Greetings, and welcome to the Sportsman's Warehouse Second Quarter 2024 Earnings Call. At this time, all participants are in a listen-only mode. Question and answer session will follow the formal presentation. If you require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce you to your host, Riley Timmer, Vice President of Investor Relations. Thank you, Riley. You may begin. Thank you, operator. Participating on our second quarter call today is Paul Stone, our Chief Executive Officer, and Jeff White, our Chief Financial Officer. I will now remind everyone of the company's safe harbor language. The statements we make today contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which includes statements regarding expectations about our future results of operations, demand for our products, and growth of our industry. Actual results may differ materially from those suggested in such statements due to a number of risks and uncertainties, including those described in the company's most recent Form 10-K and the company's other filings made with the SEC. We will also disclose non-GAAP financial measures during today's call. Definitions of such non-GAAP measures, as well as reconciliations to the most directly comparable GAAP financial measures, are provided as supplemental financial information in our press release, included as Exhibit 99.1 to the Form 8-K we furnished to the SEC today, which is also available on the investor relations section of our website at sportsmans.com. I will now turn the call over to Paul. Thank you, Riley, and good afternoon, everyone. Since joining Sportsman's Warehouse in November, my primary focus has been on revitalizing the company as a leading specialty retailer. Our mantra, which forms the foundation of our company and drives our mission, is Great Gear and Great Service. Initially, we concentrated on the great gear aspect, addressing distressed and slow-moving inventory, phasing out low-selling brands, and refining our product assortment. This strategy aimed to free up capital tied to underperforming inventory, enabling us to invest in newness and core merchandise that aligns with our business and resonates with our customers. We will discuss more about the great gear strategy and our plans to boost sales during this call. The supporting foundational element is great service. I've spent my entire 35-year career running all levels of store operations and cannot emphasize enough the importance of service, especially for our unique business. We know customers have a choice when they shop. Our competitive difference and the way we win customers will be because of our great service. In the second quarter, we implemented a culture change in all our stores. We now refer to our employees as Outfitters versus simply associates. Many of our talented Outfitters are also passionate outdoor enthusiasts and have a natural affinity with our customers. We want them to share more of their local expertise and experiences rather than focusing on in-store tasks. We expect them to evaluate the customer outdoor needs and outfit them with merchandise in all departments throughout the store. While it may sound simple, this change is a significant shift in how our stores have historically operated. While we are encouraged by the progress, we are still in the early innings of our business reset and transformation. Turning now to our second quarter results. Our sales continue to reflect the challenging macroeconomic environment and a consumer whose discretionary spending remains under pressure. Net sales for the second quarter were $288.7 million compared to $309.5 million in the prior year, with same-store sales down 9.8% compared with last year. While comp sales were down each month during Q2, we were encouraged to see improving trends each month as we moved through the quarter. From a same-store sales by department perspective, all of our departments, with the exception of fishing, were down this quarter. Similar to the last quarter, all departments except fishing outpaced the decrease in year-over-year inventory levels, and we are executing strategically to end the summer season with clean inventory in each of these departments. This will provide us the open-to-buy dollars needed to invest in-depth with key vendors, putting us in a much better position for the back half of the year. Our hunting category was down 13% in the quarter, but saw improved month-to-month trends during Q2. Ammunition is one of the key store traffic drivers, with a consumer who is sensitive to price right down to the price per round. To stay market competitive, we made strategic buys and priced ourselves to win in this key category. While we believe this will drive sales and traffic, this will be a headwind to our ammunition margins in the back half of the year. In mid-June, we made a strategic shift to focus more of our promotional efforts on firearms and ammunition, our two largest categories, to drive sales and online traffic. Given that our customers are shopping for value, it was important that we make the necessary adjustments to strategically target and promote hot buys to win on price. Our top-performing department this quarter was fishing. Comp sales were up about 6%, with relatively consistent growth across all of our regions. This growth highlights the importance of having the right merchandise positioned and ready early in the season and in-depth to be successful and capture additional market share. This is the merchandising roadmap we've implemented as we buy into the seasons in all of our departments. E-com driven sales were up about 3% in the second quarter, driven by sales from our hunting and fishing departments, and comprised 19% of our total sales. To reiterate, we are in the early innings of this turnaround and are building out the necessary tools and skills to successfully transform this company. Now I'll share some perspective on inventory and merchandising. Frankly speaking, the first half of the year, we ran inventory too low and did not invest in the right amount of inventory, particularly in our core products. This further