Q3 2024 Vista Outdoor Inc Earnings Call

February 1, 2024

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Alex: Hello, and welcome to the third quarter fiscal year 'twenty to 'twenty for Vista Outdoor earnings Conference call. My name is Alex and I'll be coordinating the call today.

Alex: If you'd like to ask a question in the presentation you can press star followed by one on your telephone keypad.

Speaker Change: I'd like to remove your question you May press Star two.

Linda: And I had to empty a hoist Hello, Linda will vice President of Investor Relations. Please go ahead. Thank you operator, and good morning to everyone joining us for our third quarter fiscal year 2024 earnings call with me. This morning is Jason Vanderbeek, Inc. Co CEO Vista outdoor and CEO the kinetic group Eric.

Speaker Change: Eric <unk> co CEO of Vista, outdoor and CEO, Rod lift and Andy Keegan, Chief Financial Officer, Mr. Outdoor before.

Linda: Before we begin I'd like to remind everybody that during today's call, we will be making several forward looking statements, reflecting future events and their potential effect on our operating and financial performance. We make these statements under the safe Harbor provisions of the private Securities Litigation Reform Act.

Linda: These forward looking statements reflect our best estimates and assumptions based on our understanding of information known to US today and we are under no obligation to provide updates to these forward looking statements.

Linda: These forward looking statements are subject to the risks and uncertainties that face Vista outdoor and the industries in which we operate and actual results may differ materially from these forward looking statements.

Linda: We encourage you to review today's press release and Vista outdoors SEC filings for more information on these risks factors and uncertainties.

Linda: Please also note that we have posted presentation materials on our website at investors that Vista outdoor dot com, which supplement our comments. This morning and include reconciliations of non-GAAP financial measures.

Operator: Hello, and welcome to the third quarter fiscal year 2024 Vista Outdoor Earnings Conference Call. My name is Alex, and I'll be coordinating the call today. If you'd like to ask a question at the end of the presentation, you can press star five by one on your telephone keypad. If you would like to remove your question, you may press star followed by 2.

Linda: Andy ill turn it over to you.

Andrew S. Burns: Good morning, and thank you all for joining us today as we discuss our fiscal year 2024 third quarter results before Jason and Eric provide you with an update on the kinetic group and Rebalances I want to take a few minutes to provide an update on the status of the previously announced agreement to sell the kinetic group to Czechoslovakia.

Andy Keegan: Group or ESG.

Andy Keegan: I am pleased to report that the transaction process is progressing well and is on track. We have recently made large strides on the regulatory approval front, including the following one HSR Act or antitrust notification was filed on November nine 2023.

Andy Keegan: On December 11, 2023, the waiting period under the HSR Act expired.

Andy Keegan: To the United Kingdom National Security and investment Act of 2021.

Tyler Lindwall: And I hand it over to your host, Tyler Lindwall, Vice President of Investibulations. Please go ahead. Thank you, operator. A good morning to everyone joining us for our third quarter fiscal year 2024 earnings call. With me this morning is Jason Vanderbrink, co-CEO of Vista Outdoor and CEO of the Kinetic Group; Eric Nyman, co-CEO of Vista Outdoor and CEO of Revelist; and Andy Keegan, Chief Financial Officer of Vista Outdoor. Before we begin, I'd like to remind everybody that during today's call, we will be making several forward-looking statements reflecting future events and their potential effect on our operating and financial performance. We make these statements under the safe harbor provisions of the Private Securities Litigation Reform Act.

Andy Keegan: Notification was filed ICSC on November 10th 2023.

Andy Keegan: On November 22023, the notification was accepted and on January 5th point like for the transaction was approved and.

Andy Keegan: <unk> III DSG and Vista outdoor Violet joined notice with the committee on foreign investment in the United States or CBS with respect to the transaction, which was accepted on December 28 2023.

Andy Keegan: The transaction is currently being reviewed by five years and our team is working with Cps to obtain as clearance.

Andy Keegan: As a reminder, under the merger agreement CSC has committed to take all actions necessary or advisable to obtain the necessary regulatory approvals and to pay a termination fee equal to $114 6 million. If the transaction does not close due to our failure to obtain the required regulatory.

Tyler Lindwall: These four looking statements reflect our best estimates and assumptions based on our understanding of information known to us today, and we are under no obligation to provide updates to these four looking statements. These four looking statements are subject to the risks and uncertainties that face Vista Outdoor and the industries in which we operate, and actual results may differ materially from these four looking statements. We encourage you to review today's press release and VISTA Outdoors' SEC filings for more information on these risks, factors, and uncertainties. Please also note that we have posted presentation materials on our website at investors.vistaoutdoor.com, which supplement our comments this morning and include reconciliations of non-GAAP financial measures. Andy, I'll turn it over to you.

Andy Keegan: Literary approvals.

Andy Keegan: In addition to regulatory approvals I have noted the transaction is subject to the approval of our stockholders and other customary closing conditions.

Andy Keegan: With our S. Four proxy filed on January 16th 2024, we expect to hold our stockholder vote.

In the second quarter of calendar year 2024.

The regulatory approvals are complete by the time of the stockholder vote, which cannot be assured we expect the transaction to close shortly thereafter, we reaffirm our confident believes that the transaction will deliver meaningful value for our stockholders and is the best strategic alternative for maximizing value because among other reasons the.

Andrew S. Burns: Good morning, and thank you all for joining us today as we discuss our fiscal year 2024 third quarter results. Before Jason and Eric provide you with an update on the Kinetic Group and RevList, I wanted to take a few minutes to provide an update on the status of the previously announced agreement to sell Kinetic to Czechoslovak Group, or CSG. I am pleased to report that the transaction process is progressing well and is on track. We have recently made large strides on the regulatory approval front, including the following. One, the HSR Act, or antitrust notification, was filed on November 9th, 2023. On December 11th, 2023, the waiting period under the HSR Act expired.

Andy Keegan: <unk> payment of approximately $750 million of cash consideration or $12 90 per share lots of uncertainty of value for our stockholders in the near term.

Andy Keegan: Please reference the presentation materials for additional details regarding the tax treatment of Vista outdoor shares at closing.

Andy Keegan: Long term, we expect the separation to jumpstart, our compelling vision forever by capitalizing on its balance sheet with cash to accelerated capital allocation strategy.

Andy Keegan: We believe <unk> will be well positioned to hit the ground running as a successful independent company.

Andrew S. Burns: 2. The United Kingdom National Security and Investment Act of 2021 notification was filed by CSG on November 10th, 2023. On November 20th, 2023, the notification was accepted, and on January 5th, 2024, the transaction was approved. And three, CSG and Best Outdoor filed a joint notice with the Committee on Foreign Investment in the United States, or CIFIUS, with respect to the transaction, which was accepted on December 28, 2023. The transaction is currently being reviewed by CIFIUS, and our team is working with CIFIUS to obtain its clearance.

Andy Keegan: Now I'll turn it over to Eric to provide an update on revenues for the quarter Eric.

Eric: Thanks, Andy and good morning, everyone. As we gather today this earnings call I feel encouraged to speak about the tremendous potential and opportunities that lie ahead for <unk>.

Eric: Over the past few months as I visited employees across our company locations have continued to be impressed by the dedication to our transformation.

Eric: <unk> gained insight into their enthusiasm for the future.

Eric: <unk> I've had left me energized deeply inspiring and optimistic about what's to come.

Eric: The commitment and talent that our employees bring to the table harnessed within revamped structure that we're building.

Andrew S. Burns: As a reminder, under the merger agreement, CSG has committed to take all actions necessary or advisable to obtain the necessary regulatory approvals and to pay a termination fee equal to $114.6 million if the transaction does not close due to a failure to obtain the required regulatory approvals. In addition to the regulatory approvals I've noted, the transaction is subject to the approval of our stockholders and other customary closing conditions. With our S4 proxy filed on January 16, 2024, we expect to hold our stockholder vote in the second quarter of calendar year 2024. If the regulatory approvals are complete by the time of the stockholder goal, which cannot be assured, we expect the transaction to close shortly thereafter. We reaffirm our confident belief that the transaction will deliver meaningful value for our stockholders and is the best strategic alternative for maximizing value because, among other reasons, the expected payment of approximately $750 million of cash consideration, or $12.90 per share, locks in certainty of value for our stockholders in the near term. Please refer to the presentation materials for additional details regarding the tax treatment of this janitor's shares.

Eric: We will achieve both our short term and long term goals I am honored to steer the course with our exceptional team as we begin to unlock the potential of the <unk> business.

Eric: Record sales for the quarter were $317 million, which is slightly lower than expected due to the phasing of shipments with a small number of dollars shifting into the Q4 period adjusted.

Eric: Adjusted EBITDA was $15 million with adjusted EBITDA margins of approximately 5%, which met our performance expectations due to higher promotions to move higher price inventory.

Eric: The revenue was culture of innovation drove many exciting new product innovations and content collaborations over the last few months and also secured incremental revenue opportunities.

Eric: Our team delivered new and innovative products collaborations and contract wins that will allow us to exceed the requirements of our ambitious consumers I would like to quickly highlight a few of these exciting products collaborations and contract wins our team delivered in the quarter.

And our adventure sports platform Fox racing expanded and held the line with the introduction of the cross frame pro.

Eric: Fox will be celebrating its <unk> anniversary in 2024 and to commemorate and celebrated storied history passion and future yet to be written will be releasing a 15th anniversary limited edition collection of its most iconic and category defining here.

Eric Wold: Long term, we expect the separation to jumpstart our compelling vision for Rebels by capitalizing its bounty with cash to accelerate its capital allocation strategy. We believe Routless will be well positioned to hit the ground running as a successful independent company. Now, I'll turn it over to Eric to provide an update on Revelus for the quarter.

Eric: And our precision sports technology platform <unk> sports is coming off its best quarter in company history with its strongest ever a period of new product launches.

Eric: <unk> recently launched the Falcon and Quad Max to consumer delight.

Falcon is a direct response to meet the evolving demands of the ever growing simulation technologies and simulation golf market. The top 6 million participants in 2023, which represents growth of over 70% since 2019.

Eric Wold: Thanks, Andy, and good morning, everyone. As we gather today for this earnings call, I feel encouraged to speak about the tremendous potential and opportunities that lie ahead for Revelus. Over the past few months, as I've visited employees across our company locations, I have continued to be impressed by their dedication to our transformation, and I've gained insight into their enthusiasm for the future. The conversations I've had have left me energized, deeply inspired, and optimistic about what is to come, the commitment, and talent that our employees bring to the table. Harnessed within the revamped structure that we are building, I am confident that we will achieve both our short-term and long-term goals. I am honored to steer the course with our exceptional team as we begin to unlock the potential of the RevList business. Revoist sales for the quarter were $317 million, which is slightly lower than expected due to the phasing of shipments, with a small number of dollars shifting into the Q4 period.

