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Clarus Reports First Quarter 2024 Results

Increased Quarterly Adventure Sales 27%

Reduced Apparel Inventory at Outdoor 38%

Reaffirms Full Year Guidance

SALT LAKE CITY, May 02, 2024 (GLOBE NEWSWIRE) — Clarus Corporation (NASDAQ: CLAR) (“Clarus” and/or the “Company”), a global company focused on the outdoor enthusiast markets, reported financial results for the first quarter ended March 31, 2024.

First Quarter 2024 Financial Summary vs. Same YearAgo Quarter (adjusted to reflect the reclassification of the Precision Sport segment as discontinued operations)

Management Commentary
“We entered 2024 with a strong balance sheet and an experienced leadership team focused on initiating our strategic plan for our next phase as a pure-play, ESG-friendly outdoor business,” said Warren Kanders, Clarus’ Executive Chairman. “We are pleased with our execution in the first quarter, prioritizing simplification and right-sizing in Outdoor, along with the launch of compelling new products and expansion beyond the home market in Adventure. Based on our results to date, we have reaffirmed our full-year guidance and believe we have laid the foundation to drive increased profitability and unlock new growth opportunities going forward.”

Mr. Kanders added, “During the quarter, we saw evidence that our strategic initiatives are yielding incremental near-term benefits. Specifically, at Outdoor, we made progress on our inventory reduction initiatives, highlighted by a decline in apparel inventory of nearly 38% year-over-year. Overall, while we saw continued stabilization of the North American wholesale market, Europe and our independent global distributor markets still face difficult conditions. Building on the momentum we generated in the second half of last year, Adventure sales increased 27% in Q1 driven by strength in OEM customer demand. We are committed to establishing a best-in-class product ecosystem across the Adventure segment, while remaining intensely focused on enhanced product margins as we scale.”

First Quarter 2024 Financial Results
Sales in the first quarter were $69.3 million compared to $70.3 million in the same year‐ago quarter. This decrease was primarily driven by softness in the European wholesale market at Outdoor, partly offset by strength at the Adventure segment due to continued success with new product launches and OEM customers.

Sales in the Adventure segment increased 27% to $22.3 million, or $23.0 million on a constant currency basis, compared to $17.5 million in the year-ago quarter, reflecting higher demand from OEM customers and the impact of the TRED Outdoors acquisition. Sales in the Outdoor segment were $47.0 million, or $46.7 million on a constant currency basis, compared to $52.8 million in the year-ago quarter. The decline primarily reflects weakness in European and independent global distributor markets, partially offset by growth in the North American wholesale channel.

Gross margin in the first quarter was 35.9% compared to 36.3% in the year‐ago quarter. The decrease in gross margin was primarily due to promotional pricing at the Outdoor segment, the increase in PFAS related inventory reserves, as well as unfavorable channel mix at the Adventure segment. Adjusted gross margin in the first quarter was 36.9% compared to 36.3% in the year-ago quarter.

Selling, general and administrative expenses in the first quarter were $28.2 million compared to $29.4 million in the same year‐ago quarter. The decrease was attributable to expense reduction initiatives in the Outdoor segment to manage costs, as well as lower intangible amortization and lower stock compensation expenses. The decrease was partially offset by higher investment in marketing initiatives in the Adventure segment.

The loss from continuing operations in the first quarter of 2024 was $6.5 million, or $(0.17) per diluted share, compared to loss from continuing operations of $2.0 million, or $(0.05) per diluted share in the year-ago quarter. Loss from continuing operations in the first quarter included $3.0 million of charges relating to legal cost and regulatory matter expenses and $0.7 million of PFAS inventory reserve.

Adjusted loss from continuing operations in the first quarter of 2024 was $0.1 million, or $(0.00) per diluted share, compared to adjusted income from continuing operations of $0.4 million, or $0.01 per diluted share, in the year-ago quarter. Adjusted (loss) income from continuing operations excludes legal cost and regulatory matters expenses, PFAS inventory reserves, restructuring charges and transaction costs, as well as non-cash items for intangible amortization and stock-based compensation.

Adjusted EBITDA from continuing operations in the first quarter was $2.0 million, or an adjusted EBITDA margin of 2.9%, compared to $1.1 million, or an adjusted EBITDA margin of 1.6%, in the same year‐ago quarter.

Net cash used in operating activities for the three months ended March 31, 2024, was $16.4 million compared to net cash generated of $3.2 million in the prior year quarter. Capital expenditures in the first quarter of 2024 were $1.9 million compared to $1.5 million in the prior year quarter. Free cash flow for the first quarter of 2024 was an outflow of $18.3 million compared to positive free cash flow of $1.7 million in the prior year quarter. Free cash flow was significantly lower because of a significant reduction in accounts payable.

