Clarus Corporation

Good afternoon, everyone, and thank you for participating in today's conference call to discuss Clara's Corporation's financial results for the third quarter ended September 30, 2025. Joining us today are Clara's Corporation's Executive Chairman, Warren Kanders, CFO, Mike Hayes, President of Black Diamond Equipment, Neil Fisk, and the company's External Director of Investor Relations, Matt Berkowitz. Following the remarks, We'll open the call for your questions. Before we go further, I would like to turn the call over to Mr. Berkowitz as he reads the Company 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 we 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 Clare'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, followed by 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 Clarissa's executive chairman, Warren Kanders.

Good afternoon, and thank you for joining Clarissa's earnings call to review our results for the third quarter of 2025. I am joined today by our chief financial officer, Mike Yates, who will cover our third quarter results, including adventure segment performance, as well as Neil Fisk, who will discuss our outdoor segment. During the third quarter, despite a difficult global consumer market, we made progress executing against our strategic plan. Our quarterly results reflected incremental financial improvement as we continued to reshape our organizational structure, product offering, and go-to-market approach, while also balancing the real-time evolution of global demand trends and consumer sentiment. CLARIS generated net sales of $69.3 million in line with our expectations, which was a 3% increase over the same period last year, and quarterly adjusted EBITDA increase of 15%. Mike and Neil will detail the segment figures, but at a high level, these increases were driven by strong outdoor demand in North American wholesale, our largest channel, and success with a new adventure customer in Australia and sales from Rocky Mountains. A key highlight in the outdoor segment has been the success of the revamped Black Diamond apparel line, which saw sales growth of 29%. Apparel is critical to our growth strategy, and we continue to be encouraged by positive signs that our new approach to apparel and enhanced creative direction is resonating with customers in both the retail and direct-to-consumer channels. Neil and his team have done an outstanding job prioritizing our best customers and our most profitable products and styles, evident in the stronger quality of revenue. Full-price product sales increased, sales from discontinued merchandise declined significantly, and the highest margin A styles represent approximately 70% of our inventory, which is a figure that has continued to trend upward in recent quarters. Now turning to our adventure segment, we continue to make operational progress during the third quarter and have been pleased with the direction of the business under the new leadership team. There is significant work to do, but our simplified organizational structure is a step in the right direction. Of note, 2.3 SG&A was down. $600,000 year over year driven by the reorganizations we completed in November 2024 and July 2025, as well as other expense reduction initiatives. On an annualized basis, we have taken out $1.1 million of fixed costs from the business in our most recent reorganization. Counterbalancing these positive developments, macro, trade, and consumer headwinds continued to weigh on near-term financial results across both segments. While the latest trade deal should ease some of the tariff burden, outdoor intervention margins and cash flows were again pressured by increased tariff costs and cash outlays in the third quarter. Our outdoor segment also dealt with significant losses on FX contracts in 2025, which amounts to $600,000 EBITDA impact in the third quarter. When these contracts roll off in 2026, we will see a lift in product margins. At Adventure, margins came in below expectations, primarily due to a combination of tariff-related headwinds on products sold in the United States, higher freight costs to customers, and aggressive pricing of slow-moving inventory as we work through SKU rationalization and overall inventory simplification. In addition, pricing in several of our markets, particularly Australia, has not kept pace with inflation or our cost base, which has contributed to margin erosion. We will continue to take proactive steps to address these issues, including price increases in our U.S. Rocky Mountains line and a planned pricing reset in ANZ to restore profitability. Overall, in the face of a challenging macro environment, we continue to take decisive actions to enhance margins and set the stage for sustainable growth and profitable growth over the long term. With that, thank you for being with us today, and I will turn the call over to Neil.