Good afternoon, everyone, and thank you for participating in today's conference call to discuss Claris Corporation's financial results for the third quarter ended September 30th, 2026. Joining us today are Claris Corporation's Executive Chairman, Warren Kanders, CFO, Mike Yates, President of Black Diamond Equipment, Neal Fiske, and the company's External Director of Investor Relations, Mac 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'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 we begin, 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 Claris 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 the SEC. During today's call, we will refer to certain non-GAAP financial measures which should be considered in addition to and not as a substitute for our results reported in accordance with GAAP. Reconciliations of these non-GAAP measures to the most directly comparable GAAP measures are included in our earnings press release issued earlier today. which was furnished as an exhibit to our current report on Form 8K filed with the SEC and is also available on the SEC filing section of our website at www.clariscorp.com. I would 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. Now I'd like to turn the call over to Clarice's Executive Chairman, Warren Kanders.

Good afternoon, and thank you for joining Claris' earnings call to review our results for the third quarter. I am joined today by our Chief Financial Officer, Mike Yates, who will provide a financial update, including adventure segment performance, as well as Neal Fiske, who will discuss our outdoor segment. We delivered strong third quarter results, reflecting the continued progress we are making to strengthen our businesses and drive sustainable, profitable growth. Our efforts to simplify operations, sharpen our product focus, and improve cost efficiency are translating into meaningful financial improvements, including consolidated gross margin of 41% up from 35.1% a year ago. and significant year-over-year growth in net income and adjusted EBITDA. Mike will discuss IEPA tariff recovery we recognized during the quarter. Excluding that benefit, we believe that the underlying improvement across both segments remains substantial. Building on the momentum we saw in the first half of the year, Black Diamond generated double-digit revenue growth in Q3 with strength across major product categories and geographic markets. Importantly, this growth was accompanied by substantial margin expansion, reflecting our ongoing focus on higher volume, higher margin products, healthier inventory, and a more disciplined approach to promotional activity. These results underscore the strength of the Black Diamond brand and the effectiveness of our strategy. In Adventure, third quarter sales declined. primarily reflecting a challenging consumer environment in Australia. However, we continue to make meaningful progress repositioning the business and excluding the tariff refund, gross margin improves 640 basis points year over year. Overall, we believe the adventure business is in a fundamentally stronger position than it was 18 months ago. We've simplified our operating footprint, improved our cost structure, strengthened key customer relationships and expanded our international distribution capabilities. With signs of momentum in the Americas and continued growth opportunities internationally, our focus remains on maintaining our margin improvements, exercising cost discipline, and positioning the business to capitalize on our recovery in demand. Turning to the guidance supported by our strong performance through the first nine months of the year and constructive outlook for Q4, we are raising the low end of our full year revenue guidance and raising our adjusted EBITDA outlook. We now expect 2026 adjusted EBITDA to range between approximately 15 million and $17 million. At the midpoint, this represents an increase of approximately 28% versus our prior adjusted EBITDA forecast of 12 million to $13 million. Before passing it over to Neal, I will briefly touch on the review of strategic alternatives we announced in May. We continue to explore a range of potential actions aimed at unlocking value more effectively than the market is recognizing today. We have retained Jefferies as our financial advisor to assist in this process. Potential alternatives could include the sale of all or part of the business or other strategic or financial transactions involving the company. Please note that we will not be answering any questions or commenting further on our strategic review process until additional disclosure is appropriate or required. With that, thank you for being with us today. And I will call, I will turn the call over to Neal Fiske.

