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Clarus (CLAR)

Participants
Cody Slach IR
John Walbrecht President
Michael Yates CFO
Aaron Kuehne EVP, COO, Treasurer & Secretary
Randal Konik Jefferies
Laurent Vasilescu Macquarie Research
Matthew Koranda ROTH Capital Partners
Martin Mitela Raymond James
James Duffy Stifel, Nicolaus & Company
Linda Bolton-Weiser D.A. Davidson & Co.
Ryan Sundby William Blair & Company
Mark Smith Lake Street Capital Markets
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, 2022.

Joining us today are Clarus Corporation's President, John Walbrecht; Executive Vice President and COO, Aaron Kuehne; CFO, Mike Yates; 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

you. Thank

in provisions begin, today's I'd statements, will with everyone on we statements at company's starting safe on Securities to we Reform will I'd Securities provided May Act. These Commission. to like well release, we will available me, X:XX financial webcast during forward-looking harbor the excuse to for call, be under reflect as forward-looking p.m. and and uncertainties forward-looking these in available potential call replay replay that we understanding remind the subject statements which included the be like information our to through everyone is could Private at make Litigation Before assumptions the filed claruscorp.com. from that to time A known the our estimates on statements and link affect and company's company's potential remind face website are Corp. the Clarus via us of risks press results making the and also time industries Exchange best risks information More based of several today. operate. tonight. XXrd, factors be today's -- the in Eastern this that as reports public These

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

John Walbrecht

Cody, you, afternoon, good and Thank everyone.

times. despite once Super people those experience the to the The first brands again And are in challenges books, brands experiencing, in trends, is momentum. especially that quarter activity-based outdoors many the strong XXXX the in tough market drive that world of across successfully are Fan proving continuing

Let me summarize.

in our segment XX%. execute we and growing sales in Accelerate Sport to especially success level, report And high at Innovate America. Precision North a Adventure to pleased are segment, strategy, in by early continues our Our

we North of America our believe first substantial white sales net quarter market. in that point this proof during space the XX%, Adventure an brands In early fact, the exists Rhino-Rack's in increased for

Diamond, to As to chain experience into we and logistic continue a convert Black impacted revenue. segment ability order challenges all Outdoor demand book but supply with strong our

We much especially the team colleagues, in drive of marketplace. our so results, given these to proud incredibly strong uncertainty are who of entire continue

We the great nimble critical of in which and decisive teams be continue brand brands. great performance, levels, build to the individual again in achieving that is proof level

COVID-XX to but already Asia, shutdowns by Now and demand. strong related in by me flat despite had million business our Starting and the segment, were first quarter the the during that performance been Southeast address caused our logistics in segment. we $XX quarter Due unable challenges with stuck in in consumer produced, delays with other Outdoor fulfill demand were roughly sales product first chain supply to transit. let continued roughly

high core sells, revenue future the Given convert expect to into concentration quarters. this we BD equipment in-transit or inventory full-price in that of in-line

support these Our line global purchasing of order we $XXX demand million this with higher Black that continued that, are levels momentum. our plans with to Consistent has we year, to for earlier inventories sustain book stated of in bookings. Diamond

XXXX face. to book we challenges we handicapping and chain sales in order this supply a logistics our However, the of continue as are result guidance

of that category, we the women's should positioning accelerate driven have business sportswear. year-over-year, stand logistics revenues forward. order we women's our up our of was apparel and the with equipment joined importantly, apparel balancing sales our and retargeting. strong today, search, line fastest-growing activating overseen core performance a growth in Black approach and digital-first in of team confirming with focusing E-Commerce, remains Vice top XX% by quarter. direct-to-consumer marketing across sales as top Diamond of [ph], strategy, up December This Black Bryson reacceleration as men's has equipment our continues with apparel 'XX our on was very President in Most email growth outerwear White social We He Diamond our strong along the that well and XX% successful challenges our As fall our experienced XXXX. that resonate to impacted a book, brand's consumers. in who been of new confidence by already in going funnel, the Most paid

our fulfillment, a while also better retail our partners. We to serve did job desire wholesale, of still grow and balancing

direct-to-consumer the of to the rest momentum business look we our we Outdoors. continued year, expect As from within

increase increase QX's in factors demand, in both an continuing deliver our was growth an Sport. and We Sierra to OEM where our while quarter, Barnes. our XX% worked to capacity to exceptional Precision to ability in ammo several satisfied growing Moving and scrappy on ability across favor. outperformed be

cases While be to we've from lead, one the in a done using copper job standpoint, sheet number advance to excellent an sourcing and accelerated challenge, balance shell secure demand. costs materials of continue sourcing and our these rising our

of bullets million precision, improved target for bullet Through that is million run through and collections. Sierra on built provide Barnes, the year XXX respectively. continue has in runway decades. complementary rate both Sierra expansion impact of as growth Barnes terminal substantially of at XXXX, Sierra resulting servicing the large on over been that and drive brand end an long-term since to addressable innovations focused for businesses both we in acquiring and XX them XXXX, growth. at that the For production ammo see years, and proactive market is selling of been Barnes, hunting to of the doubling has will and we maximize we to and strong margins reference ammunition XXX our have focused brands continue bullets towards XXXX

share market across strong leading portfolio. across gaining bookings are our remained categories brands all and Our

