Good afternoon, everyone. Thank you for participating in today’s conference call to discuss the Clarus Corporation’s final results for the Second Quarter Ended June 30, 2021. Joining us today are Clarus Corporation President, John Walbrecht; Executive Vice President and CFO, Aaron Kuehne and the company’s External Director of Investor Relations, Cody Slach. Following their remarks, we will open the call for your questions. Before we go further, I would like to turn the call over to Mr. Slach as he reads the company’s Safe Harbor statement within the meaning of the Private Securities Litigation Reform Act of 1995 that provides important cautions regarding forward-looking statements. Cody, please go ahead.

Thanks, Brenna. Please note that during this call, the company may use words such as appears, anticipates, believes, plans, expects, intends, future and similar expressions, which constitute forward-looking statements within the meaning of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are made based on the company’s expectations and beliefs concerning future events impacting the company and therefore involve a number of risks and uncertainties. The company cautions you that forward-looking statements are not guarantees and that actual results could differ materially from those expressed or implied in the forward-looking statements. Potential risks and uncertainties that could cause the actual results of operations or financial condition of the company to differ materially from those expressed or implied by forward-looking statements used in this call include, but are not limited to: the overall level of consumer demand on the company’s products; general economic conditions and other factors affecting consumer confidence, preferences and behavior; disruption and volatility in the global currency, capital and credit markets; the financial strength of the company’s customers; the company’s ability to implement its business strategy; the ability of the company to execute and integrate acquisitions; the impact that global climate change trends may have on the company and its suppliers and customers; the company’s exposure to product liability or product warranty claims and other loss contingencies; disruptions and other impacts to the company’s business as a result of the COVID-19 pandemic and government actions and restrictive measures implemented in response; stability of the company’s manufacturing facilities and suppliers as well as consumer demand for our products in light of disease, epidemics and health-related concerns such as the COVID-19 pandemic; changes in governmental regulation, legislation or public opinion relating to the manufacture and sale of bullets and ammunition by our Sierra…

Thank you, Cody and good afternoon everyone. It is great to be addressing you all today. We are very proud about another outstanding quarter, driven by continued growth across our portfolio of super-fan brands as well as the favorable trends in the outdoor industry overall. We reported sales of approximately $73 million, up 144% versus last year; and an adjusted EBITDA of $11.7 million compared to a loss of $1.3 million in Q2 of 2020. Both metrics were a record for any second quarter in our history. We also saw continued increases in gross margin, reporting a 280 basis point year-over-year improvement to 38.2%. These results are a testament to the value of the brands, continued operational excellence and strong supplier partnerships. On the supplier front, we have leveraged our super-fan brand recognition to strengthen our relationships with our key retail partners and our global suppliers. We continue to see evidence that suppliers prioritize the formation of long-lasting and productive partnerships with brands that are best poised for long-term performance. And we believe our brands fit this mold. To give you an example, in our Black Diamond business, we prioritized product availability in 7 of our core products during the quarter. This allows us to isolate the needs of our supply chain on the components that really moved the needle, which allowed us to increase sales and satisfy our retail partners and ultimately our consumers. It’s creative, nimble and deliberate actions like these that have allowed us to stay ahead of our supply chain challenges our peers and the broader industry are facing. I want to thank our entire team for their hard work. Without them, these results and our performance over the past few quarters surely would not be possible. In addition to our strong results, during the second…

Thank you, John and good afternoon everyone. For the second quarter of 2021, total sales increased 144% to $73.3 million. By segment, Black Diamond sales improved 122% to $44.9 million. And sales in the Sierra segment increased 190% to $28.4 million. Excluding Barnes, which we acquired in early October 2020, our second quarter sales in Sierra alone were up 71% organically. In connection with our recent acquisition of Rhino-Rack on July 1, I want to note that Rhino-Rack will concentrate a third reporting segment. We will report the new segment’s sales on future earnings calls. Given the comparative year-ago period reflects the depth of the COVID-19 pandemic, I would also like to share how our second quarter sales compared to the same quarter in 2019. Black Diamond sales in Q2 2021 were up 19%. And Sierra sales were – and Sierra sales, excluding Barnes, were up 83% versus Q2 2019. Not only does this exercise provide a more normalized growth rate, but we believe it demonstrates the staying power and longer-term demand trends of both of these great businesses. The Q2 2021 performance within Black Diamond was driven by growth across all geographies, sales channels and categories, given the continued recovery within the outdoor space. As John mentioned, inventory rationalization at our national accounts drove a substantial increase in our year-over-year Q2 performance with these partners, and our specialty business also experienced healthy growth. We continue to believe this is being driven by the fact that we were the best positioned to fulfill inventory in the current volatile supply chain environment with a core brand that has maintained on price. The $7 million or 71% year-over-year increase in Sierra brand was due to continued robust domestic demand for green box, OEM and our ammo initiative. Roughly $5.2 million of this…

Thank you, sir. [Operator Instructions] And our first question will come from Anna Glaessgen of Jefferies. Please proceed.

