Clarus Corporation Q4 FY2025 earnings call

• Company focused on sustainable growth in 2025, prioritizing profitable products in outdoor and incremental progress in adventure. - Outdoor segment fundamentally reshaped over two years, simplified portfolio, exited low margin categories, rationalized SKUs, upgraded leadership, reduced cost structure, expanded product margins. - Adventure segment took corrective action, identified pricing issues, moved forward with price increases, saw green shoots in Europe and Japan, and had record new fitments in 2025. - Neil discussed Outdoor segment Q4 performance, including impact of tariffs and currency, operating results by business unit and channel, gross margin details, and restructuring actions. - Mike discussed Adventure segment Q4 revenue decline, gross profit factors, consolidated financial results, and adjusted EBITDA by segment.

Outdoor segment: Q4 revenue was down 2.1% year-over-year, down 2.9% in constant currency excluding FX contracts. Ski business unit was down 30% due to low margin category rotation and unfavorable seasonal conditions. Apparel was up 10% in Q4 compared to 2024. Mountain and climb business units were up 0.4% and 4.3% respectively. Gross margin rate declined 280 basis points due to unrecovered tariffs, FX contracts, and inventory write downs. Adjusted EBITDA was $2 million for the quarter. Adventure segment: Q4 revenue declined $2.1 million year-over-year, or 10.4%, driven by reduced demand from OEM customers, weaknesses in US bike market, and customer transitions in Australia/New Zealand. Gross profit impacted by inventory reserve write-down, higher customer rebates, and US tariffs. Took price increases on Rocky Mounts SKUs in November and across all brands/markets in Q1 2026.

• 2026 full year sales expected to range between $255 and $265 million and adjusted EBITDA to be in the range of $9 million to $11 million. - Adventure segment 2026 sales guidance $80 million, Outdoor segment $180 million. - First quarter sales expected to be between $60 and $62 million. - Focus on improving gross margins to achieve guided adjusted EBITDA.

• Challenging market characterized by weaker consumer demand, tariff impact, supply chain disruptions, and broader macro headwinds. - Legal risks including Section 16B securities litigation matters, and open matters with CPSC and DOJ regarding avalanche beacons, where DOJ served subpoenas and identified targets.

Q: Just wanted to hear a little bit more about the pricing actions that you guys took, I guess, at the end of the year and then in January. So maybe just between breaking them out between outdoor and adventure. Could you just talk about sort of the magnitude of pricing that was taken and how that impacts the outlook for growth for 26 between the two segments?

A: Neil talked about Black Diamond pricing offsetting about 75 - 80% of tariff impact, about $7 - 8 million price increase; Mike talked about Adventure took price increase on Rocky Mounts in November and across Rhino Rack business in Q1 2026, expecting about $2 - 3 million price this year.

Q: I'd like to start on the category breakdown within Black Diamond. You know, you used to disclose the breakdown between mountain, climb, ski in the case. It's been a while. I think by the prepared remarks, it implied that ski was roughly 10% of the business. Was that accurate? And is that the right number going forward to expect? Or should we expect some compression as we fully lap the exit of findings, etc.?

A: Mike said they're focused on mountain, climb, apparel categories which were 90% of sales, ski is less than 10% and expected to drop more as they complete rotation out of certain categories.

Q: Just following up on the overall trend, can you talk about the recent trends in the outdoor segment, particularly like What are you saying in terms of consumer demand and also channel inventories?

A: Neil said through the heavy days of destocking post-COVID, now retailers are fine-tuning inventory; apparel has most momentum, up 10% in Q4, expected to be up double digits in 2026; mountain and climb categories showing growth.

Q: Looking at the Rocky Mountains contribution in the quarter, could you just talk about how that business is performing so far, how meaningful you expect it to become within that adventure segment over time?

A: Rocky Mountains business did over $5.5 million revenue in 2025, expected to grow, with investment in point-of-sale marketing; Europe warehouse in Netherlands allows expansion and serving smaller customers, expected to bring incremental revenue to adventure segment.