Clarus Corporation (CLAR) Earnings Call Transcript & Summary

[Audio Gap] that the event is being recorded and broadly distributed via live webcast, which along with today's slides, is accessible at www.claruscorp.com. An audio replay of the event will be available on the website later today. Let me please remind everyone that our discussion today contains forward-looking statements. Actual results may differ materially from those projected in looking statements. More information on potential factors that could affect the company's operating and financial results is included from time to time in the company's public reports filed with the SEC. With that, I will turn it over to Warren Kanders.

Thank you very much, and welcome. Okay. Starting on Slide 3. It is a pleasure to be here to talk about the emergence of Clarus as a pure-play ESG-friendly outdoor business with compelling long-term prospects. Over the past 2 years, we have put together an experienced and dedicated leadership team, and I am pleased to have the team here with us today. First of all, you know our Chief Financial Officer, Mike Yates. Mike has over 35 years of financial management, executive leadership, accounting and M&A experience and joined us in 2021 from IDEX Corporation, where he held multiple leadership positions, including Chief Accounting Officer, Interim CFO and Corporate Controller. I am also excited to formally introduce the 2 leaders of our Outdoor and Adventure segments. Neil Fiske joined us as President of Black Diamond in the first quarter of 2023. With over 20 years of experience as a Chief Executive Officer, Neil brings deep experience in building brands, driving innovation and improving operational performance in outdoor, active and apparel categories. Notably, Neil has led transformational change in the active outdoor space, including turnarounds at Eddie Bauer and Billabong International as well as Body Glove and Dakine. Early in his career, he led the turnaround and transformation of Bath & Body Works. Also with us today is Mat Hayward, who has served as Managing Directors of Clarus' Adventure since March of 2023. Mat has over 28 years of experience in building brands globally, focused on growth. This has included accelerated growth at DC Shoes under Quiksilver, taking the business from $100 million to over $400 million in 5 years, with Deckers Asia-Pacific that saw similar growth from under $100 million to over $300 million. Previously, that was part of L Catterton's Asia-Pacific operations team, placed in 2 of their assets taking 1 for sale. This was as Chief Marketing and New Business Development Officer at R.M. Williams, an iconic Australian footwear brand. Mat also has held senior executive roles at Deckers, Quiksilver and DC Shoes. I am confident that we have the right team in place and encouraged by the steps Neil and Mat have taken to advance our turnaround. We are excited for Neil and Mat to share the significant progress that they have each made to date rebuilding top-level leadership teams, reengage with the customer base and restart the product development pipeline, with a focus on delivering superior product margins. Moving to Slide 4. I will detail the new Clarus, which is anchored by our Black Diamond brand in the Outdoor space that has a 35-plus year history providing equipment and soft goods to climbers, hikers and skiers, as well as our Adventure segment, a global growth platform that includes the iconic Rhino-Rack brand, MAXTRAX and TRED, each of which is geared towards building and empowering an Adventure community. Clarus is now simplified around 2 traditional Outdoor and Adventure businesses, with brands that are leaders in their respective core categories. While we are in the early stages of implementing our action plan and the segment resets are at different points, we are seeing positive signs in both Outdoor and Adventure as we focus on achieving less complexity, better margins and streamlined operations. As I highlighted on our earnings call last week, Adventure is coming off its best quarter of 2023, with net sales increasing 43% and gross margins at a 38.1% rate. At the same time, Outdoor has made progress simplifying its organizational structure, product categories and channel strategy as well as better aligning inventory with the expected market demand. Complementing this progress and following the sale of Precision Sport, we have a debt-free balance sheet that provides us significant optionality to allocate capital for the benefit of our shareholders, which Mike will discuss in a moment. Looking forward, we are positioning Clarus for enhanced growth and profitability but recognize that our strategic initiatives will take time. With that said, reiterating the guidance we provided last week on our earnings call, we expect 2024 sales to range between $270 million to $280 million, with adjusted EBITDA from continuing operations of approximately $16 million to $18 million. We also expect capital expenditures to range between $4 million and $5 million and free cash flow to range between $18 million to $20 million for the full year 2024. With that introduction, thank you for being with us today, and I will turn the call over to Mike.

Thank you, Warren. Great to be here today. We really thank everyone on a tremendous turnout here in-person. It's great to see many of you, who have spend some time. I'm going to start [indiscernible] Slide 5, right, and just a brief discussion around the monetization of Precision Sports, which we completed on February 29 for $175 million. By the way of background, Clarus identified Sierra Bullets in 2017, [indiscernible] strong acquisition targets, [indiscernible] track record of profitability and free cash flow. Our value-added indicatives, while [indiscernible] The business, included targeting Barnes bullets, a highly accretive and complementary bolt-on acquisition to our Precision Sports business. We acted decisively to acquire the brand out of the Remington bankruptcy process in 2020. With the management team built around [ industry ] leaders, we ultimately tripled total bullet output through targeted capital investment and efficiency initiatives. We are pleased to we have unlocked significant value during our ownership period, achieving a highly successful outcome here this past February for our shareholders. Specifically, we believe we've monetized Precision Sports at a highly attractive price of $175 million on a relative multiple basis. During that ownership period, Precision Sports achieved best-in-class EBITDA performance, averaging EBITDA margins of 34% and returned cash of nearly $94 million to Clarus prior to the $175 million that we also received upon sale. I'd like to highlight also during our ownership period of Precision Sports, we utilized $103 million of the NOLs. We've finished this year with $7 million of NOLs, which we expect to fully utilize in '24. Finally, the sale of Precision Sports is extremely tax efficient. As I mentioned during our earnings call last week, I only expect the cash expect the cash -- tax cash is on the sale, the approximate $50 million gain, to be between $2 million and $3 million. Importantly, as we transition our focus to Clarus higher upside, higher multiple business segments that Warren just described, Adventure and Outdoors, we have a significantly enhanced balance sheet. After retiring all of Clarus' outstanding debt with proceeds from the sale, our balance sheet is debt-free, with approximately $43 million of cash on hand. Turning to Slide 6. I'll discuss our near-term capital allocation priorities. A primary component will be reinvesting in the existing businesses to drive profitable growth in 2025 and '26. We are committed to the highest-margin, highest-return investment opportunities. We also will pursue a disciplined bolt-on acquisition strategy, small acquisition strategy in the Adventure space. A good example of what I'm referring to is the purchase of TRED in the fourth quarter. We made a small purchase of TRED outdoors in October of 2023 for about $6 million. It's a bolt-on deal that's included in the Adventure segment that significantly strengthens our offerings to existing retail customers in the recovery board business. Additionally, in the coming months, we will continue our focus on cash generation through continued rightsizing of inventory and growth of our businesses, with the intent of letting cash grow on our balance sheet. Given our cash position after the sale of Precision Sports, we plan to manage it prudently. I'd like to point out that we're getting about 5% interest income on our cash balance presently. At the same time, we will continue to return capital to shareholders in the form of our quarterly dividend. But just to be clear and to reiterate, our plan in the short term is to manage the balance sheet conservatively as we seek to prove out our operating model at each segment. We're also working with our incumbent lender to put a new credit facility in place to further enhance our liquidity and capital resources. More to come on that here in the coming months. With that, I'm super excited, which many of you are waiting for, is to introduce Mat Hayward, our Managing Director of our Adventure business, who will be followed by Neil Fiske, our President of our Black Diamond business. Today is really about their opportunity to explain what they've been up to. They've both been with the business for about a year. And this is a great opportunity for everyone in the room to meet them and share -- hear what they've been up to share their vision and strategies and initiatives for both of their businesses. So without any further ado, let me hand it over to Mat Hayward, our Adventure leader.