Hi. Good afternoon. Thanks for taking my question. First, I mean, clearly, demand has outstripped supply over the past few quarters. Could you maybe provide some perspective on where channel inventories stand today and how long we should expect this tailwind from replenishment to continue?

Yes. Thanks, Anna. I think the logistics issues combined with the COVID issues in other parts of the world will still play as it has in the past. 2021, I’m anticipating that it will at least impact the first quarter or two of 2022 and may go longer as back-to-school and holiday all kicks into 2022. We believe we will continue to gain market share. We will be very aggressive about our supply chain and our management. Logistics is the biggest challenge, whether it’s port closures or just movements in the rates of getting things around the world. Our goal ultimately is on-time delivery, 100% fulfillment and ease of doing business with. The demand continues to surge, which only complicates the ability of logistics and supply chains to keep up. I think that we’re probably hoping to see some normalization by spring of ‘23.

Great. Thanks. And now turning to Rhino-Rack, congrats on the recently announced partnership with Polaris, how should we be thinking about the potential for this partnership and partnerships like this to accelerate the brand’s penetration in North America, which, as you touched on historically, hasn’t had or been as distributed?

Yes. I mean obviously, we love this brand. We – it checked all the boxes of the super-fan brand, leading market share in its home market in history of innovation and just not a lot of brand awareness of go-to-market, and that was the real opportunity here. The great thing about the Rhino-Rack business is that we’re able to focus on multiple tiers of distribution, one being that of OEMs and partnering with players like Polaris or Ford or Toyota or Jeep or whomever to develop rack systems, specifically for their new launch products. Then there is the aftermarket automotive business, which is where Rhino-Rack has really played in the United States over the last few years. And then we see a huge opportunity in this outdoor segment that is growing which is a combination of micro-adventures meets overlanding. And we think that, that over the next 3 to 4 years is the fastest-growing category of the rack business. And if you’ve seen what others have posted, the demand similar to that of BD or even with Sierra and Barnes, the demand by the consumer far exceeds the supply right now. And so we’re still chasing on that. But yes, we definitely think that the Polaris partnership alongside our retail partnerships will allow us to accelerate this business.

Great, thanks.

Your next question is from Matt Koranda of ROTH Capital. Please proceed.

Hi, guys. Thanks for taking the questions. Wanted to start out with BD and it looks like just the implied back half guidance for revenue, there is a slight pickup even seasonally relative to prior years. I wanted to see if you could maybe discuss some of the implications for margins there? And then also, if you could thread in, it’d be interesting to see – I know you guys have a pretty strong strategy going and building inventory so that you have availability for your customers. But did you build in any headwind to revenue in the back half of the year, given the supply chain is relatively tight and it’s still difficult to get certain components?

Yes, Matt, this is Aaron. Great to speak with you. Answering the last part of the question first, naturally and consistent with how we’ve guided this entire year, we continue to be fairly conservative in terms of how we guide or forecast the year, considering the different dynamics that exist. And so the answer is yes, we continue to be cautious in terms of how we think about the rest of the year based off of what’s taking place within the various supply chains and the logistical elongations that are taking place. We do feel confident about where we’re positioned currently. For the back half, we have a strong order booking for the Black Diamond business in particular. As John mentioned during the script, outdoor continues to be a favorable tailwind for us and something that we’re very well positioned to be able to take advantage of and it really comes down to the product availability. But based off of the different initiatives that we put into place earlier this year, we do feel like we’re continuing to better position ourselves each and every day to be able to satisfy demand, recognizing that it is taking a little bit longer than what we had originally anticipated. As it relates to the margin profile of BD, we do expect it to continue to progress and improve. As mentioned before, we do feel that we have a clear path to being able to scale this business appropriately, both from an increase in gross margin, but also at the adjusted EBITDA levels. Naturally because of what’s taking place within the logistics side of things, we do see some leakage there, and we’re very focused on mitigating and eliminating that leakage. We do have a few levers that we will be looking at and imploring, especially as we head into spring 2022. And so there – the guide that we’ve also provided from an EBITDA perspective also reflects some of the noise that could exist in the back half associated with bringing that inventory to the various warehouses.