Thanks, Warren. Turning to slide six. I will review the outdoor segment's third quarter performance and our expectations heading into the remainder of 2026. Overall, Black Diamond had a great Q3 with revenue margin and EBITDA all well ahead of prior year as our strategy of simplification, focus, and business reshaping continues to pay off and build momentum. Total revenues for the quarter were up 12.4%. reflecting accelerating growth in all of our regions and across our major categories. Our big three business categories of mountain climb and apparel drove 92% of total revenues and grew 13.1%. As I said on the last call, the core of the business is healthy and growing. It's great to see the momentum from a strong Q2 build into an even better Q3. For the quarter, Mountain was ahead 15.2% versus prior year and saw a nice lift from our collaboration with Norda Footwear, which launched at the UTMB event in Chamonix in August. The climb category posted another strong quarter, growing 15.1%. Apparel was up 3.3% for the quarter, the sixth consecutive quarter of growth. Gross margin is also a very positive story for the quarter. Excluding the small amount of tariff refunds, about $70,000 in the quarter we received in Q3, gross margin came in at 40.4% of 440 basis points over the prior year period. The strong year-over-year improvement reflects the progress we've made and the quality of our inventory are focused on our most profitable categories, less discounting, and a more full-price premium business model. Operating expenses, including restructuring transaction costs and legal and regulatory matter expenses, were up 9.6% for the quarter, reflecting the costs of the Salt Lake Distribution Center move along with other factors. Restructuring expenses were $200,000. Outdoor adjusted EBITDA for the quarter came in at $8 million, up 80.7% versus prior period. Inventory ended the quarter at $73.8 million versus $62.8 million in the prior period. This was a deliberate effort to invest in growth and identify the potential upside in our key categories and Style Franchises. We have seen the benefit of this investment in the strong growth for the quarter and historically high sales from at once orders, also known as ASAP orders. From here, we'll have a more accurate view of the sales potential and we'll begin bringing the inventory balance down. We expect to end the year around $67 million in inventory with less discounted merchandise and concentration in our proven styles. Now, turning to results by region and channel, North America wholesale grew 10.7%. North America digital D2C, which represents 14.3% of the region's revenue, was up 15.7% on the top line, with much healthier margins and less discounting resulting in a 350 basis point improvement in gross margin for the channel. North America retail comp store sales were up 23.6% with gross margins lifting 580 basis points. EU wholesale was up 13.1% in dollars and 10.3% in constant currency. EU digital D2C which represents 5.1% of the region's revenue was up 0.7% in constant currency as we pulled back on both promotional activity and less profitable transactions. Our international distributor channel was up 31.9% for the quarter. Looking ahead, we are in a good position heading into Q4 and on track to achieve or exceed our goals. We feel good about our progress, our momentum, and our results. That said, we remain mindful of cautious consumer sentiment and potential adverse macro factors as well as the potential of a warmer El Nino winter on cold weather categories. Once again, I'd like to congratulate and thank our teams around the world for all their hard work, passion, and skill in driving these results. With that, I'll turn it over to our CFO, Michael Yates.