Thanks, Mike. Pleasure to be here, everyone, this afternoon. I'm still getting used to the time. Landed here, I think, Friday morning. I'm originally from New Zealand, but I've lived about 20 years outside of Australia. I've got a mixed-up accent. I speak pretty quickly. I'm on a lot of caffeine, so if you've got questions, please follow up with me later on. Before we get into it, a lot of people say what made me join Clarus and the brands that we've got in our portfolio. I've been really lucky in my career to work with some pretty epic Australian brands, Deckers. I've seen the growth of that, great Aussie brand taking to the world; with Quiksilver and DC Shoes and last, R.M. Williams footwear and apparel premium brand. And when I started talking to Clarus about the opportunity, there are a few things that ran true: Most importantly, incredible product, some of the best product in the world in this category. Incredibly strong brands. So if you look at MAXTRAX and Rhino-Rack, the power of the brand and the home market is phenomenal. So with those two things and what I've really enjoyed doing in my career is accelerating amazing products and amazing brands and taking them to the world. And that was really how I saw this opportunity. So today, what I really want to help you guys understand is how we see the road map moving forward and how we're using this platform for the growth of these 3 brands in our business. From a statement point of view, the Adventure segment of Clarus, it's our global growth platform for our portfolio. And you'll see through this presentation a slightly different mindset change in how we're actually integrating and working across our 3 brands for the betterment of growth globally. They're not individuals, so there are shared services, and you'll see that in our organization and how we're using this team to actually grow and define each opportunity by market, by region, by group. Before previously, we haven't really looked at it. They've been very much autonomous brands, run autonomously. And there's a lot of opportunity from a shared service point of view to empower these, depending on the markets. And I'll go into that in greater depth later on. So what's this all about? We believe across the 3 brands and in the Adventure segment that there is an adventure in all of us. And these can be large or small adventures, everyone defines it by their own lifestyle. And our mission is to really help people make space for adventure, be it mentally, physically or both. And this is really important, especially in this day and age, especially after the last couple of years. And we want to empower and really help people around the world take on adventures. And this is with world-ready outdoor gear, born and proven in Australia. And you'll see a few images about what we mean by that. So a lot of people talk about our competitors. And there's a couple of big ones, and we like to kind of make a bit of fun about them. They're very big, and they have incredible product. And it's created in the lab, with guys in beautiful lab coats, in highly dust-free environments. And what makes us different with all 3 of our products? This is our lab, okay? I don't know how many of you have been to Australia, but it's known as pretty much one of the harshest environments in the world. If the snakes and spiders don't kill you, maybe the 40-degree temperatures in the outback will. This is where we build our product. Our engineers are best-in-class, but they're actually on site, and it's built for this environment. This is our quality control. We swear by our quality. So our engineers tried and tested and making sure with all of our partners. MAXTRAX, you don't want to be caught anywhere in the outback or any environment globally with a product that you can't trust. This is our quality control. Before anything goes out in the market, it's actually tried and tested and taken the market by proven guidance. And this is our field test, and this is what makes us different, the ability to have unique product and take that story to market. And this, we always like to say, if it can take you from your house to the adventure and back home in Australia, it can pretty much will do that anywhere in the world. Outside of that, from a strength of brand point of view, there's a huge opportunity. There's a couple of large players in our primary market with Rhino-Rack for roof racks. But as we purchased TRED, when you're looking at the caravan and camping market, there's very large addressable markets. There's large player in the roof rack market. And outside of that, there's a lot of minos. And so the opportunity to really consolidate it and take a very targeted point of view globally is there. TRED gives us a massive opportunity of going to a secondary market of caravan and camping, and you'll see this transition in some of the products that we're going to be bringing to market in the next 2 years. The addressable market there, the growth is there. And again, like I said, this is just about taking some of the world's best brands and products from Australia to the rest of the world. At a high level, just a quick snapshot, we're targeting $90 million in revenue for this year, delivering $13.5 million EBITDA. We have over 1,500 accounts, so that's not retail doors, that's accounts. So for example, with our partners in Australia, some of our accounts have over 500 doors. It's omnipresent in Australia, and our challenge is to make it omnipresent in the U.S. and in other parts of the world. We have our products across the 3 brands, TRED, MAXTRAX and Rhino-Rack, distributed in over 60 countries currently. And when you put the 3 groups together, we have over 200 employees as a group. That's across the 3 regions and 3 brands. One of the exciting things is also with this group and how we're looking at the restructure of the business and the organization is giving a bit of flexibility to our organization and actually taking some of the reliance of the Australian market from a performance point of view. So at a high level, and again, throughout today, what I'm going to walk you through is the evolution across the next 3 years and how we see this playing out. But currently, sales by region, ANZ has a lion's share. Again, it's incredible foundation home market across all 3 brands. The Americas kicking in 25% of that. And the big opportunity is the rest of the world. But to make it really, really clear, our focus is really investing into the U.S. market for '24. And then through '25 and '26, you'll start to see investment into the rest of the world. And we've got great partnerships in Japan and China, fledgling investments, and those are paying dividends already. Our products are turning up in Saudi Arabia and other parts of Asia Pacific. So there is a huge opportunity in the rest of the world that currently is only standing for 10%. By channel, wholesale, very much all the dominant part of our business. And this, again, is our opportunity. When I say DTC, MAXTRAX has led the way here and also Rhino-Rack in the U.S. We have not been online in our key market of Australia, and this is going to change. I'll talk about that a little bit further. This is not in competition to wholesale, but more about empowering them and just actually owning a lot of the communication with our consumer. And lastly, OEM, a vital channel for us. We work with some of the world's greatest car manufacturers and adventure brands in the world. We've been very lucky to work with a new incumbent, so INEOS, with their launch of their new vehicle globally, and this has been a global partnership that's really paid dividends in '23, and it's growing across '24 as well. And that's not just on our base systems. It's actually with our MAXTRAX partners as well. So off the back of our success with Rhino-Rack, we're now going to be kicking off work with MAXTRAX and INEOS globally. We've had great success with Polaris in the U.S., and we see this as being a growing opportunity. And lastly, by category, to help you understand this with the 3 brands, the accessories, that's where MAXTRAX and TRED set. So the way it's consolidated, trays, so Pioneer and all of our tray systems, certain trays, bars, the classic Cross Bar systems, they sit in that category. And like I mentioned, accessories, everything from our tents that are within our Rhino-Rack business, but also MAXTRAX and TRED now get consolidated under the accessories umbrella. And that's why you see the representation of 50% there. So this is our portfolio. Again, I think one of the most amazing things, we've got some of the most incredible brands. Our product is best in class. We just need to help the world understand that, and that's the task for the next 3 years. So Rhino-Rack, like I said, world tested, best-in-class, and we're really evolving the quality in portfolio. MAXTRAX, what you see here, I don't know if anyone is aware, but one of our partners was actually -- they launched -- or they relaunched the Dakar edition of their 911. And this little upstart brand called MAXTRAX was actually a partner, and we made a special edition board for their Dakar. I think they limit this to around 1,400 units globally, and our MAXTRAX borders on top of that. So again, the opportunities, because of our product quality and knowing has been best-in-class in these territories, is evident. And lastly, TRED, our recent acquisition. What this does is open up an opportunity within the accessories market and really from a caravan and camping point of view, really taking that on. It also opens up an avenue of being a white-label partner for a lot of brands globally. They currently are white label for a couple of the big partners down in Australia, and we see this as being a big driver over the next couple of years. The other change is we've been very product focused, so again, working through wholesalers and how they take our product to market. And what we're trying to do is make sure that this is about empowering adventures in different people's lifestyle. So here you can see some of the different kind of activities that people engage in, overlanding, which is at the heart of our brands, all 3 brands; camping, weekend adventures, touring, snow. You name the season, the activity, we are typically relevant and evident in all of those activities. So it really is about empowering all adventures across all lifestyles as much as we can on a global level. In the past, there's been a lot of discussion on creating an ecosystem with our 3 brands and our 3 businesses. And only at the end of '23 and really in '24 do you start to see this come to life, empowering how the products are working together, how the brands are working together. In this picture here, you can see our new tent, which we just launched actually this month that's going to market, in ANZ and in the U.S. And it's the first time that we're launching a tent. So some might say we're the last to market here. Yes, we're quite late. But also, it's an empowerment of our ecosystem. And we've had feedback already from a lot of our partners and big partners, why this is going to be a better product? Well, it's made from a point of view of using our core rack system. So this can get installed pretty quickly, I'm talking 10 to 30 minutes, versus others take an hour. And why? Well, we're talking about how it actually gets used on our rack systems and others. So the accessibility in making products that actually interrelate and work with each other is vital to actually empowering growth in every market. And you'll see this more and more how TRED products and MAXTRAX products and Rhino-Rack products can all work together across platforms. From a base product point of view, especially Rhino-Rack, in the last few years and historically, a lot of our systems weren't interoperable. So if you bought a tray system, the accessories weren't transferable if you bought a claw system. So a lot of the accessories, you can invest a huge amount in to, say, buying an Apple iPhone every season, you have to update all these accessories. Now on one hand, it's great financially, but it also is the pain in the a*** for the consumer, and it doesn't give a good experience. As mentioned, we're really about trying to empower the ecosystem of people's lifestyles. We really embrace, I guess, the diversity that Adventure offers on a global basis, the adventures that they partake in Beijing versus Sydney versus California, they're very diverse. And this is about turning up and making sure we can be part of those everywhere. We are known as having some of the best roof rack systems in the world. But historically, we haven't been strong in either bike or luggage racks, and that's changing in the next couple of months and also in the next couple of years, really stepping in and building out our product portfolio to make sure we empower our base systems. You can see here on the bottom left, Trade. This is important to call out because Trade has kind of, I guess, a split personality. There are tradespeople which is a huge market on its own. So if you think of fleet vehicles and empowering huge companies worldwide to actually get their fleet vehicles set up to be able to actually undertake all different tasks, that's a huge business. In Australia alone, it accounted for between $8 million to $10 million historically. But with the change over the last couple of years in strategy, we actually kind of parked that to the side and focused on overlanding. And you see a course correction as well that we'll talk about. This is a big opportunity from both an audience, the tradespeople themselves, but also for fleet vehicles. This is the growing opportunity that we're going to focus on. The other thing I really want to bring to life here is we've got historical products that have really done a great job, best-in-class and really delivered great results from an ANZ point of view. And what we're accelerating is our new product development. So at the top here, just some examples of some of the areas that we're going to be going into in '24 and beyond. So top left, you see MAXTRAX boards, for the first time, going from 4 wheels to 2. So one of the fastest-growing categories in the world for motorcycles are adventure bikes. And a lot of you may think, "Well, why do you need a traction board for a motorcycle? Can't you just whiskey throttle and get it out of the mud?" Well, these bikes are quite considerably heavier than dirt bikes and farm bikes. So we've been asked by consumers to look