pressured our sales, given we did not have the appropriate depth in core items in most of our departments. As we move through the back half of 2024, our stores, for the first time in years, will be assorted with new seasonal merchandise and with depth. Additionally, we are making an incremental $20 million investment into new and core inventory, focused on products for our hunting department, which we believe will help drive additional top-line results. Turning now to store operations. We have completed the reset of our initial set of 87 stores, where we have significantly improved the customer shopping experience, including how we visually showcase our high-traffic areas. Keep in mind, these store upgrades have been accomplished using very little capital resources and have largely used our Outfitter labor to accomplish this significant undertaking. We are excited to see how our customers respond to these improvements. Further, we have empowered our employees, now referred to as Outfitters, with training programs that allow certification across a wide variety of our outdoor products. Our stores are hosting product demos and seminars each weekend during our seasonal peak to teach, train, and allow our customers to touch and feel the great products that we sell. With this, we emphasize quality products with newness and value that align with key outdoor seasons to drive traffic and increase basket size. This allows our customers to develop relationships and gain trust with our Outfitters, many of whom participate and are perhaps even experts in certain outdoor activities. This is one of our competitive advantages, and we will continue to lean into this as we drive the business forward. Now, I'll briefly address our omnichannel marketing strategy. We're excited to welcome Susan Sanderson, who has joined the team to lead our omnichannel marketing efforts. She's moving quickly to transition us from traditional mass marketing to omnichannel growth marketing. These efforts will enable us to strengthen our brand, reinforce our competitive advantage, and improve the performance of our marketing investment to have a greater impact on our top-line results. Susan's initial focus has been to unify three disconnected areas into one cohesive omnichannel team with a single go-to-market plan. These functions have historically operated independently, resulting in an ineffective model. Under her leadership, this team will now work collectively to create a digitally led, full-funnel, consumer-driven approach. I'm excited about the direction we're headed as a unified omnichannel team. Susan's next focus is transforming our go-to-market strategy and refining our marketing mix model. We're identifying the most effective allocation of marketing resources across various channels and tactics to maximize overall performance and return on investment. We are testing and learning to understand the impact of different marketing activities on sales, customer acquisition, and brand awareness, enabling us to make informed decisions on how to optimize future marketing strategies and budgets for better results. While we've completed some initial testing and are optimistic about the future, an agile test-and-learn mentality will ensure we make right moves as we lay the groundwork for the coming quarters. While we are still in the early innings, I'm both encouraged and optimistic about the progress we are making to reset the company and transform Sportsman's Warehouse. The foundation is being reestablished, and we are moving with speed to turn ourselves to positive comps and return the business to profitability. We continue to take unnecessary, non-customer-facing costs out of the business, part of which we will reinvest back into sales-driving initiatives. To reiterate how I began my prepared remarks today, our strategic edge remains as the premier outdoor retailer, providing our customers with great gear and great service. We will continue to focus on the areas of the business we can control and work with urgency to get our top-line trends moving in the right direction. We're confident in our plan and believe the strategies are in place to achieve our short- and long-term objectives. As I conclude, I want to emphasize the importance of managing the business to generate positive free cash flow for the full year. As we do this, we will prioritize the paydown of our debt as the primary use of our excess cash flow, maintaining a strong balance sheet as a top priority as we manage the business for a successful turnaround. With that, I'll now turn the call over to Jeff. Thank you, Paul, and good afternoon, everyone. I'll begin my remarks today with a review of our second quarter 2024 fiscal results, then cover our liquidity, balance sheet, and capital allocation strategy, and finally, provide additional context around our updated outlook for 2024. As Paul mentioned, net sales for the second quarter were $288.7 million, compared to $309.5 million in the second quarter of the prior year. Sales came in below our expectations as our business remained pressured from a challenging macroeconomic environment, which continues to weigh on consumer discretionary spend- Apologies, we are experiencing technical difficulty. Please stay on the line. Thank you, everyone, for waiting. We apologize for the technical difficulties. Greetings and welcome to the Sportsman's Warehouse Second Quarter 2024 Earnings Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If you require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce you to your host, Riley Timmer, Vice President of Investor Relations. Thank you, Riley. You may begin. Thank you, operator. Participating on our second quarter call today is Paul Stone, our Chief Executive Officer, and Jeff White, our Chief Financial Officer. I will now remind everyone of the company's safe harbor language. The statements we make today contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which includes statements regarding expectations about our future results of operations, demand for our products, and growth of our industry. Actual results