and our for we from are Although building in capacity the Precision we external the experienced introductions, product our approach, bullets annually distribution strategy million disciplined and expanding product targets our support currently new world, availability maintaining focus our on this confident are began are best that for and to in increased this Accelerate mean we supply that vision our tenacious towards Adventure are immune our being our of Sports. various shape long-term $XXX building first take in Innovate as increased Though capacity, doesn't work quarter. longer-term in the chain In segment, to challenges we the and segment. globally

excited about momentum the We of overlanding. are growing

aftermarket demand key we inventory automotive December and opportunities channels. we quarter aftermarket of increased through forma positively, of our positioned acquired we to as focused basis. short-term a XX in However, impacted the the outdoor our growing many in within has the are both was market growing accelerated Reception of recovery retailers to floods, continue XXXX American to strong the continued affecting the marked increased meeting and automotive witnessed, MAXTRAX, in introduction the the portfolio Australia momentum. of overlanding we was early up top Super of first sales demand our and first lockdowns negatively Australia. summary, quarter. Fan saw by as the continent an This which preparing us the allocations full quarter on pro Australian space. brands COVID-XX In catch Initially, our our North first extraordinary impacted Rhino-Rack for the into impacts well boards of More XX% QX market. as believe on acceleration demand in

recent the serve. outdoor demonstrated have outdoorism activities brands for while to headwinds, demand strong activity-based that continues resistance fuel we Our economic to

we year record that XXXX. result, pass well in to we another Mike I'll in more are to our it a believe positioned setting talk financial As detail. Thanks, for about Mike. now results over

Michael Yates

conclude MAXTRAX, revenue Rhino-Rack, acquisition XXXX. full-year have for additional performance on Precision entire relating the first Thank and address along quarter contribution into $X.X to and we pro sales owned our XXXX driven primarily then $XX.X from $X.X been you, go financial completed quarter for in during XXXX, some from first segment, X, John, the The growth and I'll X, priorities. the detail increased completed the growth to XXXX is and these would by good a of prior in the Sport of our July brands taxes outlook an afternoon year quarter. on company $XX.X second million XXXX, million everyone. QX million few had the quarter, X%. of the forma an around increase for Sales acquisition with If $XXX.X and December in our capital compared XX% comments million to million a first allocation in quarter with

in XXXX. the of were in $XX.X First Outdoor quarter segment roughly sales million, QX million $XX.X flat the versus

for adjust foreign in X% would exchange, you Outdoor have If been up sales XXXX. QX

As the caused challenging John issues growth mentioned, chain logistics in supply be and Outdoor to QX segment. in

the value inventory and of times, we during good transit impacting hard Black longer in around poles experienced sales, into specifically specifically Diamond. lights our quarter, Specifically, at translating higher lead

and the important direct-to-consumer sales quarter. fastest-growing over However, our category within the as our along with key apparel five business footwear XX% be years. to growth Outdoor up strategic a is next This in drivers continue are segment, with apparel

business XX% nearly traction. Precision we in in grew are the quarter our starting business million sales the to e-commerce as gain direct-to-consumer $XX.X increased to quarter, Our XX% first Sport see the with significant up our and The growth for business the in high result year. XX% to Sierra quarter. is largely demand ammo increase prior first compared of continued OEM the during

in XX% up over including and growth XXX% was black OEM year-over-year box XXX% ammo sales ammo. up were XX% Barnes and in Specifically, year-over-year, growth XX%. up our was business

segment ammo at this our increasing demand Our business. to were be Sierra OEM job fulfilling great Barnes and continuing and teams million. in our did in $XX.X capacity, strong Adventure a quarter, scrappy Sales

North in to in is going by basis were a seeing due As to the Australia. regions results. John key sales market it quarter of Australia pro the shutdowns first the caused and XX% Rhino-Rack COVID-XX and for flooding according are in America environment the we Rhino-Rack Total year-over-year catastrophic mentioned, on integration challenging plan forma the in throughout down

of MAXTRAX XX.X%, get year-over-year first and of We segment quarter. gross was million the margins. is related to XXX drove mix, Improvements Consolidated of to points inventory the it sales than Switching important a basis the It bulk $XXX,XXX first in Outdoor up expect XXX the $X.X to call during first ago and incurred air X% more last pricing. basis of our reiterate Rhino-Rack pro the on forma of up in the XX.X% operational associated our business to MAXTRAX's fair XXXX. Total to the in in expenses channel year increased the for product performance, from period commentary XX.X% the the quarter growth when with the incremental basis. to adding remainder freight with value that points it margins for we some efficiencies that back along over this quarter acquisition. were to step-up to charge compared margin in offset

thoughtful be and to disciplined approach in continue our will to We pricing.

we believe have the is still ability Super brand doing the increase to A characteristic strong market approximately Fan prices share and been growing we by we year, a XXXX, portfolio. pricing able raise X% are while Clarus across to During each both. of

million or compensation of down quarter million first the the activities stock-based in a of The income primarily share, compared products EBITDA $XX.X first driven year in the Sport support $X.XX further in strong and $XX.X awards due expenses. XX.X%. record ago or Selling, investments XXXX.The quarter ago remainder an Moving year to driven general ago $X.XX segment go-to-market in in adjusted to million, to and million, the of was diluted increase the higher inclusion million, increased $X.X million, for quarter. compares EBITDA $XX.X same $X.X compared XX% in diluted was per expenses in of was first increase EBITDA margin Rhino-Rack our in $X.X the adjusted was the Non-cash in were same growing XX.X% million and quarter share $XX.X carry. the first the by million compared to administrative $X.X of quarter. The our were Adjusted margin income statement. per the contributed quarter. the quarter by which fulfilment million, to those Net a performance an or Precision results $X.X MAXTRAX, or of margins adjusted sales. and year This to increase