Eric: The Falcon is the next evolution of the simulation focus GC <unk> and.

Eric: It includes a full complement of cutting edge simulation capabilities and a more powerful form factor that is roughly half the size of its predecessor.

Eric: In addition, foresight launched the quad Max the newest and by far most powerful iteration of its award winning launch monitor technology.

Eric: Built with the most advanced four camera photo metric data capture system.

Eric: Quad mass pass on most features ever presented for the golfer.

Eric: Including the touch screen display with the ability to customize onscreen, Canada and new performance data tracking parameters into its compact ruggedized form factor.

Eric Wold: Adjusted EBITDA was $15,000,000, with adjusted EBITDA margins of approximately 5%, which met our performance expectations due to higher promotions to move higher-priced inventory. Revolut's culture of innovation drove many exciting new product innovations and content collaborations over the last few months and also secured incremental revenue opportunities. Our team delivered new and innovative products, collaborations, and contract wins that will allow us to exceed the requirements of our ambitious consumers. I would like to quickly highlight a few of these exciting products, collaborations, and contract wins our team delivered during the quarter. In our adventure sports platform, Fox Racing expanded its helm of mine with the introduction of the X-Frame Pro.

Eric: <unk> also demonstrated its mass appeal delighting crowds by exhibiting and launching a new product that the consumer electronics show in Las Vegas earlier in the months before Cathy powered by AI is a push cart that holds your clubs while seamlessly following you around on the golf course without any human power.

Eric: It's an innovation packed products with leading battery life wireless remote and the magnetic strip for Europe, Bushnell golf laser range finder.

Eric: In our outdoor performance platform Blackhawk, a leader in law enforcement and military equipment announced a four year contract from the federal police in Belgium to deliver new duty holders from the brands T series Holster line.

Eric Wold: Fox will be celebrating its 50th anniversary in 2024. And to commemorate and celebrate its storied history, passion, and future yet to be written, we'll be releasing a 50th anniversary limited edition collection of its most iconic and category-defining gear. In our Precision Sports Technology Platform, Foresight Sports is coming off its best quarter in company history with its strongest ever period of new product launches. Foresight recently launched the Falcon and Quad Max to consumer delight. The Falcon is a direct response to meet the evolving demands of the ever-growing simulation technologies and simulation golf market, which topped 6 million participants in 2023, which represents growth of over 70% since 2019. The Falcon is the next evolution of the simulation-focused GC Hawks.

Eric: We believe serving military law enforcement and first responders around the world is incredibly important to our business as well as to the safety and service of our citizens.

Speaker Change: Congratulations and thank you to the teams across our organization for their hard work not only on these exciting products and opportunities, but also all the important work we are doing to equip and inspire our diverse range of consumers around the globe.

Speaker Change: As we look ahead to <unk> Standalone company post separation of <unk>.

Speaker Change: Brand led consumer obsessed and maker fueled culture is coming into shape.

Speaker Change: We're positioned well with winning brands inefficient structure.

Speaker Change: A clean balance sheet post separation and the right people to drive shareholder value.

Eric Wold: It includes a full complement of cutting-edge simulation capabilities and a more powerful form factor that is roughly half the size of its predecessor. In addition, Foresight launched the Quad Max, the newest and by far the most powerful iteration of its award-winning launch monitor technology, built with the most advanced four-camera photometric data capture system.

Speaker Change: <unk> business fundamentals are improving and our balance sheet is healthy due to actions taken in the quarter.

Speaker Change: We were successful in moving through higher priced inventory or using discounted products and promotions to drive sales as we discussed on our earnings call last quarter.

Speaker Change: These efforts produced solid results as we saw <unk> inventory decreased approximately 25% year over year, and just under 10% sequentially.

Eric Wold: That's the most features ever presented for the Golf, including the touchscreen display with the ability to customize on-screen data, and new performance data tracking parameters into its compact, ruggedized form factor. Foresight also demonstrated its mass appeal, delighting crowds by exhibiting and launching a new product at the Consumer Electronics Show in Las Vegas earlier in the month. Forecasting, powered by AI, is a push card that holds your clubs while seamlessly following you around on the golf course without any human power.

Speaker Change: As mentioned earlier, we maintained adjusted EBITDA margins of 5%. During these actions, which was consistent with our guidance and is testament to our team's focus on cost containment measures and profitability.

Speaker Change: We have observed marketplace retail and wholesale channels getting healthier in recent months.

Speaker Change: Channel inventory weeks on hand has come down year over year, and our brands are seeing signs of optimism in the channels compared to more cautious behavior that we experienced in calendar year 2023.

We expect this dynamic to translate into future results now the channel inventory is in a healthier position.

Eric Wold: It's an innovation-packed product with leading battery life, a wireless remote, and a magnetic strip for your Bushnell Golf Laser Rangefinder. In our outdoor performance platform, Blackhawk, our leader in law enforcement and military equipment, announced a four-year contract from the Federal Police in Belgium to deliver new duty holsters from the brand's T-Series holster line. We believe serving military, law enforcement, and first responders around the world is incredibly important to our business as well as to the safety and service of our citizens. Congratulations, and thank you to the teams across our organization for their hard work, not only on these exciting products and opportunities but also all the important work we are doing to equip and inspire our diverse range of consumers around the globe. As we look ahead to Revolus being a stand-alone company post-separation, our brand-led, consumer-obsessed, and maker-fueled culture is coming into shape.

Speaker Change: Our direct to consumer sales channel is building momentum and saw mark year over year improvement in both the quarter and during the holiday season.

Speaker Change: Our DTC sales for the quarter increased 15% year over year led by our adventure sports platforms over 40% year over year increase during.

Speaker Change: During the holiday season measured from mid November through the end of December DTC sales were up 9% year over year.

Speaker Change: Our precision sports technology and adventure sports platforms performed strongly as both increase their holiday sales by nearly 20% compared to the same period last year.

Speaker Change: Our teams also were boosted by the <unk> list.

Speaker Change: First of its kind social campaign, bringing <unk> products directly to consumers at the enterprise level.

Speaker Change: This growth continues to prove out that in a channel that is not impacted by destocking and other noise. Our brands have a strong positive connection with our base of passionate consumers, who were able to access our full portfolio of products wherever and whenever they want to shop, we will.

Eric Wold: We are positioned well with winning brands, an efficient structure, a clean balance sheet post-separation, and the right people to drive shareholder value. Revelist business fundamentals are improving, and our balance sheet is healthy due to actions taken in the quarter. We were successful in moving through higher-priced inventory by using discounted products and promotions to drive sales, as we discussed in our earnings call last quarter. These efforts produced solid results, as we saw Revelist inventory decrease approximately 25% year-over-year and just under 10% sequentially. As mentioned earlier, we maintained adjusted EBITDA margins of 5% during these actions, which was consistent with our guidance and is testament to our team's focus on cost containment measures and profitability.

Speaker Change: Continue to focus our D to C strategy on our power brands and challenger brands through centralized resources, and a consolidated ecosystem to accelerate higher margin revenue and share growth.

Speaker Change: Our gear up transformation program, which we introduced during our last earnings call is well underway and we continue to make progress on implementing our vision and the cost savings initiative announced last quarter.

Speaker Change: As a reminder, the gear up transformation program is expected to drive $100 million of run rate cost savings by fiscal year 2027 by focusing on three areas.

Speaker Change: First we're simplifying the business model to accelerate our vision of becoming integrated house of high performing platforms and iconic outdoor brands working together as one cohesive globally branded company secondly, we're delivering increased efficiency and streamlined operations to drive profitability.

Eric Wold: We have observed the marketplace, retail, and wholesale channels getting healthier in recent months. Channel inventory weeks on hand have come down year over year, and our brands are seeing signs of optimism in the channels compared to the more cautious behavior that we experienced in calendar year 2023. We expect this dynamic to translate into future results now that channel inventory is in a healthier position. Our direct-to-consumer sales channel is building momentum and saw marked year-over-year improvement in both the quarter and during the holiday season. Our D to C sales for the quarter increased 15% year-over-year, led by our adventure sports platforms, which saw a over 40% year-over-year increase. During the holiday season, measured from mid-November through the end of December, D to C sales were up 9% year-over-year.

Speaker Change: From that simplified structure and lastly, we're reinvesting in our highest potential brands to accelerate their growth and innovation pipelines and transforming them for the future.

Speaker Change: Since last quarter's earnings call. We have continued to work diligently on our transformation and are confident in our ability to realize our cost savings goals. Additionally, we have started to take actions that we believe will position us to capture $25 million to $30 million of run rate cost savings in fiscal year 2025 as previously <unk>.

Speaker Change: <unk> on our last quarterly earnings call.

Eric Wold: Our Precision Sports Technology and Adventure Sports platforms performed strongly as both increased their holiday sales by nearly 20% compared to the same period last year. Our teams were also boosted by the Revelist list. A first-of-its-kind social campaign, bringing Revellist products directly to consumers at the enterprise level. This growth continues to prove that in a channel that is not impacted by destocking and other noise, our brands have a strong, positive connection with our base of passionate consumers, who are able to access our full portfolio of products wherever and whenever they want to shop. We will continue to focus our D2C strategy on our power brands and challenger brands through centralized resources and a consolidated ecosystem to accelerate higher margin revenue and share growth. Our Gear Up Transformation Program, which we introduced during our last earnings call, is well underway, and we continue to make progress on implementing our vision and the cost savings initiative announced last quarter. As a reminder, the GEAR UP Transformation Program is expected to drive $100 million of run rate cost savings by fiscal year 2027 by focusing on three areas.

Speaker Change: These actions include the consolidation of offices within our new platforms.

Speaker Change: Our back office technology stack supply chain and organizational structure.

Speaker Change: We believe these initiatives will maximize the efficiency and profitability of reckless.

Speaker Change: We will provide further details on the gear up program at our Investor day in the spring of 2024.

Speaker Change: Additionally, we are performing a strategic review of our brands and portfolio composition to assess core assets and focus on streamlining our brand portfolio into our power brands and Challenger brand framework.

Speaker Change: Through this review we have identified certain non core assets as candidates for divestiture and have begun holding preliminary transaction discussions with various parties.

Speaker Change: These assets have garnered strong interest and the conversations have been progressing well, we expect to have further communications and announcements in the coming months.

Speaker Change: We are optimistic that potential future divestitures, alongside the $250 million in cash that we expect to capitalize the <unk> balance sheet with at the time of separation will allow us to accelerate our momentum through our capital allocation strategy that we expect will include investment in core organic growth opportunities.