at this opportunity and help them with it. And again, it opens up a brand-new opportunity from a customer and a retail point of view. Next to it, just being able to look at accessories, so going into all their periphery accessories that go with the recovery trip. We recently launched first aid kits, also for Australia, snakebite kits, quite relevant to the local market. But again, just expanding on the success and the ownership of our customer. There you can see -- so this is called the Moto aptly named the Mega. So a huge opportunity from an industrial point of view. Farms, mining, we're getting asked to actually help a lot of the different industries. We work with military around the world. We work with a lot of industrial partners. And we're getting asked to actually help them empower their vehicles with our same system. The board you're seeing here, it's [ morphed ] up. It's probably about my height, which isn't hard, but it's a different take on the recovery system. And then going to accessories. So you can see some opportunities for storage and then campsite chairs. Again, this brand has got incredible engagement with consumers around the world, and it's just taking it beyond the board, so to say. In the middle, Rhino-Rack and kind of the foundation, a lot of this growth. On the left here, you see a brand new platform. This is our Pioneer 6, so you probably know it from a roof rack point of view. Our trays are Pioneer. It is a flagship franchise, and it's been incredibly powerful from an ANZ point of view. And now we need to make sure that we take that platform to the world. And to do so, we've introduced a new platform specifically developed for American vehicles in partnership with our American team. This will be launching in the middle of this year. And again, one of the opportunities here that we have with OEM is working closely with key partners, and this will be on launches, the new Land Cruiser. I don't know if you've seen, it's making a return to U.S. shores after many years being kind of out of the market. And this is almost like an Australian champion coming back into the market, and it will be with new products. On top of that, we're very proud to introduce, and I'll take you through the evolution of our Cross Bar system. This has been probably one of the foundations of Rhino Rack, but it comes with a degree of complexity, trying to fit all the different roof types around the world, it's a mathematical equation. And sometimes, it has inventory impact. So I'll show you how we're going to handle that, but also cater to the multiple fits. And lastly, just luggage boxes and tents and other accessories, our recent kind of brethren in the family. So TRED, we're actually going again. So the opportunity of owning more of the activity at the campsite. Chris Roberts, who is the current GM of the business, he called this the last table you'll ever need. And the idea of this is it's fully plastic. It's circular, so the ability to actually, if it breaks, use it, you can recycle it and turn it back into it's source. And it's modular, so when you turn up, height adjustable, you can click in the storage box that we've already launched, and there's going to be other accessories that allow it to have modular use. This is a tire deflator, a very simple one, and then we're making additional storage boxes. So the storage box launched this year. And again, we'll be pushing hard into many of the markets. So again, NPD is going to fuel quite a bit of the growth in just going from our core product and actually helping empower all the different lifestyles that we have. And this is the best way of looking at it. In the past, we've been known as having the best fit in the world. So it's been a focus area of ours. If there was a vehicle out there, the chances are that Rhino-Rack could fit it. But typically, what we do is we would find the fit and then we'd sell you our Cross Bar or our tray system, and that's where the relationship stopped. The average vehicle ownership, it's pretty consistent between key markets, ANZ and U.S. It's around 10 years. I'm not talking about those who are lucky enough to turn the car every year or every 3 years, but the average car life cycle for ownership is about 10 years. We like to think that our product has a 5-year run cycle, so we'd like to evolve our key systems every 5 years. So if you start looking at the math of this, you can start to look at what is the lifetime value of our consumer proposition, and no one's ever really kind of looked at it that way. So if we can focus on the fit and how often new vehicles are coming out, if we're going to empower the sale of the system, be it trays or Cross Bars, and then actually link that to an accessories world, that really drives seasonality. So if your family is into skiing, if it's into camping, does it go from the winter or skiing into surfing and SUP and other water sports, we've never really focused on being able to go with you on that journey and power an adventure life cycle and adventure, I guess, lifestyle. And so this is really an opportunity to look at what are the opportunities to actually own more of that customer relationship through their different adventures. And that's what we're really kind of focusing on the next couple of years. Just to talk about the complexity I raised earlier, we call it raising the bar. And again, this is just giving you a little snapshot about some of the operational muzzle that we're bringing to the business. On the left, so this is our classic Cross Bar systems. And for those who know cross bars and roof racks, you typically have your legs and bars and the fit. There are 5 different roof types that operate. So it's quite complex from, raise rail, flash rail, gutters and beer. So you can imagine what you need to do in terms of empowering that from a product and inventory point of view. And on the left here, you've got our current state. So we offer 4 different bars currently and 4 different types, and that's for weight and trade and so forth. Mounting systems, we currently have over 180, and that's how we actually link those bars, from a leg and fit point of view, to the vehicle. And fit kits, over 600. That creates over 11,000 fits, but it also creates a large amount of supply and demand planning and inventory management. And that hasn't necessarily been one of our, I guess, great strengths as a business, and that's where we're really leaning it. So from a future state point of view, we're evolving to 2 bars. These are 2 new bars. They've got greater strength, rigidity and functionality. There's more adaptability by accessories. We're going from over 180 different mounting systems to [ 10 ]. And this is again, where our engineers are really stepping in and creating an opportunity of having more mounting points, more accessibility, more use, but reducing the complexity. And then this empowers over 530 fits. And what we're doing is basically 80-20 rule. We want to be relevant for the top 80% of our consumer vehicles. but at the same time, reduce some of the complexity that's existed in the business, really try and simplify it. And this is really important when you go -- when you think that over 90% of our business is with wholesalers. So we released this to them, and then it's up to them to take the story to the consumer. So you're handing over in good faith that this complex story can make it to a consumer and they understand what they need for their vehicle and that year. And what we want to do is help empower the this, simplify the story, but also from an online point of view, make it easier for everyone to understand what's needed for them and what other systems they can use. From an operations point of view, this is really important as well, and I'll touch on it a little bit, but at the moment, one of our roof rack, cross bars, when I first joined, I was asking how our operations and supply chain works. So 2 of the main markets that we're delivering production from is Australia and China. The complexity is that there are a lot of components currently getting made in Australia. We then ship them to China. They then get added to components there, and we then ship them back. So again, really looking at the efficiency of the supply chain, where they're made and with which partner and how to simplify this whole global supply chain is a big focus in 2024, just removing the complexity and the double handling and the costs involved in some of this product. From a customer point of view, when I talk customer, I'm talking more of our B2B partners and consumers, our end users. So this is how we look at our consumer. And we've got 4 main groups, the overlander, and you would have heard that quite a bit in the last couple of years. Just to be really, really clear, this is still our bullseye. And the best way of thinking of it is it's a heartbeat. It's that classic guy who go -- who heads out and really takes on the most extreme adventures in their 4-wheel drive vehicle. This is still at the heart of the business. The only difference is it's not our business, it's not everything. It's a great part of it. It drives a lot of the aspiration. People see these incredible advantages that people take on. And then we drive to our local trade store by timber for the weekend. So they are still our priority bullseye. But added to that, we've got our tradesperson, our weekend warriors that heavily involved in different seasonal activities, biking, kayaking, snow, the family traveler. When we focused on overlanding in the last couple of years, we ignored Subaru drivers. So we stopped looking after them from a fit point of view. There's a lot of those in a lot of markets. It's actually one of the best-selling vehicles in both New Zealand and Australia. So again, making sure we're really empowering the family traveler. And then on the local level, we've got the sportsperson very focused in the U.S. We don't have a lot of hunters typically in Australia and New Zealand. Firearm laws are a little different down under. But again, the sportsperson and really being able to empower them, our partnership with Polaris is really looking at that. And then we've got a huge market in Australia called the young explorer. And this customer is basically, they've inherited, therefore, drive from their mom and dad, and they're using that. So it's probably a 10- or 15-year-old vehicle. So these are the consumer groups that we're going after with all 3 brands. And again, just being really focused on how we empower these consumers through our wholesale partners, but also product getting built for these groups. It hasn't really been a focus in the past. We have 3 regions. We have 3 brands, and we've got one global platform. What I mean by this is, historically, you had 2 different entities, so you had the U.S. team and you had the ANZ team, and they offered pretty much in silos and independent of each other. I joined, and when I joined in March, I was the MD for ANZ and International, and it's where the engine is, it's our product development, our engineers, our IT infrastructure, our operational infrastructure, but it's very separate to the U.S. And one of the key things we did is integrate the business. So in July, I took over our global operations. And again, that's looking at creating our first shared services team. So now we have one shared services HQ empowering operations, finance, IT, all of the back of house and then empowering 3 new GMs. So we have 3 GMs running our 3 regions, focused on ANZ, rest of world where the predominant focus is on Asia and Europe and then North America. And you can see here, just to call out, this is all about how to accelerate growth in North America, how do we really empower this market with a huge opportunity, especially from a vehicle and activity point of view, and taking the great knowledge from down under. Like I said, rest of world, it's unlocking opportunity. It's a distributor-driven business at the moment, and we have great partners in a huge amount of markets. The other thing to call out is when I first joined the business in March, so it's 1-year anniversary, I was 1 of 4 people sitting around the leadership table, okay, just to give a perspective. So obviously, there's a lot of change from a family-owned business, and again, just the times of life and what we're looking for to take on the world. When I joined, so what's called out here is our new leadership team and the background. In this team, we have diversity. We've got 3 individuals who have worked internationally. When I sat around the table, there were only 2 of us who have worked outside of Australia. And again, just bringing that experience to the table to take on, growth in China, Japan, Saudi, Philippines, the U.S., opportunities in Latin America, there just wasn't a muzzle on their experience. And now we have a team that can really take on these opportunities and actually build global supply chains. Our Head of Operations has backgrounds in Venezuela, working with the likes of Estee Lauder, very complex organizations with large SKU counts. And again, this is all about building the right team, so the right people with the right process and really overhauling our business in totality. Here, you can also see a focus on shared services, so all of our key back of house and empowering 3 regional leaders. And this is a big change for the business. Before you had the ANZ team and the U.S. team kind of working autonomously, and it really wasn't looking at empowering the front office. So a lot of work done to really focus on making sure we've got the right people sitting around the table. I want to spend a little bit of time just talking about some of the challenges and again, owning them as a team and how we are overcoming them. So the last 12 months, there's been a huge amount of change. And I think you can see it in the results. Again, I think 2023 is the tale of 2 halves, as I like to say. And the second half of the year really kicked in from a performance point of view from ANZ. Our leadership team was lacking integration. They worked autonomously between the 2 regions. We didn't have a really clear vision, who do we want to be? How are we using these 3 brands? How we're going to take on the world and the opportunities? There wasn't a lot of direct experience, as I mentioned. And what we've done is make sure we've got a very diverse best-in-class management team and really looking at overhauling that. And again, without the right people, you won't have the right