Okay, that’s helpful. And then just turning to Sierra-Barnes, I noticed just if I look at the implied back half revenue guidance, it does imply a bit of a step down relative to the first half and with the understanding that obviously the first half has been sort of at record highs for ammunition and bullets in the industry. But I wanted to get your thoughts on sort of why the step down, just given that it seems like channel inventory is still pretty light and demand hasn’t really led up all that much? So any color there would be helpful as well?

Yes. So consistent with what we just discussed related to BD, one of the things that we wanted to also do on the Sierra-Barnes side is because that – albeit domestic, that continues to experience some of the similar supply challenges that we just discussed, but also that we’ve highlighted previously. And so consistent with past practice, we’ve also been a little bit tempered in terms of how we think about that business coming together and being able to materialize the demand that’s out there. To your point, we have not seen a slowdown in the overall marketplace for the demand especially for our two businesses. I think the team has done an extremely a great job of positioning that brand and extremely proactive in reaching out to the different retail partners in establishing ourselves as one of the premier providers of ammunition and specialty bullets, but it comes back down to how quickly can we satisfy, but also how reliable will the supply chains be. And the guide once again reflects that tempered view on that ability.

Yes. I think we would all know that there is more than enough demand in centerfire rifle bullets and ammunition, specifically going into hunt season. But obviously, one of the biggest constraints in the industry so far has been there is a blast in the centerfire category. And so we will be as scrappy and as aggressive as we can, but we also – we’ve always had a mentality of meeting or exceeding expectations.

Fair enough. And if I could just quickly complete the trifecta in terms of segments, I guess, on Rhino-Rack. Was a little surprised, I guess, given that it looks like the run rate on Rhino-Rack should be – I mean I don’t have any real idea for seasonality. But if you just kind of take the $90 million in trailing 12-month revenue and quarterize it, you get to sort of a $22 million to $23 million run rate. But wanted to see if you could maybe just speak to seasonality in Rhino-Rack in the second half and just sort of what the constraints may be to revenue on that front, just given the $40 million in revenue guidance for the back half of the year here.

Yes. Similar to the way that we handled this also with the acquisition of Barnes last fall, one of the things that we’re very focused on is ensuring that we integrate – that we go through the integration side of things extremely well and that we position ourselves for long-term success. One of the things that has recently come up as well, though, is that of COVID, especially in the Australian marketplace. We’re seeing extremely strong progression within the U.S. and also New Zealand markets where its core business currently exists. But there is a little bit of conservatism baked into the guide to factor in what we’re currently seeing within the core market of Australia. But coming back to – once again, it’s right in line with how we think about – how we bring on these businesses. We want to give ourselves a little bit of headroom as we work through the integration topic. As John mentioned as well, we are very well positioned to be able to accelerate this business, especially here domestically in the U.S. But similar to what we’ve discussed as well, we need to make sure we get those supply chains in place in the right way that we get the inventory where it needs to be so that we can with confidence and credibility go out and look to accelerate this business with the different retail partners that we have.

I think it’s really important, no matter how aggressive we are on these plans the one thing we can’t control right now is the impacts of COVID in Australia, which was a little bit of a surprise in the lockdowns there. Some of the impacts of COVID had an impact in markets like Vietnam or Indonesia recently. And then obviously, as asked in the earlier question by Anna at Jefferies, when do we think this noise in the logistics channel is going to clear, I’ll be honest, guys, not soon. Now it doesn’t mean we can’t find ways to win and put points on the board. But you have to be aggressive, you have to be smart. You will get some headwinds in this space that you’re not aware of. Nobody expected a port to close. And so we’re just – always the view is, look, recognize every single headwind that we could face, what is the plan we know we can hit, then fight like hell to overcome every headwind. And if we achieve three or four of them, fantastic, if we have a quarter like Q2 and we achieve 60% to 70% of them, even better.

Great. Fair enough guys. Nice job and I will leave it there.

Appreciate it.

Your next question is from Laurent Vasilescu from Exane BNP Paribas. Please proceed.