all across up given levels XXXX. efficiency. million, XX% increase where our I'll proactive the dollar shift and to asset at Inventory we $XXX.X were Now, ended of reflects from segments demand curve. The buying liquidity

lead translating In than quarter, times the inventory levels. experienced during higher longer normal addition, we into

now of supply We which challenges also at currently see translate are we times lead expect into to improve, lower half back chain expect in starting levels subside to the of inventory year we to these end. XXXX, as

inventory we decrease debt defined debt leverage that trailing right a In is clear less seek we will million, we our plan targeted always million of of a cash basis, investments Net was bit cash us activities our XX, net to the year. The compared previously may compared million XX-month by negative leverage goals connection Xx leverage million. have expect the a of XXXX, position do, at was the is $XX.X XXXX, million period. future and in range million cash we debt capital which were for low EBITDA a shared XX, may extend But we XX-month a over total with flow, quarter that may in targeted X.Xx within a to primarily to a at M&A, to noted. of quarter. bring of and it back this we when As cash last At to adjusted $XX.X end the course on expenditures, $XX.X experience of provided XXXX, Xx $XXX.X December how higher. March due was negative in XX, putting $XXX.X net equivalents to the same $X.X XXXX.Free as March first operating

But committed are how took step and Fan credit The $XXX April revolving bank by pursue prior new run is banks and On and an similar shareholder-friendly we our that to we partners, on were additional our our our from upsizing agreement. expanded being to responsible We strengthen able to our banking the owners manage operators increased very with agreement activity-based brands our XX, Super are ability seven million. million credit working $XXX business to agreement expand million. to to other $XXX facility group leverage. to and to we

shareholder in $XXX have compared the and organically million, capital of prudently of to forward create to $XXX prior million. the to million $XXX bringing to our loan invest We using facility agreement continue total We look value. to credit this a term additional amount seek inorganically both to

our Let me for move XXXX. outlook to on

to grow segment We is to Outdoor By XXXX the million. compared XXXX. segment, consolidated $XXX.X for expect approximately $XXX.X for to we our to growth sales XXXX to digits expected single-digits million million in increase expect to sales Sport and approximately sales to XX% segment $XXX high-single Precision low

We expect XXXX. segment contribute our in also approximately sales from to Adventure $XXX million

of expect quarter second $XXX consolidated the million. for XXXX, of Specifically we approximately sales

expect importantly, quarter expect deliver expected all segments the to consolidated to second sales we to to we XXXX a growth. broad-based, the EBITDA More with grow adjusted to On three growth be $XX basis, approximately in XX% in continue million.

cash a to of million In tax full-year like approximately USDXX million addition, full-year flow and From million expected between is the we expenditures still perspective, $X expect USDXX for free our still to I'd capital NOLs. range and XXXX. address

realize in quite tax to million expiration our XXXX, value in while acquisitions, shareholders. to is we with to $XXX end We This have for delivered NOL significant record of XXXX. savings In acquisitions, sales accretive and profitability that has their expect benefits in of cash creation over $XX.X enabled benefits XXXX. organization's us we've capital to million starting tax deploy with prior of million time, testament carryforwards. Since associated Bullets realized $XXX the in a our making accomplishments at over Sierra this on our also driving tax

allocation to I'd our priorities. capital Finally, like address

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

historically continue shown, to seek the utilize foremost to we've growth. sheet will to and our As balance as way first we

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

amount the being on. owner, business, committed to on we operators that how run of are including the We take we shareholder-friendly and are responsible leverage

program, still also We a $XX repurchase $XX.X million million which maintain share available. approximately has

continue shares $X.XX to we we million average to approximately our outstanding X.X $XX.X allocation per price purchased years, prioritize capital a but I'll an at a our an will are we dividend common share. continue accumulate nearly on the to basis. at cost seek stock here now expect back Over we to opportunistic Q&A. of shares organic strategy, have as million From share of over the of repurchase, call pause hand operator quarterly and for to M&A, growth, the ready

Operator

Jefferies. [Operator first question Konik with our Instructions]. come from Randy And will

Randal Konik

there, is Aaron guess, I right?

Aaron Kuehne

Yes.

Randal Konik

still are they to from the And elevating? Are wanted just perspective running wanted a in chain Yes. starting perspective, how terms then on lead flatten trend still you think kind of costs forward? impacted I around lines times of get are quarter. side we're of do -- Or cost perspective we get supply going Just -- about some the on lead how in on out? of equation. to the times, to ability you negatively to cost fulfill kind spoke the demand your

Are or of wanted least they what starting peter there to those to on seeing around Just Just kind some as lead get times? out some at well. they are wanted get still perspective increasing? perspective to you're

Aaron Kuehne

Yes, you bet.

things course, things, they're are to the normalize starting of say stabilize. wouldn't us, or So starting normalized, on side enough for of cost to I