Liquidity at March 31, 2024 vs. December 31, 2023

Sale of Precision Sport / Discontinued Operations

On December 29, 2023, the Company announced the sale of its Precision Sport segment for $175 million. As the disposition was completed on February 29, 2024, we recognized a gain of $40.6 million, pending customary working capital adjustments, on the disposition during the three months ending March 31, 2024. The activities of the Precision Sport segment have been segregated and reported as discontinued operations for all periods presented.

2024 Outlook
The Company continues to expect fiscal year 2024 sales to range between $270 million to $280 million and adjusted EBITDA of approximately $16 million to $18 million, or an adjusted EBITDA margin of 6.2% at the mid-point of revenue and adjusted EBITDA. In addition, capital expenditures are expected to range between $4 million to $5 million and free cash flow is expected to range between $18 million to $20 million for the full year 2024.

Net Operating Loss (NOL)
The Company has net operating loss carryforwards (“NOLs”) for U.S. federal income tax purposes of $7.7 million. None of the NOLs expire until December 31, 2029.

Conference Call
The Company will hold a conference call today at 5:00 p.m. Eastern time to discuss its first quarter 2024 results.

Date: Thursday, May 2, 2024
Time: 5:00 p.m. Eastern time (3:00 p.m. Mountain time)
Registration Link: https://register.vevent.com/register/BIcdb6a4a884d64ac9a3bcfbb6965a71f6

To access the call by phone, please register via the live call registration link above and you will be provided with dial-in instructions and details. The conference call will be broadcast live and available for replay here and on the Company’s website at www.claruscorp.com.

About Clarus Corporation
 Headquartered in Salt Lake City, Utah, Clarus Corporation is a global leading designer, developer, manufacturer and distributor of best-in-class outdoor equipment and lifestyle products focused on the outdoor enthusiast markets. Each of our brands has a long history of continuous product innovation for core and everyday users alike. The Company’s products are principally sold globally under the Black Diamond®, Rhino-Rack®, MAXTRAX®, TRED Outdoors® brand names through outdoor specialty and online retailers, our own websites, distributors, and original equipment manufacturers. Our portfolio of iconic brands is well-positioned for sustainable, long-term growth underpinned by powerful industry trends across the outdoor and adventure sport end markets. For additional information, please visit www.claruscorp.com or the brand websites at www.blackdiamondequipment.com, www.rhinorack.com, www.maxtraxus.com / www.maxtrax.com.au, www.tredoutdoors.com, or www.pieps.com.

Use of Non‐GAAP Measures
The Company reports its financial results in accordance with U.S. generally accepted accounting principles (“GAAP”). This press release contains the non-GAAP measures: (i) adjusted gross margin and adjusted gross profit, (ii) adjusted (loss) income from continuing operations and related earnings (loss) per diluted share, (iii) earnings before interest, taxes, other income or expense, depreciation and amortization (“EBITDA”), EBITDA margin, adjusted EBITDA, and adjusted EBITDA margin, and (iv) free cash flow (defined as net cash provided by operating activities less capital expenditures). The Company believes that the presentation of certain non-GAAP measures, i.e.: (i) adjusted gross margin and adjusted gross profit, (ii) adjusted (loss) income from continuing operations and related earnings (loss) per diluted share , (iii) EBITDA, EBITDA margin, adjusted EBITDA and adjusted EBITDA margin, and (iv) free cash flow, provide useful information for the understanding of its ongoing operations and enables investors to focus on period-over-period operating performance, and thereby enhances the user’s overall understanding of the Company’s current financial performance relative to past performance and provides, along with the nearest GAAP measures, a baseline for modeling future earnings expectations. Non-GAAP measures are reconciled to comparable GAAP financial measures within this press release. We do not provide a reconciliation of the non-GAAP guidance measures Adjusted EBITDA and/or Adjusted EBITDA Margin for the fiscal year 2024 to net income for the fiscal year 2024, the most comparable GAAP financial measure, due to the inherent difficulty of forecasting certain types of expenses and gains, without unreasonable effort, which affect net income but not Adjusted EBITDA and/or Adjusted EBITDA Margin. The Company cautions that non-GAAP measures should be considered in addition to, but not as a substitute for, the Company’s reported GAAP results. Additionally, the Company notes that there can be no assurance that the above referenced non-GAAP financial measures are comparable to similarly titled financial measures used by other publicly traded companies.

