Clarus(US:CLAR)2022-11-08 04:46Financial Data and Key Metrics Changes - Consolidated sales increased by 6% year-over-year to $115.7 million, with year-to-date sales up 34% compared to the previous year [24][6] - Adjusted EBITDA for Q3 was $15.1 million, reflecting a margin of 13%, down from $19.2 million and a margin of 17.7% in the prior year [32][39] - Net income for Q3 was $2.8 million or $0.07 per diluted share, compared to $4.5 million or $0.13 per diluted share in the same quarter last year [32] Business Line Data and Key Metrics Changes - Outdoor segment sales grew by 7% to $62.9 million, with an 11% increase when adjusted for foreign exchange [25][6] - Precision Sports segment saw a 13% increase in sales to $34.2 million, driven by military and law enforcement orders [28][14] - Adventure segment sales declined by 5% to $18.6 million due to lower consumer demand and supply chain constraints [29][16] Market Data and Key Metrics Changes - Specialty account sales increased by 69%, outperforming big box and national accounts [12] - Direct-to-consumer sales rose by 23% year-over-year, indicating strong demand within the core community [13] - European sales were down only $1 million year-over-year, despite a $2.4 million impact from foreign exchange [13] Company Strategy and Development Direction - The company is focused on activating and scaling go-to-market activities within each brand, emphasizing new product introductions and supply chain improvements [9][18] - The shift towards a DIY installation model for products is expected to unlock new retail distribution opportunities [81][80] - The company aims to prioritize organic growth, accretive M&A, quarterly dividends, and share repurchases in that order [43] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term growth potential of the brands despite short-term challenges from macroeconomic factors [5][23] - The company anticipates that elevated freight costs and foreign exchange pressures will normalize over time [8][39] - Management expects a rebound in certain categories and margin normalization in 2023 [40] Other Important Information - The company revised its full-year 2022 sales outlook, expecting outdoor sales to increase by 1% to approximately $223 million and Adventure segment sales to drop to approximately $92 million [37][36] - Inventory levels were $155.2 million, with a goal to reduce inventory to approximately $145 million by year-end [33] Q&A Session Summary Question: What led to the decrease in the sales forecast in the outdoor segment? - Management noted macroeconomic challenges and elevated inventory levels at national accounts affecting business acceleration [46] Question: Can you provide insight into the performance of Precision Sports? - The segment's growth was driven by military and law enforcement orders, with expectations for continued demand despite supply chain constraints [49][50] Question: Why was the Adventure segment down significantly in North America? - Management indicated that new product launches and inventory issues contributed to the decline, with expectations for improvement in the future [56][57] Question: What is the outlook for the apparel business? - The apparel segment experienced strong growth, but management noted a slow start to the winter season due to supply chain challenges [59][60] Question: Can you clarify the distribution breakdown between specialty and mass channels? - Approximately 40% of business is in specialty retail, with 30% in national accounts and 25-30% in big outdoor shops [62]