Good afternoon, everyone, and thank you for participating in today's conference call to discuss Clarus Corporation's financial results for the fourth quarter and full year ended December 31, 2019. Joining us today are Clarus Corporation's President, John Walbrecht; Chief Administrative Officer and CFO, Aaron Kuehne; and the company's external Director of Investor Relations, Cody Slach. Following their remarks, we'll open the call for your questions. Before we go further, I would like to turn the call over to Mr. Slach as he reads the company's Safe Harbor statements within the meaning of the Private Securities Litigation Reform Act of 1995 that provides important cautions regarding forward-looking statements. Cody, please go ahead.

Thanks, Carmen. Please note that during this call, the company may use words such as appears, anticipates, beliefs, plans, expects, intends, future and similar expressions which constitutes forward-looking statements within the meaning of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are made based on the company's expectations and beliefs concerning future events impacting the company and, therefore, involve a number of risks and uncertainties. The company cautions you that forward-looking statements are not guarantees, and that actual results could differ materially from those expressed or implied in the forward-looking statements. Potential risks and uncertainties that could cause the actual results of operations or financial condition of the company to differ materially from those expressed or implied by forward-looking statements used in this call include, but are not limited to, the overall level of consumer demand on the company's products; general economic conditions and other factors affecting consumer confidence, preferences and behavior; disruption and volatility in the global currency, capital and credit markets; the financial strength of the company's customers; the company's ability to implement its business strategy; the ability of the company to execute and integrate acquisitions; the impact of global climate change trends they have on the company and its suppliers and customers; the company's exposure to product liability or product warranty claims and other loss contingencies; the stability of the company's manufacturing facilities and suppliers including in light of disease, epidemics and health related concerns such as coronavirus; changes in governmental regulation, legislation or public opinion relating to the manufacture and sale of bullets and ammunition by our Sierra segment and the possession and use of firearms and ammunition by our customers; the company's ability to protect patents, trademarks and other intellectual property rights; any breaches of or interruptions in…

Thank you, Cody, and good afternoon everyone. It's a pleasure to be joining you to discuss our fourth quarter and full year 2019 results. We are pleased with our strong performance in the fourth quarter driven by the continued momentum within Black Diamond, which grew 13% year-over-year with contribution from all regions and product categories. The solid performance from Black Diamond demonstrates the continued success of our innovate and accelerate growth strategy. The same can be said for our full-year performance. Black Diamond sales were up 13% with growth in every geography, sales channel, and category. This drove a 9% increase in our consolidated adjusted EBITDA for the year and 10% growth in adjusted net income. We achieved these results while managing through headwinds brought on by the ongoing trade wars and the strengthening U.S. dollar, which together reduced our full-year adjusted EBITDA by 3.7 million. We have taken and will continue to take proactive steps to reengineer our supply chains whenever possible in order to mitigate these headwinds. Aaron will share more on this shortly. As we've discussed previously, we have focused our Black Diamond strategy over the past three years on leading the market with new product introductions across all categories of climb, mountain, and snow, including the core activities of climbing, alpinism, mountaineering, trail running, back country skiing, and snowboarding. These innovations in equipment have generated more than 2,900 product reviews in popular media and more than 92 industry awards for 2019 compared to 75 in 2018. This allowed us to achieve more first to market with our key retailers than ever before, while accelerating the marketing of these new products through social media, athlete [ph] content, and national advertising. In fact, we increased followers across social media platforms by more than 33% and some of our…

Thank you, John, and good afternoon everyone. For the first quarter of 2019, sales increased 7% to $61 million compared to the same year ago quarter and on a constant currency basis, sales were up 8%. This was driven by 13% growth in Black Diamond, which saw strong performance across all categories, geographies and channels partially offset by a 35% decline in Sierra due to continued headwinds and the bullet and ammunition marketplace, which were felt most prominently in our domestic OEM and international industrial businesses. In the domestic market, military law enforcement orders remained soft while our international industrial business was impacted by lower demand. Both markets continue to face a supply versus demand imbalances with the global environment being heavily promotional, which is not something Sierra's interested in chasing. Consolidated gross margin in the fourth quarter was 35.5% compared to 35.6% in the year ago quarter. The slight decline was primarily due to foreign exchange headwinds from the strengthening U.S. dollar and the impact from recent tariffs, foreign exchange headwinds reduced year-over-year gross margin by approximately 75 basis points in the fourth quarter and the impact from tariffs was 80 basis points. Overall, our sales in gross profit in the fourth quarter were negatively impacted by unfavorable foreign currency changes on a transactional basis of $700,000. [Technical Difficulty] cost of our inventories denominated in U.S. dollars, while 30% of our global sales are denominated in foreign currencies, primarily the Euro, Canadian dollar, Norwegian kroner, and Swiss Franc. We attempt to manage our foreign currency risk on a continuous basis through natural hedges and foreign currency hedge contracts, but these hedges will never be a perfect offset to the actual currency movements, especially with recent currency volatility. In our reported sales and gross profit, our hedges offset approximately $200,000…

