Clarus Corporation

Good afternoon, everyone, and thank you for participating in today's conference call to discuss Claris Corporation's financial results for the second quarter ended June 30th, 2025. Joining us today are Claris Corporation's Executive Chairman, Warren Cantus, CFO, Mike Yates, President of Black Diamond Equipment, Neil Fisk, and the company's External Director of Investor Relations, Matt Berskowitz. Following their remarks, we will open the call for questions. Before we go further, I would now like to turn the call over to Mr. Berskowitz 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. Matt, please go ahead.

Thank you. Before I begin, I'd like to remind everyone that during today's call, we will be making several forward-looking statements, and we will 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 potential risks and uncertainties that could cause the actual results of operations or financial condition of Claire's Corporation to differ materially from those expressed or implied by the forward-looking statements. More information on potential factors that could affect the company's operating and financial results is included from time to time in the company's public reports filed with the SEC. I'd like to remind everyone this call will be available for replay starting at 7 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. Now I'd like to turn the call over to Clarice's Executive Chairman, Warren Kanders.

Good afternoon, and thank you for joining Clarice's earnings call to review our results for the second quarter of 2025. I am joined today by our Chief Financial Officer, Mike Yates, who will cover our overall performance and our adventure segment, as well as Neil Fisk, who will discuss our outdoor segment. During the second quarter, we experienced a mix of positive and negative trends across our individual segments, selling channels and geographies as we continue to manage through the realities of the current global consumer landscape. Overall, I am pleased with our progress against our operational initiatives as we simplify our organizational structure and streamline our product offering. We generated net sales of $55.2 million consistent with our quarterly expectations, with a slight increase over the same period last year. Mike and Neil will touch on the figures in more detail, but at a high level, the increase reflected solid performances in both European and North American wholesale at Outdoor and improvement to North American wholesale and direct-to-consumer channels at Adventure. On the other hand, our direct-to-consumer performance and overall site traffic at Outdoor softened as consumers continued to pull back following Liberation Day, and we saw continued deterioration of our legacy OEM accounts at Adventure. While the macro environment remains uncertain, particularly with respect to evolving tariff policies and consumer behavior, our focus is controlling what we can to position Claris for sustainable, profitable growth as market conditions normalize. We continue to reduce complexity at outdoor as evidenced by improved financial results year over year. Sales margins and adjusted EBITDA all increased in Q2 at outdoor by choppy consumer sentiment. We delivered on our commitment to raise our going in product margins while improving the quality of our inventory and revenue. Specifically, the team has done an outstanding job enhancing our inventory composition with less exposure to discounted merchandise and a healthy concentration in our most profitable A-Styles, which we believe will position Black Diamond to grow its full-price business in the back half of the year. I would also highlight that we completed the sale of our PEEPS no safety brand and intellectual property rights associated with Avalanche Safety Equipment in July for $9.1 million. representing a highly successful outcome after comprehensive strategic review and competitive process. The divestiture is aligned with Clarissa's simplification strategy and further bolsters our balance sheet. Turning to our adventure segment, I am pleased with our progress since we reported our last quarter amid personnel changes within the team. We've reengaged with each key customer and believe we have a good sense for where our best-in-class brands can win prospectively. We have taken key measures to simplify the cost structure and flatten the organizational reporting in light of slower demand trends. Our global wholesale and direct-to-consumer businesses increased by approximately 8%, partially driven by bike rack sales and was offset by the continued soft demand at certain legacy retailers. Our sales declined over the prior year quarter, due in part to the drop-off in customer-specific OEM sales, which were down by approximately $3.1 million. We have emphasized reducing overhead, eliminating R&D projects on lower margin categories, and supporting a handful of key product launches that we believe will yield results in the second half of 2025. As we look forward, we are focused on unlocking value at each outdoor and adventure. In connection with the development of three-year plans for our businesses, we have initiated an internal review to ensure we are evaluating all possible opportunities to create value for shareholders. This includes, but is not limited to, further simplification and further cost reductions, incremental to those taken in July, which Mike will outline. Additionally, we believe that the sum of the parts of our two segments exceeds today's market's valuation, and we are committed to seeking to maximize long-term value. In terms of near-term capital allocation priorities, we are focused on reinvesting in our existing two segments to seek to drive organic growth. Supported by a nearly debt-free balance sheet and our current cash position, Our goal is to maintain flexibility and discipline in how we deploy capital with an emphasis on the highest return opportunities. Zooming out, the primary question for CLARIS and the outdoor market as a whole continues to be how macro conditions will evolve during the remainder of the year. We have begun implementing countermeasures to mitigate a portion of the impact from tariffs as you will hear more about shortly, but uncertainty around consumer sentiment and demand in the back half of the year makes it very difficult to confidently forecast. In the face of these challenges, we continue to take decisive actions to strengthen our cash position and improve our profitability while maintaining our competitive position in the market. With that, thank you for being with us today, and I will turn the call over to Neil.