Speaker Change: Opportunistic.

Speaker Change: Mystic share repurchases when we believe valuation is highly attractive and selective tuck in acquisitions with clear integration use cases.

Eric Wold: First, we're simplifying the business model to accelerate our vision of becoming an integrated house of high-performing platforms and iconic outdoor brands, working together as one cohesive, globally branded company. Secondly, we're delivering increased efficiency and streamlined operations to drive profitability from that simplified structure. And lastly, we're reinvesting in our highest potential brands to accelerate their growth and innovation pipelines and transform them for the future. Since last quarter's earnings call, we have continued to work diligently on our transformation and are confident in our ability to realize our cost savings goals. Additionally, we have started to take actions that we believe will position us to capture $25 to $30 million of run rate cost savings in fiscal year 2025, as previously communicated on our last quarterly earnings call. These actions include the consolidation of offices within our new platforms, our back office technology stack, supply chain, and organizational structure. We believe these initiatives will maximize the efficiency and profitability of Revlin.

Speaker Change: Our focus will be to drive tech enablement and unlock performance in our existing brands with an initial focus on precision sports technology, our highest growth potential and highest margin business.

Through the strength of our balance sheet and decisive actions under the Euro we expect our operating model and platforms will be able to drive value and synergies through M&A compared to previous acquisitions that were completed under a holding company philosophy moved.

Speaker Change: Moving forward, we believe the business is transforming for the better both operationally and financially as a result of all of these factors.

Speaker Change: We are reaffirming the revenue guidance for fiscal year, 2024, and expect to see top and bottom line improvements in the business with a return to growth of breakfast in the fourth quarter.

Speaker Change: We will continue to build on this momentum in action further gear up initiatives to head into the separation on solid footing with the expectation that we will still be in position to double <unk> EBITDA on a standalone basis, and our fiscal year 2025.

Eric Wold: We will provide further details on the gear-up program at our investor day in the spring of 2024. Additionally, we are performing a strategic review of our brands and portfolio composition to assess core assets and focus on streamlining our brand portfolio into our power brand and challenger brand framework. Through this review, we have identified certain non-core assets as candidates for divestiture and have begun holding preliminary transaction discussions with various parties.

Speaker Change: In closing, we are positioned well with winning brands the right structure and a clean balance sheet post separation.

Speaker Change: We have a clear line of sight to a solid foundation to the gear up transformation program built.

Speaker Change: Built upon an improved and more closely integrated platform structure.

Speaker Change: Our culture is permeating across the business with our teams unified behind the brand led consumer obsessed and maker fueled mentality.

Eric Wold: These assets have garnered strong interest, and the conversations have been progressing well. We expect to have further communications and announcements in the coming months. We are optimistic that potential future divestitures, alongside the $250 million in cash that we expect to capitalise the Revoist balance sheet with at the time of separation, will allow us to accelerate our momentum through a capital allocation strategy that we expect will include investment in core organic growth opportunities, opportunistic share repurchases when we believe valuation is highly attractive, and Selective Tuckin Acquisitions with clear integration use cases. Our focus will be to drive tech enablement and unlock performance in our existing brands, with an initial focus on precision sports technology, our highest growth potential and highest margin business.

Speaker Change: I've seen the passion that our team has for our products and customers and believe this will fuel our success as we embark towards the next phase of our company.

Speaker Change: I am proud and excited by the work that we're doing to transform the company execute our strategic vision and deliver value to our stakeholders.

Speaker Change: Thank you.

Speaker Change: <unk> dedication and support relevance.

Speaker Change: I'll now hand, it over to Jason to provide an update on the kinetic group for the quarter Jason over to you.

Jason Vanderbrink: Eric we are three quarters through our fiscal year and on track to meet our prior guidance sales in the third quarter were $365 million with an adjusted EBITDA margin above expectations at 28% driven by our team's focus on operational efficiency and profitability.

Jason: I want to reiterate that the kinetic group ownership by <unk> will allow us to grow the reach of our iconic American brands and expand into new markets, where our legacy of superior U S manufacturing will shine with our new consumers.

Eric Wold: Through the strength of our balance sheet and decisive actions under GEAR UP!, we expect our operating model and platforms will be able to drive value and synergies through M&A compared to previous acquisitions that were completed under a holding company philosophy. Moving forward, we believe the business is transforming for the better, both operationally and financially, as a result of all these factors. We are reaffirming the RevList guidance for fiscal year 2024 and expect to see top and bottom line improvements in the business with a return to growth at RevList in the 4th quarter. We will continue to build on this momentum and action further gear up initiatives to head into the separation on solid footing with the expectation that we will still be in position to double rebelist EBITDA on a standalone basis in our fiscal year 2025. In closing, we are positioned well with winning brands, the right structure, and a clean balance sheet post-separation. We have a clear line of sight to a solid foundation for the GEAR UP Transformation Program, built upon an improved and more closely integrated platform structure.

Jason: Transaction will allow us to further expand our U S manufacturing footprint, while providing new opportunities for our brands and our team members.

Jason: <unk> is a private family based company and has a rich history of excellence in manufacturing and experience and the American ammunition market.

Jason: Our strategic long term buyer fully committed to continuing the legacy of our brands support for the military and law enforcement customers and investments in conservation and our hunting and shooting heritage.

Jason: Further.

Jason: We expect the separation to jumpstart our compelling vision for rebel list by infusing its balance sheet with cash to accelerate its capital allocation strategy and we will put Eric and his team in a position to hit the ground running as a successful independent company.

Jason: For the 53rd straight month mixed data surpassed more than 1 million firearms checks. The month of December was up nearly 2% in 2023 versus 2022, and 14% higher than December of 2019, demonstrating that although moderating from pandemic.

Eric Wold: Our culture is permeating across the business, with our teams unified behind the brand-led, consumer-obsessed, and maker-fueled mentality. I have seen the passion that our team has for our products and customers and believe this will fuel our success as we embark on the next phase of our company. I am proud and excited about the work that we are doing to transform the company, execute a strategic vision, and deliver value to our stakeholders. Thank you for your continued dedication and support of Revell. I'll now hand it over to Jason to provide an update on the kinetic group for the course. Jason, it's over to you.

Jason: Levels the industry has sustained its elevated base of users.

Jason: Additionally, the National shooting Sports Foundation recently released a report on firearm production in the United States that included information from the Bureau of alcohol tobacco firearms and explosives.

Jason: The report estimates that there were more than 473 million firearms in civilian possession through 2021.

Jason: From 2020 to 2021, and the ATF reports, a nearly 30% increase in domestic firearm production and an interim 2022 estimate shows an additional $11 million domestically made firearms were added to the United States from 2021% to 2022.

Jason Vanderbrink: Thanks, Eric. We are three quarters through our fiscal year and on track to meet our prior guidance. Sales in the third quarter were $365 million, with an adjusted EBITDA margin above expectations at 28%, driven by our team's focus on operational efficiency and profitability. I want to reiterate that Kinetic Group ownership by CSG will allow us to grow the reach of our iconic American brands and expand into new markets where our legacy of superior U.S. manufacturing will shine with our new consumers. The transaction will allow us to further expand our U.S. manufacturing footprint while providing new opportunities for our brands and our team members. CSG is a private, family-based company and has a rich history of excellence in manufacturing and experience in the American ammunition market.

Jason: Of those firearms 7 million, where pistols and revolvers a market segment, where recent industry surveys say federal CCI Speer and Remington brands and products are leaders in consumer preference.

Jason: <unk> being preferred by the consumer.

Jason: Federal and Speer are the duty and training ammunition choice for many U S law enforcement agencies.

Jason: Finally, the ATF reports analysis reminds us that firearms and ammunition manufacturing accounted for more than 12400 jobs in the United States and produced more than five $6 billion in goods shipped in 2021.

Jason: Several of our new products recently received very prestigious awards that recognize product performance and innovation.

Jason: Field <unk> stream recognize remingtons Premier long range as the best Center fire ammunition, Cci's clean 22, hyper velocity as the best rimfire ammunition and to make it a clean sweep in the ammunition category field <unk> stream awarded heavy shops, heavy 12, and 28 gauge as its best shotgun.

Jason Vanderbrink: They are a strategic, long-term buyer, fully committed to continuing the legacy of our brand, support for military and law enforcement customers, and investments in conservation and our hunting and shooting heritage. Further, we expect the separation to jumpstart our compelling vision for RevList by infusing its balance sheet with cash to accelerate its capital allocation strategy and will put Eric and his team in a position to hit the ground running as a successful independent company. For the 53rd straight month, NICS data surpassed more than 1 million firearms checks.

Jason: Munition.

Jason: NRA publications announced its prestigious Golden Bullseye awards, and among the winners or Remingtons $3 60, Buck Hammer for American Hunter's ammunition of the year Federal's Force X two surety as American rifleman ammunition product of the year and shooting illustrated designated Spears.

Jason Vanderbrink: The month of December was up nearly 2% in 2023 versus 2022 and 14% higher than December of 2019, demonstrating that although the industry is moderating from pandemic levels, the industry has sustained its elevated base of users. Additionally, the National Shooting Sports Foundation recently released a report on firearm production in the United States that included information from the Bureau of Alcohol, Tobacco, Firearms, and Explosives. The report estimates that there will be more than 473 million firearms in civilian possession through 2021.

Jason: <unk> dot for pistol caliber carbine ammunition product of the year.

Jason: Federal and CCI also won readers' choice awards from Predator Extreme magazine with gold honors for federal in the shot shell category and CCI in the rimfire category.

Jason: Our government contract team continues to secure wins that amplify our strength as a proud supplier of the U S military.

Jason: Recently, the United States Navy awarded federal and Remington with contracts to supply a rifle and shot gun ammunition to the maritime branch of the military.

Jason: The naval surface warfare Center Crane division or to federal ammunition, a two year contract to produce its mark 316, 308 rifle ammunition.

Jason Vanderbrink: From 2020 to 2021, the ATF reports a nearly 30% increase in domestic firearm production, and an interim 2022 estimate shows an additional 11 million domestically made firearms were added to the United States from 2021 to 2022. Of those firearms, 7 million were pistols or revolvers, a market segment where recent industry surveys say federal CCI, Spear, and Remington brands and products are leaders in consumer preference. Besides being preferred by the consumer, Federal and SPEAR are the duty and training ammunition choice for many U.S. law enforcement agencies.

Jason: The 175 grain match ammunition built at our Anoka, Minnesota facility meets the outline specs for extreme accuracy and tolerance.

Jason: Remington was awarded a five year contract to build the.