product, you won't have the right process and you really won't be going anywhere fast. We had a very rigid focus on overlanding. So when I joined, overlanding was literally our key market. That's what we're going for, and we quickly rightsized that. Now like I said, overlanding is still very important to us. It's the core of our brand, and it's the aspirational kind of, I guess, North Star, but it's not everything. It's a bit silly to say we're only going to focus on 4-wheel drive vehicles, and we're not going to look after the other 90% of vehicles that people need help and empowerment with. So we quickly rightsized that. And a good example, historically, we've done over 250 fits per year. And what I mean by fits is that's how you're connecting our product to all the different vehicles and all the different makes and roof types around the world. During this period of time where we focus on overlanding, we reduced that to under 90. And just to help you understand why this is important, if you don't get the fit for the vehicle and you're not having that, I guess, offering, you're automatically reducing your revenue opportunity. Less fits, less systems that you can connect with vehicles, less accessory sales, less platform sales. It's a really simple math. So we quickly rightsized that, and we're ramping fit-up across '24 and '25 and getting back on track. Multi-brand is centralized. So when I joined, we wanted every business, every brand to operate individually. And I think there was a fear that you would dilute the brand facing customer and consumer. And what we've done is make sure that we've created an integrated shared services team. And what this means is we're not having to hire duplicate roles and experience in every single brand and every single region. So we've got a shared services group, and that empowers all 3 regions. And also, we're looking at the cost savings of this integration. So things like warehousing. We're shipping to pretty much from all the same customers across MAXTRAX, Rhino-Rack and TRED, all the big key accounts. You imagine if you're a key account of ours and you're getting a shipment from MAXTRAX from one warehouse and at the same time, another container will turn up from Rhino-Rack. So again, we're trying to think of how to make their life easier by our back-of-house operations. And also multiple sourcing points. A huge amount of '24 will be focused on our global supply chain, reducing the complexity, finding better partners, ramping up quality. Going across the 3 years, we'll be looking at how to actually get manufacturing closer to source. So as we focus on U.S., are there opportunities in Mexico? Are there opportunities in Europe? Reducing this unique mix of Australian and Chinese supply chain, where we're shipping products all around the world. There was an interesting data point. My team said that for the RX 200, which is a brand-new Cross Bar system, the parts traveled 190,000 miles before we actually got them to the consumer. While that's a great number, it's also not something to be proud of. So again, how do we reduce that complexity? And how do we make sure that we're looking at the best product in the world with the best performance and margin upside? So giving you a view into our road map. Like I said, '23 was really all about stabilizing and resetting the business, strong leadership team and looking at how we make sure we deliver our numbers. Not really, if you heard my background and what I've done from a, I guess, a past career point of view, I don't have the luxury of a J curve. Give me 2 years, and I'll get us back on track, no. This is make sure we're hitting our numbers every month, every quarter and at the same time, overhaul the business and get it to, to where it needs to accelerate the next 3 years. That's what this is all about. And '23 was a great kind of kickoff for that. So rebuilding the organization, literally overhaul the entire leadership team, focusing on 3 regional GMs that can empower decisions from a customer and consumer point of view. As we head into '24, we're looking to ramp up both revenue and EBITDA. And again, this is looking at finding sustainable growth and heading towards our '26 targets of 20% EBITDA. And again, how are we doing that? I'll go into the next slide, but here, it's making sure that our structure, our product development and our operational muzzle really helps deliver this. An anecdote here, when I joined, there was no product plan. So we created the company's first 3-year product plan for Rhino-Rack. You can imagine without that, some of these products take between 2 to 5 years to develop, from an engineering point of view. So if you don't have a 3-year product plan, it's very, very hard to get you a supply chain to actually plan that out. And so for the first time, from an Adventure segment point of view, every single brand that we operate has a 3-year product plan that's giving us a vision to allow us to actually create the right supply chain for each region and each market, and this is vital. That's where you see the underlying performance go take us from just over 13% EBITDA to over 20%. And again, looking to deliver almost a doubling of the business in the next few years. Now some people might say that's ambitious, but I'd also like to remind everyone, at some point, the U.S. just a few years ago, accounted for over $25 million in revenue. And they didn't do that last year. So we're not being overly ambitious. We're not being overly aggressive. It's just about taking our place back at the table and being more efficient. A lot of the pain that we suffered from a revenue point of view, we did to ourselves. We removed fits, which is the natural enabler of revenue and growth. It empowers additional sales and also a bit more opportunity with customers. Once you have your rack, you can sell additional accessories, you're going to power MAXTRAX sales. So when you reduce the fit, once again, you're just removing that. How are we going to -- how we see this building up? So here are some of the key building blocks? And again, I'd love to say everything is happening at once. I do have challenges of impatience, personally. But again, these are all sequential building blocks that we need to deliver to '23 really around the leadership team, creating our global HQ for the first time ever and what that means from a supply chain point of view, operations, IT and systems. The acquisition of TRED and like I said, the reason this is so exciting is it actually gives us the ability to go into a new category for us, RV in camping. It's a huge market globally. And I've gone in there with their storage box and some of the leveling ramps. Leveling a ramp, if you turn up at a campsite, it's how you rightsize your vehicle to make sure that if you've got a rooftop tent, you're not sliding out of the door overnight. And again, this is allowing us to go into white label. In ANZ, we do white label manufacturing for 2 of the largest retailers down there with their own private label boards and businesses. So we see this as an opportunity of doing this globally. If we can find our partners and work with these great wholesale partners we've got globally, white label can be a really great empowerment. What it also allows us to do is have good, better, best pricing. So Rhino-Rack and MAXTRAX are typically known as being the best from a product standard point of view. We've got premium pricing. And what MAXTRAX and TRED will allow us to do is have a good, better, best structure, so we can offer more products at different price points for different consumers and different wholesalers. And like I said, the first 3-year product plan. Going into '24, the integration of Adventure operations, and this is where we bring all 3 brands together, the different teams and look at manufacturing globally. You imagine when I joined, you've got a different product team running all 3 brands. So you've got engineers in each one of the businesses, working with a whole different group of developers, different -- working with a whole different group of suppliers. But at the end of the day, a lot of the materials are the same, you're talking about plastics and aluminum extrude. So how do we really empower and find a solution to that? The investment into the U.S. kicks off in '24. And this is across every facet of the business, brand investment, people were ramping up and really making sure we've got a really strong team. We've got a great group of people there and we need to wrap them with arms and give them a bit more support, product specifically developed for the U.S., marketing investment. Our brand awareness in ANZ is upwards of over 60%. I think a lot of people who make it to Australia, no surprise, literally every second car has a Rhino-Rack on its roof. The target is to do that in the U.S., that's what we need to do. Digital transformation. Now I want to be clear, this doesn't mean we're taking on the world from a website point of view and e-comm. This is every part of the business, digital empowerment and our use of data. So you've got 3 different businesses with different systems, working on different ERPs and also nonintegration of our financial data. So it's just cleaning everything up from a digital point of view and making sure we're really driving the opportunity of how we use data real-time to drive better decision-making. And saying this, yes, we are pushing into e-comm. Why? Well, we need to help build the brand for consumers for all of our wholesale partners. If we don't do our job, we're relying on them to do our sell-through. So this is another part that we have to kind of really, really push. Our global supply chain, that's kicking off in '24. We're overhauling our entire operations, looking at finding partners closer to source, as I mentioned. And lastly, MAXTRAX and TRED, some of the products you saw in the NPD pipeline. It's their first ever 3-year product plan. The Mark II for MAXTRAX is an incredible product, but it's now 13 years old. It's still delivering a huge amount of revenue and enjoyment for customers around the world, but it needs some help. And where's is Mark III? Is Mark III coming down the pipeline? So this is what we're really trying to address. As you head into '25, we transitioned into further investment into the rest of world, and this will be done looking at very, very tactical kind of, I guess, opportunities with our distributors. So at the moment, like I said, we signed up a new partner for Rhino-Rack in Japan. Last year and this first year, did over $1 million. This year, it's jumping to $3 million. So that's an area that we'll look at investing. We just invested with our partner there in a trade show in January to make sure like, how are you turning up? And do we need better product? And are our fits relevant for your vehicles? So everyone might know, there's a different size of vehicle class in Japan. Their trade vans are slightly different from the U.S. ones. Are we making fits and systems for them? So this is an opportunity as we invest in the rest of the world. The investment into the U.S. ramps up continually through '25 and also brand investment. It's -- no one wants to be the world's best product that no one ever hears about, and that's the challenge outside of ANZ, really making sure we're investing in the U.S. with our wholesale partners and our consumer. Global supply chain transformation continues. And again, investment into DTC continues into '26. We're really evaluating what does that mean, how are we really supporting our wholesale partners with installation? That's one of the challenges. Like we've got this incredible mix of product, and one of the confusions that can happen when a consumer turns up, "What product do I need for my vehicle across all the opportunities?" So we're looking at ways of making it better both digitally and also within the retail space. So very quickly from a highlight point of view, investment, cleaned up, an integrated org structure, and that's already paid dividends at the second half of '23. This allows us to actually scale and look for efficiency across the team, but also focus on the regions. So not every region is worrying about their IT system and their supply chain and their brand calendar and marketing investment, that's all taken care of. And they focus on how they treat and look after customer and consumer, how are we actually empowering the growth of that? Brand recognition in ANZ, like I said, I wish we had it everywhere, it would be a different story. And that's our focus, how do we make sure that we take that brand strength from ANZ and translate that across international markets? Category-leading brand portfolio, we have some of the world's best product. Our Pioneer is one of the best trays in the market. We've even had people try and copy us and get us out of their retail trades. And then, in the end, the they have to take us back because we drive traffic, we drive customer engagement. We need to build on those franchises, and you see that now. For MAXTRAX going to be on the board, for example, people love the brand. There's so much opportunity beyond our core board. And then again, from a U.S. point of view and an ANZ point of view, we've got some of the world's best retailers in our portfolio. We've got some of the world's best brands, from an OEM point of view. We have not done a great job focusing on those and how we look at working -- with which OEM and which market. And OEMs are complex environment, like products that could take 2 years, end up taking 5, managing that and really making sure that it's paying dividends. And again, one of the most important things I want you to take away is '23 was a great second half. We really set ourselves up to start acceleration into '24 and '25. The goal is to double the business over the next 3 years. But it's not doing it in any other way than leaning on our franchise products, turning up in markets in a better way, making sure there is brand awareness and again, having the right people to do it. And we like to think that, again, if we can do half of that and we can actually help inspire people to take on an adventure with our product, we'll be able to deliver that and more. And the goal is, like I said, quarter-on-quarter, month-on-month, deliver the results as we're ramping up all of this new product and a change in the business. So on that note, I'd like to introduce my running mate from an Outdoor point of view, I'm going to hand over to Neil.