As Mike in to, the not the way how in to been we've to a cost that, the have inputs with fortunately able of inputs, navigate But partners, things managed pricing cost in our general. they starting also mentioned, in way, enough, that of vendor through terms approached we of stabilize. side terms are disciplined only but we've

the about the so thing our out come redesign it with gives And offset and that Accelerate is with to that time efforts find also teams and ways new the vendor we Innovate chance associated the products is just flat, each trend the R&D well. products, line efforts. working but also market And our supply more a you through aggressively you as price chains and with partners, our also are to nice reset cost-cutting for playbook to and

about we year, times lead so, really elongate started Europe actually lead towards a see side felt particular, building aware the by things from pipeline challenges as that about being with was been the of good this to end logistic in January the or on to business offset days. associated with inventory Asia mid and As in that part to the in the mid it the the experienced. to that QX, Southeast times it to associated We US see were but you're mid-February of at we longer XX February, we to we to were of up way we've saw, -- also started last of delays heading of, relates the product getting of part Outdoor

we gap in get result, QX. a created saw As started to a

lead we April, that times starting the that back QX is up side positive experiencing come flowing. were in softening stabilize to we last see able the enough to of inventory Fortunately get start into is that The to year. and and QX in traditional and back were to to warehouses. It's

As Mike of inventory find a where warehouse. water, bit its mentioned, we the had to quite the that way on inventory into is now starting

we into again. so rhythm woods get to And not expect in And the to and get but growing we're stabilization to we back as that units businesses. each the back the to a us there, to get business more enable back are look out a we to do QX, to of it's that will see growing starting natural

Randal Konik

Super question of segment helpful. is, or about Mike growth talked last guess the my brought Outdoor the apparel. you up nice And within then I

Outdoor Just versus channel goes? curious perspective wholesale, perspective? get of you're of on mix then in to think distribution channel just how where maybe from perspective, Just penetration wanted get do some about from DTC kind thinking And total that again, kind to you of thinking John long-term of or penetration where can segment? a within apparel Mike's how you're again, terms the

John Walbrecht

Yes.

have is seen quarter, that 'XX and and apparel-as-equipment we new growth rainwear opens from that this forward, that rock expansion, apparel is the head 'XX, growing obviously, in now this us as this last that, question, strategy are are sportswear. up in concept the door saw So, fall at categories which second as we we really that existing time both then within door within initiatives happening, rainwear, that And opportunities Super reported expansion launch Fan fill happening of new is three confidence of moving think then focused bottoms. really also new as flagship and And in retail same on monthly expanding stores. but in into bookings time our that obviously, as doors, term, of and around well Fan your apparel-as-equipment through name really great direct-to-consumer. there, both three performance measurement the product DXC we this currently that quarter about Long but momentarily. And the focused we what great we've the when flagships. on those kids, we we for into our and rest here equipment, it to anywhere significantly. has the the apparel of Men's stretch we're And being we our spring global the To snow, now We we obviously, wide and through what gives of answer of of both on to expanded XX% of while a is eventually is DXC just that our that we retail XX% it. somewhere see building first that core. women's, that I we're have core wholesale penetration sales represent globally, correctly ensuring those the we'd the with higher but focuses, footprint. foremost, confidence do in success apparel right you gives XX% on own the that distribution. of like our business our consumer, XX% in aligning and us And there, apparel a Obviously, see yes. Super think that's a into the And see at success apparel sales between and opportunities

And our growth is in big a you the few that. our accounts next success gives and we opportunity biggest and get in in retail DXC of key lot see the level in then it specialty years of that globally. retailers our So to

Operator

come our BNP Vasilescu And question next Laurent with will from Paribas.

Laurent Vasilescu

half up if Precision should the that's the that, segment year-over-year. that then that across the about case, the this, back which $XXX revenues at should mentioned you we think million, XQ I appreciate I some growth Should assume case. XQ Sport segment. maybe that's in and XQ for we mentioned you think be would I be down Mike, think If in balanced double-digits

driver that? Just curious on the to what's know

Michael Yates

Precision right, as here, comes business $XXX million, you a second we But -- well. Sports. do -- even across back Sports consistently It saying the not show -- understood growth the our and them quarter been gro we've that it's question expect demand in to of always to we being But the has also done which the a scrappy, about we when casing, an around continuing capacity, specifically around bit talk question ammo it's making an capacity. right? about amazing little team challenges talked that. cell sourcing the the add job, Precision can No, that source, from as standpoint, to We've sure

don't it our gotten do sit that we the We've have performs a conservative second view year-end Sports. a but yet And XXXX, the quarter the expect and May year we to great year. going we year, prudent through and going prudent one to ago days understanding, in it guidance full the as the throughout for for as here a the view So, on for grow as how full as we're at to taking on with we're here. gave continue that We're business be noticing. you're back off with on in we Precision look when half but be view released to start, quarter our we first of the it well been business has time. to remainder XX our in

Laurent Vasilescu

first gross quarter or second my are hear, Most And is the companies here. margin? gross can of to great the margins down. of then out really kind Mike. But you reporting a question two-part drivers That's guys parse question

as the chain of get the drivers? in coming How course BD on out of X/X do what's one we China. like earnings think from to then the it I calls gross of supply to evolve about understand called over its year? XXXX, had that was And back the think they just So margins about

Just you're curious disruptions if from in today the stands and China. where to that lockdowns know seeing any

Michael Yates

a get But margin on Well, the the over Aaron. about, question The questions the get quarter, our full I'll it's could back bit much first this XX% I'll there. one mixed pass business And from a what Sports But right, a a in separate thought we for year, fueled we in that call margins, even really, chain bag. first and we just few of supply margin -- did standpoint, little a quarter take to we with March. there of to talked right? margin two improvement. Precision

