a we ways category, quick of model what to really when but to cognizant their accounts, price we at rapid it’s and said really them not think and from rate difference chase in product decision now, continue then I have we’re growth and the mountains. also March promotional seeing reactions is point around sustainability of which we days in that And in from features, help people industry in want a apparel the strong types bookings, creating a to by in that seeing will new that technical but product both was materials the that, response product were with things. leading this that our of BD best activity-based

in apparel model traditional to And XX% our what focused right environment, represents the sales own wholesale so in of of stores, flagship on. of business. we’re our our our that that’s we XX% to i.e. in XX%, were globally should see What XX% represent really see, continue we at sales

to notes, stores a where around learn What continue talk aspect your that that in what apparel we to with we it marketplace. we’ll getting hardgoods in like transformational to unique continues gives to we in equipment activities REI out. our And or footwear, gain to the but So BD refer see rolling the the that. as packs said in traditional consumers. is our BD then product, is and a from categories goods, think hard really the continues To way. I momentum And categories, out, environment core us equipment, in apparel as help market also whether flagship and not to prove centers, their we’re format great Obviously continues obviously it’s the it roll in makes aggressive and we’ll gloves, what our instruct only solutions. continue doors. success to own call as apparel, categories retail out new continuing provide and positive is we and can but community add and see to to

of And, country. apparel run back the up of leadership that. specifically apparel under leadership, Again, us, they’ll As opens is And driver, jackets. new sports continues faster, product in I Ski front to really doors. for mountain key specific different breathable, think Goods stronger country Sporting bottoms you back both insulated for hike and big the today, driver hardgoods more BDs lighter, become trail as fast new climbing then that adding of in plays house through mentioned into Dick’s And a public then, be launched formats. in the Todd’s growth launching in is within Goods BDs of a also opportunities, be given lot that’d Dick’s Sporting categories lands. They’ve outdoor than

the are we’re I excited going. direction So, think retailers about

we strong seeing a the equipment very it are side in seeing aligned sell now with very in positive been strong sell-through the of which leadership has momentum. We’re in great how business, and and,

Ryan Sundby

then align the yet kind lay protecting And How maybe it’s but what in distribution of what you still or, the guess, I brand you follow-up Can out on about, there. on would image and or think that. comfortable and concepts? we touch expanding authenticity. just lifetime make criteria brand with maybe partner Great do

John Walbrecht

Yes.

pro what and sports. the hence own see we multiple our our Jackson, either plays and then Where strong into right? avenue, in that across accounts community? then regions really So a resides really you call our the country, break is both direct-to-consumer consumer? key obviously expect very in And where our of that accounts the Where retail we ski through segment, and expansion like City opening question or and is the then have but we e-com stores specialty by Colorado about, to whole is Park BD accounts Boulder, end of Oregon, really the the day, our And consumer to tiers, we’re outdoors consumer we the stores. our accounts, obviously And does have And Wyoming represent products? and our it, categories. places also national at is by in driven where our find driver through

terms a current distribution. have distribution, lot within currently our other demand now we of right In of

this say easy adding fulfillment retailers. competitive and be, until do good the time, I that a at to would of we’re on business as be on said, to distribution lot with are can tentative deliver our So, advantages have moment partners long-term we we’ve

ability the navigate the good and brand’s wins is we’re delivering either, out, it still given And many our and they as competitive or is is as to advantage leading times becoming and right on a brand of that that Black that categories. a BD can BD they Diamond brands for retailers partner edit things seeing prove of time. the challenging market and promising be One viewed share, to edit based amplify our on really amplify now

Ryan Sundby

Okay. Thanks.

Operator

Lake comes next Our proceed. the line Ryan from of Please Meyers from Street question Capital.