Sound check here, everybody hear me okay? Great job, Mat. It was awesome.

Thanks, Neil.

So it's been about a year since I've been in this seat. I thought I might give you a little bit of background on my journey here. I've been the CEO, President for almost 20 years now. The true line of that time has really been about finding great brands, where the underlying business is either broken, not optimized and then fixing [indiscernible]. I did a turnaround -- first turnaround was at Bath & Body Works in my career and then Eddie Bauer, Billabong [indiscernible]. And then when this opportunity came up [ I went in ] all the way back to a very formative experience for me back when I was running Eddie Bauer in 2007. On my first climb of Mount Rainier, the most glaciated peak in the Lower 48, on a late September day, where the weather pattern was such that it was very warm during the day, very cold at night; and so this nice, soft snow that on Mount Rainier had to turn to pure ice. And frankly, I was in a little bit over my head on this climb. But I got up and I got down, I got up and I got down, and I looked at my gear. We had Black Diamond crampons, Black Diamond harness, Black Diamond helmet, Black Diamond headlamp, Black Diamond ice axe. And I said to myself at that time, "That is a great brand. If you ever in your career, have a chance to go work for that brand, jump at it." So thankfully, that opportunity came along, and I'm thrilled to be here. And this is a brand with incredible history, heritage and potential. And I think that, like me, one of the things that makes this brand so unique and special is that we deliver product to people doing activities of great consequence. Their life literally is placed in our hands. And when you have a brand like that, the bond between the consumer and the brand is next level. And is that consumer bond at the end of the day and the equity that comes from it, that we're going to grow upon. So Black Diamond, most of you know this, worldwide leader, an iconic brand, incredible history, going all the way back to really the origins of American rock climbing in the U.S. and around the world and a great mountaineering heritage as well. In fact, you can't really tell the story of the growth of American climbing without telling the story of Black Diamond. We were founded in 1989 by Peter Metcalf, who was at the time working under Yvon Chouinard. And Peter had a great quote, he actually had 3 or 4 brand-defining quotes that still guide us today. And one of them was the "Best days of climbing are in the windshield, not the rearview mirror." And the story behind this quote is quite interesting because he and Yvon Chouinard have been working together for a long time in Chouinard Equipment. And they got to the point where Yvon Chouinard said, "Geez, the golden age of climbing has come and gone." And Peter took the opposite view. He said, "No, actually, the best days of climbing are ahead of us. They're in the windshield, not the rearview mirror." And that statement has always been a call to action for those of us at BD to be progressive, to push the boundaries of sport and to redefine it to keep it modern and relevant. And we play in an incredible market. The outdoor market, in general, is a great market. Notwithstanding the ups and downs of the pandemic surge and the post-pandemic contraction, this is an industry powered by long-term tailwinds, with a tremendous amount of white space. And so how big is the market? So a couple of different estimates of the size of the global outdoor industry in the categories we play in, ranging from $40 billion to $60 billion. So if you take $40 billion of that, there's a portion, about $0.5 billion, that's really in that technical rock climbing space, then a bigger portion when you start to broaden climbing to things like gym. But then if you look at the growth of climbing overall in all the categories of climbing, while the overall outdoor market is projected to grow at 5.5%, climbing as a discipline is more than double that at 11.5%. When we look at the market, we see opportunities, white space in categories, in geographies and channels. When you break that $40 billion to $60 billion global market down in terms of regions and categories, you start to see some pretty striking opportunities for Black Diamond. The regional split, APAC, North America and Europe, comprise about 85% of the whole market, and they're roughly split equally, so about 1/3, 1/3, 1/3 of that 85%. When we look at our business, we're heavily skewed towards North America, a good Europe business and tremendous opportunity in APAC. And if you slice that global market by major category, 55% of the market is apparel, about 25% of the market this footwear and about 20% is equipment. So we have tremendous opportunity in apparel. We dominate in equipment and will be a very niche-focused player in footwear. But when you add all that up, tremendous growth opportunities for Black Diamond by region, by category, by channel. From a consumer standpoint, we think about participation and the growth of participation in our core sports. And this is U.S. data, there are about 10 million climbers of all disciplines from rock to big mountaineering. The snow category, ski and snowboard, about 26 million participants. Our core of that is about 4 million backcountry skiers, people who go off [ peace ], like the soft snow. But then there's a halo into the bigger snow sports market because people want to look like they're backcountry skier, even if they're skiing in the resort. Trail run is a huge market, 12 million. It's one of our core sports participants. You can see this giant circle, the most demographic part of the market -- most democratic part of the market for us, which is how you can track 50 million participants annually in the U.S. So where are we today? A snapshot of BD. We are about $185 million projected in 2024. That's actually down a little bit from 2023. And one of the terms I don't like is this idea that we're shrinking to grow. In fact, it's -- our strategy is just the opposite. It's focus to grow. We think we have tremendous opportunity to grow this business, but we have to narrow our focus to do fewer things bigger and better. We'll generate about $15 million of EBITDA this year through 9,000 retail doors and 60 countries by about 390 employees worldwide. If you break the business down further, you can look at it three ways. By region, north America is 65%; EU, 25% rest of the world, 10%. So again, if you think about the global market, 1/3 in North America, 1/3 in Europe and 1/3 in APAC. You can see that we have opportunity to grow in Europe, and we have enormous opportunity to grow in APAC. Sales by channel, 75% wholesale. D2C is 15% and growing quite quickly for us and quite profitably, by the way. And our distributor markets that we call IGD, is 10% of our mix. Then when you break the business down by category, our segment we call mountain is our biggest, 40%, things like trekking poles, lighting, packs. Climb is climb equipment, harnesses, helmets, carabiners. Apparel is about 20% of our business today; ski equipment, 10%; and footwear, about 5%. Across that portfolio, we have the #1 or #2 position in a lot of our core categories. And naturally, you think of climb, helmets, carabiners, harnesses, protection like cams. And for sure, we have 40%, 50% market share in those core categories. But what you might not think about immediately is where we're #1 in the United States in headlamps and trekking poles and all those things that expand into that big bubble of hike and trek. And we are, in the U.S., 40% of the trekking poles market, we're 2.5x the size of our nearest competitor in the U.S. In headlamps, we're 55% of the U.S. market, according to NPD, again, about 2.5x the size of the nearest competitor. Really important point. Within this very diverse portfolio that Black Diamond has today, we have incredible positions of strength, franchises. And our strategy is to focus on those positions of strength, double down on them and use them to propel the growth of the company forward. Great thing about Black Diamond as an equipment company is it travels very well globally. This is truly a global brand with global reach, whether it's our athletes, our expeditions all around the world. The culture of climbing is really a tribal, global culture. And so the brand moves very well and really needs no translation country to country. In terms of how we approach that, we have market setup in North America, market setup in Europe. And through the rest of the world, we reach our consumers through 21 distributor partners. Team. So a lot of work has gone into rebuilding the Black Diamond team. I call it the Black Diamond great renaissance of talent, and it's been pretty remarkable over the last year. The number of people that have wanted to come back to Black Diamond, who have been associated with the brand over the years, really a testament to the optimism and conviction that people have behind the future of this brand. Our Creative Director is a BD rehire, who was at Black Diamond for about 5.5 years, went off to be the Creative Director of Under Armour. And when he saw what was going on at Black Diamond, he said I went back Kasey Jarvis, an enormous brilliant creative talent. We're thrilled to have him back at Black Diamond. Likewise, our Head of Product, Doug Heinrich, was with Black Diamond all the way back to the Chouinard Equipment days and was with Black Diamond for many years, left to go be the Product Director at a fast growing Mountain brand called Cool in a good place. And we said, "Hey, come on back, there's something big happening at Black Diamond," and Doug came back. Between Doug and Kasey, if you go back to the origins of the great innovations of Black Diamond over the years, one or both of those individuals will have had their hands on those industry defining breakthroughs. So it's incredible get for Black Diamond to have those guys back. VP of Operations, been here 20 years, VP of Marketing and Digital. We hired from Armour, he has been here about 2 years. Superstar really young up and coming guy. Our VP of HR has been with us more than 20 years. And our VP of Sales as part of the great Black Diamond rehire talent renaissance, named Heath Christensen, and Heath was with Black Diamond running North America sales for 15 years. Got recruited away to run sales for Cotopaxi. Very happy in his job and we got them back. He said, I like what's going on at BD, I want to be a part of it. And as soon as we brought Heath back, you could see our accounts turned on a dime like there is something happening in BD, by getting the very best talent back in their seats. And then our GM of Europe, Stephan, has been with us for 10 years, and he does a great -- he's a great operator, does a great job in growing Europe. And I think certainly the person that can capitalize on the opportunity in the European market. Put all that together, not everybody on the management team has changed. We've kept some important points of continuity. But there's been a great talent influx. The team has changed dramatically and we've come in together very quickly. One of the things that brings us together as a team is the specialness of this brand. And I've worked on a lot of brands over the course of my career. And frankly, there's something different about Black Diamond, something intangible, something about its soul, where we came from that puts it in a class by itself. And all of us on the leadership team are attracted to that history, that heritage and that future. And we all feel a tremendous sense of stewardship to take the brand to its full potential. How do we do that? We do a little bit of look back to respect the past and our history and heritage, but then think about how do we modernize that and take it forward. How do we look through the windshield and not just the rearview mirror. But to look back real quickly, a lot of you know the story, but Black Diamond actually was an outgrowth like Patagonia of a prior company called Chouinard Equipment, founded by Yvon Chouinard. At about 1989, Patagonia split. Black Diamond took the hard goods business, Patagonia took the apparel business. But Peter Metcalf, our Founder, worked under Yvon Chouinard for many, many years. He is through and through, still amuse, our inspiration, our North Star. One of the things when you have a founder story like we have and Peter Metcalf, it keeps people grounded on the values of the brand, the things that have defined us and the things that need to keep us pointed in the right direction. And Peter has a couple of, I would say, foundational sayings, expressions that are used from the beginning. One of them is our mission statement, which is to be one with the sports we serve and he would say, and absolutely indistinguishable from them, we shorten that down to one with the sports we serve. And then he was also quite an advocate of protecting the environment, promoting access to public lands, sustainability, inclusion, diversity, long became -- long before they became popular topics. And his quote was, this is more than a business we're here to make a matter -- to make a difference on matters of great importance to our community. So if you say, we're one with the sports we serve, and that's a guiding statement. Then the next question is, what sports do we serve? And this is where I think maybe we've drifted a little bit over the last 5 years not being clear on who we're going after, what sports are in, what sports or out. We've really narrowed that down to 4 core sports. Climbing is at the center of everything we do because it's a history of the brand, our origins, our bloodline, and it also very nicely links to the concentric circles out to scheme out nearing backcountry snow, training in the mountains for climbing through trail run and even approach is really a form of hiking and trekking. And so climbing, sort of the core of this brand connects all the way through the concentric circles of the sports that we serve. And I'd say one thing on climbing too, because climbing can mean a lot of things to a lot of people. We believe that by focusing and doubling down back on climbing we have an expansive opportunity ahead of us. Because climbing can mean climbing in the gym, bouldering outside, trade climbing, sport climbing, ice climbing, climbing 8,000-meter peaks, mountaineering like climbing Mount Rainier. When you put all the types of climbing together, it's a huge market. And when you look at those brands that have grown over the years to be big brands in our space, whether it's Patagonia or Arc'teryx or North Face, it's because of their reach to the top of the mountain that has created product franchises that become consumer staples. So climbing is an enormously powerful growth opportunity for us. And it legitimizes everything else that we do, it halos everything else that we do. Once we said we're one with the sports we serve, here are our 4 core sports, then it's like, okay, within the sports, how do you think about consumer segmentation. And as you all know, segmentation is a way to unlock growth. So we think about segmentation of consumers, segmentation of product, segmentation of channels and very disciplined about how we approach those different segments. So on the consumer side, we go from outdoor recreationists, more of a casual user all the way up to the Pro Athlete, Alex Honnold, and Free Solo, and everything in between. That then translates to a product opportunity for those entering the sport, those who want to get better at the sport, and those who are close to mastering it or accomplishing things for the first time. So really not good, better, best in a traditional sense, but an opening price point, entering to the brand, a trade up to a better skill level and better product and then mastery of the discipline. And then lastly, that translates into a distribution pyramid. Specialty accounts at the very top, along with our D2C, the National Outdoor. And then some very exciting opportunities we have to take certain categories like lighting into lateral channels of distribution because the consumer will want to buy them from Black Diamond versus somebody else. And I think this is really important to pause on because maybe in the past, there has been a time in Black Diamond's history where we've just focused on the top of the pyramid, being sort of a bad ass brand for elite athletes. And we still are a bad ass brand for elite athletes. But now what we're doing is systematically filling out the pyramids of growth underneath those positions. So an example of that, if we take our 40% market share in the U.S. in trekking poles and say, how do we continue to build on that business? We think about this consumer pyramid and then we think about product franchises that speak to each of those segments. And those franchises are distance franchise, our pursuit franchise and our trail franchise. So the trail as you might expect more of the casual person looking to get out and enjoy the outdoors but do it safely. Pursuit is a step up from that, more objective based, I want to climb this mountain or cover this much territory in a certain amount of time. And distance is really the elite athlete that wants to climb the mountain up and down in record amount of time and move very fast and light. And our corresponding product line then does translate to a sort of good, better, best, but really driven from a consumer need perspective. Our trail back pole at $89, our Pursuit FLZ, Z-pole, which we created and invented $159, and then a super light distance carbon pole that weighs like a feather if you're moving fast and light at $209. And by the way, this season we brought in even below the trail back line and explore line of poles starting at $59. So we've really taken a category that we own. We segmented the market. We've kept the halo and our permission to play, but we've broadened that demographic dramatically through this approach to segmentation. So that's the journey from one with the sports we serve, what sports do we serve, what consumers do we target within those sports to, okay, let's get down to creating amazing product for those consumer segments. And the one thing that I would say has defined Black Diamond above any other company is this marriage of beautiful design and superior engineering. Analogs, you could think of Herman Miller, for example, in office furniture, beautiful design, superior engineering or Apple in electronics, beautiful design, superior engineering. A thing about a Black Diamond product is it's not only going to give you the best performance, it's going to have the best aesthetics, look and feel and the best emotional connection. And you can just see it in the imagery here, many of the products that we've created over the years that have become icons of the industry, some of which by virtue of their beautiful design that made it into the museum of modern art. So moving forward to unlock this potential, we have been doing a lot of heavy lifting this year. And I'd say, if I categorize the challenges that existed when I stepped into this role, there are a couple of big ones. And I think number one is number one, which is the brand had become way overextended. We are trying to do way too many things, go into too many categories with too much complexity and has simply overwhelm the organization. So we've spent the last year really narrowing down into the sports we serve, the kits we need to build for those sports and taking first 30% of our SKUs out of the equipment side, then we'll take another 20% out and really focusing on doing fewer things, bigger and better. That's the mantra, "fewer, bigger, better." The easiest way to make money in my experience is to make the big things bigger. So you'll see us double down on those areas where we have market leadership position, product franchise and turn those into growth vehicles for Black Diamond. Talent, as you could probably tell, was a huge issue. We've been through a period where, quite frankly, we lost a lot of the best talent at Black Diamond. And I'm very happy to say that talent is coming back. If it's not back already, people are knocking on our door to get back in the Black Diamond game. Our inventories, you all know this, got out of control. We had these enormous visions for growth, riding the COVID boom, the market contracted, and we were left, like a lot of our retail partners, way too much inventory and not just too much, but too much in the wrong places. So too much in the C and D styles that don't generate a lot of our revenue. We have a classic, actually a more pronounced version of the 80-20 rule. Top 5% of our styles generate 50% of our revenue, make the big things bigger. That's where our franchises are. The top 17% of our styles generate 80% of our revenue. The bottom 70% of our styles generate less than 10% of our revenue. The bottom, 70% of our styles generate less than 10% of our revenues. Do we need 69 different pairs of gloves, different styles? Probably not. When we get really focused on the sports we serve, the consumer needs and building those kits, you're going to see this business get really simple and really clear. And that's what drives growth. That's what drives margin lift. That's what drives inventory turn. That's what drives GMROI, and that's what drives long-term value creation. And then lastly, I would say there were a number of core processes and new product development, sales and operations planning, inventory management that just didn't exist in the business. So we design those processes, we spent a year putting them in place, and now they're up and running, and we're perfecting them. So all this work, what does it translate to? A road map for the next few years. To be clear, we all acknowledge 2023 was a reset year for us. We did about $200 million in sales, marginal EBITDA really dragged down by the amount of clearance up that we did to our inventories to set ourselves up for growth. So in 2023, we reset the business to what the new demand is in the post-pandemic market reset. We resized the business, we resized our inventory, we revamped our leadership team, and we installed these core processes. So really foundational moves in '23 that set up '24 and '25. '24 then is about really taking this discipline of simplification and dial-in it all the way through the business. So you'll see us exit some categories, you'll see us exit some styles and you'll see this business gradually get more and more focused where we're our mantra is make the big things bigger. We've also rationalized the organization structure, and we've got it to a point now where we've got the right team, it's the right size, and we can grow 8% to 10% per year for the next 3 or 4 years without adding any headcount. And so the cost leverage that we have on the organization that we built will be tremendous. Then '25 is about showing the initiatives that we've got underway are gaining traction. The biggest one will be a breakout year for our new apparel line, which, again, if you go back to 55% of the global market is apparel, and it's less than 20% for us today. We believe that in the next 3 to 4 years, apparel should be a $100 million business for us on the way to $150 million, maybe $200 million, but at least $100 million within our '27 time horizon. And you'll see in '25, we'll launch an apparel catalog, we'll have more digital marketing behind our apparel. You'll see it on our athletes. You'll see it in expeditions, and it will be a holistic presentation of our product line, and it will be a breakout year. And then '26 is really double down on our initiatives, let them take hold and then start to put some marketing behind the places that have traction to accelerate. Think about building blocks, '23, revamp the leadership team, right-sized cleanup inventory, restructure the sales organization, particularly in North America. I think there was a period maybe of 3 years where we didn't have a full sales team in North America. We now have a great full sales team under his leadership. We've closed unprofitable stores. We stood up a whole new apparel team to deliver on this potential of $100 million plus in the apparel segment. And we've laid out our simplification road map. In '24 then, we take that simplification road map into action. You'll see us exit some styles, some categories and really get the business over, I would say, '25 and '26, much more tight in terms of the assortment that we're bringing to market, the franchises that we're trying to build and the kits, the solution sets that we're building for consumers. You'll see us relaunch our D2C platform, some system upgrades we need to run the business more efficiently and really a big push on improving our margins through better sourcing. We're standing up this year in Taiwan, BD Asia sourcing and product development office. And we expect to see lifts of 100 to 200 margin points in our -- basis points in our margin as a result of BD Asia. Implementing our new processes and then this whole bottom line, which goes across all 3 years, is to expand our climb leadership. Our goal is to be undisputedly the #1 climbing brand in the world, everything from gyms to 8,000 meter peaks. You will see this year, this spring, BD return to the top of the mountain. You'll see our athletes on Everest, a new prototype gear, putting up new routes, doing things that have never been done, all the way down to youthful urban gym collaborations that roll out in '25. So continued focus on building leadership in climb through new partnerships, through new athletes collaborations and launches. One of those new partnerships, by the way, is with Rainier Mountaineering that will unveil itself this spring. Rainier Mountaineering is the largest guide service in the United States, 70 guides around the world on Denali, Rainier, Aconcagua, Everest McKinley. They will be head-to-toe Black Diamond apparel and equipment. And you'll see that expand over the course of '25 and '26. Flowing that all the way through the P&L, how does this line up? What's our investment thesis? So revenue growth, not crazy. We're not shooting for the moon. We're not getting over our skis literally. We're being patient and deliberate, showing traction that then goes into a steady growth, 8% to 10% CAGR over this time period by focusing on our consumer segmentation, growing apparel, focusing on completing kits, growing D2C and reaching into some of the untapped nontraditional channels that are available to us and growing APAC. All of those things have more than enough opportunity to sustain steady 8% to 10% growth for the foreseeable future. Gross margin is a huge driver of the value proposition here, 400 points minimum from the '22 baseline. I wouldn't look at the '23 baseline because it's got too much markdown in inventory clearance. From the '22 baseline, we will add at least 400 basis points of gross margin through these initiatives by '26, possibly more. And then lastly, cost leverage. You'll see about 200 to 300 basis points of cost leverage materialize by '26. By leveraging this organization we built, not a lot of new count required to support the growth. And then getting the cost savings associated with the simplification, really a focus on productivity, more output per head count. Summarizing. Investment highlights, driven by reestablishing first and foremost, our team, our strategy, our focus. Number two, thinking about the power of the Black Diamond brand. And there aren't a lot of these, but I'd say Black Diamond is one of them, where the brand and the equity of the brand is actually much bigger than the financial results itself. So as we fill out the picture of the brand known and revered all around the world in categories, in channels, in consumer segments, we want to get the size of the business to match the size of the equity of the brand. We want to leverage those points of category leadership, build franchises and then launch apparel and get digital to 30% of our mix. And with that, I'm going to hand it over to Mike.