Thanks Aaron. Now that we've highlighted our results, I'd like to transition our focus to Black Diamond's upcoming spring and fall 2020 seasons. We have an innovative and comprehensive suite of 250 new products offerings that will be coming to market and have already garnered significant positive response. For spring 2020 we expect to have 125 new products launching, covering, climb, mountain and apparel. Within climb, we are expecting and expanding our performance footwear offering to include both performance and lifestyle approach shoes, which we plan to launch globally this spring. This extension will compliment our climbing shoe line and continued the strong momentum we have already generated with our entrance into footwear two years ago. We will also be launching new carabiners, new Z4 cam, vision helmets, award-winning air net harness, rock shoes, and boundary accessories. In our mountain categories, we plan to introduce a complete collection of rechargeable lighting, new trekking poles, and expanded collection of day packs. Within apparel, the focus of spring 2020 will be on both Alpine and trail running categories. We will launch the new awarded highline jacket, swift pants, rhythm shirt in long sleeve, a new distance running short and the deployed jacket. In time, we have expanded our stretch denim program with our new crag denim adding to the forge denim and creamy unique denim story made only for our core climbing consumers. Supporting these product launches will be a marketing campaign focused on accelerating in-store support and consumer engagement via athletes events and a more robust digital presence. The addition of three new strategic retail locations will help elevate the awareness and demand for our brand in a more consumer centric manner. Now turning to fall 2020, as we continue to refine our focus on the activity based consumer, we see…

Thank you. [Operator Instructions] Our first question is from Randy Konik with Jefferies. Please go ahead.

I guess Aaron, really a question for you, how are you thinking about or where are you at with fulfillment for the eCommerce direct-to-consumer business units grew dramatically. Your business from direct to consumer is growing dramatically in the quarter, and you talked about increasing penetration there. Where are you at with investments there and kind of fulfillment for those needs of that channel distribution, and what should we expect from the company over the next six to eight quarters? Thanks.

Great question, Randy and hope all is well. As mentioned, we continue to see the direct-to-consumer business performing certainly well for us. In the fourth quarter alone, it was up 38%, and we are mindful of how this channel interacts with our retail partners, not only in terms of how it's priced and how it's presented, but also how it's allotted inventory and the overall fulfillment or the overall prioritization of fulfillment. This is something that we're actively working through in that we recognize that with the strong growth we found ourselves with some holes as it relates to fulfillment through that channel. And so, part of the elevated inventory levels that you see at the end of the year is in response to some of those constraints or some of those holes that we've identified and continue to work through to ensure that once again we continue to reinforce our retail partner -- the relationships with our retail partners, but also ensure that the consumer experience is best in class and part of that is ensuring that we have the inventory available on the website and in the actual retail stores themselves. So, it’s something that we're very aware of and something that we're actively managing and working through, and it's something that we expect to see significant improvements over the next several quarters as we continue to refine our approach and have greater insights as it relates to mix and also just overall demand.

I was going to say as you found Randy, because I know you’ve sent me a couple of texts about it during the year, obviously last year we saw greater demand for some of these new categories of insulated and snow specific apparel than we had originally forecasted. So, we were chasing it.

Yes. Helpful. So, this is my last question, and this is for you, John. The playbook of innovate and accelerate has really worked wonders in terms of doing a great job of adding new products. You talked about, I think you said 250 new products. You've talked about -- give some perspective on the awards that those products are garnering. How are you thinking about, as we think about the next few years managing, the SKU count and the product lifecycle as you kind of tell your team kind of let's just continue to kind of push down envelope on innovation across our product categories. How do you kind of think about what's the appropriate level of SKUs to have in the business across the different channels of distribution? Just curious on how you're thinking about managing that over the medium term. Thanks.