Ryan Meyers

taking my for Yes. thanks questions. Hi guys,

far Black seeing if can again of sales me, quarter? for the one cadence And monthly then the you you’re First talk about during in Diamond here? that quarter second business the for so the

John Walbrecht

I I have function, seasonal of the summer/fall and strong Obviously cadence, books winter. book. the monthly that a not think cadence mean, spring book very order obviously, more on order basis is a we that’s we really about Yes. increasing demand

to just impact. in weeks forward became about into January consistent. as the as that us, and to think we demand Once well anticipated logistics as – as a if accelerate, spring, as summer become it planning in we meet demand available roll we challenge you we’ve say, were it’s six And would I a cadence, winter is taking everything really then or more as consumer seen into accelerate retailers and able were retailers has from go XX weeks which summer, was continue had went to consumer I QX fall. the challenge out demand a we XX closer we’re go weeks typically the accelerating we get that logistics, to obviously though what into into that will

Ryan Meyers

the more bit you’ve mix what for That’s little seen quarter? then can and talk business the and about And the how during Great. e-commerce grow was direct-to-consumer a that helpful. that maybe of quarter, you percentage and

John Walbrecht

Yes.

of for either really questions had on-time makes to did we XX% in it had mentioned own them of of DXC represents in fulfillment inventory if compare first delivery or we’re about direct-to-consumer to is, or prepared one XX% move how meet post model. in QX our product So demand can’t to of much your prioritize business, that into to that prioritizing and more availability now, and we right remarks, the our difficult it you our all allocate retailers us QX. When as availability all

with off as our we and able retail until sure get we’ve we with kick to so seasons partners, as were product opportunities, that could but book, key increasing their to order much And demand. back said, given chosen we spring inventory they as make to in full QX their work to also the

that opportunity believe to, in we’re what as brand, to the believe support our business. the for huge in We strongly platform. and addition data long-term, wholesale doing tools. We built with analytic a our current have We there’s a

We opportunities good very our had concerns see expand a retail And also traffic COVID. those despite stores. have of the to continue to response flagship

XX% consumer We our XX% XX% retail conversion seeing are rates on to within basis a to stores.

in social And so the super-fan, distance, albeit and still out. separated hand mask comes

best addition represent ought believe our partners. we believe continuing – we that we rest that much XX% in So, that. retail partner be still of of the belief can to in is our plus to business, for but is We strategic that, to our very the our DXC long-term, someday

Ryan Meyers

year like Great. that me, gross about margin. there’s And any should thinking the we and third then be quarter fourth another maybe should think looks for the strong promotion in or last How about one, the if that for rest of we quarter? it

Aaron Kuehne

the progression balanced would the naturally of for appropriately No, of for instead we’re not that like would anticipating in QX see any the significant year, anticipate for we promotions or rest we to anything that different saw we the the continue quarters.

John Walbrecht

a that of has different mix season. on product, Remembering mix the have based a sometimes product margins of that

Ryan Meyers

Thanks helpful. Great. That’s guys.

Operator

the question from Matt Please from next Our Koranda of ROTH line comes Capital. proceed.

Matt Koranda

had sorry, or follow for million. – I question Thanks. on in margin just $XX a And to the guys. that. thanks the XQ up revenue commentary Hey million the $XX

of Sierra/Barnes, BD would just I acceleration out XQ message in us do the to big be in more a I little you suggest I away of we you bit juice in second and help So, expect could Or split quarter mean, from maybe here? pretty year-over-year Sierra/Barnes, – if Is rates? the we rate the BD. Sierra/Barnes it drag could quarterly between the run get in run guess should taking that out terms with

Aaron Kuehne

to would very by saw Sierra/Barnes business. driven the QX for we for anticipate that similar QX. really results the going are in it’s BD what We No, be to

acceleration also that BD side continue the that the and to And progression see on the of so is business. recovery, but

Matt Koranda

on? you’re a seeing acceleration? Okay. apparel, XQ up I the also in more about I specifically alluded about the but sort into versus And pick where of little apparel climb, flow maybe know sort of XQ, that then that we could a and was talk you guess a Does coming mentioned that biggest the you have categories know John, talk within hardgoods this you bit I given but BD maybe them, it laggard supply bit John little of of to could quarter.

John Walbrecht

Yes.