Jason: <unk> 312 gauge two and three quarter into one ounce rifled slug for duty use by the United States Navy.

This is the first military contract awarded to Remington since its acquisition by Us and the product will be built in our lone Oak, Arkansas facility.

Jason: As we look towards the closing of the sale of the kinetic group to CST, we remain acutely focused on building the best ammunition in America and delivering on our goals.

Jason Vanderbrink: Finally, the ATF report analysis reminds us that firearms and ammunition manufacturing accounted for more than 12,400 jobs in the United States and produced more than $5.6 billion in goods shipped in 2021. Several of our new products recently received very prestigious awards that recognize product performance and innovation. Field and stream recognize Remington's premier long range as the best center fire ammunition.

Jason: With a diverse customer base and multi brand strategy, we are positioned to grow while steadily expanding our presence into new markets as.

As we enter another election cycle in the United States. Our teams are well prepared for whatever the market holds in the future.

Jason: I have full confidence that with the best team in the ammunition business, we will continue to perform at the highest level.

Jason: Our future is filled with great opportunity and we look forward to closing the sale of the kinetic group to CST.

Jason Vanderbrink: CCI's clean 22 hypervelocity as the best rimfire ammunition. And to make it a clean sweep in the ammunition category, Field and Stream awarded Heavy Shots, Heavy 12, and 28 gauge as its best shotgun ammunition. NRA publications announced its prestigious Golden Bullseye Awards, and among the winners are Remington's 360 Buckhammer for American Hunter's Ammunition of the Year, Federal's Force X-2 Shorty as American Rifleman's Ammunition Product of the Year, and Shooting Illustrated designated Spear's Gold Dot for Pistol Caliber Carbine its Ammunition Product of the Year.

Jason: I'll hand, it back to Andy to provide an update on the financial results for the quarter Andy.

Andrew S. Burns: Thanks, Jason My comments today will focus on adjusted results compared to the prior year period, unless otherwise noted, which I presented using non-GAAP financial measures.

Andrew S. Burns: In the appendix to the slide presentation. We've included reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures.

For additional information regarding forward looking statements and non-GAAP financial measures. Please refer to page four of the slide presentation.

Andrew S. Burns: I will start by noting during the quarter, we had a triggering event as our enterprise value decrease due to the decline in our stock price and the previously communicated decrease in our guidance, which resulted in recording an impairment of goodwill and intangible assets of $219 million.

Jason Vanderbrink: Federal and CCI also won Reader's Choice Awards from Predator Extreme Magazine, with gold honors for Federal in the Shot Shell category and CCI in the Rimfire category. Our government contract team continues to secure wins that amplify our strength as a proud supplier of the U.S. military. Recently, the United States Navy awarded Federal and Remington contracts to supply rifle and shotgun ammunition to the maritime branch of the military. The Naval Surface Warfare Center, Crane Division, awarded Federal Ammunition a two-year contract to produce its Mark 316-308 rifle ammunition. The 175 grain match ammunition built at our Anoka, Minnesota facility meets the outlined specs for extreme accuracy and tolerance. Remington was awarded a five-year contract to build the AO-23 12-gauge, two- and three-quarter-inch, one-ounce rifled slug for duty use by the United States Navy.

Andrew S. Burns: Now moving into the results for the quarter turning to slide 21.

For the third quarter total sales decreased nine 6% to $682 million in line with our expectations the.

Andrew S. Burns: The sales decrease was a result of declines in both segments.

Gross profit was $203 million and gross margin decreased 257 basis points to 29, 7% the.

Andrew S. Burns: The decline was caused by decreases across both segments.

Andrew S. Burns: EBITDA in the quarter decreased 32% to $94 million and EBITDA margin was 13, 7%.

Andrew S. Burns: <unk> 405 basis points.

Andrew S. Burns: The decline was driven by lower gross profit in both segments, partially offset by decreased selling cars at the kinetic group.

Andrew S. Burns: Third quarter EPS decreased 37% to 80.

Jason Vanderbrink: This is the first military contract awarded to Remington since its acquisition by us, and the product will be built at our Lone Oak, Arkansas facility. As we look toward the closing of the sale of the Kinetic Group to CSG, we remain acutely focused on building the best ammunition in America and delivering on our goals. With a diverse customer base and a multi-brand strategy, we are positioned to grow while steadily expanding our presence into new markets. As we enter another election cycle in the United States, our teams are well prepared for whatever the market holds in the future. I have full confidence that with the best team in the ammunition business, we will continue to perform at the highest level.

Andrew S. Burns: Turning to slide 23, our balance sheet health improved we made significant progress in improving our inventory position decreasing total inventory more than 15% year over year and 5% sequentially.

Andrew S. Burns: As Eric mentioned rentals in particular had success moving through high priced inventory decreasing by approximately 25% year over year and just under 10% sequentially.

Andrew S. Burns: Year to date free cash flow was $270 million net.

Andrew S. Burns: Net debt decreased $127 million sequentially to $778 million.

Andrew S. Burns: And our net debt leverage ratio is now at one seven times.

Andrew S. Burns: Turning to our Q3 segment results on slide 24 within <unk> sales decreased 10, 2% to $317 million driven primarily by increased discounting lower volume and unfavorable mix as consumers continue to face pressures from high interest rates and other short term <unk>.

Andrew S. Burns: Our future is filled with great opportunities, and we look forward to closing the sale of the Kinetic Group to CSG. I will hand it back to Andy to provide an update on the financial results for the quarter.

Andrew S. Burns: Thanks, Jason. My comments today will focus on adjusted results compared to the prior year period, unless otherwise noted, which are presented using non-GAAP financial methods. In the appendix to the slide presentation, we've included reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures. For additional information regarding forward-looking statements and non-GAAP financial measures, please refer to page 4 of the slide presentation. I will start by noting that during the quarter, we had a triggering event as our enterprise value decreased due to the decline in our stock price and the previously communicated decrease in our guidance, which resulted in recording an impairment of goodwill and intangible assets of $219 million. Now moving into the results for the quarter, turning to slide 21. For the third quarter, total sales decreased 9.6% to $682 million, in line with our expectations. The sales decrease was a result of declines in both sectors. Gross profit was $203 million, and gross margin decreased 257 basis points to 29.7%. The decline was caused by decreases across both segments.

Andrew S. Burns: Factors affecting their purchasing of consumer durable goods.

Andrew S. Burns: Gross profit decreased 17, 2% to $85 million.

Andrew S. Burns: Due to increased discounting lower volume and unfavorable mix, partially offset by favorable foreign exchange rates.

Andrew S. Burns: Gross margin decreased 228 basis points to 26, 7%.

Andrew S. Burns: EBITDA was $15 million down 52, 6% with an EBITDA margin of four 6% down 416 basis points.

Andrew S. Burns: The decline in the quarter was primarily driven by decreased gross profit.

Andrew S. Burns: For the kinetic group sales decreased nine 1% to $365 million.

Andrew S. Burns: Driven by lower shipments across nearly all categories as channel inventory has normalized and lower pricing.

Andrew S. Burns: These decreases were partially offset by increased shipments of rifle and primary categories.

Andrew S. Burns: Gross profit decreased 16, 5% to $118 million driven by decreased volume increased input costs due to inflation and lower pricing.

Andrew S. Burns: Gross margin decreased 287 basis points to 32, 4%.

Andrew S. Burns: EBITDA was $102 million down 17, 9%, primarily due to lower gross profit, partially offset by decreased selling costs EBIT.

Andrew S. Burns: EBITDA margin was 27, 9% a decrease of 301 basis points.

Andrew S. Burns: We are reaffirming the full year 2024 guidance discussed on our previous earnings call for the full fiscal year 2024, we expect sales of $2 75 billion to $2 85 billion.

Andrew S. Burns: EBITDA in the quarter decreased 30.2% to $94 million, and EBITDA margin was 13.7%, down 405 basis points. The decline was driven by lower gross profit in both segments, partially offset by decreased selling costs at the Kinect. 3rd quarter EPS decreased 37% to 87%. Turning to slide 23, has balance sheet health improved? We made significant progress in improving our inventory position, decreasing total VISTA inventory by more than 15% year-over-year and 5% sequentially. As Eric mentioned, Rettles in particular had success moving through high-priced inventory, decreasing by approximately 25% year-over-year and just under 10% sequentially. Year-to-date pre-cash flow was $270 million. Net debt decreased $127 million sequentially to $778 million.

Andrew S. Burns: The kinetic group sales of 45 billion to $1 5 billion.

Andrew S. Burns: And <unk> sales of 127, 5 billion to $1 $3 billion to $5 billion.

Andrew S. Burns: Adjusted EBITDA margin between 15, 5% and $16 two 5%.

Andrew S. Burns: The kinetic group EBITDA margin range of 26, 5% to 27, 5% and rental its EBIT margin range of 775% to 825%.

Andrew S. Burns: Adjusted EPS in the range of $3 65 to $4 five.

Andrew S. Burns: And adjusted effective tax rate of approximately 19, 5%.

Andrew S. Burns: Interest expense in the range of $55 million to $65 million.

Andrew S. Burns: And adjusted free cash flow between $265 million and $315 million at Regulus, We expect a return to low single digit growth in the fourth quarter driven by strength in golf as a result of the exciting new product launches, including the Vulcan the Forecaddie and the cloud Max We also expect growth in <unk>.

Andrew S. Burns: And our net debt leverage ratio is now at 1.7 times. Turning to our Q3 segment results on slide 24, Within Revelest, sales decreased 10.2% to $317 million, driven primarily by increased discounting, lower volume, and unfavorable mix as consumers continue to face pressures from high interest rates and other short-term factors affecting their purchasing of consumer durable goods. Gross profit decreased 17.2% to $85 million due to increased discounting, lower volume, and unfavorable mix, partially offset by favorable foreign exchange rates. The growth Margin decreased 228 basis points to 26.7%. EBITDA was $15 million, down 52.6%, with an EBITDA margin of 4.6%, down 416 basis points. The decline in the quarter was primarily driven by decreased growth.

Andrew S. Burns: Sports due to improving Pos and stronger order books as compared to the prior year period.

Andrew S. Burns: Additionally, we successfully moved through much of our higher priced inventory during the quarter and have observed marketplace retail and wholesale inventory, becoming healthier in recent months.

Andrew S. Burns: We are seeing more optimistic purchasing patterns and are starting to see conversions.

Andrew S. Burns: And sell it within certain categories.

Andrew S. Burns: As we look at revenues margins, we expect high single digit adjusted EBITDA margins in the quarter due to lower product discounting compared to the third quarter.

