Financial Data and Key Metrics Changes - Q1 net sales were $60.4 million, exceeding expectations despite a challenging consumer backdrop, reflecting a decline from $69.3 million in the prior year [4][31] - Adjusted EBITDA for the quarter was a loss of $800,000, compared to breakeven guidance, indicating a significant decline in profitability [36][40] - Gross margin for Q1 was 34.4%, down from 35.9% in the prior year, impacted by lower volumes and unfavorable product mix [34][35] Business Line Data and Key Metrics Changes - Adventure segment revenue was $16.1 million, down 28% year-over-year, primarily due to significant declines from three specific accounts [32][29] - Outdoor segment revenue was $44.3 million, down 6% year-over-year, driven by product simplification and a planned decline in ski business [15][32] - The company sold $2.7 million of discontinued merchandise in the Outdoor segment, which contributed to the revenue but negatively impacted gross margin by 80-90 basis points [70][73] Market Data and Key Metrics Changes - North America wholesale sales in the Outdoor segment were down 7.3%, with a 38% decline in the ski category [16] - Europe digital D2C sales were up 10.7%, indicating some regional strength despite overall declines [17] - International distributor markets saw a 21.4% decline due to optimal timing shifts in deliveries [17] Company Strategy and Development Direction - The company is focused on executing its strategic roadmap for profitable growth, emphasizing product simplification and SKU rationalization [4][5] - A new leadership appointment in the Adventure segment aims to drive critical progress and revamp the organizational structure [8][9] - The company is actively working to reduce its exposure to China sourced products, with plans to complete the transition by the end of 2026 [22][41] Management's Comments on Operating Environment and Future Outlook - Management has withdrawn full-year guidance due to economic uncertainty and the impact of U.S. trade policies on consumer demand [11][40] - The company is taking decisive actions to maintain competitive positioning and financial strength, supported by a balance sheet with zero third-party bank debt [11][39] - Management remains confident in the strategic direction and is proactively working to mitigate the impact of trade policies on financial performance [40][41] Other Important Information - The company announced the divestiture of its PEEP Snow Safety brand for EUR 7.8 million, aligning with its strategy to simplify the business [39] - Cash and cash equivalents at the end of Q1 were $41.3 million, down from $45.4 million at the end of the previous year [38] Q&A Session Summary Question: Are there any cancellations in products brought into the U.S. due to tariff impacts? - Management confirmed there have been no cancellations and emphasized efforts to maintain supply while managing margin impacts [47][49] Question: Can you size the headwinds to gross margin in each segment? - Management indicated that the unfavorable margin mix was primarily due to higher levels of discontinued merchandise, impacting gross margins significantly [55][58] Question: What is the annualized contribution of the PEEP business to revenue and EBITDA? - The PEEP business historically contributes about $5 million in revenue annually, with EBITDA around breakeven [62] Question: What is the strategy around Black Diamond stores? - The company aims to maintain a limited number of stores as brand expression and learning labs, with a focus on community partnerships [77][78]
Clarus(CLAR) - 2025 Q1 - Earnings Call Transcript