Hi everyone. This is actually Aubrey on for Laurent. Do you guys hear me okay?

Yes, we can. Thank you.

Great. Thanks for taking our question. I want to start first on Rhino-Rack. Can you talk about what the revenue growth trajectory has been there? And long-term, how big of a business do you think it can be over time? And along those lines, are there adjacencies that you think you can go into in terms of product extensions?

Yes. So you obviously understand our playbook. Typically, Rhino-Rack has typically been a high single, low double-digit type of growth model. Obviously, with outdoorism growing in the last window of COVID, there has been some surge. We definitely think that this has got a long-term opportunity. Rhino today is, let’s call it, ballpark $100 million business. The competition in the space is $700 million to $1 billion in sales for the two big market share leaders. Somewhere between $100 million and $700 million is probably the right number. To your point, I think what’s really different about Rhino-Rack’s versus our competition is that ours is not based off a horizontal bar structure, but more of this north/south pioneer rack. And what that really opens up, as you call on to resolve the potential accessories and adjacencies that align with Rhino-Rack, once you have this rack system, the rack system in and of itself is just the start of the legos. And what can you put on that rack system from – obviously what the markets do today is everything simply from ski racks to cargo boxes to bike racks. But really more beyond that, rooftop tent boxes, coolers, light, speakers, stereo, you name it, goes on. What can you do with the top of the vehicle, but didn’t even think wider than that more than a vehicle, what about on a trailer, what about in the treillage, what in the back of a vehicle. Like where are all the ways that you can rack something and create – making space for adventure, the theme of it really open up. And so that’s where we see the biggest opportunities. A, the North American market and its competition and then just the ability to look at wider opportunities of legoism, as we are calling it, relative to these racks.

Got it. Thank you. And then going back to the topic of the integration of Rhino-Rack, just given that it’s going to operate as a standalone, how expensive or lengthy is that integration process? Obviously, COVID notwithstanding, but typically, how should we think about how long or involved of an integration we should expect?

Yes. Because it was standalone, we don’t anticipate seeing a lot of system-type topics, but more it’s around the planning and the go-to-market process. And so the way that we have been thinking about it is working towards a six-month integration cycle. We are hoping to be able to accelerate that up. But at the same time, we want to make sure that we are extremely thoughtful and well positioned to really accelerate the go-to-market activities or cycle, supported by the basic formula that we have really been following over the last several years, not only as an innovate and accelerate playbook, but it’s really about being easy-to-do business with, on-time deliveries, high levels of fulfillment, new product introductions or product adjacencies and then accelerating it also through expanded or enhanced brand awareness through the various marketing activities. And so that’s something that we are currently working through with the team on. And it’s something that we expect to have finalized within the next 6 months.

I think the other side that’s different here – the other side that it helps on this is that though it’s a standalone business, they do a phenomenal job in the Australia and New Zealand markets, right. And so obviously, our goal is to go over there and try and change that model. They proved that model out well over the last few years. Our hope is to take what is the Rhino-Rack range and assimilate it into the North American market closer at home. And I think that’s where we really want to make sure we do this right before we accelerate this.

Excellent. And then if I could just ask one more on the rest of the business. Were there any revenue shifts between the second quarter and third quarter in either direction? I know last quarter, you called out that potentially there could be some shifting on the BD side maybe from 2Q into 3Q. And just in general, you have been seeing a lot of noise, given the supply chain disruptions. Is there anything that you would call out there? Thank you.

Yes. So, on the Black Diamond side, we saw a shift of revenue from Q2 to Q3 of at least $6 million to $8 million.

Great. Thank you.

And obviously, on the Sierra and Barnes side, it didn’t shift. It’s just almost unachievable, right? The order book is so strong and you do everything you can to maximize not only bullet production, but ammo roadies at our max capacity and our efficiency, but the order book far exceeds our ability to keep up.

Your next question is from Ryan Sundby of William Blair. Please proceed.

Hi. Thanks for taking my question and congrats on the quarter, guys. Aaron, I think you said Sierra 30% of their sales tracking this quarter. Clearly, it’s well ahead of the 10% goal. Was there any specific about this quarter, maybe just given the lack of inventory on the shelf by competition that helped to accelerate that number and then does that make you kind of rethink that 10% target? Could that be higher as you move forward?