may differ materially from those suggested in such statements due to a number of risks and uncertainties, including those described in the company's most recent Form 10-K and the company's other filings made with the SEC. We will also disclose non-GAAP financial measures during today's call. Definitions of such non-GAAP measures, as well as reconciliation to the most directly comparable GAAP financial measures, are provided as supplemental financial information in our press release, included as Exhibit 99.1 to the Form 8-K we furnished to the SEC today, which is also available on the investor relations section of our website at sportsmans.com. I will now turn the call over to Paul. Thank you, Riley, and good afternoon, everyone. Since joining Sportsman's Warehouse in November, my primary focus has been on revitalizing the company as a leading specialty retailer. Our mantra, which forms the foundation of our company and drives our mission, is Great Gear and Great Service. Initially, we concentrated on the great gear aspect, addressing distressed and slow-moving inventory, phasing out low-selling brands, and refining our product assortment. This strategy aimed to free up capital tied to underperforming inventory, enabling us to invest in newness and core merchandise that aligns with our business and resonates with our customers. We will discuss more about the great gear strategy and our plans to boost sales during this call. The supporting foundational element is great service. I've spent my entire 35-year career running all levels of store operations and cannot emphasize enough the importance of service, especially for our unique business. We know customers have a choice when they shop. Our competitive difference and the way we win customers will be because of our great service. In the second quarter, we implemented a culture change in all our stores. We now refer to our employees as Outfitters versus simply associates. Many of our talented Outfitters are also passionate outdoor enthusiasts and have a natural affinity with our customers. We want them to share more of their local expertise and experiences rather than focusing on in-store tasks. We expect them to evaluate the customer outdoor needs and outfit them with merchandise in all departments throughout the store. While it may sound simple, this change is a significant shift in how our stores have historically operated. While we are encouraged by the progress, we are still in the early innings of our business reset and transformation. Turning now to our second quarter results. Our sales continued to reflect the challenging macroeconomic environment and a consumer whose discretionary spending remains under pressure. Net sales for the second quarter were $288.7 million, compared to $309.5 million in the prior year, with same-store sales down 9.8% compared with last year. While comp sales were down each month during Q2, we were encouraged to see improving trends each month as we moved through the quarter. From a same-store sales by department perspective, all of our departments, with the exception of fishing, were down this quarter. Similar to the last quarter, all departments except fish outpaced the decrease in year-over-year inventory levels, and we are executing strategically to end the summer season with clean inventory in each of these departments. This will provide us the open-to-buy dollars needed to invest in-depth with key vendors, putting us in a much better position for the back half of the year. Our hunting category was down 13% in the quarter, but saw improved month-to-month trends during Q2. Ammunition is one of the key store traffic drivers, with the consumer who is sensitive to price right down to the price per round. To stay market competitive, we made strategic buys and priced ourselves to win in this key category. While we believe this will drive sales and traffic, this will be a headwind to our ammunition margins in the back half of the year. In mid-June, we made a strategic shift to focus more of our promotional efforts on firearms and ammunition, our two largest categories, to drive sales and online traffic. Given that our customers are shopping for value, it was important that we make the necessary adjustments to strategically target and promote hot buys to win on price. Our top-performing department this quarter was fishing. Comp sales were up about 6%, with relatively consistent growth across all of our regions. This growth highlights the importance of having the right merchandise positioned and ready early in the season and in-depth to be successful and capture additional market share. This is the merchandising roadmap we've implemented as we buy into the seasons in all of our departments. E-com-driven sales were up about 3% in the second quarter, driven by sales from our hunting and fishing departments and comprised 19% of our total sales. To reiterate, we are in the early innings of this turnaround and are building out the necessary tools and skills to successfully transform this company. Now I'll share some perspective on inventory and merchandising. Frankly speaking, the first half of the year, we ran inventory too low and did not invest in the right amount of inventory, particularly in our core products. This further pressured our sales, given we did not have the appropriate depth in core items in most of our departments. As we move through the back half of 2024, our stores, for the first time in years, will be assorted with new seasonal merchandise and with depth. Additionally, we are making an incremental $20 million investment into new and core inventory focused on products for our hunting department, which we believe will help drive additional top-line results. Turning now to store operations. We have completed the reset of our initial set of 87 stores, where we have significantly improved the customer shopping experience, including how we visually showcase our high-traffic areas. Keep in mind, these store upgrades have been accomplished using very little capital resources and have largely used our Outfitter labor to accomplish this significant