Thank you, Neil, and good afternoon, everyone. On today's call, I'll provide an update on the Adventure segment and then conclude with a summary of our Q3 financial results, followed by the Q&A session. Starting with Adventure on slide seven. Third quarter results reflected continued pressure on the top line. particularly in our home market in Australia where challenging consumer conditions and softer demand across key product categories continue to weigh on the market. However, we are encouraged by the progress we are making to strengthen the underlying business with significant improvements in gross margin and cost discipline enabling us to maintain profitability despite lower sales volumes. Excluding the half a million dollar tariff refund at Adventure, Q3 adjusted EBITDA was in line with Q3 2025 adjusted EBITDA on 20% less revenue. Gross margin improved 640 basis points year over year, excluding the tariff refund, reflecting the benefits of pricing actions and improved customer and product mix and reduced promotional activity. We are also navigating the impact of changes to our distribution network as we prioritize stronger, more profitable customer relationships. While these factors have weighed on sales, we continue to make progress strengthening our position with key retail partners, including Super Cheap Auto in Australia, where we were recently recognized as the most engaged trade partner. In the Americas, we are beginning to see the benefits of our commercial initiatives. with an improving sales trend during the third quarter. Growth in Rocky Mounts, Max Trax, and continued expansion of our dealer network are helping offset softness among certain larger accounts. We have added more than 120 dealers this year, generating approximately $1 million in incremental year-to-date revenue. We are particularly encouraged by the performance of Rhino Rack in the US, where we believe margins have improved significantly because of our pricing and channel initiatives. Our international expansion efforts also continued to gain traction. EMEA revenue increased 27% year to date, supported by new customer and dealer relationships and improved distribution capabilities following the opening of our new facility in the Netherlands. In Japan, our decision to expand beyond an exclusive distribution arrangement has contributed to strong growth. We are also making encouraging progress with European automotive OEMs, including new relationships with Bentley, Porsche, Jaguar, Land Rover, and Mercedes, which we believe can support incremental growth in the years ahead. At the same time, we continue to invest selectively in product innovation to position and venture for the next cycle. The recently launched Maxtrax recovery shovel has been well received and our acquisition of Onward has expanded our portfolio of high margin vehicle accessories. Looking ahead to 2027, we have an exciting pipeline of new products across our brands, including the next generation of our platform rack, the P7, expanded vehicle fitments and a new MaxTrax recovery board, the MK3. With that, now let me turn to the consolidated and segment financial review on slide eight. Consolidated Claire's third quarter sales were 71.2 million compared to 69.3 million in the third quarter of the prior year. On a reported basis from a segment perspective, outdoor was up 12.4% and adventure was down 20.2%. Sales were up in nearly every market for outdoor, as Neil mentioned. And the weaknesses at adventure was primarily in the Australian markets for Rhino Rack and Max Trax. The consolidated reported gross margin rate in the third quarter was 41.0% compared to 35.1% in the prior year quarter. The gross profit includes a benefit of $600,000 from the recovery of IEPA tariffs in the third quarter of 2026. The vast majority of these tariff refunds in the third quarter were at Adventure. Specifically, Adventure received $495,000 and Outdoor received approximately $70,000. Gross margins excluding the tariff benefit for the two segments are as follows. Outdoor gross margins were 40.4%, up 440 basis points compared to the third quarter in the prior year. And Adventure gross margins were at 39.6%, up 640 basis points compared to third quarter in the prior year. Gross margin growth has been realized through pricing and our simplification strategy along with better product and customer mix. Third quarter consolidated selling general administrative expenses were 25.3 million compared to 26.2 million in the same year ago quarter. Third quarter 2026 expenses reflect lower outside services and employee related costs at the corporate level and other expense reduction initiatives and adventure to manage costs offset by slight increase at the outdoor segment primarily due to higher selling expenses. Adjusted EBITDA in the third quarter was $6.8 million on a consolidated basis or an adjusted EBITDA margin of 9.6%. The third quarter adjusted EBITDA by segment was $800,000 at Adventure and $8 million at Outdoor. Adjusted corporate costs were $2 million in the third quarter. Let me shift over to liquidity in the balance sheet. Free cash flow defined as net cash provided by operating activities less capital expenditures for the third quarter of 2026 was a $7.4 million outflow compared to a $7 million outflow for the three months ended September 30th, 2025. Despite the significant improvements in net income in the third quarter, the negative free cash flow in the quarter was due to increased working capital needs, specifically an increase in inventory at outdoor that Neal mentioned to fulfill ASAP orders. And and the entire accounts receivable driven by slower collections and much higher sales at the outdoor segment in the month of September of 2026 compared to the month of September 2025. We do expect free cash flow to be positive in the fourth quarter as inventory and accounts receivable normalize. Neil mentioned we expect inventory to reduce to $67 million at outdoor by the end of the fourth quarter. At September 30th, 2026, total debt was zero. At September 30th, 2026, cash and crash equivalents were 20.8 million compared to 36.7 million at December 31st, 2025. Moving on to our 2026 outlook on slide nine. We now expect fiscal year 2026 sales to range between 251 million and 255 million. and we now expect full year revenue and adventure to be approximately $65 million and full year outdoor revenue to be approximately $188 million. We have revised our full year 2026 adjusted EBITDA to be in the range of $15 million to $17 million or an adjusted EBITDA margin of 6.3% at the midpoint of our revenue and adjusted EBITDA ranges. The revision to our full year adjusted EBITDA guidance compared to our prior guidance of $12 to $13 million is as follows. Assuming the midpoint of the two guides, the primary difference between the $12.5 and the $16 million is the third quarter beat in adjusted EBITDA compared to our prior guidance, partially offset by corporate costs now expected to be $9 million rather than $8 million a quarter ago. Turning to the fourth quarter, sales are expected to range between $62 and $66 million. And at the midpoint of our full year guidance of $16 million of adjusted EBITDA, adjusted EBITDA is expected to be approximately $3 million for the fourth quarter of 2026. Let me give an update on legal. I'd like to provide an update on the company's Section 16 litigation with Half Trading LLC. in the company's action against Hap Trading LLC and Mr. Barish A. Padilla for disgorgement of short swing profits under Section 16B, the district court granted summary judgment to the defendants on March 14, 2025 based on the market-making exemption under Section 16B. The company's timely appeal and appeal was argued before the Second Circuit Court on February 12, 2026. The SEC has declined the court's invitation to submit an amicus brief, and the company is still waiting on the second court's decision. In closing, we are focused on unlocking the intrinsic value of our outdoor and adventure segments and maximizing long-term value for our shareholders. With more focused businesses, a simplified operating structure, a debt-free balance sheet, we believe we have the foundation in place to drive sustainable, profitable growth. At this point, operator, we're ready to take any questions.