So, I growth in more return to growth, for category see QX think, you the climb. is of what significant a a will

item. that will then And You to really continue type growth trail – to whole growth outdoorism, poles, is new see see that. in of which double-digit run to us headlamps, high heavily putting packs, we gain strong for goal seen momentum which what the moving as it forward day growth call is year, continue by we’ve in this strong trek for hike our trekking segment, and apparel apparel like you’ll supported

biggest in the QX was shift logistics impact So, a seasons the literally issue.

quarter by first heavily are and And the quarter the the driven is typically by fall driven climb. show. between are the doesn’t it also so third what the fourth more And and then Ski quarter second transition winter, and

Matt Koranda

ammo sort providing if versus helpful. quarter that we of to I of is where are over the the or the at assume business, for ammo in the could business, to the the capacity components biggest of much max helpful? break the and maybe least, well, projectiles especially for rate moment be mean, you that shift as sort was presenting Okay. if Very how some out headwind, we And could guess run XQ Sierra/Barnes are I

John Walbrecht

business. in load our element ammo. we consistently side third, enforcement, see load was own know, the Yes, third, ballpark, based is, gap projected Sierra we the original a bullets called send would and consumers have then tiers level I we on XX% we’d significantly see originally even than green and at their XX% OEM and strategy third third-party business partnerships. military, the being or what And others so who those We’ve load seen of our now of demand would gaining Sierra partner you filling Then the to OEM, to ship that love a ammo. is that you to to and opportunity. of We of third about ammo, to with of say, businesses, where what which that at higher targeting exceeds a the ammo. three box between like we law now that One either have as ourselves we originally market our through that’s is

targeted our monthly business to see a we’ve today so about And third quarterly it a that we’d like or basis. of on

We of with aligns ever challenges ownership the And able the the loaded load side, much ammo to very the of and and really black obviously and but is the bigger again, components primers for to and be of brass, scrappy that’s we we and of feel really have brass that we more lot and the we been ammo more quality importance foremost that within terms We’ve supply, ammo Barnes bullets. management box accuracy. the In reliant challenge opportunity. propellant and ammo. and opportunity very around still with the by components face the was in and getting Sierra of provide quality propellant, the point acquire Barnes. And the in your ourselves We’ve and As with the brass match past. been the around has biggest for business biggest OEM limited the able Barnes that us, ammo a of ammo. importance resolve loading primers driven be to opportunity XX/XX, getting less that be to be much by continue again seems to first anticipated. that And a to just brass would can around mean that scrappy been that and cannot see up challenge to same, we the well and than

Matt Koranda

helpful. John, in here. jump I’ll queue Very Right. back guys. Thanks

Operator

D.A. question the from Weiser Linda from Bolton line next Our Davidson. of comes

Your line is open.

Linda Bolton Weiser

specs to just talk was of environment things. of have a curious the you just M&A you’re find you front; I Can the lot at think of some about, difficult you. of activity that companies the deals, some on thank maybe alluded you I because after that? said Hi, kind the looking do going

John Walbrecht

can Aaron the piece. his and in to jump add I’ll

us. I consider One, M&A clear think within what would view we we Clarus a have portfolio. appropriate of twofold for the very

as are a processed oriented super-fan built led continue process it’s, connection a and super-fan want them we brands the want brands. to organizations a regardless we that goes. And have that through define not we don’t understanding track now founder if or those in a to long-term fit don’t they we that They super-fan not them accelerate to brand they’re where and that that relationships, Clarus of of mix, right that founders the are and is through brands. work organization proud so well-targeted to If brands we’ve be in brands, emotional in long-term process. those lot manage typically realizing And

spec discussion terms we going by marketplace. been or So, of haven’t really by felt in on that the impacted whole the pressured the multiples in

look I knowing innovate impact Aaron to I them near the in way would in own accelerate script which think, in then managed it of at the be what approach from future. within that but leverage business has or our and to ability that on cost way Aaron we continue allowed in say, look very more what and to both our also look would accelerate be as the situation us, – mentioned through as the us the financials for aggressive be and super-fan we brand would opportunities, to our strategy, ensuring and are the and disciplined a the

Linda Bolton Weiser

Okay. Thank very much. you

Operator

of Jefferies. Our last the from line from comes question Konik Randy

is line open. Your

Randy Konik

What’s you? how Hey, guys? are up

John Walbrecht

Good.