undertaking. We are excited to see how our customers respond to these improvements. Further, we have empowered our employees, now referred to as Outfitters, with training programs that allow certification across a wide variety of our outdoor products. Our stores are hosting product demos and seminars each weekend during our seasonal peak to teach, train, and allow our customers to touch and feel the great products that we sell. With this, we emphasize quality products with newness and value that align with key outdoor seasons to drive traffic and increase basket size. This allows our customers to develop relationships and gain trust with our Outfitters, many of whom participate and are perhaps even experts in certain outdoor activities. This is one of our competitive advantages, and we will continue to lean into this as we drive the business forward. Now, I'll briefly address our omni-channel marketing strategy. We're excited to welcome Susan Sanderson, who has joined the team to lead our omni-channel marketing efforts. She's moving quickly to transition us from traditional mass marketing to omni-channel growth marketing. These efforts will enable us to strengthen our brand, reinforce our competitive advantage, and improve the performance of our marketing investment to have a greater impact on our top-line results. Susan's initial focus has been to unify three disconnected areas into one cohesive omni-channel team with a single go-to-market plan. These functions have historically operated independently, resulting in an ineffective model. Under her leadership, the team will now work collectively to create a digitally led, full-funnel, consumer-driven approach. I'm excited about the direction we're headed as a unified omni-channel team. Susan's next focus is transforming our go-to-market strategy and refining our marketing mix model. We're identifying the most effective allocation of marketing resources across various channels and tactics to maximize overall performance and return on investment. We are testing and learning to understand the impact of different marketing activities on sales, customer acquisition, and brand awareness, enabling us to make informed decisions on how to optimize future marketing strategies and budgets for better results. While we've completed some initial testing and are optimistic about the future, an agile test-and-learn mentality will ensure we make right moves as we lay the groundwork for the coming quarters. While we are still in the early innings, I'm both encouraged and optimistic about the progress we are making to reset the company and transform Sportsman's Warehouse. The foundation is being reestablished, and we are moving with speed to turn ourselves to positive comps and return the business to profitability. We continue to take unnecessary, non-customer-facing costs out of the business, part of which we will reinvest back into sales-driving initiatives. To reiterate how I began my prepared remarks today, our strategic edge remains as the premier outdoor retailer, providing our customers with great gear and great service. We will continue to focus on the areas of the business we can control and work with urgency to get our top-line trends moving in the right direction. We're confident in our plan and believe the strategies are in place to achieve our short and long-term objectives. As I conclude, I want to emphasize the importance of managing the business to generate positive free cash flow for the full year. As we do this, we will prioritize the paydown of our debt as the primary use of our excess cash flow, maintaining a strong balance sheet as a top priority as we manage the business for a successful turnaround. With that, I'll now turn the call over to Jeff. Thank you, Paul, and good afternoon, everyone. I'll begin my remarks today with a review of our second quarter 2024 fiscal results, then cover our liquidity, balance sheet, and capital allocation strategy, and finally, provide additional context around our updated outlook for 2024. As Paul mentioned, net sales for the second quarter were $288.7 million, compared to $309.5 million in the second quarter of the prior year. Sales came in below our expectations as our business remained pressured from a challenging macroeconomic environment, which continues to weigh on consumer discretionary spending. Same-store sales decreased 9.8% in the second quarter compared with the same time period of fiscal year 2023. This represents an improvement of 380 basis points versus Q1 2024. We are optimistic that as we continue to execute our strategic plan, we will further improve sales and see better month-over-month comps as we move through the balance of fiscal 2024. Our most difficult comp will be the month of October, where we lap the impacts from the Israel-Hamas war. Gross margin for the second quarter was 31.2% versus 32.6% in the prior year period. This reduction as a percentage of sales was largely driven by increased costs associated with shrink, as we revamped our methodology in the quarter to better align our counts with higher velocity SKUs and count more frequently in order to ensure better inventory accuracy as we focus on utilizing every dollar of inventory. We expect that shrink will continue to be a headwind in the back half of 2024 with these methodology improvements. Additionally, in an effort to end the summer season with clean inventory, we marked down seasonal goods, primarily in the apparel and camping departments, and we're pleased with the results of these efforts. As a percentage of net sales, SG&A expense was 32.7%, compared to 33.1% in the second quarter of the prior year. In absolute dollars, SG&A was down $8 million year- over- year, which includes expenses from six additional stores, reflecting our cost-cutting and expense management efforts implemented during the second quarter of last year. We continue to closely manage overall payroll expenses, with that line item down $5.7 million compared with the prior year's second quarter. On a per-store basis, SG&A dollars in Q2 were down 12.9% versus Q2 of 2023. We will continue