Thank you. At this time, we will conduct the question and answer session. To ask a question, you will need to press star 11 on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Mark Smith of Lake Street. Your line is now open.

Hey, guys. I want to ask just within outdoor first. I know that you guys have focused on simplification in the business, but I'm curious kind of how sales of new products have been trending, any bumps that you've gotten from new products, and kind of how your pipeline to new products looks.

I can take that. Thanks, Mark. I'd say overall we're quite pleased with our new product introductions and what we've got in the pipeline across all the categories, Klein, Mountain, Apparel. We've had some great successes in the quarter, the collaboration launch with Norda where we had special trucking poles, special and Martin Running Pack. Carabiner was far, far and away above our expectations and Norda's. Just one example of very creative collaboration, striving innovation. Another example we brought back kind of by popular demand, our Magnetron Carabiner was a huge launch, sold out immediately. We took back orders. We planned and sold out again. And so that's a good example in Klein. And in apparel, we've got a number of our franchise styles like the dirt bag pant that have sold out multiple times. And we're investing in inventory really to find out how high is high on some of these key franchise styles. So I think we're hitting it. You never bat a thousand, as you know, on MPI, but across the three major business units, really strong success. And even in footwear, where we narrowed our focus to rock shoes, our Momentum Climb Shoe, which we introduced this year, is doing very well. So I'm very happy with our new product introductions We have an amazing design and engineering team, good merchants, and I'm really pleased with the progress. And I think that will sustain itself as we look into what we've got on deck for 27 and 28. We plan pretty far out, as you know, in this business. and got a really good three-year product roadmap. And I think it's going to continue to lift the business and also hopefully be accretive to our gross margin profile.

Perfect. And then sticking in outdoors, I wanted to ask just about kind of the international sales. I know that you guys called out Europe and quantified kind of some growth there. Here's kind of other regions that may be doing well or if there's anywhere that maybe is a drag.

Yeah.

Go ahead. Was that for outdoor or for adventure?

No, it's for outdoor. Outdoor primarily, yeah.

So, as you know, we basically have three regions, North America, Europe, and then our International Distributor Group, which surfaces pretty much the rest of the world. And that division, IGD, is having a great year, and we're seeing really strong growth and ahead of expectations there. Importantly, one of the things I look at as kind of an immediate short-term leading indicator of the business is how strong the at-once order business is. And it's strong across all regions, by the way, which is one of the things that gives us confidence going into Q4. But if I look in particular at IGD, I think by the beginning of September, we had done more at-once orders than we've ever done in any other year. And so that just tells you sort of the strength of the demand that we're seeing. And also, as Mike mentioned, the payback that we're getting from investing a little bit more inventory in our best style so that we can fulfill that at once demand. But I think as an indicator of strength in the business and IGD in particular, that's a pretty good one. And also looking forward to The order book for 27 and the kind of response we've gotten to the product from those rest of world markets. We feel very good about that. There are some places that I think we need to accelerate a little bit more than we have. We have a great distributor in Korea, one of our biggest and best international markets. China is growing, but probably under its potential, just given what we've seen with the success of other outdoor brands, and we'd like to accelerate even faster in China. And in Japan, we have changed over our distributor, really a succession plan from the owner of the prior distributor to his management team as he retired. And I think Japan has a lot more upside for us than what we're seeing today. So business is strong, ASAP's best indicator of that. But I think we're just at the beginning of realizing a lot of growth in those markets.

Mark, just to reiterate what Neil shared in the prepared remarks, North American wholesale is up over 10%. Our North American DTC was up over 15%. EU wholesale was up over 13%. And IGD, our international business, was up over 31%. So it was, as I summarized that, you know, nearly in every market, we were up across the BD business. Yeah.

And Mike, can you just clarify and maybe repeat? I apologize that I missed it. I think that you gave some of the sales guidance for outdoor and adventure.

