Clarus Corporation

Good afternoon, everyone, and thank you for participating in today's conference call to discuss Claire's Corporation's financial results for the fourth quarter and full year ended December 31, 2018, and its outlook for 2019. Joining us today are Claire's Corporation's President, John Walbrecht, Chief Administrative Officer and CFO, Aaron Cuney, and the Accompanied External Director of Investor Relations, Cody Slough. Following their remarks, we'll open the call for questions. Before we go further, I would like to turn the call over to Mr. Slob as he reads the company's safe harbor statement within the meaning of the Private Security Litigation Reform Act of 1995 that provides important cautions regarding forward-looking statements. Cody, please go ahead.

Thanks, Sonia. Please note that during this call, the company may use words such as appears, anticipates, believes, plans, expects, intends, future, and similar expressions which constitute forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are made based on the company's expectations and beliefs concerning future events impacting the company and therefore involve a number of risks and uncertainties. The company cautions you that forward looking statements are not guarantees and that actual results could differ materially from those expressed or implied in the forward looking statements. Potential risks and uncertainties that could cause the actual results of operations or financial condition of the company to differ materially from those expressed or implied by forward looking statements used in this call include, but are not limited to, the overall level of consumer demand on the company's products, General economic conditions and other factors affecting consumer confidence, preferences, and behavior Disruption and volatility in the global currency, capital, and credit markets The financial strength of the company's customers The company's ability to implement its business strategy The ability of the company to execute and integrate acquisitions The company's exposure to product liability or product warranty claims and other lost contingencies The stability of the company's manufacturing facilities and suppliers Changes in governmental regulation, legislation, or public opinion relating to the manufacture and sale of bullets and ammunitions by our Sierra segment and the possession and use of firearms and ammunition by our customers. The company's ability to protect patents, trademarks, and other intellectual property rights, any breaches of or interruptions in our information systems, fluctuations in the price, availability, and quality of raw materials and contracted products, as well as foreign currency fluctuations. The company's ability to utilize its net operating loss carry forwards, changes in tax laws and liabilities, tariffs, legal, regulatory, political and economic risks, and the company's ability to declare a dividend. More information on potential factors that could affect the company's financial results is included from time to time in the company's public reports filed with the Securities and Exchange Commission, including the company's annual report on 10-K, quarterly reports on 10-Q, and current reports on Form 8-K. All forward-looking statements included in this call are based upon information available to the company as the date of this call and speak only as the date hereof. The company assumes no obligation to update any forward-looking statements or reflect events or circumstances after the date of this call. I would like to remind everyone this call will be available for replay through March 18, 2019, starting at 8 p.m. Eastern time tonight. A webcast replay will also be available via the link provided in today's press release as well as on the company's website at clariscorp.com. Any redistribution, retransmission, or rebroadcast of this call in any way without the express written consent of Claris Corporation is strictly prohibited. Now I would like to turn the call over to the president of Claris, John Walbrecht. John?

Thank you, Cody, and good afternoon to everyone listening in. It's an exciting time to be joining you, what for us will be the culmination of our first two-year strategy. As communicated in our earnings relief today, the fourth quarter continued the solid momentum of our overall business and with our brands, showing sales up 9% to $57.3 million compared to the same year-ago quarter. Both Black Diamond and Sierra saw strong growth again, up 8% and 14% respectively. The solo performance was a result of the dedication to a product innovation, as well as providing our consumers a compelling product offering across all of the various categories. For example, Black Diamond's apparel category grew 60% in the quarter with strong results from nearly all segments, including stretch wind wear program, bottoms, logo wear, and sportswear. Additionally, we launched first to market with an innovative and redesigned line of lighting products and saw continued success across both gloves and footwear. Accompanying Strong's top line results in the quarter was a 300 basis point improvement in our gross margin, as we saw a higher proportion of full price selling and a favorable product mix and channel mix. Transitioning to the full year of 2018, we more than tripled adjusted EBITDA and generated $20 million Thank you very much. will see the introduction of over 300 new products across all of Black Diamond's primary product categories and the continuation of our enhanced go-to-market strategy at both Sierra and Skin Nourishment, which is focused on new product introductions, expanded distribution, and better consumer engagement. We believe that our current playbook of Innovate and Accelerate will continue to provide us with strong organic growth in 2019 enabling us to further scale and leverage our portfolio. We also remain optimistic in an M&A strategy that seeks to find other superfan brands in which we can deploy our unique innovate and accelerate brand strategy. But before speaking more about the future, I'd like to focus on our fourth quarter results. First, diving into category results within Black Diamond, which were aided by total brand impressions in the fourth quarter increasing 14% compared to the fourth quarter of 2017. Starting with apparel, as I mentioned earlier, sales in the fourth quarter were up 60% driven by the continued strong demand for stretch ring wear, bottoms, logo wear, and sportswear. Apparel continues to be our fastest growing category and we anticipate significant runway for continued growth. Our mountain business was up 10% due to the new lining product introductions that were well received at retail, along with strong performance in gloves. As we mentioned before, gloves are a strategic focus area where we believe that we can drive real innovation in product segmentation where our brand awareness is high. Our climb category was down slightly in the fourth quarter, but only due to the fact that a year ago quarter included a launch of the new footwear initiative, the Momentum Rock Shoes. Also, due to the seasonality of the climb segment, the fourth quarter is typically a lighter selling period given the winter activities favoring our ski and mountain products. Our ski business was essentially flat in the fourth quarter due to the delay in the launch of the Black Diamond beacons and the strategic reduction of Jet Force 1.0 shipments in anticipation of the entirely new Jet Force tour packs expected to launch in fall 19. Regarding the delay in the launch of BD Beacons, we anticipate the bulk of this business to be captured in the first quarter of 2019, largely due to brand strength as well as pent-up demand in the marketplace from a strong late winter, particularly out here in the West and in Europe. In fact, the first quarter of 2019, we have been chasing significant product demand in our winter products, including various stock outs in our Avalanche safety gear. I'd like to quickly mention that in 2018, we were intently focused on the innovation and acceleration of our brands and product offerings. And during the 2018 trade show season, Black Diamond products were recognized for 72 product awards, more than double the 35 in 2017. Turning to Sierra. As mentioned, the brand also generated strong organic growth with sales up 14% from the fourth quarter of 2017. Since acquiring the Sierra business, we have been implementing the similar go-to-market strategy that we deployed at Black Diamond, and we are very encouraged with the results to date. Our improvements to sales and marketing, as well as order fulfillment, combined with our innovative new products is driving outsized demand for the brand and strong financial results. Now on to some regional comments. Sales domestically were up 13% in the fourth quarter, again due to solid performance in our apparel and knotting categories, as well as strong growth in Sierra. In our international region, sales were up 4%. Despite some product availability shortages in our color snow safety line, our international team has done an excellent job of positioning the brand with our retailers and creating awareness within each of our product categories. This effort also drove heavy traffic and interest to the most recent ISPO conference. Additionally, we saw increased ASAP orders in Europe and continued to strengthen in Japan and Australian markets due to strong adoption across the Black Diamond hard goods offerings. All in all, our strong performance in the fourth quarter helped drive a record year in 2018. This is grounded by our strategic focus of creating the most disruptive brands in the outdoor industry by out-innovating the competition, building disruptive marketing campaigns around these products, and an ease of doing business with mentally as well as long-term capital allocation strategy and strategic M&A focus on other superfan brands. With that, I'd like to turn the call over to Erin to speak more in detail on our fourth quarter financial results. and then I'll return to speak to you about our operational outlook for 2019. Thanks, Aaron.