So, ease flat, Black the bit. the under a we alluded that. being with in to, Black year the growing back as there. just Obviously, margins so improve and But and question, half. little Black Diamond that's Aaron struggling the They're expect supply we where business the as at with consistent Diamond flow pressure that, Diamond second see a and you to see in answered were first as Outdoor will through the he business we little expect line top throughout margin here the chain quarter more the

those couple So, to that's how the of of things. combination margin got up XX%. It's a really

John Walbrecht

And level on-time of things, mitigate making those or work highlights, of partners, to we we're that and levels delays. the through with shutdowns and would, that really where terms our or also it our Lauren, a the just higher what China -- can that's also partners in the has just our team logistic at. with different It within chain reinforces exposure our And really be working still it with approach to consistent supply though, side the on DXC to to way whether and trying highest in variations hopefully our marketplace, then, of by normally of some also investments own consumers those delivery of into more carrying securitize but to fulfillment. little provide the so service inventory end channels inventory we exposures bit than retail continued

Operator

the Matt line of come question with will ROTH next Koranda And our from Capital.

Matthew Koranda

if I prepared in in X% about pricing increases quarter. remarks, think, I contribution So, average, the guys from you mentioned correctly, heard the on

thinking would a So, to less had the My maybe a our bit guys Sierra, ability the bit on supply And guess, I push for curious But more ability could given in just MAXTRAX? if more. some price Barnes, there? price be of and you then still bit you Rhino-Rack I maybe recently this is so the segments action there price the you've just opportunity And additional in how are price? for chain of characterize to maybe where was where year little discuss in challenges. correct a BD, the just have to we assumption, within take then rest more

Michael Yates

and color. across and our are call, X% portfolio across we of increase year Aaron prices we But and add hey, believe prior Well, late I'll price mentioned start, last around on in let we of average effect -- John the any businesses. put again the those into that I'll entire We out portfolio. as there

I we price costs, across margins. higher right? we're business, that's incurring that, mentioned think expanding so the were And think capturing I are too. we how So, entire We

to expected XXX basis as which is which in even well about up go We a costs to points we're probably realizing improvement -- margin, basis that. about yield points XXX

to across Copper we'll So, evaluate we in continuing to -- take here input be based that realized year throughout we'll going go the the we to pound price, have that experience, $X.XX, and entire on this morning. think, low we're continue as we're I push to right? the portfolio. continues the And a costs

of well. we're continuing as So, aluminum to increases, types see those

price. accordingly react necessary, year with we'll So, able if to and later additional prudent be the in be

John Walbrecht

of is, add only thing Sierra that absolutely increases has The unless year. we to a price obviously, necessary, business own once each case other Barnes, In cyclical its nature. I do and would typically,

in new NPI how season, the introductions, also relative pricing prices to each However, raise relative to And innovations we we both season, revisit products, on through then single every the input get to in competition position but the and the both the to we marketplace. BD and market. ourselves cost, new world,

But topic. we position margins maintain ongoing of as on spring how we brand, always how both, that way but we overall the perspective also an it's think And as again. to so revisit our pricing we our to a 'XX, look and market. And our we

Matthew Koranda

the bit Great. a Could Very a terms maybe in there. more like chain helpful, sounds this the point is finer some us. the in improvement on you subsiding And also challenges half for ocean just of think inbound about freight just when sourcing the of of timing it just break later guys. then on we just But in and for back a of the this it's down product function us there at improvement sort year? put It BD year, improvement the side? what's driving supply mostly assumed

Aaron Kuehne

you Matt. Yes, bet,

it improving. So stabilization was commentary a versus more around

distinction during in our there call, in challenges just improvements highlights approach an are around we've the balance in some our the of out seeing supply anticipate required once et taken also availability, chain lighting are a we products, to highlighted of side We previous avalanche subside in what there utilizing supply from the that terms important challenges and the similar overall I microprocessors sheet. that really chain we've for transceiver some think been that again but our of particular strategy do cetera. still way that's inventory but or things, our beacon

with it's we way something we the why interact working it's to disciplined possible the we partners, do position to can daily inventory is through that so the our also -- very on-time business, time be our that But during these way for our we in we in continue to way deliveries. levels the that be capital chain outcome. focused again, in we'll of prioritized deploy that And actively once the fulfillment and team the we're how periods of and on are of prioritization we But so plan get pole realize because and supply that and able terms basis. a the in increase of best

Matthew Koranda

way inventory there side. if it's Is Maybe could inventory still mention guys super XQ? just front helpful. one just much on water you the to embedded within I you that's sneak that any the is be curious inventory If how on for the trends on how quantify follow-up XQ? trended of since year-over-year, Just would that's end can expanded at the balance a

Aaron Kuehne

our result, And the into sheet, as we a the the price have flow that balance Yes. say the that always naturally. will that or But water at system plans. the we're line the a inventory but of that translate brought level on to, that be the the delays that our confident levels of full end look I'd and manage some very free we next of purposely we're of way in way to we're that We of that million inventory to health continue the have the cash It $XX in experiencing. books sensitive very order on we inventory over working the at that existed we revenues on of one, that that challenges in-line or is quarter overall we when sitting of the on mitigate the also manage extra generation logistic though, certain quarter, to we inventory supply through highlight, particular chain important or and inventory, just is two.