to look for areas of the business where we can reduce expenses, simplify the business, and drive top-line growth. Net loss for the second quarter of fiscal 2024 was $5.9 million, or - $0.16 per diluted share, compared with a net loss of $3.3 million or - $0.09 per diluted share in the second quarter of the prior year. Adjusted net loss in the second quarter was $5.3 million, or - $0.14 per diluted share, compared with adjusted net loss of $1.6 million or - $0.04 per diluted share in the second quarter of the prior year. Adjusted EBITDA for the second quarter was $7.4 million, compared with adjusted EBITDA of $10.9 million in the second quarter of 2023. I will now take a minute and review our balance sheet, cash flows, and liquidity as of the end of the second quarter of 2024. Total inventory at the end of the second quarter was $363.4 million, compared to $457.2 million at the end of the second quarter of 2023, a decrease of $93.8 million or 23.8% on a per store basis. This is also down approximately $28 million from the end of Q1 2024. We expect to quickly increase our inventory during Q3 to ensure that we have the depth and core items and make a strategic investment in inventory of approximately $20 million into certain products that resonate with our customers to drive incremental top line, particularly around the holiday shopping season. As Paul mentioned in his prepared remarks, it is critical that we have our depth in our core products, like certain firearms and key ammo calibers, and in our high volume seasonal merchandise to ensure our customer has a positive shopping experience. We also have certain stores that are running too lean on inventory, which we believe is a factor influencing our soft year-over-year sales. With depth in core products and having the right assortment of new merchandise, we believe we will start to see improvements in comp sales in the back half of 2024. While we plan to make these inventory investments in Q3 and early Q4, we expect a clean sell-through of merchandise, ending the year with total inventory between $335 million and $350 million. In regards to liquidity, we ended the second quarter with a total debt balance of $155.1 million and total liquidity of approximately $100 million. While the company is not yet generating profits, we expect positive free cash flow for the full year 2024, which will go directly to pay down debt. We were pleased to partner with Pathlight Capital and Wells Fargo to secure a $45 million term loan, bolstering our balance sheet and overall liquidity. This will allow us the flexibility needed to strategically invest in inventory and further execute our ongoing reset of the business. We remain confident in the strength of the balance sheet and our strong vendor support. Our capital allocation strategy continues to prioritize the paydown of debt as our primary use of excess cash. Turning now to our guidance. Given the persistent macroeconomic pressures weighing on consumer discretionary spend, we are taking a more cautious view on the back half of 2024 and are providing an update to our full year guidance. We now estimate the following: We believe fiscal 2024 net sales will now be in the range of $1.13 billion-$1.17 billion. We expect adjusted EBITDA for fiscal 2024 to be in the range of $20 million-$35 million, which at the low end, still yields positive free cash flow. And finally, we continue to expect CapEx for 2024 to be between $20 million and $25 million, relating to technology investments to improve store service and merchandising productivity, as well as our normal store maintenance. Again, to reiterate my earlier comments, even at the low end of our range, we expect to generate positive free cash flow during 2024, which will be used to pay down our debt. That concludes our prepared remarks today. I will now turn the call back to the operator to facilitate questions. Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we pull for questions. Thank you. Our first question comes from the line of Ryan Sigdahl with Craig-Hallum Capital Group. Please proceed with your question. Hey, good afternoon, guys. I want to start with shrink. I guess this is the first time I've heard you guys call that out, I think, really ever, which is different relative to a lot of other retailers. Can you walk through exactly what? Is it an accounting nuance where you're changing your methodology a little bit, or are you guys actually having theft and actual shrink that a lot of other retailers are having? Then we'll follow up, quick one. Yeah. Hey, Ryan, it's Jeff. Good question. I would call it an accounting slash operational change. As we moved through the quarter and we were reducing inventory, there came to light a need to focus on inventory accuracy. So we looked at the methodology underlying our cycle counts, increased cycle counts in areas of the business with higher velocity SKUs to make sure that we had better inventory accuracy. As we keep managing inventory closer and closer to the dollar and leveraging that asset more and more, the need to have accurate quantity on hand has become very apparent. So it's been a change in our methodology. As we think about, you know, the go forward, we're gonna continue to work on the methodology in the back half of the year. Thus, in my prepared remarks, I talked about the impact in the back half. But it was again, to reframe, I would say it's more operational slash accounting methodology change than how you framed it up, an increase in theft out the door. It m akes sense. Then just on the discounting, and maybe that's just me, but it seemed like you guys were discounting quite a bit of fishing as well, kind of end of season. I guess, is that what we should expect going forward, is kind of fresh new inventory, but still kind of heavy discounting at the end of the season to make sure you're clean going into the next season? Or is that just kind of a refinement going forward to try and balance the inventory and sell it through in more normal fashion? Yeah. Hey, Ryan, Paul. I think our big, you know, commitment was, as we get into season, is to