Matt Koranda: Okay. Got it. That that’s clear. And then on Revelyst, for Eric, maybe, just curious, are we committing to mid-teens standalone EBITDA margins, for Revelyst still and then as the GEAR up program enough to get you there? I guess I’m curious how much of the $100 million of incremental cost savings in that program are related to sort of segment cost improvements versus corporate costs. If you could maybe just help us understand and unpack that program in a bit more detail on how it pertains to the long-term targets, that’d be great.
Eric Nyman: Sure. Hey, Matt it’s Eric. I’ll provide some color, and then I’ll turn it over to Andy to give a little bit of additional detail, but first and foremost, to your first question, you asked about our long term guidance and we do feel like the mid-teens long term guidance is something that we are still committing to and, you know, we’ll continue to provide more detail on that over the coming months. With regards to the GEAR Up program, it’s obviously something that we’re very excited and committed to doing. It’s a program that drives profitability improvements along with organic growth for Revelyst and everything does ladder back to that $100 million in new cost saves and $25 million in cost savings from the March 2023 initiative.
So we just want to make sure it’s clear that that’s how we get to the $125 million in cost savings by fiscal year 2027. We are on that with a great team and a world class consulting organization and just to give you some color before I pass it over to Andy, there’s a lot of significant detail there that I think will build confidence for all of our stakeholders. When we look at simplifying the business model, we do feel really good about the three platforms that we announced this morning, and we’ve been working on now for the past several weeks, really going to that Precision Sports Technology platform which will be driven by Foresight and Bushnell Golf, the Adventure Sport platform, which will be driven by Fox, Bell, Giro, QuietKat, and CamelBakand our outdoor performance group, which will be driven by Simms, Camp Chef, Bushnell, Blackhawk, Primos, and more and there’s a lot of excitement about being able to really focus on those brands to grow and then secondly, we feel really good about delivering increased efficiency and profitability.
There’s some color to that initiative called GEAR Up which is really that entirety of the transformation. With supply chain today, we have 9 DCs in domestic warehouses, and we see significant consolidation opportunity in the future. Today, we have 8 USA manufacturing sites, and we see opportunity for consolidation in the future, which will lead to cost savings there. On the real estate front, we have over 21 domestic locations today, and we expect some significant real estate consolidation. So, that’s just a little bit of color for how we’re going to get there, but yes, we do feel good that those programs will lead to those you know, improvement, improved margins over time and do you want to add any more to that?
Andrew Keegan: Yeah Matt. I think [Indiscernible] is we want to be clear the $100 million GEAR Up program is going to be fully related to Revelyst. So there isn’t going to be only a part of that that actually goes to Revelyst. Unlike the previous program, which was split between the two, this is going to be completely related to Revelyst. So that will get us a fairly significant way towards that mid-teens once fully implemented. There will be a little bit more of we need to do, and I think some of that is going to be a lot of what Eric talked about is the growth in some of these very high profit areas of golf and other areas with new products that are going to generate additional revenue will help close that gap as well, but this is going to be a significant component of us getting, which is why we’re confident in the mid-teens in the long run.
Matt Koranda: Got it. I’ll leave it there guys. Appreciate it.
Operator: Thank you. We now have Mark Smith of Lake Street Capital Markets. Please go ahead when you’re ready.
Q –Alex Sturnieks: Hey, guys. It’s Alex Sturniekson the line for, Mark Smith this morning. For my first question, for the Revelyst business, you guys mentioned simplifying the business model, reinvesting in high potential brands. Is there any consideration or discussion about the possibility of divesting certain brands within that Revelyst portfolio?
Eric Nyman: Hey, Alex. It’s Eric and thanks for the question. The answer is yes. As we think about focus we’re going to continue to give more information about, how we’re looking at our brands over the months ahead, but, at a high level, we look at our power brands being things like Foresight And Bushnell Golf, Fox Bell, Giro, Simms, and Bushnell and we’re going to really focus a lot of our efforts on those things and as we focus intensely on our power brands that will also mean that we’re taking a look at all of the brands in our portfolio and I would say that know, we’re evaluating all of our assets and we’re open to licensing or divesting from non-coreassets and brands in the future and as we make more progress on that, we’ll certainly be updating all stakeholders in our community.
Q –Alex Sturnieks: That’s great. And then for my second question here, could you give your thoughts around the promotional environment as we enter this holiday season, are you guys being a little more promotional than traditional levels? And then are you guys seeing retail partners getting overly promotional?
Andrew Keegan: Yeah. So, I mean, as we mentioned, the promotional level is going to be I would say more than historical as we are moving through inventory than our retailers are moving through inventory in this time period. So the high-priced inventory that we have on our balance sheet. We have made progress. Our Outdoor Products business was down about $20 million a little bit over that inventory here in the in the quarter, but we need to move through more of that. So you’re going to see promotional environment more than typical in the third quarter, which is why we are expecting EBITDA margins to be a little bit lower in Q3 for the Revelyst side and then that will return because those promotions will not continue past the holiday season.
So it’ll come back in Q4, which is a little bit of a dip and bring it up, but it will move through the inventories and the retailers will have moved through it because we’re partnering with them as well and that will not continue into next year as the expectation. It’ll return more to historic normal level.
Q –Alex Sturnieks: Well, that’s great. Hey. Thanks for taking my questions today.
Andrew Keegan: You bet. Thanks, Alex.
Operator: Thank you. We now have Jim Chartier of at Monness Crespi & Hardt.
Q –Jim Chartier: Good morning. Thanks for taking my question. Can you just tell us, you know, kind of what your expectation for standalone EBITDA for Revelyst is this year?