This is Walbrecht. I will try and answer it. We missed a little bit, but I will try and answer it. And then you may want to rephrase the question with us, so we can do the best on it. Do we continue to shake inventory in the market, 100%. Did we – were we able to fulfill everything that people wanted, no. Were our inventory levels at the end of Q2 at the store levels ready for fall ‘21, no. Are we outperforming our competition as best we can, yes. Do we continue to face headwinds relative to logistics costs in order to accelerate and meet that fulfillment, yes? And so that obviously has an impact in our business short-term. And short-term is probably going to play into the market for the next at least 6 months to 12 months. But our long-term view, and we have often said this, is that rising tides rise all ships. But these challenging times that we are in now, we actually gained market share even faster. And so our goal is to continue to be the best partner we can for our retailers, gain more market share. And we believe that long-term, this will continue to create scale and growth, scale and margins, and therefore, flow through. Did I answer that?

Yes. John, I guess just specifically for Sierra and the ammunition initiative there, I think the target was roughly…

I am sorry, I missed you.

No, no. But – yes.

We started with a goal of 10% for Sierra straight out, and that was – are we seeing a lot faster than that, 100%. It’s now running at about 30%. Do we think it could be even higher than that if we did make it, yes. We are not vertically integrated yet at Sierra, obviously. Part of the strategy with Sierra or what we have acquiring Barnes was to partially do that. However, Barnes did sell everything they could load right now. So, we will continue to work with our very best partners to try and load as much of this ammo as we possibly can. The demand is significant. And I think what we have proved out and what will become the leader of this side is that the value chain portion of the loaded ammunition starts first and foremost with the premium bullets. And that’s – especially as you go into certain of these growing categories like hunt, we become even more valuable. And so chasing, loading ammo in hunt for Sierra or even in pistol has really stretched us, and it has exceeded our expectations. Do we think it’s going away, no. Has it changed our strategy, do we think there is more opportunity for ammo within these brands, 100%. But I believe that, frankly, if we didn’t make ammo right now, could we sell every single bullet we made to OEM, yes. So, there is more opportunity, and we will continue to increase our production while expanding our loading.

Got it. Yes, that’s perfect. And great to hear that mix is bigger than you thought. John, I feel like that you have kind of stressed the community-centric approach to consumer engagement a little bit more this quarter. I feel like also your stores are kind of coming online now or at least have been open maybe for a year or so. Do you think you are hitting an inflection there in terms of that direct involvement with the consumer and what that means for either the brand or development going forward?

I think what we saw in 2020 and ‘21 was this massive outdoorism and people really starting even more tailwind into the sports of climbing, backcountry skiing, trail running, hiking, you name it. We are an equipment-driven house, and therefore, we believe that in these communities that we not only have an opportunity, but really we have a responsibility to be one – a leader in the voice of access to the outdoors where all these works take place, but also to really be a builder of the community from an educational and experience perspective and to lead on that. And specifically, as we watched heavily, and this is where this came from, as we watch what took place during the winter, and this onerous responsibility to make sure that we coach, train and educate people on that country safety and specifically around Alpine snow safety. And we think that these mountain towns are going to continue to become the meccas for outdoors. They are going to continue to grow. They are popping up in towns. Towns are seeing growth that people never heard off. And we think that opens up more and more activation with our super-fans.

That’s great to hear. Thanks.

Your next question is from Linda Bolton-Weiser of D.A. Davidson. Please proceed.

Hi. Thank you. So, I believe that you had taken some price increases in May. Can you kind of update us on that, the magnitude of those increases and how they are being received by customers? And did the price increases have a positive effect on second quarter results?

We don’t really publish on that on a wide spectrum, what we did. Typically, the price increases that we did were in standard with the industry and really around the commodity pricing discussions that were taking place in the industry. We have maintained our prices now for the third quarter and fourth quarter in those markets. And I don’t – frankly, what drives our results in Q2 is really the overarching demand for the products, both in bullets and ammo. Pricing was literally just an even-steven with what’s taking place in commodities.

Okay. Thanks. And then you talked about the impact – there was a negative impact on gross margin, even though your gross margin was up strongly due to logistics and component inflation and things like that. Is there any way you can quantify the impact and break it down? Like was it more the freight and shipping and logistics or was it more like the materials and components that were the bigger impact on the margin?

It was more related to the logistics and supply chain side of things, and that did have a negative impact of about 50 basis points on consolidated margins.