Andrew S. Burns: We also see inventory costs, improving as freight cost returned to more normal levels and expected adjusted EBITDA margins towards the low end of the guidance range for the full fiscal year.

Andrew S. Burns: At kinetic group, we expect sales to be down by low double digits in the quarter and closer to the low end of our guidance range for the full fiscal year 2024 at channel inventory has normalized in many categories.

Andrew S. Burns: For the Kinetic Group, sales decreased 9.1 percent to $365 million, driven by lower shipments across nearly all categories as channel inventory normalized and lower prices. These decreases were partially offset by increased shipments of rifle and primer categories. Growth profit decreased 16.5% to $118 million, driven by decreased volume, increased input cost due to inflation, and lower prices.

Andrew S. Burns: We expect adjusted EBITDA margins towards the high end of our guidance range for the full fiscal year of 2024.

Andrew S. Burns: As we look at profitability on a total company basis for the full year, we expect adjusted EBITDA margins to be within our guided range for the fiscal 2020 for guidance.

Andrew S. Burns: And we expect an interest expense towards the high end of the range for the full fiscal year.

Andrew S. Burns: Looking forward, we remain enthusiastic about the progress we saw in the quarter related to our gear up transformation program, we expect Europe to contribute limited cost savings in Q4 of fiscal 'twenty, 'twenty, four and approximately 25% to $30 million and realized cost savings during our fiscal 2025.

Andrew S. Burns: Gross margin decreased 287 basis points to 32.4%. EBITDA was $102 million, down 17.9%, primarily due to lower growth profit, partially offset by a decreased selling. Even the margin was 27.9 percent, a decrease of 301 basis points. We are reaffirming the full year 2024 guidance discussed on our previous earnings call. For the full fiscal year 2024, we expect sales of $2.725 billion to $2.825 billion. The Kinetic Group sales of $1.45 billion to $1.5 billion and Revolet sales of $1.275 billion to $1.325 billion, but just the EBITDA margins between 15.5% and 16.25%. The Kinetic Group EBITDA margin range of 26.5% to 27.5% and the relative EBITDA margin range of 7.75% to 8.25%. Adjusted EPS in the range of $3.65 to $4.05. An adjusted effective tax rate of approximately 19.5%, interest expense in the range of $55 million to $65 million, and adjusted free cash flow between $265 million and $315 million.

Andrew S. Burns: Additionally, we expect to unlock an estimated $100 million.

Andrew S. Burns: And realized annual cost savings in the fiscal year 2027, as a result of this program.

Andrew S. Burns: In fiscal year 2025, we see a clear path to doubling standalone adjusted EBITDA at <unk>, primarily driven by the following.

Andrew S. Burns: <unk> $25 million to $30 million of.

Andrew S. Burns: Cost savings related to our gear up program.

Andrew S. Burns: To contributions from our previously announced April 2023 cost restructuring program of which $25 million related to <unk>. We expect these savings to fully run rate later in our fiscal year 2024.

Andrew S. Burns: Three improvements in supply chain and freight as our inventory with higher priced freight we'll have churned through our inventory balance.

Andrew S. Burns: And for lower expected promotions as we compare to our fiscal year 2024, Q3 period in which we had higher than usual promotional level to drive inventory levels down.

Andrew S. Burns: With these variables are standalone revlon business, including estimated stand alone cost would be a high single digit EBITDA margins.

Andrew S. Burns: This would be approximately 400 basis point improvement from fiscal year 2024.

Andrew S. Burns: Long term, we believe that <unk> adjusted EBITDA margins will be in the mid teens, including estimated standalone cost, which has an estimated 1000 basis point improvement over Standalone fiscal year, 2024, primarily driven by gear up savings.

Andrew S. Burns: At Revelist, we expect a return to low single-digit growth in the fourth quarter, driven by strength in golf as a result of the exciting new product launches, including the Falcon, the 4Caddy, and the Quad Max. We also expect growth in action sports due to improving POS and stronger order books as compared to the prior year period. Additionally, we successfully moved through much of our higher-priced inventory during the quarter and have observed marketplace, retail, and wholesale inventory becoming healthier in recent months. We are seeing more optimistic purchasing patterns and are starting to see convergence of POS and selling within certain categories. As we look at Revo's margins, we expect high single-digit adjusted EBITDA margins in the quarter due to lower product discounting compared to the third quarter.

Andrew S. Burns: Both transaction closing, we expect revenues will have a well capitalized balance sheet with no debt and $250 million in cash.

Andrew S. Burns: We expect the $250 million in cash will be utilized to fund the remaining gear up restructuring activities as well as meaningfully accelerated return and shareholder value through organic growth initiatives opportunistic share repurchases and select tuck in acquisitions.

Speaker Change: Thank you operator, please open the line for questions.

Speaker Change: Thank you.

Speaker Change: As a reminder, if you'd like to ask a question it slipped by one on the telephone keypad.

Speaker Change: If you like to remove your question you May press star slipped by two.

Speaker Change: <unk>, you're on mute locally when asking your question.

Andrew S. Burns: We also see inventory costs improving as freight costs return to more normal levels and expected adjusted EBITDA margins towards the low end of the guidance range for the full fiscal year. At Kinetic Group, we expect sales to be down by low double digits in the quarter and closer to the low end of our guidance range for the full fiscal year 2024, as channel inventory has normalized in many categories. We expect adjusted EBITDA margins towards the high end of our guidance range for the full fiscal year of 2024. As we look at profitability on a total company basis for the full year, we expect adjusted EBITDA margins to be within our guided range for the fiscal 2024 guidance, and we expect interest expense to be towards the high end of the range for the full fiscal year.

Speaker Change: Our first question for today comes from Matt Koranda from Roth Capital Partners.

Matthew Butler Koranda: Your line is now open. Please go ahead.

Matthew Butler Koranda: Yeah.

Matthew Butler Koranda: Hey, everybody good morning.

Matthew Butler Koranda: Just drilling down on <unk> first.

Matthew Butler Koranda: Eric I think you mentioned phasing of shipments, causing a little bit of weakness in the quarter and maybe some of that was pushed into the fourth quarter anyway to size up.

Speaker Change: Sort of the impact there and any particular products that shifted over into the fourth quarter.

Eric: Sure Good morning that nice to hear from you, yes. It was a marginal amount Matt just a.

Eric: A couple of million shipments that.

Eric: It moved from one quarter to the other.

Andrew S. Burns: Looking forward, we remain enthusiastic about the progress we saw in the quarter related to our Gear Up transformation program. We expect Europe to contribute limited cost savings in Q4 of fiscal 2024 and approximately $25 to $30 million in realized cost savings during our fiscal 2025. Additionally, we expect to unlock an estimated $100 million in realized annual cost savings in the fiscal year 2027 as a result of this program. In fiscal year 2025, we see a clear path to doubling stand-alone adjusted EBITDA at revenues primarily driven by the following, won $25 to $30 million of cost savings related to our gear up program. 2.

Eric: Okay.

Eric: So the offline on that one and then.

Eric: Just in terms of channel inventory. It sounds like you guys are signaling, there's a little bit more optimism in the channel.

Eric: With rebel is products and we're expecting a return to growth in the.

Eric: Fourth quarter could you maybe just unpack a few more of the drivers I know you mentioned the action sports might be a driver of growth.

Eric: Could you talk about the visibility there.

Eric: Action Sports and then golf as well it sounded like more new product impacted in terms of the growth expectation, but just wondered if you could give a little more color on sort of what we're expecting from the Gulf side of things as well in terms of the the organic outlook for the fourth quarter.

Eric: Sure.

Speaker Change: I'll start with golf net.

Speaker Change: Just off the heels of several new product introductions that we launched both CES and the PGA show last week the teams at foresight sports and Bushnell golf, we're really hitting on all cylinders, we have the new Falcon, which is really one of the best new innovations and stimulated projection technology that's ever been Cree.

Andrew S. Burns: Contributions from our previously announced April 2023 cost restructuring program, of which $25 million is related to Revalist. We expect these savings to fully run rate later in our fiscal year 2024.

Speaker Change: <unk>, we've also launched our new Quad, Max which is a terrific new launch monitor platform.

Speaker Change: For both pro and casual golfers alike.

Andrew S. Burns: Improvements in supply chain and freight, as our inventory with higher-priced freight will have turned through our inventory balance, and for lower expected promotions as we compare to our fiscal year 2024 Q3 period, in which we had higher than usual promotional levels to drive inventory levels down. With these variables, our stand-alone REBLA business, including estimated stand-alone costs..., would be a high single-digit EBITDA mark. This would be approximately a 400 basis point improvement from fiscal year 2024. Long term, we believe that Breville's adjusted EBITDA margins will be in the mid-teens, including estimated stand-alone costs, which is an estimated 1,000 basis point improvement over stand-alone fiscal year 2024, primarily driven by gearing up savings. Post-transaction closing, we expect Revolus will have a well-capitalized balance sheet with no debt and $250 million in cash.

Speaker Change: And we're seeing incredible new interest in that platform. So we do expect with those new product innovations and a very strong innovation pipeline to come that will have not only a strong Q4, but have good momentum going into the prime golf selling season.

Speaker Change: In our fiscal Q1 and Q2 this year.

Speaker Change: With regards to adventure sports.

Speaker Change: It's a little bit of a mixed bag, but we are seeing more optimism, we talked about our D to see strengths in our remarks and I'm very proud of the teams across the adventure sports network for the strong growth in DTC and in.

Speaker Change: Uncluttered.

Speaker Change: Stock no stock backup environment.

Speaker Change: We're seeing also some really good cleanup and mass Matt. So we're optimistic that going forward that kind of Destocking challenge and in the mass market is really receding at a good pace.

Speaker Change: We still have some things to clean up.

Speaker Change: Don't want to minimize that.

Operator: We expect the $250 million in cash will be utilized to fund the remaining Gear Up restructuring activities, as well as meaningfully accelerate return on shareholder value through organic growth initiatives, opportunistic share repurchase, and select Tuck In Acquisitions. Thank you. Operator, please open the line for questions. Thank you. As a reminder, if you'd like to ask a question, you can press star followed by one on the telephone keypad. If you'd like to remove your question, you may press start followed by two.

Speaker Change: And specialty Theres still a few headwinds, but by and large we're certainly more optimistic today than we were at the end of last quarter.

Speaker Change: Okay. That's helpful. Eric Thank you and then maybe for Andy.

Speaker Change: It sounds like we're going to be run rating basically all of the $50 million in actions savings.

Speaker Change: At rebel lists that have been implemented as part of gear up and then also as part of the prior restructuring program just curious.