Thank you very much. I mean I've talked to many of you in the room over the last 2 years since I joined, and we've been talking about doing an Analyst Day for now over the last year. So excited we were able to pull together. We did defer it for about 6 months as we went through the precision sports sales process. But I think that in the hindsight now, that ended up being a tremendous benefit because they gave both Mat and Neil another 6 months to go through their businesses, get into their details and really present what they shared today. And there's incredible vision strategies, initiatives that they share today of how they're going to turn both these brands around and execute over the coming 3 years. And I don't think we would have been able to present that 6, 8, 10 months. And so in some strange way, it's turned out tremendous that we had to delay this until we finalize the Precision Sports sale. But I'm super pleased with that. So hopefully, you can see the passion and excitement Warren and I have with both Mat and Neil on the team now. So with that, let me walk through some of the summary. So first, there was a typo, and I will call that out back in one of Mat's slides where we showed 15% and $15 million of EBITDA on the $90 million, the 15% is correct, but the number should have been $13.5 million. Not sure how that happened because I think we've checked these numbers 15 times. But Outdoors number is $90 million, 15% EBITDA margin or $13.5 million, not $15 million. So if you add those all up with the numbers Neil shared, the '24 numbers, the $275 million, the $28.3 million of operating company EBITDA, the $13.5 million and the $14.8 million that Neil just shared, less the corporate cost of $11 million is the $17 million approximately, which is right in the midpoint of the guidance we gave between $16 million and $18 million of EBITDA, okay? So just to reconcile that. So '24 ties out right to the guidance, just to be clear, that we shared last week that Warren and I shared with you all last week. '25 and '26 tie back to those do tie. They do tie back to the presentations that Mat and Neil walked through today. Obviously, the lawyers require me to say something to the fact that there are projections. We reserve the right to update you and we will update you if we see something materially different. But you can tell by the passion, the initiatives, the strategy, the detail behind what both these fellows are working on that we're excited about presenting those numbers, but we will reserve the right to update you on those, and they are projections, right? Going on to corporate cost. We're holding those relatively flat. We finished '23 at about $11 million. We're saying '24 is about $11 million. The corporate costs there's just a fixed amount of legal, financial, insurance cost that goes into being part of a public company, right? We also have some nonstock -- noncash costs there. It's entirely stock-based compensation that these numbers are adjusted for. So that's a summary of where this all kind of flows from a results and projection standpoint. We do see cash flow growing greater than EBITDA here in '24. That's as we continue to deleverage the balance sheet probably -- essentially from favorable inventory performance. Going forward, we see cash flow being about 85% of EBITDA because we will have working capital -- increases in working capital as the business starts to grow. So that's the summary. We're super excited about that. If we move over to why invest in Clarus? Super amount of change has taken place over the last 18 months, right? And we're excited. We're really excited to relaunch Clarus 2.0 of the new Clarus, whatever we want to call it. It really is a pure-play outdoor business. We view outdoor and adventure end markets is highly attractive and resilient, both of these businesses has benefited tremendously during COVID. But the last couple of years have really resulted in a reset as the entire market finds us new baseline, right? But overall, we believe the long-term participation, as Neil walked through, and as Mat demonstrated in his slides, it's just continue to grow. There is secular tailwinds in these markets that we participate in now, right? The pure-play outdoor business. Maybe the most important thing we heard about today is just the passion around the leadership teams too. Both fellows have rebuilt their leadership teams, some of the great renaissance of talent that's returned to BD and some of the great talent that's been infused at the Adventure business is exciting as well. The teams are all passionate about bringing these businesses to their potential. Management's work through. The detail that we shared today with the goal of executing. Sure, there's execution risk and that's why we have to put up the caveats and the forward-looking statements. But we're excited about executing. With respect to the investments and changes made in '23, we're beginning to see some green shoots. I think we shared that last week during our call, Warren and I. We're seeing progress on our initiatives and our overall brand strategies. These changes are really more pronounced in the results last week that we shared at Adventure, but we are super pleased with what Neil is up to and what the team is doing at outdoor. And you can see the enhanced profitability that we're targeting at Outdoor in '24. I mentioned this earlier, and I think Warren mentioned it, it's super important to understand at this point, the balance sheet is as fortress as it could possibly be, right? We have a debt-free balance sheet as of today. This morning I have over $43 million of cash on the balance sheet. And the cash we view is king. It's always king, right? It provides us the flexibility and optionality to manage the business here in -- be super prudent with our cash as we see -- until we see all of these operational initiatives and strategies really take hold. So before Q&A, I want to share one last thing we did for my analyst friends in the room. Last week, when we filed the 10-K, we restated all of -- the 10-Ks completely been restated, '21, '22, '23 to just reflect the new Clarus, all of the Precision Sports information has been peeled out to -- and presented as assets held for sale at the end of '23 and its discontinued operations for the prior years presented. And that's kind of the way the lawyers worked at that. But then what else we've provided today, and these are new numbers, they filed the presentation with the 8-K this afternoon. And these are the 2023 quarters restated to just show Adventure and Outdoor. So when we present quarterly reports, first quarter, we'll be comparing against March of '23. So you want to go and look and update your models, here's the quarterly restatement as well. So we're excited. We got that done over the weekend, and I wanted to share that with you all as well. These are also -- we've updated our adjusted loss and income from continuing operations, essentially simpler set its adjusted earnings per share. And we're adjusting for noncash items and a few unusual things like restructuring and transaction costs. And this is the new format that we'll be following. Pay attention, this is different than what we have done in the past, right? This is a simpler, cleaner version from my perspective. And then lastly, this is just adjusted EBITDA that has been updated as well by quarter. So with that, I think it's time to open up the floor to Q&A.