Yes. So, if you recall three years ago, we felt as a company that we had lost the title of being the innovator in the outdoor space, and that a lot of retailers, due to a lot of the things that we had done internally had their foot on the brake, and our goal was first to get it off the brake and then to put it on the gas. That was accomplished in this innovate and accelerate strategy by innovating products at a pretty rapid pace relative to our competition. And then, through the awards, hopefully achieving the success and the recognition for what we're doing. And successfully, as you said, that's worked. The next chapters are more about redefining some of these categories and items. Clearly, if we can still build faster, lighter, stronger products than either our product ourselves or our competition, we will continue to look at that. But we're going to -- as we're finding that, we're successfully getting product placement now, it's about how do we motivate as well as accelerate that to the marketplace in marketing. And then, the other side is deciding where the return on investment for these products are in the best case scenario for our investments into them versus RBI, which we call return on brand investments and sometimes they are brand investments to make the ultralight ice crew in the world. Other times it's more -- as we go into things like footwear where it's really focused on the return of actual investment in that category. I think we're very disciplined to look at those all the time. I would say that I think the team would be happy to know our goal is not to continue to maintain or increase the pace of the amount of products we have launched to market, but to focus more on the fulfillment and the marketing around those.

Thank you. Our next question comes from Jim Duffy with Stifel.

Thank you. Hi, John. Hi, Aaron. Hope you guys are doing well.

Thanks Jim.

John, I wanted to ask you to spend a moment talking about just the state of the bullet and ammunition industry. When does this promotional downward spiral break? How are you thinking about this plan forward in 2020 and are you planning for inflection in the Sierra business as the year progresses?

Well, I think the market would say that and we say this every time we talk. I think the market would say at this point that the market has bottomed, and there's some signs of some positive momentum. Now, can that be changed if other companies in the industry don't survive. And that impacts it potentially if that drops inventories on the market potentially. I think there's always been a cyclical nature to this business, and then this year, politics will likely play a role into this. I know that we've never really focused heavily on the handgun business, bullet business, we've been more of a rifle, but I know that the market is commenting that there's a rise in handgun, bullet demand right now that they haven't seen. And I suspect with other legislation going into the fall, we'll see that, across the wider spectrum. We haven't modeled the business yet on that because we haven't seen it. We hope for and anticipate that there may be some upside, but right now we've been prudent and said, hey, let's base it on what we really can control both from a product bullet and ammunition launches and fulfillment. And then, attack each year. We're not slowing down, as we said in the write-up on the new product innovations, nor the launches into ammo. And we believe that the strategy is right long-term and the cyclical part of the nature and the market share we're gaining what reward is in the appropriate market.

Very helpful. Thank you. And then you mentioned a bright spot in technical outerwear that being a bright spot in an otherwise challenging market. Can you talk about, is that translating to orders for second half of '20 or is the challenging year for the market as a whole working against the order book?

No. I think that what we're finding is that outwear as a whole is a mature marketplace, technical outerwear, there's -- we can name the top 10 outerwear companies and then there are lists and lists after that that participate in that sport. In difference to when we launched apparel in fall 13, we really been specific about building being apparel that is equipment. And the Dawn patrol hybrid shell is exactly that. It is specific to a use and a process and because of it, it's won awards. Things like the approach down being the lightest weight down jacket in the marketplace literally in a year and a half went from never heard of to our number one revenue style in outerwear. The vision down, the high line, which is the first recycled, fully recyclable PSC free shell from us is doing really well. And as we look into the future, we seem to think this strategy is paying off for BD as a differentiator towards what is otherwise, a mature market. And we do see strong responses to our bookings in these -- some of these new specific product categories. And hence we'll continue to chase down them.

Great. And then last one from me, Aaron, you just eyeball in the margins and thinking about some of the headwinds that you're seeing with tariffs of facts and Sierra weakness from a mixed standpoint, the margins actually look like they're holding up pretty well. Can you talk about what you're seeing in the core Black Diamond business? Is that reflective of a mixed dynamic or, what are some of the other factors that might be a responsible for that?