Forward-Looking Statements
Please note that in this press release we 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 our expectations and beliefs concerning future events impacting the Company and therefore involve a number of risks and uncertainties. We caution 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 in this press release, include, but are not limited to, those risks and uncertainties more fully described from time to time in the Company’s public reports filed with the Securities and Exchange Commission, including under the section titled “Risk Factors” in the Company’s Annual Report on Form 10-K, and/or Quarterly Reports on Form 10-Q, as well as in the Company’s Current Reports on Form 8-K. All forward-looking statements included in this press release are based upon information available to the Company as of the date of this press release and speak only as of the date hereof. We assume no obligation to update any forward- looking statements to reflect events or circumstances after the date of this press release.

Company Contact:
Michael J. Yates
Chief Financial Officer
mike.yates@claruscorp.com

Investor Relations:
The IGB Group
Leon Berman / Matt Berkowitz
Tel 1-212-477-8438 / 1-212-227-7098
lberman@igbir.com / mberkowitz@igbir.com

CLARUS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except per share amounts)
       
  March 31, 2024   December 31, 2023
Assets          
Current assets          
Cash $ 47,484     $ 11,324  
Accounts receivable, less allowance for          
credit losses of $1,394 and $1,412   51,954       53,971  
Inventories   88,630       91,409  
Prepaid and other current assets   7,966       4,865  
Income tax receivable   930       892  
Assets held for sale         137,284  
Total current assets   196,964       299,745  
           
Property and equipment, net   16,345       16,587  
Other intangible assets, net   37,526       41,466  
Indefinite-lived intangible assets   56,897       58,527  
Goodwill   38,300       39,320  
Deferred income taxes   16,280       22,869  
Other long-term assets   14,664       16,824  
Total assets $ 376,976     $ 495,338  
           
Liabilities and Stockholders’ Equity          
Current liabilities          
Accounts payable $ 12,772     $ 20,015  
Accrued liabilities   22,441       24,580  
Income tax payable   816       805  
Current portion of long-term debt   44       119,790  
Liabilities held for sale         5,744  
Total current liabilities   36,073       170,934  
           
Long-term debt, net   37        
Deferred income taxes   17,324       18,124  
Other long-term liabilities   13,167       14,160  
Total liabilities   66,601       203,218  
           
Stockholders’ Equity          
Preferred stock, $0.0001 par value per share; 5,000 shares authorized; none issued          
Common stock, $0.0001 par value per share; 100,000 shares authorized; 42,878 and 42,761 issued and 38,236 and 38,149 outstanding, respectively   4       4  
Additional paid in capital   692,381       691,198  
Accumulated deficit   (329,811 )     (350,739 )
Treasury stock, at cost   (33,114 )     (32,929 )
Accumulated other comprehensive loss   (19,085 )     (15,414 )
Total stockholders’ equity   310,375       292,120  
Total liabilities and stockholders’ equity $ 376,976     $ 495,338  
           
CLARUS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands, except per share amounts)
           
  Three Months Ended
  March 31, 2024   March 31, 2023
           
Sales          
Domestic sales $ 28,284     $ 24,197  
International sales   41,027       46,081  
Total sales   69,311       70,278  
           
Cost of goods sold   44,460       44,770  
Gross profit   24,851       25,508  
           
Operating expenses          
Selling, general and administrative   28,215       29,354  
Restructuring charges   370        
Transaction costs   38       37  
Contingent consideration benefit         (1,565 )
Legal costs and regulatory matter expenses   3,002       128  
           
Total operating expenses   31,625       27,954  
           
Operating loss   (6,774 )     (2,446 )
           
Other (expense) income          
Interest income, net   370       5  
Other, net   (909 )     76  
           
Total other (expense) income, net   (539 )     81  
           
Loss before income tax   (7,313 )     (2,365 )
Income tax benefit   (851 )     (334 )
Loss from continuing operations   (6,462 )     (2,031 )
           
Discontinued operations, net of tax   28,346       3,629  
           
Net income $ 21,884     $ 1,598  
           
Loss from continuing operations per share:          
Basic $ (0.17 )   $ (0.05 )
Diluted   (0.17 )     (0.05 )
           
Net income per share:          
Basic $ 0.57     $ 0.04  
Diluted   0.57       0.04  
           
Weighted average shares outstanding:          
Basic   38,208       37,137  
Diluted   38,208       37,137  
           