Matthew Butler Koranda: Please ensure you are unmuted locally when asking your question. Our first question for today comes from Matt Koranda of Roth Capital Partners. Matt, your line is now open, please go ahead. Hey, everybody. Good morning. Maybe just drilling down on Revalyst.

Speaker Change: How does that only translate to high single digit EBITDA margins in the fourth quarter I'm, just like it seems like it should be dropping a bit more.

Speaker Change: Into the fourth quarter in terms of margin and so I'm wondering if there are any headwinds that we should be factoring in in terms of additional discounting or promotions.

Eric Wold: First, Eric, I think you mentioned phasing of shipments causing a little bit of weakness in the quarter, and maybe some of that was pushed into the fourth quarter. Any way to size up sort of the impact there and any particular products that shifted over into the fourth quarter? Sure. Good morning, Matt.

Speaker Change: Well, Matt I.

Speaker Change: I guess, what I'd first start with the $50 million from the April 2023, those have been coming in throughout the year. So those have been over this entire year has been coming in so the amount that actually is just coming in in the in the fourth quarter is a little bit.

Eric Wold: Nice to hear from you. Yeah, it was a marginal amount, Matt, just a couple million shipments that moved from one quarter to the next. Okay, I'll take the rest of the offline on that one. And then, just in terms of channel inventory, it sounds like you guys are signaling there's a little bit more optimism in the channel with Revolis products, and we're expecting a return to growth in the fourth quarter. Could you maybe just unpack a few more of the drivers?

Speaker Change: Les it's gonna be then translating next year from the Q2 Q3, and Q4 savings that were implemented into the full run rate that's going to be affecting it. So.

Speaker Change: <unk>.

Speaker Change: But we.

Speaker Change: We are I guess at first Charlotte, we're doubling EBITDA from Q3 to Q4, I mean, we're going from the $4 six.

Speaker Change: High single digits, that's going to be close to doubling your EBITDA from that perspective, so theres going to be a number of things that are coming in along with the reduction in promotions that we took as we reduced the inventory in a significant way in our third quarter and as we start to see some of the inventory that did move now is getting results in some freight improvements. So we are seeing.

Eric Wold: I know you mentioned action sports might be a driver of growth. Could you talk about the visibility there within action sports? And then golf as well, it sounded like more new product was impacted in terms of the growth expectation, but just wondered if you could give a little more color on sort of what we're expecting from the golf side of things as well in terms of the organic outlook for the fourth quarter. Well, I'll start with golf, Matt.

Speaker Change: Hansen some.

Speaker Change: Pretty meaningful improvement in our EBITDA as we head into Q4, and then into next year.

Speaker Change: Okay, all right fair enough and then I'll do a couple more on Connecticut, and I'll turn it over.

Speaker Change: Curious, Jason if you could maybe speak to channel inventory health.

Speaker Change: The surge in demand that we saw in October and November kind of followed through but waned a little bit in December.

Eric Wold: You know, we're just off the heels of several new product introductions that we launched at both CES and the PGA show last week. The teams at Foresight Sports and Bushnell Golf are really hitting on all cylinders. We have the new Falcon, which is really one of the best new innovations in simulated projection technology that's ever been created.

Speaker Change: Per our checks, but I guess, how far are you from sort of September levels in terms of channel inventory, maybe just speak to sort of some of the dynamics that youre seeing after after the surge in demand.

Speaker Change: Yeah, Good morning, Matt and Greg to talk to your channel inventory is pretty clean there.

Speaker Change: Still pockets.

Bear ourselves, which is what we're working on in the next coming quarters.

Eric Wold: We've also launched our new Quad Max, which is a terrific new launch monitor platform for both pro and casual golfers alike, and we're seeing incredible new interest in that platform. So we do expect, with those new product innovations and a very strong innovation pipeline to come, that we'll have not only a strong Q4, but good momentum going into the prime golf selling season in our fiscal Q1 and Q2 this year. With regard to adventure sports, you know, it's a little bit of a mixed bag, but we are seeing more optimism. We talked about our D2C strength in our remarks, and I'm very proud We're also seeing some really good cleanup in mass, Matt.

Speaker Change: But the surge as you referenced in October and November cleared out a lot of a lot of categories that we're at a point probably a more weeks of supply than customers would have liked so coming out of the shot show last week customers were pretty bullish on the year.

Speaker Change: And not too concerned on the inventories of what inventories out in the channel is pretty healthy inventory, so that will bode well for us in the fourth quarter and as we head into the fiscal year of 25.

Speaker Change: Okay, and then one more there.

Speaker Change: Could you speak to pricing actions.

Speaker Change: Actions may be taken last year at the end of last year and then just in terms of.

Speaker Change: Supply chain, obviously, I think powder has been a topic.

Speaker Change: But folks have been.

Start about lately, maybe just speak to the availability.

Speaker Change: They're in and how we think about sort of supply chain component.

Speaker Change: Through this coming year.

Speaker Change: Sure, we announced a price increase effective January one to the trade we.

Eric Wold: So we're optimistic that going forward, you know, that kind of destocking challenge in the mass market is really receding at a good pace. We still have some things to clean up, and we don't want to, you know, minimize that.

Speaker Change: We did it to help offset the propellant price increases that you reference in the price has been accepted to the market.

Speaker Change: Was good we will say that we do expect propellant challenges.

Eric Wold: You know, in specialty, there are still a few headwinds. But by and large, we're certainly more optimistic today than we were at the end of last quarter. Okay, that's helpful, Eric.

Speaker Change: Last I mean, thats not only of calendar year 2024 thing I think it's going to go on a little longer than that having said that I think the procurement team for the kinetic group has done a wonderful job to secure propellant for us.

Andrew S. Burns: And then maybe for Andy, it sounds like we're going to be running a rating on basically all of the $50 million in actions savings at Revelist that have been implemented as part of Gear Up and then also as part of the prior restructuring program. Just curious, how does that only translate to high single-digit EBITDA margins in the fourth quarter? It seems like it should be dropping a bit more in terms of margin. And so I'm wondering if there are any headwinds that we should be factoring in in terms of additional discounting or promotion. Matt, I guess what I'd first start with is the $50 million from April 2023; those have been coming in throughout the year.

Speaker Change: So while I don't see.

Speaker Change: Any big hiccups of us getting supply I do think theres going to be some supply constraints in the world on propel.

Speaker Change: Okay got you.

Speaker Change: Ill turn it over to the next.

Speaker Change: Thanks, Matt.

Thank you.

Speaker Change: Our next question comes from question from B Riley.

Speaker Change: Amit Your line is now open. Please go ahead.

Andrew S. Burns: So those have been coming in throughout this entire year. So the amount that actually is just coming in in the fourth quarter is a little bit less. It's going to be translating next year from the Q2, Q3, and Q4 savings that were implemented into the full run rate that's going to be affecting it. Goodbye.

Amit: Hello, Good morning, Thanks for taking my question.

Amit: I'd like to touch on some commentary from private outdoor retailer recently spoke to.

Amit: Finally challenging conditions in the broader market.

Amit: <unk> declines in 2024.

Amit: As we think about the outlook for the next pilot the pilot.

Andrew S. Burns: We are, I guess I'd first start with, we're doubling EBITDA from Q3 to Q4. I mean, we're going from the 4.6 to the high single digits, so it's going to be close to doubling your EBITDA from that perspective. So there's going to be a number of things that are coming in, along with the reduction in promotions that we took as we reduced the inventory in a significant way in our third quarter. And as we start to see some of the inventory that did move, it's going to result in some freight improvement. So we are seeing some pretty meaningful improvement in our EBITDA as we head into Q4. Okay, all right, fair enough. And then I'll do a couple more on kinetic energy and then turn it over.

Amit: To what extent are you baking in a.

Amit: A little bit of recovery in these categories or maybe you have a different view than the retailer.

Amit: Okay.

Speaker Change: Hey, good morning, Thanks for the question Eric.

Speaker Change: I would say, where we take extreme extremely close attention to our retailers and we've had many conversations, particularly and I think what youre, referring to is probably the outdoor specialty retail space. There's certainly as continued headwinds in that sector of our channel strategy.

Speaker Change: Whereas our inventory.

Speaker Change: With a lot of those retailers is in pretty good shape.

Speaker Change: And our inventory on our own side is also.

Speaker Change: <unk> made significant improvement year over year, we are certainly understanding of some of the challenges of the specialty retail marketplace is facing at this point in time.

Matthew Butler Koranda: But I'm curious, Jason, if you could maybe speak to channel inventory health after the surge in demand that we saw in October, November, kind of followed through but waned a little bit in December, per our checks, but I guess how far are you from sort of September levels in terms of channel inventory? Maybe just speak to sort of some of the dynamics that you're seeing after the surge in demand? Yeah, good morning, Matt. Great to talk to you.

Speaker Change: That knowing that we've certainly spent a lot of our time effort and energy on our direct to consumer business. You saw the excellent momentum that we have there that we've talked about in our remarks earlier today.

Speaker Change: With the team up in a really positive way and we've also seen a nice recovery in our mass business and those are two areas that will continue to seek to stimulate as we go forward into calendar 2024.

Jason Vanderbrink: Channel inventory is pretty clean, but there's still pockets of bare shelves, which is what we're working on in the coming quarters. But you know, the surge, as you referenced in October and November, cleared out a lot of categories that were at the point probably of more weeks of supply than customers would have liked. So coming out of the SHOT Show last week, customers were pretty bullish on the year and not too concerned about the inventory. So what inventory is out in the channel is pretty healthy inventory. So that will bode well for us in the fourth quarter and as we head into the fiscal year of 25. Okay, and then there is one more there.

Speaker Change: Great.

Speaker Change: That math.

Speaker Change: <unk>.

Speaker Change: Commentary Oppenheimer.

Speaker Change: Now over the kind of Covid period, we thought.

Speaker Change: <unk> getting inventory among the retailers thought they were a little bit less discerning on brand and previously there's been a thought that there would be a setback the quality.

Speaker Change: The big brands when we can.

Speaker Change: Capture some of that southeast have you seen that.

Speaker Change: We kind of come into the next theme since the Covid recovery.

Well no I really can't speak to all the different dynamics at mass retail, but I can say that the teams are doing a terrific job partnering with our mass retail partners.

Jason Vanderbrink: Just could you speak to pricing actions maybe taken last year at the end of last year and, and then just in terms of supply chain, obviously, I think powder has been a topic that folks have been concerned about lately, maybe just speak to the availability there and how we think about sort of supply chain and component through this coming year. Sure. We announced a price increase effective January 1 to the trade. We did it to help offset the propellant price increases that you referenced, and the price has been accepted by the market, which was good. We will say that we do expect propellant challenges to last. I mean, it's not only a calendar year 2024 thing.