Yeah, I did. I did. For the full year, we raised the low end of our range to 251. and to the high end of $255 million for the consolidated business. But for by segment, we said that kind of breaks down at the midpoint of $188 million for the outdoor business and $65 million for the adventure business. The $188 million and $65 million kind of hits you right in that midpoint of the $251 million to $255 million or $188 million and $65 million is $253 million. Excellent. Thank you.

Thank you. Our next question comes from the line of Laurent Vasilesu of BNP Paribas. Your line is now open.

Good afternoon. Thank you very much for taking my question. I wanted to follow up. I think, Neal, you made a point about El Nino. It's obviously a pressing concern out there for the overall industry. I'm curious to know, If you're seeing any order book cancellations or if you're seeing anything on that front with regards to variability for the fourth quarter.

No change yet, Lauren, in order book or even the pace of at once. But I think it's too early to tell. will know more in late November and December. The thing I think we're cautious about is that El Nino could cut both ways. We could get better snow in the Rocky Mountain West and West Coast ski areas. That would be a benefit. But the thing to watch out for is just if it's a warmer winter in the Northeast and Midwest and areas of a lot of population density. Those are typically good markets for cold weather accessories like gloves and outerwear insulation. And if it's a warm winter there, we could see some slower sell-through and less ASAP. And we could see some impact on our D to C. Way too early to tell, but we look at that weather effect as kind of having both a positive and a negative and just wanted to call that out for investors to be cognizant of.

Very helpful, Neal. Thank you very much for that. And then as we look out to 27, I know you're not prepared to comment about 27 guidance, but I think we talked about this last quarter about Thank you. There are two things that work against each other and to some extent offset each other. There's no question we're seeing

some inflationary pressure in material feed stocks, oil, polyester, turning into polyester costs, nylon costs, higher freight costs, and even impacting the metals market. So that's out there. That, of course, is very much linked to the price of oil and the outcome of the situation in the Middle East. So that's a bit of a headwind for us in 27. On the flip side, we have some improvement in our underlying product margins from the work that we've done. And if you look on a like for like basis on tariffs, the tariffs at the beginning of the year and the tariffs now, we have some favorability from the way the latest tariffs have been implemented that hopefully can offset those raw material costs. And so we don't think there will be a drag on margins in 27. If anything, there might be a little bit of upside as we look ahead.

Very helpful. And then the last question here is a broader question. on the adventure side. I think adventure was down about 20% this quarter. And I appreciate it, Mike, that you gave us color on the segments for the full year. When do you expect a rebasing of that business so that it can return to growth? I understand Australian market is difficult, but I'm just curious to know, aside from the macro, when do you think the work that you've done leads to growth going forward for this segment. Thank you.

Laurent, great question. I appreciate that. Obviously, we are very happy with the work we've done on what we can control, specifically cost. You can see the improvement in gross margins during the quarter. We think that's, you know, built into our business now, right? We have better terms, better pricing, better relationships with customers, et cetera. So that gross margin we think is important. is real and that should carry forward into future years. Same with on our SG&A side. We've controlled our cost. Cost was down, as I mentioned, at Adventure year over year. So we've positioned the company, the Adventure business, from a cost standpoint to really perform once growth comes back. And so what are we doing around growth? We talked about some of the new products. We have a litany of new products. that we are teeing up to come out across 2027 that are actually being, some of them are being introduced this week at the SEMA Automotive Show out in Las Vegas. Our team's out there sharing some of that. But I mentioned one of them on the call, the new MaxTrack and a board that nests with a shovel. That's been tremendously successful. So lots of efforts around MPI, lots of effort around fitment to make our own luck essentially on the sales side. Obviously we are defending the core and the big product that we expect to introduce next year. And when I say defend the core, that's the Australian business. the new P7 platform rack. That's expected to come out late in 2027, I think in the third quarter. So, you know, if all that comes to, if we can continue to drive the gross margins, continue to manage our SG&A costs with the MPI that is teed up, I would expect the business to grow in 2027.

That's great to hear. Thank you very much and best of luck with the balance of the year. Thank you, Lawrence.

Thank you. I'm showing no further questions at this time. I would now like to turn it back to Mike Yates for closing remarks.

Thank you. I want to thank everyone very much for their interest in attending the call this afternoon and your continued support and interest in CLARIS. We look forward to updating you on our results again next quarter. Thank you again, everyone.

Thank you for your participation in today's conference. This does conclude the program You may now disconnect