Operator: Thank you. Our next question comes from Anna Glaessgen from B. Riley. Anna, your line is now open. Please go ahead.
Anna Glaessgen: Hi, good morning. Thanks for taking my questions. First, I’d like to touch on some commentary from a Private outdoor retailer recently, they spoke to fairly challenging conditions in the broader market, projecting declines in 2024. As we think about the outlook for the next this calendar year, to what extent are you baking in a little bit of recovery in these categories or maybe you have a different view than this retailer on what the setup is?
Eric C. Nyman: Hey, Anna, good morning. Thanks for the question, Tarek. I would say we’re we pay extremely close attention to our retailers and we’ve had many conversations particularly and I think what you’re referring to is probably the outdoor specialty retail space. There certainly is continued headwinds in that sector of our channel strategy, whereas our inventory with a lot of those retailers is in pretty good shape and our inventory on our own side has also made significant improvement year over year. We are certainly understanding of some of the challenges that the specialty retail marketplace is facing at this point in time. Knowing that, we’ve certainly spent a lot of our time, effort and energy on our direct-to-consumer business.
We saw the excellent momentum that we have there that we talked about in our remarks earlier today with the team up in a really positive way and we’ve also seen a nice recovery in our mass business and those are two areas that we’ll continue to Seek to stimulate as we go forward into calendar 2024.
Anna Glaessgen: Great. And touching on that that mass, the commentary at the end there, you know, over the kind of COVID bloom period, you saw really difficulty in getting inventory among the retailers, and so they were a little bit less discerning on brands. And previously, there’s been a thought that there would be a shift back to quality, so, you know, the big brands would recapture some of that shelf space. Have you seen that, as we kind of come into the next phase of the COVID recovery?
Eric C. Nyman: Well, I’ll note, I really can’t speak to all the different dynamics at mass retail, but I can say that the teams are doing a terrific job partnering with our mass retail partners across many different facets, sporting goods and you’d probably call it more mass overall. And they are certainly finding a lot of value in the brands at Revelyst. We continue to see good momentum in the mass market for a lot of our products.
Anna Glaessgen: Got it. Thanks, Eric. And one more for me. There’s been a decent amount of coverage of the relatively light snow at this point through the winter. To what extent do you see risk of snow related products having to see some heavier discounting? And to what extent that could impair the guidance for the fourth quarter in terms of high single digit EBITDA?
Eric C. Nyman: It’s definitely something that we’re monitoring, Anna. Snow got off to a very slow start this year. I think probably across all of specialty retail, it was just I hate to blame anything on weather, but there certainly was not a lot of snow in the early start of the year across the United States in particular and that led to slower POS than expected. So it’s something that we’re looking at very closely. It has picked up in recent weeks, but that is something that we’re going to continue to monitor for the rest of the quarter.
Andy Keegan: And just to add to that, just from the composition of our business, snow is a relatively small portion of the overall Revelyst business and Q4, in particular, is not the heaviest sell in. You’re doing replenishments as we go through the Q4, the actual winter season. Most of your sell in, which is the bulk of it is the largest portion of your sales is happening in Q3 our fiscal Q2 and Q3, so the calendar Q3 and Q4 and then you’re in replenishment mode. A lot of that went through, so we already saw some of those shipments come through. And then Q4, so this quarter is really more replenishment. So I wouldn’t expect it to have a significant impact on our Q4. We’ll be looking at that as we head into next order season.
Anna Glaessgen: Okay, great. Thanks, Andy and Eric.
Operator: Our next question comes from Mark Smith of Lake Street Capital Markets. Mark, your line is now open. Please go ahead.
Mark Smith: Hi, guys. First off, just wanted to look at the, kind of guidance of doubling EBITDA within Revelyst. Just want to confirm that that’s kind of fully burdened by corporate overhead as you look at that number?
Eric C. Nyman: That’s correct. When we’re talking about doubling EBITDA, it would be viewed as a standalone. So pro form a 24 compared to a 25 if we were standing alone.
Mark Smith: Perfect. And then we saw that kind of corporate overhead number come up a little bit here during the December quarter. Is there any change in kind of the weighting of that, for how much of that maybe falls on Revelyst is still roughly 70% number may be the best way to look at that.
Eric C. Nyman: You’re still looking at about 70%. Speak to the increase itself, there’s a few things that are in those numbers. One, we are starting to see some of the dyssynergies that we expect to have as we start to more align on the separation of the business, we’re starting to Implement some of those activities, so you’re starting to see that come through. We also had some comps that had a timing adjustment due to the transaction. There is a little bit of traffic shifted between Q3 and Q4, so you’ll see core costs actually come down some in the Q4 time period as well as what we mentioned last quarter, which was some changes in how we have some non-GAAP adjustments that were shifted between non-GAAP to GAAP and so you saw that come up a little bit, but the actual percentage that we’re looking at is probably still roughly in line with what we discussed previously.
Mark Smith: Okay. And then just looking at segment guidance here, the guidance seems to imply Kinetic you know, EBITDA margin, coming down here in the fourth quarter to kind of stay within that guidance range. Yes we’ve seen recent price increases come in at the beginning of the quarter. Were those price increases, you know, not enough to cover some of the increased pressure maybe from Propellant or anything else or anything guidance you can give us on as we look at Q4, primarily EBITDA margins within Kinetic Group.