Speaker Change: Across many different facets sporting goods.

Speaker Change: You would probably call it more mass overall and they are certainly finding a lot of value in the brands of <unk>.

Speaker Change: We continue to see good momentum in the mass market for a lot of our products.

Speaker Change: Got it.

Speaker Change: And one last for me.

Speaker Change: Thanks Ben.

Speaker Change: Coverage for relatively light now at this point through the winter.

Speaker Change: Do you see risks.

Speaker Change: Now related products.

Ben: Some heavier discounting and to what extent that could impair the guidance for the fourth quarter.

Ben: In terms of high single digit EBITDA.

Jason Vanderbrink: I think it's going to go on a little longer than that. Having said that, I think the procurement team for the Kinetic Group has done a wonderful job to secure propellant for us. So while I don't see any big hiccups in us getting supply, I do think there's going to be some supply constraints in the world on propellant. Okay, gotcha. I'll turn it over to the next guy. Thanks.

Speaker Change: It's definitely something that we're monitoring.

Speaker Change: <unk> got off to a very slow start this year.

Speaker Change: I think probably across all of specialty retail there was just I.

Speaker Change: I hate to blame anything on weather, but there is certainly was not a lot of snow and the early start of the year across the United States in particular.

Speaker Change: And that led to slower Pos than expected. So it's something that we're looking at very closely.

Matthew Butler Koranda: Thank you. Our next question comes from Anna Glaston from Bee Riley. Anna, your line is now open. Please go ahead. Hi, good morning.

Speaker Change: It has picked up in recent weeks, but that is something that we're going to continue to monitor for the rest of the quarter and just add and just to add to that just.

Speaker Change: From a composition of our business is a relatively small proportion of the overall <unk> business and Q4 in particular is not the heaviest donlin youre doing youre doing replenishment as we go through the Q4, the actual winter season, most of your sell in.

Anna Glaston: Thanks for taking my question. First, I'd like to touch on some commentary from a private outdoor retailer recently. They spoke to, you know, fairly challenging conditions in the broader market, projecting declines in 2024. As we think about the outlook for the next calendar year, to what extent are you baking in a little bit of recovery in these categories? Or maybe you have a different view than this retailer on what the setup is? Hey Anna, good morning.

Speaker Change: Which is the bulk of it is the larger portion of your sales is happening.

Speaker Change: In Q3, our fiscal Q2 and Q3, so the calendar Q3, and Q4 and then Youre in replenishment mode.

Speaker Change: A lot of that went through so we already saw some of those shipments come through and then Q4. So this quarter is really more of a replenishment. So I wouldn't expect it to have a significant impact on our Q4, we'll be looking at that as we head into next order season.

Eric Wold: Thanks for the questions, Eric. You know, I would say we pay extremely close attention to our retailers. And, you know, we've had many conversations, particularly, and I think what you're referring to is probably the outdoor specialty retail space. There certainly are continued headwinds in that sector of our channel strategy. You know, whereas our inventory with a lot of those retailers is in pretty good shape, and our inventory on our own side has also made significant improvement year over year, we are certainly understanding of some of the challenges that the specialty retail marketplace is facing at this point in time, knowing that we've certainly spent a lot of our time, effort, and energy on our direct to consumer business. You saw the excellent momentum that we have there that we talked about in our remarks earlier today with the team playing in a really positive way.

Speaker Change: Okay, great. Thanks, Andy.

Andrew S. Burns: Thank you.

Andrew S. Burns: Our next question comes from Mark Smith of Lake Street capital markets.

Mark Smith: Your line is now open. Please go ahead.

Mark Smith: Hi, guys.

First off just wanted to look at the kind of guidance of doubling EBITDA within Rob less just just want to confirm that that's kind of fully burdened by like corporate overhead as you look at that number.

Mark Smith: That's correct when we're talking about doubling EBITDA it would be viewed as a standalone pro forma 24 compared to a 25, if we were standing alone.

Mark Smith: And then we saw that kind of corporate overhead number come up a little bit here during the December quarter.

Is there any change in kind of the weighting of that for.

Mark Smith: Or how much of that maybe falls on <unk> is still roughly 70% number maybe the best way to look at that.

Eric Wold: And we've also seen a nice recovery in our mass business. And you know, those are two areas that we will continue to seek to stimulate as we go forward into calendar 2024. Great. And touching on that math commentary at the end there, you know, over the kind of COVID boom period, you saw, you know, really difficulty in getting inventory among the retailers, and so they were a little bit less discerning about brands.

Mark Smith: Youre still looking at about 70% to speak to the increase itself. There is a few things that are in those numbers. One we are starting to see some of the dis synergies that we expect expect to have as we start to more align on the separation of the business we're starting to.

Mark Smith: And implement some of those activities are you starting to see that come through we also had some <unk>.

Eric Wold: And previously, there was a thought that there would be a shift back to quality. So, you know, the big brands would recapture some of that shelf space. Have you seen that as we kind of come into the next phase of the COVID recovery? Well, I'll note, you know, I really can't speak to all the different dynamics of mass retail, but I can say that the teams are doing a terrific job partnering with our mass retail partners across many different facets, sporting goods, and, you know, what you'd probably call it more mass overall. And they're certainly finding a lot of value in the brands at Revolis.

Mark Smith: Comp had a timing adjustment due to the transaction.

Mark Smith: A little bit of cost that shifted between Q3 Q4, so youll see core cost actually come down some in the Q4 time period.

Mark Smith: As well as what we mentioned last quarter, which was some changes in how we have some non-GAAP adjustments.

Mark Smith: That were shifted between non-GAAP to GAAP Z side that come up a little bit but the actual percentage that we're looking at is probably still roughly in line with what we discussed previously.

Mark Smith: Okay.

Mark Smith: And then just looking at segment guidance here the guidance seems to imply kinetic EBITDA margin coming down here in the fourth quarter to kind of stay within that guidance range.

Eric Wold: You know, we continue to see good momentum in the mass market for a lot of our products. Got it. Thanks, Eric. And one more for me.

Mark Smith: Yes, we've seen recent price increases come in at the beginning of the quarter were those price increases not enough to cover.

Eric Wold: You know, there's been a decent amount of coverage of the relatively light snow at this point in the winter. To what extent do you see the risk of, you know, snow-related products having to see some heavier discounting? And to what extent could that impair the guidance for the fourth quarter in terms of high single-digit EBITDA? It's definitely something that we're monitoring, Anna. Snow got off to a very slow start this year.

Mark Smith: Some of the.

Mark Smith: Kris pressure, maybe from propel at or anything else or any guidance.

Mark Smith: Guidance, you can give us on as we look at Q4, primarily.

Mark Smith: Primarily EBITDA margins within kinetic group.

Mark Smith: Yeah, Mark this is Jason and good morning.

Jason: It's as we guided we said we'd be at the high end of the EBITDA for the quarter, but it would be less than the third quarter. Obviously the price increases that were taken to keep the factories going were not offset by the price increases that we put to the market and secondly, we may be a little less efficient in the quarter as we make.

Eric Wold: You know, I think probably across all of specialty retail, it was just a, I hate to blame anything on weather, but there certainly was not a lot of snow in the early start of the year across the United States, in particular, and that led to slower POS than expected. So it's something that we're looking at very closely. It has picked up in recent weeks, but that is something that we're going to continue to monitor for the rest of the quarter. From a composition point of view, snow is a relatively small portion of the overall Revelist business.

Jason: More skus.

Jason: Obviously lose a little bit of efficiency on that now our hope on that as our gross margin on the products, we make help offset the efficiency loss.

Jason: But.

Jason: It's mainly driven due to the price increases input costs that we have to take.

Jason: Okay.

Andrew S. Burns: And Q4 in particular is not the heaviest selling season. You're doing replenishments as we go through Q4, the actual winter season. Most of your sell-in, which is the bulk of it, a large portion of your sales, is happening in Q3, our fiscal Q2 and Q3, so the calendar Q3 and Q4. And then you're in replenishment mode.

Speaker Change: Last one for me just Eric.

Eric: Any additional insight into kind of your comfort level with Rob Lewis current inventory.

Eric: Is there still some work that needs to be done on clean stuff up here as we look at Q4 or do you feel pretty confident with where you're at today.

Eric: Sure well I'm very proud of the team's mark with regards to the progress that we've made on inventory.

Andrew S. Burns: A lot of that went through, so we already saw some of those shipments come through. And then Q4, so this quarter, is really more replenishment, so I wouldn't expect it to have a significant impact on our Q4. We'll be looking at that as we head into our next order. Okay, great. Thanks, Andy and Eric.

Eric: Down both year over year and sequentially. There's always work to do I think theres still some pockets that we want to improve upon but I'd say overall, we feel much more comfortable with where we are in inventory today than where we were coming out of the.

Anna Glaston: Thank you. Our next question comes from Mark Smith of Lake Street Capital Market. Mark, your line is now open, please go ahead.

Eric: In the second quarter.

Speaker Change: Perfect. Thank you guys.

Mark Smith: Hi Guys, first off, just wanted to look at the kind of guidance of doubling EBITDA within RevList. Just want to confirm that that's kind of fully burdened by corporate overhead as you look at that number. That's correct.

Speaker Change: Thanks Mark.

Speaker Change: Thank you our next.

Speaker Change: Next question comes from Jim Chartier of <unk> Crespi unharmed.

Jim A. Chartier: Tim Your line is now open. Please go ahead.

Jim A. Chartier: Good morning, Thanks for taking my questions.

Andrew S. Burns: When we're talking about doubling EBITDA, it would be viewed as a standalone. So pro forma 24 compared to a 25 if we were... And then we saw that kind of corporate overhead number come up a little bit here during the December quarter. Is there any kind of change in the weighting of that for how much of that maybe falls on RevList? It's still a roughly 70% number, maybe the best way to look at that.

Jim A. Chartier: Can you talk about Pos trends in the quarter for both brands.

Jim A. Chartier: Compared to last quarter, and then what's kind of the visibility into the timing of when we get to flat Pos for both businesses.

Tim: Sure Good morning, Jim.

Tim: I guess when you say both I'm guessing you want both revo and kinetic is that correct.

Andrew S. Burns: You're still looking at about 70% to speak to the increase itself. There are a few things that are in those numbers. One, we are starting to see some... of the dis-energies that we expect to have as we start to align more on the separation of the business. We're starting to implement some of those activities, so you're starting to see that come through. We also had some comps that had a timing adjustment due to the transaction. There was a little bit of comp that shifted between Q3 and Q4, so you'll see core costs actually come down some in the Q4 time period. As well as what we mentioned last quarter, which was changes in how we have some non-GAAP adjustments that were shifted between non-gap-to-gap, and so you saw that come up a little bit.