Well, I know this has been a lot to digest this morning. We did that intentionally. There's a lot to think about, and it's taken us well over a year to get to this point. But I'm personally very excited about the opportunity. And as Mike said, the leadership team that we've put in place that you've been introduced to today. So with that, okay.

Here I have a question. Fairly Clarus had a huge opportunity for the ramp, really important progress that you targeted. To what extend do you -- the targets assume that retailers will be more accepting of the apparel merchandising right now? Really over indexes in DTC, which is encouraging to know that 50% to 55% to 60% of the mix is there. But to get to the $100 million, how much do the retailers have to buy into the category?

So great question. First of all, just maybe a couple of things on payroll. I have a lot of years in the apparel business. And we -- when I look -- try to be humble about it. But when I look back at what we did at Eddie Bauer and launching the first Ascent line built by the best mountaineers in the world. And I look forward to that 12 years later, that is still the strength of the brand, those styles are still the wing styles. And then go along the same thing. When we sold Billabong to Quiksilver, the story that [indiscernible] trade press was a very clear message to Oaktree and Quicksilver, which is don't mess with the Billabong brands. Their product is amazing and they're light years ahead of the competition. And so I think it's not just about building apparel, but it's building apparel to these kind of levels where it's widely regarded and best-in-class. And I've spent a lot of my career doing that. There is a process to how you get there. And in my experience, when we follow that process, the results happen. But as Ed Viesturs, the only American rock climbers 8,000-meter peaks, once said there are no shortcuts to the top. And the same is true for apparel process that we follow as a process that I developed back at Eddie Bauer, working with mountain guides, which is at the front end of the process, a very deep, immersive, intensive intake with the athletes of what are their favorite products, why do they use them, you really get to the core need, and then 3 rounds of prototypes that go out for field testing -- extensive field testing where those products are fine-tuned. And so that by the time you launch that product, you know it's dialed. And it sounds simple, it's hard to stay on. And I would say over the years, Black Diamond has had an inconsistent process. Certainly, nothing with that rigor or discipline. So the starting point is you got to come up with great product, and you have to have a process that's credible to explain to retailers how you arrived at the product you did. Why is it credible. Why does it have that point of view. And I'm confident that they'll see that from Black Diamond. With respect to how much of the growth needs to be driven by wholesale versus DTC, you'll see that our apparel strategy is really show it first in DTC, prove the sell-through, prove the uptake. And then by the way, the same was true of Billabong led with DTC and then wholesale took off right after that. And that's a little bit of an inverse to how we've tried to do it in the past, which is we developed this big line, we bought a lot of inventory. And then we try to jam it into the channel. This really needs to be consumer-driven, led by DTC. The retailers will see the sell-through and the traction and then they'll adopt it. And we'll have results to speak to that will drive that. So there is some retail adoption assumed in here, but we're not unrealistic at all. In fact, I think we're quite conservative in what we're planning for the retailer uptake. An example, we really don't have any apparel in REI right now. If I look at other brands of our size and what they're able to do in REI, it's $30 million to $40 million a year. We haven't put $30 million to $40 million in the plan. But at some point, I think REI is going to pick up our apparel line again, and that will be an upside to this case. But basically, we've got to prove it to the consumer first and then the retail will follow-up. Does that answer your question?

Yes.

Thanks for having us out and nice presentation today. Mat, a question for you on the Adventure segment and specifically the domestic business in there in 2022, that was a $25 million business this last year, slower than that. Curious, what kind of growth is contemplated in your 2026 targets from the domestic side of the business?

From a U.S. point of view?

Correct.

Look, I'd say what we've done in ANZ, I'd premise that the rebuilding of the leadership team and the organization there, what I've spent my last kind of 12 months there. There's a huge amount of that, that needs to happen in the next 6 months in the U.S. Working with the team here, we've got great people, but we don't have the strength through top management, bin management and below. On top of that, I think, to really attack the market here. We've had kind of a key focus on building our dealer base. And I think we need again to look at the strategies of how to grow our dealer base. In Australia, you've got this incredible fleet of businesses that could do installation. And we need to find newer ways or a new approach to do that here, linking that with DTC. So we've been e-com led here. So how do we drive our DTC business, increase our dealer base. Again, the growth that we're building into our 3-year plan, it's still led from ANZ, but it's comfortable. And it's more like rightsizing. Again, the business got to peaks of $25 million 2, 3 years ago. And it went down to $13 million. So we're not doing anything aggressive. We're trying to return that to a comfortable over $25 million in the next year, and that's just resetting it. It's not even growing at past precedents. And then beyond that, it's just stable growth with new product, new channels. It's the first time ever that we've got MAXTRAX and TRED. MAXTRAX was never under us. It's been run by a distributor partner. And that accounted for over $5 million for our distributor partner. So again, it's very slow and steady. So we're not reaching for the stars. Does that answer?

Yes, sir.

Thank you very much for the presentation. I want to ask about Outdoor. For this year, it's projected to decline by 9% according to this slide. Just trying to understand how much of that is driven by just the industry itself or just a portion of that is due to the rightsizing of the SKU count? And then second question on doubling your apparel business over the next few years, how much of that -- how do you think about that in the context of the PFAS regulation?

Yes, 2 good questions. I would say the '24 number really reflects businesses that we think will exit this year. The core categories that we're staying in will actually grow this year. So again, I think you have to sort of parse the business. There are some low margin, low growth, low productivity lines of business and styles that we just need to get out of. And that's really the step down from '23 to '24. It does not in any way reflect a decline in the core business. In fact, the core business will actually grow as some of these divestments happen. And we'll -- obviously, we'll tell you more about that as the year unfolds, but it's essentially chopping off parts of the business that are profitable. And then with regard to PFAS, we've been working at -- good news is we've been working at this for a while. All of our major programs with the exception of one are now coming out with PFC-free durable water-repellent solutions, and we feel like we're in a good place. There will be some rotation of inventory out of the market, not just for us but for everybody. And I think Mike talked about it on the analyst call, there might be some exposure end of this year for us and left over inventory. I would say 2 months into this year, we're feeling good about where we are in PFAS and working our way through it. But there could be a little bit of cleanup we need to do at the end of the year. And again, I think in the scheme of things will be relatively modest, might be in the $2 million to $4 million impairment sort of range. But hopefully, we'll be through it by then.

So kind of just the -- on the American market, so [indiscernible]. The other thing to note is in '23, we didn't launch any new products in the U.S. market, whereas back in ANZ, we launched 4 new key platforms. We Pioneer 6 which accounts for a huge amount of our revenue and, I guess, brand awareness. We're the leaders in that launched in the fourth quarter, and that drove a large incremental kind of revenue and margin point gains. There was 10 percentage points of margin upside just in that one product. We didn't launch that in the U.S. It's launching in April. We launched Light board for MAXTRAX, which is an entry level with a premium price, and we gave a -- it's life and price and again, a smaller slightly different to the customer. RX100, one of our best-selling crossbar systems, accounts for over $2 million in revenue in Aussie alone. We didn't launch that. And so there's a number of factors in terms of '23 and looking forward. It's just making sure once again that we've got one integrated business. So when we do a product launch, it's a cross market, its plan for market. So that had a big impact on '23. And I think lack of freshness also hurt us. So as we rightsize inventory, I think not having newness definitely impacted us.

New product, new cargo box with new customer here in the U.S. as well.

Matt Koranda with ROTH Capital. I appreciate all the detail from you guys. I guess 1 for Mat and 1 for Neil. For Mat, I guess, why wasn't simplification in the business done before? Maybe you could address sort of why it was so siloed by region. And then how much of the margin expansion that you're expecting over the next few years is kind of baking in basically just operational improvement from not double shipping some of the examples that you referenced in the presentation versus just pricing and other elements. And then for Neil, curious, just an example of maybe a SKU or 2 that we're shrinking this coming year. And I guess, were those -- were some of those negative margin, I would assume, just given like the swing that you're showing in EBITDA this year relative to last year, but expecting growth in some of the core. So maybe you could just address that and then how we protect the brand as we kind of introduce lower price point items and address the more mass market. A lot in there, sorry.

Good question. So look, in terms of why the simplification hasn't happened, look, family-founded business, different priorities, different objectives. Again, I think the simple way of saying is, we made product that was fantastic for our backyard, and it wasn't necessarily built for regions for either U.S., Europe or Asia Pacific, and we're able to sell it over there based on being best-in-class. It necessarily wasn't built in it wasn't part of the plan. So I think that's the first thing. The lack of simplification in the last 2 years, again, I can't talk to that. But for me, it's a big priority. Looking at -- I showed you that slide. That's just one example of our Cross Bar system, and we can do that across the range. The fact that you buy different accessories for your trade platform versus your cross bar, it's not integrated. So you have to buy a whole new range of products and accessories. We launch something called [indiscernible] which allows easy access. So when you're out and about it, no motor on a trail. The last thing you want is complexity, taking things off your roof or your trade. But we had different systems. So again, it's just approaching it with this idea that consumer focus, used focus, how do we create integrated solutions. And I think that's half the problem. The other thing that's coming into this is, my big goal working with this new team is we're going from a components business to being a finished goods business. We're not there stacking up on nuts and bolts and washers and so forth that our warehouse has been filled with because we're shipping parts all around the world. Again, like I said, I spent 20 years of my life living internationally. And none of those businesses was Australia manufacturing hub. We do assembly in Australia. Last time I looked at, it wasn't known for manufacturing. So I think just again, different process, different priorities. Our job with this incredible new team is to build a global brand. And so therefore we're going to go through step-by-step what that means and how do we be competitive. Like I said, looking at Mexico for auto, huge industry and how do we remove Chinese tariffs for some of the product to be competitive here. These are things we need to go through to simplify, and now it's just the time to do it. Does that answer that one?