CLARUS CORPORATION
RECONCILIATION FROM GROSS PROFIT TO ADJUSTED GROSS PROFIT
AND ADJUSTED GROSS MARGIN
             
THREE MONTHS ENDED
     
  March 31, 2024     March 31, 2023
             
Sales $ 69,311     Sales $ 70,278  
             
Gross profit as reported $ 24,851     Gross profit as reported $ 25,508  
Plus impact of PFAS inventory reserve   729     Plus impact of PFAS inventory reserve    
Adjusted gross profit $ 25,580     Adjusted gross profit $ 25,508  
             
Gross margin as reported   35.9 %   Gross margin as reported   36.3 %
             
Adjusted gross margin   36.9 %   Adjusted gross margin   36.3 %
             
CLARUS CORPORATION
RECONCILIATION FROM LOSS FROM CONTINUING OPERATIONS TO ADJUSTED (LOSS) INCOME FROM CONTINUING OPERATIONS AND RELATED EARNINGS PER DILUTED SHARE
(In thousands, except per share amounts)
 
                                                 
  Three Months Ended March 31, 2024  
  Total
sales
  Gross
profit
  Operating
expenses
  Income tax
(benefit) expense
  Tax rate   Loss from
continuing
operations
  Diluted EPS(1)  
                                         
                                         
As reported $ 69,311   $ 24,851   $ 31,625     $ (851 )   (11.6 )%   $ (6,462 )   $ (0.17 )  
                                         
Amortization of intangibles           (2,449 )     617           1,832          
Restructuring charges           (370 )     59           311          
Transaction costs           (38 )     6           32          
PFAS inventory reserve       729           114           615          
Legal costs and regulatory matter expenses           (3,002 )     461           2,541          
Stock-based compensation           (1,178 )     181           997          
                                         
As adjusted $ 69,311   $ 25,580   $ 24,588     $ 587     129.6 %   $ (134 )   $ (0.00 )  
                                         
(1) Potentially dilutive securities are excluded from the computation of diluted earnings (loss) per share if their effect is anti-dilutive to the loss from continuing operations. Reported loss from continuing operations per share and adjusted loss from continuing operations per share are both calculated based on 38,208 basic and diluted weighted average shares of common stock.  
                                         
                                         
  Three Months Ended March 31, 2023  
  Total
sales
  Gross
profit
  Operating
expenses
  Income tax
(benefit) expense
  Tax rate   (Loss) income from continuing operations   Diluted EPS(1)  
                                         
                                         
As reported $ 70,278   $ 25,508   $ 27,954     $ (334 )   (14.1 )%   $ (2,031 )   $ (0.05 )  
                                         
Amortization of intangibles           (2,768 )     278           2,490          
Transaction costs           (37 )     6           31          
Contingent consideration (benefit) expense           1,565       (335 )         (1,230 )        
Legal costs and regulatory matter expenses           (128 )     2           126          
Stock-based compensation           (1,286 )     277           1,009          
                                         
As adjusted $ 70,278   $ 25,508   $ 25,300     $ (106 )   (36.7 )%   $ 395     $ 0.01    
                                         
(1) Potentially dilutive securities are excluded from the computation of diluted earnings (loss) per share if their effect is anti-dilutive to the loss from continuing operations. Reported loss from continuing operations per share is calculated based on 37,137 basic and diluted weighted average shares of common stock. Adjusted income from continuing operations per share is calculated based on 38,109 diluted shares of common stock.  
                                         
CLARUS CORPORATION
RECONCILIATION FROM LOSS FROM CONTINUING OPERATIONS TO EARNINGS BEFORE INTEREST, TAXES,
DEPRECIATION, AND AMORTIZATION (EBITDA), EBITDA MARGIN, ADJUSTED EBITDA,
AND ADJUSTED EBITDA MARGIN

           
  Three Months Ended
  March 31, 2024   March 31, 2023
           
           
Loss from continuing operations $ (6,462 )   $ (2,031 )
           
Income tax benefit   (851 )     (334 )
Other, net   909       (76 )
Interest income, net   (370 )     (5 )
           
Operating loss   (6,774 )     (2,446 )
           
Depreciation   1,026       939  
Amortization of intangibles   2,449       2,768  
           
EBITDA   (3,299 )     1,261  
           
Restructuring charges   370        
Transaction costs   38       37  
Contingent consideration benefit         (1,565 )
PFAS inventory reserve   729        
Legal costs and regulatory matter expenses   3,002       128  
Stock-based compensation   1,178       1,286  
           
Adjusted EBITDA $ 2,018     $ 1,147  
           
Sales $ 69,311     $ 70,278  
           
EBITDA margin   -4.8 %     1.8 %
Adjusted EBITDA margin   2.9 %     1.6 %

 

 


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