ensure that we're not carrying any of our non-go-forward goods into the latter quarters. So really, that was strategic and us saying we wanted to be able to, one, in fish, probably get out on some things we know we were not gonna go forward with or clean up on some of the subcats, to ensure we're clean. But overall, it was. That was the play, is when we came to the end of Q2, to ensure that we were not gonna carry things forward that we knew that we were not going to replan on. Great. Thanks, guys. I'll turn it over to the others. Thanks, Ryan. Thank you. Our next question comes from the line of Mark Smith with Lake Street Capital. Please proceed with your question. Hi, guys. Just wondering if we can get a little more insight into, you know, product mix. Sounds like all categories besides fishing were down. Can you quantify at all or maybe speak to, you know, which categories maybe had a tougher quarter than others? Yeah, Mark, thanks for the question. It's Jeff. Give you some more color, as we look at the apparel and footwear parts of the business, still going through the SKU rationalization and reset of that merchandising strategy. So you'll see that those were more pressured than other parts of the business. As we look at areas of the business, you know, camp performing slow to start off the quarter, but we saw better improvement in camp as we moved to the back end of Q2. Then pressure during the quarter in the ammunition category, I would highlight, just as we look at in, you know, peel back the hunt, there was some degradation in the ammo business, in terms of customer attachment. Then also, as we looked at the market in terms of our pricing, we've been proactive about some changes we've made there. I'm happy with the trends that we're seeing, but during the quarter, ammo was impactful in the hunt category. Okay. And then I wonder, just any updates on as we think about kind of loyalty program, email, you know, credit card? You know, I know it's still early in a lot of this reset, and you, you've just got Susan on, but any updates on those kind of products and how you're feeling about any advancements or evolution in those businesses? Yeah, well, evolution is needed, no question. And as we think about it from a time frame, we'll definitely come back on what the timing looks like. But we're extremely optimistic about being able to put our loyalty in a better place. And then I think as we look at our operations team out there from our credit card, that we feel there's enormous upside in the partnership with marketing, loyalty, and credit. But early stages, but I think overall, we're looking at all of merch to be able to think of potential upside as we go through next year. Really, you know, the loyalty will take work, but we're gonna do the right work, already doing the right work now on what it should look like, future state, for us and how we compare with others, not just within the industry, but as we think about retail in general, what that offering should look like. Okay. And last question for you. Just, I think that you guys had said the kind of cadence through the quarter, that I think comps had gotten better through the quarter. Any additional insights there? And I'm curious, kind of a mix of price versus traffic as you know were discounting maybe a little bit later in the quarter, you know, are you seeing those traffic improvements? You know, any additional insights there would be great. Yeah, Mark, great question. You know, to give you a little more color, as we think about the trends improving, started the quarter at a, you know, double-digit down comp, ended the quarter at a single-digit down comp, so good, good improvement through the quarter. So we were happy with the trends. As we think about what that goes into, you know, we're happy with what we're seeing at the start of the quarter, with the first month in, but cautious about as we think about the back half of the year. We're anniversarying some large liquidation events. We have the anniversarying of the Israel-Hamas in Q3. So I think the guidance that we gave is figuring in some caution into the back half of the year as we start to anniversary some of these significant headwinds. I'll just add to that, Mark. The one thing, and I think the highlight in what the team's been able, as we've kind of reintroduced the Outfitter, is that our attachment is in a really good place, and each month we saw attachment grow as we were driving folks in through either promotion or getting out of our goods at the end of the season when we should get out of them. But, I mean, the team's done a really nice job of being able to attach at what we're looking at as historical rates. So I feel good about that foundational work that's being done to be able to attach at a higher rate. And I think we saw that progress in a big way as we started through the Q and ended the Q. Perfect. Thank you. Thank you. Our next question comes from the line of Mark Herrmann with R5 Capital. Please proceed with your question. Hey, guys. Thanks for taking my question. Actually, I have the same question as Mark, but I'll ask it a little bit different way. In terms of the cadence in hunting comp, would you pin any of that on either the California tax pre-buy, having seen that come out of the, you know, the West Coast stores more so, or any kind of increasing chatter about, you know, upcoming election, political kind of stuff, or, you know, hunting seasonality, or is there anything specific that you can point to that might have caused that? Yeah, Mark, great question. This is Jeff. So we did see some pull forward demand in the state of California with the 11% tax that went effective at the end of June. As I look at the comp, the comp trend in the hunt category, we saw better benefit as we moved through July and I would say, reinvented our go-to-market approach in terms of pricing, marketing, really focusing in on the hunt category. We saw better comp trends as we focused our efforts into those categories through the end of July. So yes, we did see pull forward in California. You know, it's a large state for