Yes, absolutely. And then maybe the margin -- the margin expansion, just kind of if you could buckle...

Yes, look, I think again, like I said, not having a 3-year product plan. It's very hard to go to your suppliers globally and find best opportunities in terms of volume and our supply and planning capability is pretty weak. Now we've ramped that up. We've got new teams and ops. So again, finding suppliers who have got a long-term view and instead of having a single product, trying to compete between Australia and New Zealand and China, like we're now looking at sources, we're looking at every time we do a competitive range, we look at 3 RFPs to make sure we're getting competitive pricing. Pioneer 6, 10 percentage points from under 40% to over 50%. And again, that's happened in Q4, and it will roll all the way through 2024. So that's going to be consistent as we launch RX. We've just launched RX100. Again, that product was launched using our old sourcing, which is we're making parts in both Australia and China, then they all come back to Australia, and we assemble them in our location there by middle of this year. That won't be happening. We'll be focused on finished goods. And again, there will be an upside through our crossbar system. So what you see happening in our margin upside from a trade point of view, you'll see roll into our RX program. This year, we launched RX100, 200 and 300, like I said, it's highly complex. There are 5 roof types. So therefore, RX100 to RX500, and then the next 2 parts of that will be early next year. And that's where you'll see that margin improvement roll all the way through. And the same thing we've been making accessories, but we literally are buying them off the shelf. And making them appropriate for our roof racks. We're not doing that like our tent. We work with a partner, and it took 12 months. And we developed our first tent late to market, but it's also considered one of the best in price and again, with margins again, premium pricing. So the job is every single category. We'll make sure that our goal is over 40% minimums, whereas in the past, we've been performing under 20% in margins in some case because we're buying off the shelf accessories and adding them to our range. So there's a lot of work to do across our supply chain.

And let me just restate your 2 questions, make sure I got them. So number one, an example or 2 of things that we're exiting and what the profit profile of those would be. And number two, how do you build -- how do you not lose authenticity and credibility of the brand as you fill out the pyramid underneath. So on the first one, a couple of examples for you. Within our -- you might imagine, within our portfolio of climb products, there are some things that I think people are sort of emotionally attached to low margin. And we have these conversations like why are we even offering this and somebody will say, "Well, we offered it at 1 point as part of our history and heritage. And then the question is, was it valued? Yes, it's valued. Well, then why is it low margin? And my point is, if it's valued, we should get paid for the work that we're doing, and it should be high margin. Otherwise, the consumer is voting and they're telling you there's no value. So what we've done is, we've done this thing we call the quad. The quad approach to line simplification, which is basically array every category and every business on 2 dimensions: productivity that we measure sales per style and margin. You can imagine there are 4 quadrants that come that: High productivity, high margin. So we want to concentrate our effort into accelerating those. High margin, low productivity, how do we get those to move to the right. And then really the bottom part of the quadrant of low productivity, low margin, I would say it's a target-rich environment right now where we have a lot of things in that quadrant. A couple of examples would be bindings. So we distribute ATK bindings. And the argument was it's part of the kit. It goes along with everything that BD is selling except it's very low margin. There's a ton of SKUs in it. The turn is less than 1 per year. The returns are high, the warranty claims are high and the customer service costs are high. So when you add all that up together, that is a negative contribution margin segment for us. The other example I'd give you, our #1 rope style is a negative margin rope. And so why do we even need it? There are lot of ropes out there, ours isn't particularly differentiated. And again, that kind of goes back to, well, climbers want ropes, but let's focus on the ones of ours that are actually differentiated and have good margin and let the commodity part of the market, be the commodity part of the market, we don't need to play there. So hopefully, those are examples. I love your question on like how do you build out these consumer and distribution pyramids while still growing their regard and the equity for the brand. And I think we take a page out of sports marketing companies that do this really well. I think about Nike and their investment behind the athletes in their tiered distribution. But still, they serve at the bottom of the pyramid, they serve a wide range of consumers, but nobody would ever say, Nike is not authentic, incredible and running your basketball, whatever their sports are. And the formula is they invest in the athletes, they involve the athletes in product development, they always went at the top of the market and then they let those innovations cascade down. And if you stick to that approach to win at the top and down, you come to a very different place than if you start at the bottom of the pyramid and say, how do I build up? And so that's really the playbook that we're following. And again, I think I would say is, that's not necessarily in every category. It's true in trekking poles, it's true in lighting. But there may be some where you really have to follow the consumer like in personal protective equipment. Maybe it doesn't make sense to have a good, better, best because like do you really want to trust your life to the good version of the product or are you going to pay for the better and best. And so where we really have safety and PPE franchises. Generally, those are better and best, and we don't, in any way, want to go to products that have any margin of error for our consumer. So it's really consumer-specific, category specific. Does that answer your questions?

Does the company intend to stay in a net cash position for this 3-year planning horizon?

Absolutely. I mean especially over the next 12 months.

Okay. Great. And then is the company more inclined to replace its earnings power resulting from the AMO sale from M&A or share buyback?

In the short term, we'll be very disciplined and invest back into these 2 businesses over the next 12 months. I mentioned earlier, we would look at small bolt-on type tuck-in acquisitions at Adventure similar to what we did at TRED business back in the fourth quarter of this past '23 and the fall of '23. But over the short term it'd be only accretive small type M&A. Once we demonstrate our -- some of the plans we shared today and the strategies are executing, we could in '25, '26 definitely be back full time in the M&A game.

At Black Diamond, do you guys have a 3-year product road map now? And then secondly, what are the categories of apparel that sort of get you to that $100 million that you are not at now?

Yes. So yes, we have a 3-year product road map really driven by the principles I laid out, which is make the big things bigger, build franchises, build around those franchises, edit low productivity and grow opportunity spaces like apparel. So I give you a couple of examples. I talked about the distance trail pole at the top of hike and trek. What we're doing now is we're actually building a whole franchise around distance, because it means something to a certain type of consumer fast and light in the mountains. So now we have a distance run pack, we have distance headlamp, distance trekking pole, we have distance traction for your run shoes, gators for when you're in the snow will be -- will be launched -- we have a distance wind shell, we'll be launching a distance ultralight rain shell, a distance short, distance top. Very tight collection that will merge together really well. And by the way, then you say, okay, how does that play across that channel pyramid. For the most part, Black Diamond despite having really good product franchises in the trail run space isn't in the specialty run stores that will sell those products. So once we get really tight on those franchises, the customer we're targeting, then it opens up the distribution. So all of that's laid out in our 3-year product road map, but it starts with what sports are we serving? What segments within those sports, what franchises are going to deliver against those segments and then how we roll those out to distribution. And all of those are mapped out for mountain climb, footwear. Footwear, we didn't talk a lot about today, maybe a good example of focus and simplification. There was a time when -- and you could look at the global market, 55% apparel, 25% footwear and 20% equipment, say, well, let's go after footwear in a big way. And there was a time at BD where we were putting a lot of resources into trail run and other footwear, except that's not really our competency. That's not what we're good at. And by the way, when we put it through that athlete driven process the product wasn't meeting our standard. So the easy thing to say, it's okay, launch it anyway. The hard thing to do is say, no, it's not BD standard. We're not launching it. And by the way, let's narrow our focus on footwear to just climb shoes and approach shoes and let other people have the market because they're much better at it. That would be another example of categories and styles that we've really narrowed our focus on. And by the way, I'm really glad that we took that decision last year. I think we'll pay back in spades. But that sort of product road map. With regard to apparel, one of the things, again, if you follow the process, let's go deep with the user, go deep in the market and figure out where the space is, where the volume is that you can attack and do it in a brand-right way. So we would all look at the apparel -- technical apparel market. And the beauty of that market is once you get a franchise, it will run for 10, 15, 20 years, North Face Denali, that we around for 20 years. North Face Nuptse, same thing. Patagonia Down Sweater, Patagonia Nano Puff, North Face ThermoBall. We could look at the market. We could pick 10 styles that drive most of the volume in the market. And then you look at the BD assortment and you'd say, what do you have actually that competes in where the consumer is in the market. And we -- for the most part, today, we don't have styles that compete against those big volume styles. Now we don't want to copy them. We need to do them in a brand right way, bring our design language, bring our process through them. But if we hit those big volume segments in apparel, it will take off. And you'll see -- you'll see us launch a down sweater program, jacket, hoodie, vest. By the way, traditionally, Black Diamond launch [indiscernible]. It would have a hood but no jacket, maybe a vest except a big part of the market actually wants the jacket not a hood. So really just looking at where the volume is in the market, the intersection to our sports, putting it through our apparel development process and nailing it. And again, if we had 10 styles in apparel that we perfected, more than $100 million of business. So hopefully, that answers your question.

[ Wily ] again, brains a bit slow today. The 2 questions, one related to U.S. growth and then the margins. A big part of our business has been historically OEM. But you imagine you're getting bids for Australia and New Zealand and you're getting asked to create a new platform for the likes of Toyota or Ford. And we put a competitive bid in, but maybe 4,000 units. The same bid for the same vehicle in U.S. is 40,000 units and 100,000 units. There has been a focus on that we're focused on our backyard. So the investment into the U.S. as well. So we're placing the global head of development, business development in the U.S. That's a hire that's focused on this year. Again, trying to compete from down under with Ford and Toyota and do that, we'll never be competitive. The only reason I raised this as well as size of prize and really going after those partnerships in the U.S., managing that OEM pipeline is vital. And that's where not just our own categories that we're owning, our cross bars and our trades that create the, I guess, the platform for growth in OE. If you're not managing that life cycle, which we haven't done a good job of historically, that's where you also get margin because the product could take 2 to 5 years to bring to market. And through that time, historically, we've been -- the price could change quite dramatically on the manufacturing and especially in the last 5 years, manufacturing costs have gone through the roof, materials cost, and we haven't done a good job managing that. And now we've got category managers across each one of our key categories. So it kind of touches on both the focus on how we're really going to go after, I guess, U.S. OE, size of the price and managing that business to make sure we're not getting margin erosion at the end of it. So I just wanted to circle back and touches on both.

Well, thank you all for coming, and we hope to keep you informed as we progress these plans. We're very excited about them. And we think that this year, again, it's going to be quite a good year for us. So thank you all again for coming.