And obviously, more on the Black Diamond type deal on the domestic production of Sierra and Barnes.

Okay. And then can I just ask you, in terms of Rhino-Rack, I mean, obviously, I would expect you to move as quickly as you can after integration to expand distribution in the U.S. But Australia and New Zealand will remain really important markets. How confident are you that they have plans in place to continue to grow organically in the near-term pretty strongly in the whole market of Australia and New Zealand?

Yes. So obviously, when we pick super-fans, and this is really critical to the criteria, one, leading market share, where – as we have stated, they are the dominant brands in Australia and New Zealand. Two, a history of innovation, which they have proved out many times, including of their recent Red Dot design awards. But we really look at that as what does the pipeline look like for new innovations and there is a very strong pipeline there. Next is go-to-market and we believe that they have done a phenomenal job partnering on certain aspects of the OEM and the aftermarket. But like they have looked at other markets, I think there is some outdoors opportunity within Australia and New Zealand, and the market is still obviously growing there. And I think between accelerating the pipeline they have, helping them with the go-to-market ideology in there and then just the growing demand that this trend has and it’s not slowing down, we feel confident on Australia and New Zealand, albeit realizing that there is a ceiling at some point because they are the dominant market share brand. So, we don’t expect the same – though we expect growth and anticipate that it will continue to gain market share, we don’t anticipate that it will be faster growth than we will find in other parts of the world. And then obviously, the other opportunity, which we will bring to them as part of this, is what are the extensions and expansions in accessories or other opportunities, addressable markets that are adjacent to the racks that we can help them expand into.

Okay, great. That’s it for me. Thank you.

Your next question is from Mark Smith of Lake Street Capital Markets. Please proceed.

Hi guys. First one to hit the Sierra Barnes ammo, bullet business, can you just – can you quantify at all or talk about the backlog, maybe the magnitude and how large that is in the timeframe specifically in that business to refill channel inventory?

All I can tell you is that there is months, right. If we look at this today, I would tell you that I don’t think this market is going to see a slowdown for the next at least 12 months, if not longer. And by that, my reality is that we are still dealing with not enough hunt ammo or bullets for fall ‘21. And we will hope maybe to get to that ceiling in fall hunt season ‘22.

Okay. And then looking broadly throughout the outdoor industry, retail consumer demand, have you seen any slowing at all or is there continue to be some acceleration and if you can speak domestically as well as internationally.

We have not seen any slowing at all, not at the specialty level or at the multi-door level accounts. We – if the season shifts, we actually anticipate that we will see surge #2 come winter this year, and we will be chasing the fall activities as well as the winter sports. I think Europe, as it comes – more rationalizes out of COVID, will continue to accelerate. And we are actually seeing positive momentum now coming out of the IGD market, which we haven’t seen for 12 months.

Perfect. And then just the last one from me, can you quantify at all e-commerce or your direct-to-consumer channels? And then just longer term as you look at the profitability and growth and D2C in your retail stores, how you manage growing those businesses while also managing the relationship with current retail partners?

Yes. So obviously, first and foremost, we have always stated this. It’s on-time delivery, good fulfillment, easy-to-do business with. You are not – you can’t have low fulfillment and difficulty to do business with because you prioritize your D2C model. So, it’s really important that we prioritize our specialty and our wholesale market before D2C. Now we believe that D2C will continue to grow with time because the consumer continues to go through this either community-centric to the flagship stores where they want to be educated on the product themselves rather than just buy them or through D2C as you create more and more opportunities for them to have exposure to the product. I believe at BD, we have a long runway of continuing to grow our wholesale distribution business while also growing our D2C. Part of that is product itself, and part of that is just the awareness of the brands. We still struggle with the Black Diamond versus BD syndrome. You have either never heard of Black Diamond, or BD is your favorite brand in the whole world. And that will come with time on this. The flagship stores have proved to be really strong because they become a meta both for the super-fan, but also the consumer who has never seen our brand. And we see both of those as we expand our retail distribution. And I think it’s an awareness issue on both fronts.

Excellent. Thank you, guys.

At this time, this concludes our question-and-answer session. I would now like to turn the call back to Mr. Walbrecht for closing remarks.

Thank you everyone. We appreciate you participating today. We look forward to speaking with you again when we conclude our third quarter results and come back at that time. All the best.

Ladies and gentlemen, this does conclude today’s conference. You may now disconnect. Thank you for your participation.