Clarus Corporation

This is the operator. Today's conference is scheduled to begin shortly. Please continue to stand by. Thank you for your patience. Good afternoon, everyone, and thank you for participating in today's conference call to discuss Claris Corporation's financial results for the first quarter ended March 31, 2022. Joining us today are Claris Corporation's President, John Wolbrecht, Executive Vice President and CEO, Aaron Cuney, CFO Mike Yates, and the company's external director of investor relations, Cody Slaw. 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. Slaw 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. Cody, please go ahead.

Thank you. Before we begin, I'd like to remind everyone that during today's call, we will be making several forward-looking statements, and we make these statements under the safe harbor provisions of the Private Securities Litigation Reform Act. These forward-looking statements reflect our best estimates and assumptions based on our understanding of information known to us today. These forward-looking statements are subject to the risks and uncertainties that face Claris Corp. and the industries in which we operate. More information on potential risk, excuse me, 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. I'd like to remind everyone that this call will be available for replay through May 23rd starting at 8 p.m. Eastern 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. Now I'd like to turn the call over to Claris' president, John Walbrecht. John?

Thank you, Cody, and good afternoon, everyone. The first quarter of 2022 is successfully in the books, despite the many challenges people across the world are experiencing, proving once again that activity-based brands in the outdoors are continuing to experience strong momentum and that superfan brands drive those market trends especially in tough times. Let me summarize. Our precision sports segment continues to execute at a high level, growing sales by 41%, and in our adventure segment, we are pleased to report early success in our innovate and accelerate strategy, especially in North America. In fact, Rhino-Rack's net sales in North America during the first quarter increased 42%, an early proof point of the substantial white space that we believe exists for our adventure brands in this market. As we continue to experience a strong order book with Black Diamond, but supply chain and logistic challenges impacted our ability to convert all outdoor segment demand into revenue. We are incredibly proud of our entire team of colleagues who continue to drive these strong results. especially given so much uncertainty in the marketplace. We continue to be nimble and decisive in the individual brand levels, which is critical in achieving the level of performance, proof again that great teams build great brands. Now let me address our performance by business segment. Starting with our outdoor segment, sales were roughly flat in the first quarter despite strong consumer demand. Due to the continued supply chain and logistics challenges and other delays caused by COVID-19 related shutdowns in Southeast Asia, we were unable to fulfill roughly 10 million in demand with product during the first quarter that had already been produced but stuck in transit. Given the high concentration of core equipment that BD sells, we expect to convert this in-transit inventory into in-line or full-price revenue in future quarters. Our global order book for Black Diamond has continued to sustain momentum. Consistent with that that we stated earlier this year, we are purchasing inventories in line with our demand plans of $270 million to support these higher levels of bookings. However, we are handicapped handicapping this order book in our 2022 sales guidance as a result of the supply chain and logistics challenges we continue to face. As we stand today, along with a very strong fall 22 order book, we have confidence that the Black Diamond brand's top line revenues should accelerate going forward. Most of the logistics challenges impacted our equipment sales, as our apparel business was up 53% year-over-year, driven by growth in men's and women's outerwear and women's sportswear. Most importantly, apparel remains our fastest-growing category, confirming that the black diamond positioning of apparel as equipment continues to resonate well with our core consumers. We experienced a strong re-acceleration in our direct-to-consumer growth, with sales up 38% in the quarter. This was overseen by our new vice president of e-commerce, Bryson White, who joined our team in December of 2021. He has already been successful in activating our digital first strategy, focusing on performance marketing, and balancing an approach across search, top of funnel, paid social, and email retargeting. We also did a better job of fulfillment while still balancing our desires to serve and grow our wholesale retail partners. As we look to the rest of the year, we expect continued momentum from our direct-to-consumer business within outdoor. Moving to precision sports, Q1's 41% growth was an exceptional quarter where several factors worked in our favor. We outperformed on our ability to increase capacity and satisfy an increase in growing OEM demand while continuing to be scrappy and our ability to deliver ammo across both Sierra and Barnes. While shell cases continue to be our number one challenge from a sourcing standpoint, we've done an excellent job sourcing copper and lead using our balance sheet to secure these materials in advance of the rising costs and accelerated demand. For 2022, we continue to drive towards an end-of-year bullet production run rate target of 350 million bullets at Sierra and 120 million bullets at Barnes, resulting in the doubling of both businesses and substantially improved margins since acquiring them in 2017 and 2020, respectively. Through both Sierra and Barnes, we have complementary brands that provide strong runway for long-term growth. Sierra is focused on precision, and we will continue to see to maximize growth through proactive innovations and the expansion of our ammunition collections. Barnes is focused on Terminal Impact as the hunting brand of reference that has been selling ammo for 30 years, servicing a large addressable market that has been built over decades. Our brands are gaining market share across all leading categories and bookings remain strong across our portfolio. Although we are tenacious and disciplined in our approach, this doesn't mean that we are immune from the various external supply chain challenges that are currently being experienced as we work towards building increased capacity and product availability to support our longer-term targets of $200 million annually for precision sports. Though new product introductions increase capacity, expanding our distribution globally and maintaining our focus on building the best bullets in the world. We are confident in our long-term vision for this segment. In our adventure segment, our Innovate and Accelerate strategy began to take shape in the first quarter. We are excited about the growing momentum of overlanding. However, as many witnessed, Australia was impacted by extraordinary floods affecting the Australian continent and continued impacts of COVID-19 lockdowns early in the first quarter. This negatively impacted our short-term demand in Australia. More positively, Q1 marked the first full quarter of Rhino Rack introduction into the North American market. Reception was strong as sales increased 42% on a pro forma basis. Initially, we have focused on meeting the growing demand of our top 10 key automotive aftermarket retailers, and preparing for accelerated opportunities through both the automotive aftermarket and outdoor channels. Maxtrax, which we acquired in December of 2021, saw an acceleration in the first quarter as we increased the inventory allocations to catch up to the growing demand of our recovery boards within the overlanding space. In summary, we believe our portfolio of superfan brands has us well positioned to continue our market momentum. Our activity-based brands have demonstrated strong resistance to recent economic headwinds, while outdoorism continues to fuel demand for the outdoor activities that we serve. As a result, we believe that we are well positioned for another record-setting year in 2022. I'll now pass it over to Mike to talk about our financial results in more detail. Thanks, Mike.