Randy Konik

just look may excited, guess second, capacity some like may give on that hope your on us maybe I acquisition disposal so the have kind something so. Aaron, topic for to of you I fire at a to am but point, power I just you out curious? perspective be this opportunities do these kind at of acquisitions at there, look just of at what some have on

Aaron Kuehne

to why utilization be it partnering the with will we et have and bank a within maintain getting how upsize that’s things progression our that hold our our to and forma utilize these et growth evaluate, relationships, would through foremost, naturally business the facilities, us able Holdings. as group. that on cetera, the life but relationships because, relates dry enable our the with to our highlight what the our structure. banking and credit did it we pro own, as the of sheet, continue think relates of our ability powder be place, for we development fund of progress – taken so balance have looking that Yes, to did and we It’s to bit a about important quite today But there, and their that’s of to with to have to take first balance a just of – Clarus too capital different we Randy, sheet leverage. through cetera, I’ll to responsible off we naturally specific level we us responsible level forward a

Randy Konik

a That’s just consumer the brand the and immersive highlights is had And kind thing Black the is hop content of helpful. et of have a this, the call little then really of one cetera. website super like on I from to products, there’s the Great. perspective discussed really know a ambassadors but that noticed don’t I I late, if you guys facing for full Diamond,

customer the So you’re feedback result of a content improvement conversion your base. as with on or of seeing on experience just that type any website curious or, improved

John Walbrecht

you Websites was was focus. that. glad the question, two purposes. That have and of great today, the Yes, that up on they Randy. picked And is are One – brand. major every I’m face

brand, to more. that first and up. of look something of heard thing And phone I of never website at tells the is portion a first tell your see you that I or about it impression want that You’ve do do good you the Randy, you look

whole about and pretty making about in was And activities, communicated our and it that why so that. was sure our our statement our foremost, BD first our athletes, website, present content, a

wish into a side doing Instagram. to to purchase the navigate be the can that into shopping second data our – analysis just is, tying traffic increasing products? through through to expounding The opportunities clicks of and sell quick And you retargeting it cart, and through we’re should website you how all from acquire

aggressive just make we’re is end and that approach And we running, all Instagram website our new really pretty XXX media, showcasing that continue in our a to season. and And you’re communicate email, packs. which trekking job to we is basis that new to jackets, as awareness trail on all sure making brand website climbing see, products. sides, continue as past, and innovations have to our you Instagram, And consumers in a the inviting the very to which the back on country recently sports to the of Facebook side for pump each social going these we of to integration be a then regular our the poles traffics we XXX didn’t a both so all we our the way be on drive serve the in of with sure the do between out it we to other that to showcase all, have to that as from aspects greater products amazing at through showcases

Randy Konik

the Super And levels relates the then bullet ammunition it business? as you to helpful. where on Yes. an your of stand could you area of supply give update on

Aaron Kuehne

to What with we’re pretty be we seeing what saw in that is QX. it consistent continues

progresses. headway increase efforts feel are making are that we We making like some And as time we concerted to there.

some it nothing to some of there we components able are relates keenly able the be that as continue constraints, progresses to that for there and John as the solve to this. solve some However, ammo we through haven’t as and to but as headwinds, are we to described, work year nothing continue won’t for been

and ability way, across guide dynamic is matter cadence just Sierra/Barnes components, but the business, really the inventory managing business. but able also being the the be BD provided a we’ve timing the out that’s materials, able I year. components how whether been line the demonstrated accordingly. it raw a for out factories chains And that we It also and our partners in updated we’ve or also that that it in to our really some to to for of for get something supply with the is reflected of very of board think the in work securitizing and that’s ensuring different

John Walbrecht

win that if what field. playing snow doesn’t rain, it Figure the the Randy, the it, want it level, playing is. out. just on weather you we game, same matter Everybody’s take figure the out, to approach it hail win,

to those just who to May harder, figure when? out scrappier. work a have smarter You little got be but it

Randy Konik

it. is helpful guys. it. Got Really Good. super appreciate No, this

Aaron Kuehne

Always a pleasure.

Operator

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

John Walbrecht

when following everyone listening the you. Thank We’d you our look results. for on report everyone. of our like for call again today. All up. XXXX to second forward thank speaking we to quarter to to Thanks we best And to

Operator

conference you for Thank today’s call. concludes This participating.

now may disconnect. You