Operator

next Our Smith Mark will with from Lake question Capital. Street come

Mark Smith

mix each just I want segments deeper quarter? at versus kind Precision talk the of of any Can more trended look how about to bullet those the little during of ammo a you and here.

John Walbrecht

Yes.

So in we're at seeing We're we're our you our the as percent businesses. look reported not Obviously, doubling in here, it production. increases you and we OEM well if significant way know, triple-digit XX-plus growth seeing our ammo. tripling

we choices a So, we box OEM what or box a function, green to ammo is is and allocations. said, box this, green brass that often black we OEM mentioned ammo chasing bullets, ammo through as And in as ammo. Obviously, the prioritize reloading make in also and function we've between of cartridges. and call of

of obviously, and to OEM if towards brass, scrappy we on the see depending opportunity. black pull pull better accelerated we're when box brand, and mix the so we And than when bullets. off, can't or able then green we box the reallocate off And it the and

Mark Smith

Europe main in think, international. segment What function ever or the able of driver just to that in business, quarter, your what's to And some really, best be we that Was that Okay. look in was a capacity ship markets? I international as coming the you international, -- having into at had back there?

Michael Yates

That's to on. that OEM to execute business Precision Sports was team our able over Group

think million million. a up $X from a like you're number to $X.X probably seeing I over

of there's space. So, and OEM growth all the million of it's side in $X.X over

John Walbrecht

period side it's of to dealing offering. terms will outstanding of appropriate customers. continue that provide about we been those especially were allocate it now international was time. the Pre-XXXX, versus all there, had extended have to a we area for not capacity when how to or was just very an slowdown see the international for especially being we just able of our some reiterate Mark, though, that And things, an focus we to in be And What an in felt of these we the of approach piece to and necessary orders it is market. balanced and business the with portfolio, you growth, the Barnes copper the that within domestic think have opportunity also an domestic

it to And was was XX getting over was which allocate market, importance and to the last again point XX that service the so once months it's where able months. strategic felt something be that to to underserved a we

Mark Smith

of think those Adventure growth just Perfect. And talk or more then, factors? last just that for within can about the both combination distribution the a me the one a at as there? existing distribution sales we better I or segment. Was solid Domestically, of look you function

John Walbrecht

Yes.

the last Australia, We approximately going inventory to calls. on really market had a Australia back we call to accounts in from share to and automotive pre-season to the we up US. seven the to And the we first five focus, aftermarket that quarter in we that. plus allocated -- said, So mentioned in the we XX% what catch that Australia focused accelerate in started key previous the opportunity. we We the and top X% to market reallocate situation under in program fall would as have premises American the North we used

long arguably aftermarket were we weren't of than term, to all North again, have accounts. We Australian the markets. in would difficult blessing to Outdoor chase is accelerate seven biblical to a able top we been at had America even pre-COVID And to five to the that, have rate they as kind the inventory Now, able also the maximize our top focus doors chasing weren't across it, would five, only and we live automotive of to floods, more allocating of on been side goal or able seven. those time obviously, all to had maximize market the had

were And it little a we would the proved premise been have that just in accelerate was the North so slower. able what We there just X% somewhere America. American between to market opportunity said that XX% -- out And is opportunity. always North

Operator

will from come Duffy Jim And our next with question Stifel.

James Duffy

recall Maybe the What's inventory well. I current little on materials? within help are were us raw can Mike, front-loading follow-ups guys to you some materials. the you John, with doing balances. Aaron, start some wanted on Cody, hope you questions. posture just inventory with the I visibility raw a

continue we're the quarter you it number inventory what relates any way so, at seeing end? to If is to to as there do in that consider

Aaron Kuehne

Yes.

optimal inventory, So million just that's it part of $XX of -- inventory I higher normal than levels. that and excess call wouldn't than or but higher

So, but this in the we of that that of raw can really us $X sure the And materials to piece increase the the the real we the to is in was our we that our would of in within can into missing Precision run, in with to as we be of still that optimize the terms that were is can not this flow -- components well. bucket. important coming a make year that is crank. million plants have efficient of the are enable that inventory terms was things something terms also a just operations equation or us way that, We've and more to as having those capacity was raw do is our able important of that of see Sports way only if really we side capacity close optimized, within -- materials that being

we securitize our being opportunistic, been and we've build not in terms to we've and had, the of us more load that something to to those components the about business. out which of to -- very the what be. be previously to the there where optimistic rest in than like we ammo ability continue Barnes way be year, particular, to that's enables and We're both out initiatives able through for Sierra so continue able to all scrappy securitize. able But we'd been And to

James Duffy

things, for interesting revenue bottlenecks compare at perspective supply the the within how quarter? ammunition it for Sports? second Precision Black sounds some us given with the And about for principal Diamond have guys to revenue you like the backlog I'm current offering. you're versus the the you with business that And that the if assumptions talk the does Can curious, it. I'm guidance. backlog understanding looking respect are Got

John Walbrecht

Yes.