us, but more so than that, we saw better comp trends in the hunt category in July as we really narrowed our focus on the right in- stocks and our core items with the right pricing in the right areas. Yeah, I would just add to that, is we saw that run up in June. We didn't see a huge pullback like traditionally you would see the month following the run up. But I think the work the team did to really stay engaged with the California consumer post the increase from a tax standpoint, that we worked really hard on California, great state for us. We'll continue to focus on that state. But I think the work that was done, that where traditionally you see a huge run up and then you see a huge fall, we felt really good with the performance coming out of that, and we continue to be able to target and market our California as we see different things happening. We just recently had, you know, a pullback on the one firearm per month that just got pulled back, and the way we were able to go out and market that as soon as we got that notification is, you know, the team's done a really nice job being able to communicate, so I'd add what Jeff said, but then on top of it, say the work the team's doing to stay in constant communication with that state, as different things are happening, regulations coming down, that we're able to move, and I think be a little bit more nimble than what we have in the past. Okay, great. Thanks. Just a quick follow-up. Any commentary on the penetration of firearm service or warranty programs in the quarter? As we look at those programs, to Paul's point, in terms of loyalty and the other programs, we're seeing good trends. There's a lot of work to be done. FSP attachment, warranty attachment, I would say, Mark, it's the highest that we've seen it. Mm-hmm. We're at a good run rate there. We continue to push that track. It is one of the KPIs, making sure we're informing the customer about the value add proposition that it brings. But we're seeing good traction out of the FSP and warranty programs. Yeah, to start the year and where we finished Q2, just every month, huge improvement in what the team's been able to do to be able... I think we've got a lot of momentum around our FSP program as we go through the back half of the year. We only think that'll improve, Mark. Great. Thank you. Thank you. Our next question comes from the line of Justin Kleber with Baird. Please proceed with your question. Hey, good afternoon, guys. It's Justin Kleber. Thanks for taking the questions. First one for me, I was hoping you could maybe just share some color on conversion. I understand traffic is a challenge, but how is conversion trending when customers actually do step inside the store? Particularly with the change in the labor model, Paul, you alluded to, with more generalists as opposed to traditionally having more, I guess, department specialists. So just any color on conversion, what you're seeing on that front, would be helpful. Yeah, it's. I mean, I guess without getting too far into the weeds, we're very happy with what we're seeing on the conversion piece. As we look at, you know, our Outfitters being more generalists than specialists to allow us to attach. But right now, you know, I think the color I would give behind it is we're at an all-time high. We're even higher attaching than we did during COVID, and that gives us, you know, I think, great optimism as we think about, and Craig's working with his teams to be able to drive that part of the business and getting great buy-in from our Outfitters on what that looks like and as we attach. We have our suppliers working with us on different attachment ideas, suggestions, and ability to be able to spiff our Outfitters to really be able to incent them on the total package itself. So I, I think not only what the operators are doing, what the merchants and Brian, and the suppliers are helping us to be able to create really impactful attachment as we get these individuals in, via either through the store or as they're coming in to be able to transact as they use our omnichannel to be able to go through the firearm purchase plan. Got it. Okay, that's a very helpful color. Thanks, and then a question just for you, Jeff, on the revised guidance. If I just take the change in EBITDA relative to the change in revenue, if the decremental margins look high at, you know, close to 70%. So, is that just because you've been cutting expenses for some time, and there just isn't much left that can be taken out of the business? I mean, is that the right read, or is it more related to some of the promotional activity that you alluded to over the back half of the year? Yeah, Justin, great question. I'll give you a little more color. So we'll start with margin. As we think about margin, you know, we're going into what is our prime season and hunt season, so Q3 is gonna be primarily driven by hunt season. Not a lot of high promotional activity there, as that's where we have the right to play. Really more promotional activity as we move into the holiday season, and we're competing with disposable dollars with all retailers, so we'll see promotional activity uptick in Q4. On the expense side, we're always looking for ways to maximize the business, and we're gonna continue to look this, you know, this quarter and go forward on what expenses we can take out. In terms of the magnitude, the quantity that we saw last year, we were able to take a lot out in a very short period of time. Every dollar that we find now is taking time, and it comes as contracts come up for renewal. We're actively working with all of our landlords right now to try to renegotiate some rent rates, so the dollars do not come at the high rate that they did last year. So we do see kind of a leveling out of those expenses, especially as we get into the back half of the year and start to anniversary the expense cuts from the year before. So as you think about the guide, those are gonna be the big things impacting it. You know, to reiterate, we did still guide for positive free cash flow, and that's going to be achieved through the ending inventory