Tim: Yes.

Speaker Change: Okay, what was <unk>.

Speaker Change: I'll start Jim and then I'll turn it over to Jason if that works for you.

Speaker Change: With regards to our segments and Thats, probably the easiest way to talk at a higher level on the precision sports side.

Speaker Change: Talked about.

Jason: Golf already but we saw that business from a Pos standpoint, being fairly flat really good momentum on the direct to consumer side.

Jason: Offset a little bit by some specialty with regards to adventure sport. So I'd say the same the same headlines would be there as well.

Jason: Pretty flat for the quarter, we saw some good momentum again on the <unk> side and at mass versus offset by some some small headwinds at specialty.

Andrew S. Burns: But the actual percentage that we're looking at is probably still roughly roughly the same. Okay, and then just looking at segment guidance here, the guidance seems to imply kinetic EBITDA margin coming down here in the fourth quarter to kind of stay within that guidance range. Yet, we've seen recent price increases come in at the beginning of the quarter. Were those price increases not enough to cover some of the increased pressure, maybe from propellant or anything else, or any guidance you can give us as we look at Q4, primarily EBITDA margins within the kinetic group? Yeah, Mark, this is Jason, and good morning.

Jason: And we already talked to there about a small pocket of that being snow.

Jason: Really being the most challenged on that side of the business.

Jason: With regards to outdoor performed CCR outdoor performance are less business.

Jason: That was flat to slightly down for the quarter.

Jason: Most of those brands are in what used to be called the hunt shoot portfolio.

And we're continuing to work through that work through that.

Jason: Jim on the kinetic side.

Jason Vanderbrink: It's as we guided. We said we'd be at the high end of the EBITDA for the quarter, but it would be less than the third quarter. Obviously, the price increases that we are taking to keep the factories going were not offset by the price increases that we put into the market. And secondly, we may be a little less efficient in the quarter as we make more SKUs. You obviously lose a little bit of efficiency on that. Now our hope for that is that our gross margin on the products we make helps offset the efficiency loss. But it's mainly driven due to the price increases in foot costs that we have to take. And last, last one for me, just Eric, any additional insight into kind of your comfort level with Revlis' current inventory? You know, is there still, you know, some work that needs to be done on cleaning stuff up here as we look at Q4? Do you feel pretty confident with where you're at today?

Jim A. Chartier: We referenced that we.

Jim A. Chartier: We had about a six week surged in the third quarter October November and that really helped the channel partners.

Jim A. Chartier: To clear out some inventory and since then.

Jim A. Chartier: POS has been flattish I mean, theres some weeks at its up single digits or some weeks that it's down single digits, but I think it's the market is showing normalization right now.

Jim A. Chartier: As we head into calendar year 2024, we fully expect that.

Jim A. Chartier: The Big American made brands to take market share.

Jim A. Chartier: From the smaller vendors and I think that will help us out in particular.

Speaker Change: Great. Thank you and then.

Speaker Change: I believe you said kinetic EBIT margin towards the low end of the range for this year.

Speaker Change: Whats driving that.

We expect the EBITDA at the high end of the range was.

Speaker Change: Sorry for.

Speaker Change: Rob.

Speaker Change: <unk> EBITDA at the low end sorry about that.

Rob Lewis: Yeah. So there are those EBITDA margins go into the low end of the range. So we have a few items as we look at the returns that we're expecting in Q4 were still going up to high single digits on.

Eric Wold: Well, I'm very proud of the teams, Mark, with regard to the progress that we've made on inventory. You know, we're down both year over year and sequentially. There's always work to do.

Rob Lewis: On the EBITDA level, it just isn't going to quite get to it would have to be into the double digits and were based on what we're seeing for the.

Eric Wold: I think there's still some pockets that we want to improve upon, but I'd say overall, we feel much more comfortable with where we are in inventory today than where we were coming out of the second quarter. Perfect. Thank you, guys. Thank you. Our next question comes from Jim Chartier of 1S Crespi and Hart. Jim, your line is now open. Please go ahead.

Rob Lewis: The promotion retraction and based on what we're seeing with the inventory levels at retailers, what we're seeing to move through it isn't going to quite get to the higher end of the range at this point in time, but we are expecting to see significant improvement over what we saw in Q3.

Jim A. Chartier: Good morning. I have to take my question. First, can you talk about POS trends in the quarter for both brands, how that compared to last quarter, and then what's the visibility into the timing of when we get to flat POS for both brands? Sure. Good morning, Jim.

Rob Lewis: Okay.

Rob Lewis:

Rob Lewis: And then in terms of sales growth for Rob with some fourth quarter do you expect.

Rob Lewis: It's positive in the fourth quarter.

Speaker Change: So I think in different categories can be different so as we talked about with golf new products will drive favorable Pos as these products are new innovations, we expect those to sell through in a good way for those businesses as we look at some of the other businesses that for our actions.

Eric Wold: I guess when you say both, I'm guessing you want both Revolus and Kinetic. Is that correct? Yeah. Okay. So I'll start with Kinetic, Jim, and then I'll turn it over to Jason if that works for you.

Eric Wold: You know, with regard to our segments, and that's probably the easiest way to talk at a higher level, you know, on the precision sports side, you know, we talked about golf already, but we saw that business from a POS standpoint being fairly flat, really good momentum on the direct-to-consumer side, offset a little bit by some specialty. With regard to adventure sports, I'd say the same headlines would be there as well Pretty flat for the quarter. You know, we saw some good momentum again on the D to C side and at mass versus, offset by some, you know, some small headwinds at specialty. And we already talked about it there about, you know, a small pocket of that being snow, you know, really being the most challenged on that side of the business.

Speaker Change: Sports business. This is going to be more kind of a flat to pass what we're seen as the as the inventories are getting healthier are retailers starting to put any more purchases were seeing preorders in that category at rates that weren't there last year. So we had better preorders. So we are seeing the.

Speaker Change: Signs that theyre going to purchase.

Speaker Change: And then that will just be a little bit more in line with the Pos that we're expecting so not a significant bump in the P O S.

Speaker Change: Great. Thank you.

Speaker Change: Thank you.

Speaker Change: Our next question comes from Raimo <unk> of Aegis capital your.

Raimo: Your line is now open. Please go ahead.

Raimo: Good morning, Thank you.

Raimo: You guys had referenced unfavorable mix on the rubber side for us.

Raimo: The impact in Q3 gross margins I'm wondering if you could just provide a little more granularity on that was that more.

Eric Wold: With regard to outdoor performance, our last business, that was flat to slightly down for the quarter. Most of those brands are in what used to be called the hunt-shoot portfolio, and we're continuing to work through that. Jim, on the kinetic side, you know, we referenced this, we had about a six-week surge in the third quarter, October, November, that really helped the channel partners out to clear out some inventory. And since then, POS has been flattish.

Raimo: Shifting away from action sports or was it just across the board across categories consumers difficult economy kind of shifting to lower price point lower gross margin items.

Speaker Change: Yeah, So it's actually a mix of both of those items.

Speaker Change: So we did see both what was returning from a sales perspective in the in the quarter was a little bit more of our more mass type channels and the product that southern our mass channels. Those are historically, a little bit lower margin.

Jason Vanderbrink: I mean, there are some weeks that it's up single digits, and there are some weeks that it's down single digits. But I think the market is showing normalization right now. And as we head into calendar year 2024, we fully expect the big American-made brands to take market share from the smaller vendors, and I think that will help our POS out. Great, thank you. And then I believe you said the kinetic EBITDA margin is toward the low end of the range for this year. What's driving that?

Speaker Change: Our specialty channels, our higher price helmets, and snow helmets and those items a little bit higher margin typically so those did see a transition them away.

Speaker Change: A few of those fewer of those selling than what we had previously seen so we did see that mix shifting a little bit in the channels and within the product categories that drove that.

Speaker Change: Great. Thanks very much.

Speaker Change: Thank you.

Speaker Change: This time, we currently have no further questions. So that concludes today's conference call. Thank you all for joining you may now disconnect your lines.

Andrew S. Burns: We expect the EBITDA at the high end of the range will be in our... I'm sorry, I'm sorry, for Revellist EBITDA at the low end. I'm sorry. Yeah, so there are those EBITDA margins going to the low end of the range. So we have a few items as we look at the return that we're expecting in Q4. We're still going up to the high single digits on the EBITDA level. It just isn't going to quite get there; it would have to be into the double digits.

Speaker Change: [music].

Andrew S. Burns: And based on what we're seeing for the promotion retraction, based on what we're seeing with the inventory levels at retailers, and what we're seeing to move through, it isn't going to quite get to the higher end of the range at this point in time, but we are expecting to see significant improvement over what we saw in Q4. Okay, um, And then in terms of sales growth for Revolus in the fourth quarter, do you expect POS, you know, to be positive in the fourth quarter? So I think in different categories it's going to be different. So, as we talked about with golf, new products will drive favorable POS as these products are new innovations. We expect those to sell through in a good way for those businesses. As we look at some of the other businesses for our action sports business, this is going to be more of a flat POS.

Andrew S. Burns: What we're seeing is that as inventories are getting healthier, our retailers are starting to make more purchases. We're seeing pre-orders in that category at rates that weren't there last year. We have better pre-orders. So we are seeing the signs that they're going to buy. And then that'll just be a little bit more in line with the POS that we're expecting.

Jim A. Chartier: So, not a significant bump in the price. Thank you. Our next question comes from Rommel Dionisio of Aegis Capital. Your line is now open; please go ahead. Good morning.

Rommel T. Dionisio: Thank you. You guys had referenced unfavorable mix on the Revelos side for impacting Q3 gross margins. I wonder if you could just provide a little more granularity on that.

Andrew S. Burns: Was that more, you know, the shift away from action sports, or was it just, you know, across the board and across categories, consumers, you know, in a difficult economy, kind of shifting to lower price points, lower gross margin items? Thanks. Yeah, so it's actually a mix of both those items. So, some of what was returning from a sales perspective in the quarter was a little bit more of our more mass-type channels and the products that sell in our mass channels. Those are historically a little bit lower margin, are specially channeled, and are higher priced.

Andrew S. Burns: Helmets and snow helmets and those items are a little bit higher margin typically, so those did see a transition away as we saw a few of those selling better than what we had previously seen. So we did see that mix shifting a little bit in the channels and within the product category.

Rommel T. Dionisio: Great. Thanks very much. Thank you. At this time, we currently have no further questions. So that concludes today's conference call. Thank you all for joining us. You may now disconnect your line.

Q3 2024 Vista Outdoor Inc Earnings Call

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