brand chasing whole of terms limiter fall And there's And other brass into across XXX% cases of books in don't So here we think green of what driver are as again, We're brass. books black in OEMs to driven centerfire opportunities track load and to loading At the million on facilities, we vertical, not big of we recognizing growing. specifically our of which bullets, black is Sierra a obviously, towards box a partners. So a Barnes, is Sierra. box is the either Barnes, rate is At capacity out, three 'XX, ammo business And OEM we year or Barnes XXX ammo. own And to Sierra, more unfortunately, the obviously, it's we as and growing. depending is the box the for the can we on around or not that million, and component. there's demand, again as in right in And our box we at XXX is of XXX ammo, of on versus strong components, million then ammo. Order the right? prioritized see use proponent problem OEM Order but run this. for of going by rate then businesses, whereas call bigger well Sierra that obviously, that of strong obviously same the there of case so end us, at ammo. in perspectives, load is industry. this fortunately green reloading look a that And both or Barnes. run own Sierra the and our

to books. when as strong quarter, we So chase the see We you the a there. we say, love did our as book the If cases far and then strong to the receive as crystal ball through ability but the and and first referenced, that. exactly quarter, opportunities order fulfill be out that. in scrappy fourth to momentum order well and second as opportunity And see that can't we Mike we We'll continue over-index, we to that in can see and we chase keep as third the when quarter, results. would know for

James Duffy

to you on was shift you going years? aligned the direction had COVID things give John, Diamond. future that did I Or take with didn't Understood. shared with us a update here. for Can prior different seasons? still I'm us the around surprised footwear an Black out you some? what pipeline call Is that footwear, for in

John Walbrecht

seen quarter the along, trail in the No. about we climb technical put to chase out very on, the in the the hike. we've here seen optimistic a category. huge just still We side, which of We're we footwear we're We've we of 'XX that footwear. to still our still approach, which growth spring gyms brand-new keep see just start notes approach, is explosion the concise, big Honestly, coming in back every 'XX. to trying lifestyle clearly, -- with think continue shoe business. And in And turn didn't what call climbing call single run. that we the one -- for launching opportunities outdoor

equipment gyms of now see that didn't is last COVID we I think climbing again, surge of just obviously have and which couple footwear, lockdowns. one in footwear a just the tends climbing because of years which surprises, during the we're seeing opened, other to climbing that

Operator

will from James. question Raymond with next Joe Altobello Our come

Martin Mitela

Martin calling Joe Altobello. in Mitela for is This

channel much channel? up what quarter. mentioned and your the about earlier expectations year your in that for DTC is are How revenue, for for the You that XX% went that full

John Walbrecht

I continue We accelerate will on our revenue down said breaking that of we tell don't specifically to have in the DXC Yes. aspect goal businesses. drop to business. our that is the you

of long-term the categories given our the apparel, is is were mix DXC catch split interesting being function XX% a the still why more it highly XX% vision that's sales mix. really, And and started, XX%, our that's of apparel this XX%, be see up. that wholesale. and our our prior estimates footwear, our And being in well. inventory you it's up that we equipment-driven, our like Clearly, probably between actually chasing to sales around our As to should and DXC XXXX, business our i.e., up approximately outpacing as acceleration of wholesale,

least DXC, growth Jackson of to our our So, if next the that stores. gives of you able going. with and that also those goal And approaching both and I we overall. categories said, our years, then through We be three e-com of Bend the sense to, is that not opened we'll believe recently expansion maintain two like over of trend where We kind that at XX% a XX%, percentage retail. are that business Hole of

Martin Mitela

Got questions it. answered. my have rest the of been And

Operator

And our question Linda come will Bolton-Weiser next Davidson. from with

Linda Bolton-Weiser

their being versus activities a back were your of just a in I ammo? little cut might some environment. these pinched. are also to was to a demand curious have like kind businesses consumers bit And and some Yes. for how there a perform consumer could on would expected bullets that in of if they be It of like activities be mix different recession, recessionary of strikes discretionary me outdoor

Aaron Kuehne

important tailwinds not do characteristics very those off lifestyle because approach key activities. of economic is of this change very on the the is headwinds. it's of based. Super loyal or and their that, they're their Instead, one brand really those Fan So, activity based focused that or And they're consumers

also things environments, with that's actually being do And activity in during in again, grow brand been that core the based. a also Diamond of pretty to but historically, enthusiasts, is to we've the just believe of represents able that we the concept once One recessionary particular it's way. Black of this seen that of substantial because what

very the think confident what marketplace represent optimistic how the about as that very impact -- we're different and to businesses of again. we current able about and the or ability activities nature end been overarching very business, resilient. are may that we objectives our because we're and and durable, prove the so time and once current they've itself that serve going that time the where the very to achieve the consumer serve in of our They're may And backdrops we that with and we're again,

John Walbrecht

to to any Linda, or not that the best Chipotle is, job, going of less. I not movie, I the way go my but if I'm lose I to run may think, think

that market doesn't economic really different ammo. ammo this trends. down a the its use In of those actually fact, just anxiety, to To more because may sport. or that our the do whether I world, and still right? OEM enforcement buy bullets. frankly, whether said, military, shoot I'll an of impact target, twice your slow ammo, with or day therefore, honey law And question still engaged recession run and a as reloaders recession, reload it's or of products, are it's then a that the shooting in sports, bullets deal doesn't on a i.e., not activity Those really And versus hunt the have because Aaron

Linda Bolton-Weiser

of about moderating talk seeing opportunities? of seeing the you because can more what Are of of Okay. just pricing the just holding kind environment? you're you macro I mean, you kind the kind kind of environment? Also, in in are more? seeing uncertainties are M&A back Or you

John Walbrecht

No.