Yes. So, it's a combination of a couple of different factors. One of them primarily being a series of different continuous improvement initiatives that we kicked off about a year and a half ago associated with certain value leakages that we were seeing within the business and also within our in-house manufacturing activities, resourcing activities, but then also being, very close with the different category directors. And also end market general managers, if you will, in evaluating opportunities where we could increase prices strategically or opportunistically, while also continue to make sure that we're driving higher margin products in each of the geographical regions, channels. And so it's a mixed bag, but it really is a manifestation of some of these initiatives that we put into play about a year, year and a half ago. The team has been working extremely hard towards and that's something that continues to be priority for all of us. This idea of improving every part of the business every single day and I think what you're starting to see there, or what we're starting to see there is as she had the manifestation of those activities and those of those efforts.

[Operator Instructions] And our next question is from Mark Smith with Lake Street Capital. Please go ahead.

First off, John, you talked a little bit about the Olympics and potential opportunity there, especially as we look at climbing being involved this year. Has your view changed on that, if we saw cancellation, would there be any real impact from you in the near term, have you spent money on market or anything that would impact that?

No. I think two-fold. The first piece is obviously given the coronavirus market trends and discussions. I think that the Tokyo Olympics maybe a question mark and I think a lot of people will pay very close attention to politically as well as responsible wise, how to approach that. Our belief has always been the same that it's not really about the Olympics specifically, the two weeks that would drive -- we don't have a positive impact on the Black Diamond brand. I think like anything it's the awareness of the sport in a greater spectrum to a much wider audience. It's the family sitting around watching the Olympics that decides a little Johnny is going to be a climber rather than a baseball player. Or they are going to try a climbing gym because they have now seen this sport and it seems pretty exciting and that will rise this. As I have said before Spyder had huge growth coming out of the 2002 Olympic Games not going into it. We have got lots of initiatives that we hope to try and relay on going into the Olympics. We haven't spent dollars on that to-date. So we have no risk factor in there today. But, we watch carefully down the stand, what's actually going to occur with the Olympics and the summer programs. As the health concerns roll out, we are going to be mindful. Who knows how that would be, we may experience as consumers an Olympic games like nothing ever before maybe totally just televised as opposed to attending.

Okay. And then staying on kind of Coronavirus, Aaron, you talked a little bit about kind of the supply versus the demand side of things, we work from other companies, manufacturers within China that we are seeing some people back to work and plants starting to pick up again. Could you guys talk to -- are you seeing that kind of thing going on into this point? And then, if you kind of weight what's built into your guidance here in the first half, just from -- impact from coronavirus, is it more so on the supply side or more so on kind of the demand side?

So it relates to the activity taking place and kind of specifically surrounding our supply chains and logistics, fortunately enough we are starting to see a lot of those activities come back online. We by no means are at 100% of where we need to be but I would gauge that we are about 60% to 80% of where we need to be and where we want to be on a go forward basis. As it relates to, how we are considering the coronavirus in our outlook, as you might have imagined, it's pretty dynamic and it continues to evolve every single day. But, we are more focused from an outlook perspective in terms of how this could impact the demand side of things versus the actual supply and logistics. We do anticipate that there could be some timing differences from Q1 to Q2 et cetera related to a supply and logistics standpoint. But, overall, the factors that we are considering and that we outlined are more around the demand side of things.

Okay. And then, last one for me, as we look at the Sierra business and your guidance there, some of this guidance I have to do with more of the launch in some new product roll outs that maybe hitting latter in the year that maybe drive some more growth in that business as we look at the timing, are you expecting it to maybe see more of a ramp or turn to growth in the second half of the year?

Yes. And part of it is that, remember Q1 of 2019 was still a pretty good quarter for us on a year-over-year basis and so the comparables are a little bit tough and that's where we anticipate and continue to see the negative trends that we have experienced over the last three quarters. But also, as you mentioned not only if we had a strong showing, short show with some of the new products that we are introducing for 2020, that will allow the new introductions and also -- they will be available or we will start to ship them out in H2 of 2020. And so, it's a combination of those two factors playing into the overall outlook for Sierra.

Thank you. And this concludes our Q&A session for today. I would like to turn the call back to Mr. Walbrecht for his closing remarks.

Thank you, everyone. We appreciate. At this time, this concludes it. And we would like to thank everyone for listening in today's call and we look forward to speaking to you when we report on the first quarter of 2020, our results later in May. Thank you for joining us today.

And ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for participating.