target. As you look at that reduction in adjusted EBITDA and then the ending inventory, we're gonna be free cash flow positive through that ending inventory target and making sure that we really leverage that asset on the balance sheet. Yeah, I would just add, as we think about it from a cost standpoint, the one thing that we just need to keep in mind as we'll continue to find and take ways out of costs that are, you know, non-customer facing, and the ability to be able to take some of that cost savings and be able to put back to give a greater experience to help us sell and attach at a higher rate as we think about it in the stores. So I throw caution there, but we know as we look at it around great gear and great service, we're gonna continue to invest in the stores. Okay, and then just your response to my question there, Jeff, if I could just sneak one more in. As we think about the free cash flow generation and as we move into next year, recognizing it, it's too early to talk about 2025, just trying to understand, are there still opportunities to squeeze working capital out of the business or further bring down CapEx? Or is free cash flow next year more about really just driving EBITDA and less about kind of extracting cash from inventory or payable? Yeah, it's a great question. I think to answer that, we're gonna be driving more through EBITDA in terms of cash flow generation next year. As Paul mentioned in his prepared remarks, we took inventory too low in at the end of Q2. You don't wanna be walking into what is your prime season with inventory levels that we had, and we're gonna learn from our mistakes. We feel confident with our ability to end the year where I'm guiding, given that it's the slowest timeframe of the year, but we're gonna have to be investing back into the core parts of the business, you know, the 20% that drives the 80 as we move into next year. So I don't see much room in inventory to squeeze out in terms of working capital. We're gonna focus in on CapEx, make sure that we're, you know, spending the dollars that are most needed in the company, that have the highest return. So we'll keep managing that, but from a cash flow generation, you know, without looking too far into the future, next year's gonna be driven off of EBITDA. Okay. Thanks for all the time, guys. Really appreciate it. Best of luck here, and thank you. Thank you. Our next question comes from the line of Anna Glaessgen with Jefferies. Please proceed with your question. Hey, good afternoon, guys. Now with B. Riley, but thanks for taking my questions. I'd like to start on inventory. You know, we're now through the process of cleaning up a lot, and I understand you expect to end the season pretty healthy. But now you're talking about, you know, investing in the open- to- buy, and I understand you feel that you ended this quarter too light. But considering that there was, you know, a lot of liquidation last year, I just wanna touch on, you know, what are the demand signals, or what are you looking for in terms of categories you're chasing into? And also, what are the guardrails in place to make sure you don't end up, you know, over your skis in terms of inventory? Yeah, Anna, it's a great question, and to Paul's point, you know, our focus this year, where we ended Q2, we wanted to end in clean inventory, and we feel confident in the ability and our how we executed. We feel that we ended very, very clean as we walked out of the summer season. What we need to invest back into is the core part of the business. Again, the 20% of the SKUs that drive 80% of the sales. As we make these strategic investments and we make, you know, the strategic investment in the back half of the year, that investment is focused on the core SKUs of the business that drive the majority of the demand. We have not had the ability or been good at investing in the core historically. Where we were last year on the liquidation, we had zero open- to- buy during walking into holiday, into the hunt season to invest in the core. This year, we're in a much different situation where we can make these strategic investments and have confidence that it drives the business, because we have the data that support that they are the core SKUs that drive the business. Yeah, the thing I would add to it is that really for Q4 last year, we didn't have the opportunity to buy into really the seasonal holiday goods, and it was more around all focus was on the liquidation and clearance of merchandise. So we feel comfortable with special buys and newness, that's going to bring value. And I think to Jeff's earlier comments, as we come out of hunt, and hunt is our prime to be able to go and to be able to be in market in Q4 with value items, special buys, newness, to allow the customers to see that and to be planned as we get into Q4 and the holiday season, is going to be a point of differentiation that we didn't have last year. The other thing I would add is we are gonna make strategic, you know, investment in inventory around the goods that Jeff mentioned, with the intention of being able to get out of the goods by the end of the year, knowing that we have the right goods in the right place, and to invest and put them in the stores we know that we're gonna be able to turn, to allow us to be able to get to our inventory level that we're guiding to at the end of the year. We feel, I think, confident that the inventory purchase is in the right goods and will be in that core as we talked about the 80/20, to allow us to be able to make that strategic investment and to be able to turn it, by the time we get to close the year. Thank you. Our next question comes from the line of Matt Koranda. Oop! I apologize. There are no further questions at this time. I'd like to pass the call back over to management for any closing comments. By way of note, we'll be participating in both the B. Riley and Lake Street conferences in New York City on September 12th and hosting in-person one-on-one meetings. Thank you everyone for joining today's call, and I do want to apologize for the technical difficulties. Thank you.