We Super our of upfront always look the times, times M&A been space. perform for and good to in we've think bad even One, strategy. outdoor both brands that like brands find I times. we in bad Fan in better do

and to clearly pretty To the are is the to the trade think Outdoor as there think what and segment. the I find started now trade going strong lower at. that. pipeline may pricing, businesses I we think also companies watching looking on commentary we're overlanding lower on opportunities your demand We market segment, are to valuations we're of currently we of see has have in strong just in but we a continue that growth

chase through for we processes change. the these and brands not see think market But of processes the we'll And them the going go try the I We way on some the -- and that probably some typically to of do in are are all side. typically mix. don't that

important I think our business More think going sure exact importantly done again, we same is acquisition announce to our sure of the that's accretive the And that pick, making same owners, time. in aha, M&A segments lines way And everybody's us. perfectly next have up is, long that back, each it's that Sports really brands of we're aligned. the the really we the we're Precision every answer making that's and at us, going we to to thing and really Adventure, be and we're I would Outdoor, time operators, for term.

our so and And is each to stores. meaningful acquisition every super

Operator

And will come from our Sundby Ryan William Blair. with last question

Ryan Sundby

a on nice a Congrats environment geared This Aaron. quarter here. might in tough one towards more be

over a distributor away Clearly, year think started transition a lot has Europe. you a little I ago, model to happened since then. a from in

you this if progressed visibility could the and us wondering that's during improve helped product maybe on or of uncertainty? I'm if transition how So, update time that flexibility

Aaron Kuehne

going both in Scandinavian. European transition one reasons did in we a but EU, see of dock a to of well. service momentum, Without noise of place to U.K. we areas Ukrainian go France, also ASAP despite the core reason also bookings, taking means that's to some the that a is lot core markets, extremely markets, That's has terms it of the great lot well Russian, that's particular within continue a transition doubt, the That the of orders. all of opportunities, on over and conflict team question. there continues the then that embraced and as considering growth Ryan, as replenishment a with the being the what The that markets fully

focus connecting that, key we've -- providing of highlighted high-level group good a one, that is and collective of team we, placed done that a job I them with what's on But has really with one it's think and partners also the as retail support with really the really of support. also retail then efforts. industry it better making for helped really and in deliver ability the that to understand those very has terms results of to partners standard our categories, time than strategy, X but sacred full, clear backing our really in on up a

was the supported even as recently the terms we top in way those in one of that And recognized both brands feedback through just UK. got also we've of some managing in of the process, retail that Brexit that terms but partners BD with of was the that communicate, associated

within that reinforces especially different a the basis line to definitely portfolio. for continues across but brands a distribution our model that that think on with, the out brand, region So, Diamond about Black as the expanding us, very for also global we're comfortable we

John Walbrecht

in of in UK outdoor saw #X, it's significant area the that opportunity. an move where And as obviously, one the but trendsetter was also really in a we because top a Europe, markets, globally

Ryan Sundby

shift out lockdowns wanted to Yes. well. quarter, you've and XX% Good into were questions the been what and than couple you to want for to up over is understood, up product able wanted hard America to there pressure? to of products little lean sure on I that well that mean, over going goods? North well. to other And hear that demand this is I offset is maybe a follow With I up Just going the apparel get just it transition your I growth you were make asked. follow flooding about easier hands Rhino-Rack, on just or the then with quicker to able that as given there, thought help just a that,

Aaron Kuehne

Yes.

entire again, we little piece lighting bit a delays side trekking front a organization. One, to in apparel side under once saw but the as aluminum was over-indexed is the truly is -- initiative. and apparel know, the the poles. we've such also, logistics of from represents But initiative pressure as hard why items delays we is the well. saw by the inventory real we reason also things, the of some as the specific the So of -- goods key this one purposely It is strategic on that just on

of So, what That flow this that of just we Diamond also created and XXX became that's back equipment of gap the able delays the things overcome QX. within the XX is within track. days gap side or weren't created in goods again, supply hard inventory that real to chain and once on the Black logistic because the days,

inventory to the that of extremely are continue demand of the some equipment. will product categories. because within those We expedite for is two high categories Those top

to our going deliver when naturally so impact to have the on ability it's that, business. an grow don't And we continue to

a That's thesis efforts, going transaction in piece, a Rhino-Rack was something that knew the opportunity in that through position focus an the an been Australia. was be is going also On the of our for of opportunity. of due part to to knew we area this us North Rhino-Rack terms has terms diligence of be the Rhino-Rack. we real and for and very in integration America always strong But through

know, the us enabled the upon to in high-levels ourselves show this it a including where through kind already to started America. position things to results cetera, we well of ability with cetera. right to at balance deliveries, in shutdowns the we to did fulfillment, also so be capture the place took to And that ability so not that et of right service that some try et QX, get place to right What out, market and the as time, our few really only North support and on-time market into the put as the America took much we place the flooding dependent in North the pressures inventory the of to of but and able it away is truly to COVID fall last over-index of

did distribution? is a U.S.A. we higher so XX warehouse. we do And able position And now had. Rhino-Rack one in level the expand in can was, the us top to being by accounts is we XX, no. to that now our confidence or able inventory just be And North the a answer because questions with continue of We the to that way sitting will distribution, service top expand of it America that

John Walbrecht

ceiling to have the find bucket First another before for for the you look fill. today you business

Operator

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

John Walbrecht

for you everyone, super on you, results. listening be Thank XXXX your speaking second everyone, quarter it. today look to we and support our safe. when Thanks, We and forward again we appreciate to And report in.

Operator

this gentlemen, teleconference. today's does conclude and Ladies

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