Exhibit 99.1

 

 

 

Clarus Reports Third Quarter 2020 Results, Sales Up 7%

 

- Sales in the Fourth Quarter of 2020 Expected to Range Between $67.5 Million and $69.0 Million, up 11% to 13% Versus Fourth Quarter of 2019

 

SALT LAKE CITY, Utah – November 9, 2020 – Clarus Corporation (NASDAQ: CLAR) (“Clarus” and/or the “Company”), a company focused on the outdoor and consumer industries, reported financial results for the third quarter ended September 30, 2020.

 

Third Quarter 2020 Financial Summary vs. Same Year-Ago Quarter

 

·Sales increased 7% to $64.5 million.
·Gross margin was 33.6% compared to 34.1%.
·Net income was $1.2 million, or $0.04 per diluted share, compared to $3.5 million, or $0.11 per diluted share.
·Adjusted net income before non-cash items was $9.2 million, or $0.30 per diluted share, compared to $6.0 million, or $0.19 per diluted share.
·Adjusted EBITDA increased 34% to $9.1 million.
·Free cash flow (net cash provided by operating activities less capital expenditures) improved significantly to $5.0 million compared to $(4.9) million.

 

Management Commentary

 

“As indicated in our pre-announcement, our third quarter results showed the strength of our well-diversified brand portfolio,” said Clarus President John Walbrecht. “Black Diamond sales continued to improve and ended the third quarter down only 8% year-over-year, and sales for Sierra increased 135% to a record $15.1 million. These results were supported by our well-defined strategy of preserving brand equity while continuing to execute on our ‘innovate & accelerate’ playbook across our portfolio of brands.

 

“Subsequent to the third quarter, we welcomed Barnes Bullets—our newest ‘super fan’ brand—to our platform. Barnes embodies the traits we seek in an acquisition, including a rich history of innovation and strong brand awareness amongst the core, yet untapped market potential. Leveraging our balance sheet, we expect to execute the same playbook to drive accelerated growth and market share expansion with Barnes that we’ve done with both Black Diamond and Sierra. We look forward to ending 2020 on a strong note and continuing our momentum into 2021.”

 

Third Quarter 2020 Financial Results

Sales in the third quarter increased 7% to $64.5 million compared to $60.2 million in the same year-ago quarter. Black Diamond sales were down 8% and Sierra sales were up 135%. The decrease in Black Diamond was primarily due to lower levels of retail demand due to COVID-19. The increase in Sierra was due to sales improvements across every channel and region. Sales in the Company’s direct-to-consumer channel were up 24%. On a constant currency basis, total sales were up 7%.

 

Gross margin in the third quarter decreased 50 basis points to 33.6% compared to 34.1% in the year-ago quarter due to unfavorable impacts on the Company’s supply chain and logistics as a result of COVID-19.

 

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Selling, general and administrative (SG&A) expenses in the third quarter increased 14% to $18.7 million compared to $16.4 million in the year-ago quarter primarily due to higher stock-based compensation given Clarus’ stock price appreciation during the quarter. Black Diamond brand SG&A was down 11% due to cost saving initiatives. Sierra SG&A was up 14% due to the strong sales growth.

 

Net income in the third quarter was $1.2 million, or $0.04 per diluted share, compared to $3.5 million or $0.11 per diluted share, in the year-ago quarter. The decrease included $6.6 million of non-cash charges and $1.4 million in transaction costs compared to $2.5 million of non-cash charges and minimal transaction costs in the same year-ago quarter.

 

Adjusted net income in the third quarter, which excludes the non-cash items and transaction costs, was $9.2 million, or $0.30 per diluted share, compared to an adjusted net income of 6.0 million, or $0.19 per diluted share, in the same year-ago quarter. Adjusted EBITDA in the third quarter increased 34% to $9.1 million compared to $6.8 million in the same year-ago quarter.

 

Net cash provided by operating activities for the third quarter ended September 30, 2020 was $6.6 million compared to $(4.0) million in the prior year. Capital expenditures in the third quarter were $1.6 million compared to $0.8 million in the same year-ago period. Free cash flow for the quarter ended September 30, 2020 was $5.0 million compared to $(4.9) million in the same year-ago period.

 

Liquidity at September 30, 2020 vs. December 31, 2019

 

·Cash and cash equivalents totaled $17.0 million compared to $1.7 million.
·Total debt of $41.1 million compared to $22.7 million and reflected the full purchase price of Barnes Bullets of $30.5 million, which was acquired on October 2, 2020.
·Remaining access to $38.9 million on the Company’s revolving line of credit.
·Net debt leverage ratio of 1.3x compared to 0.9x.

 

2020 Outlook

Clarus anticipates sales in the fourth quarter of 2020 to range between $67.5 million and $69.0 million, up 11% to 13% compared to $61.0 million in the fourth quarter of 2019.

 

Net Operating Loss (NOL)

The Company estimates that it has available NOL carryforwards for U.S. federal income tax purposes of approximately $132 million. The Company’s common stock is subject to a rights agreement dated February 7, 2008 that is intended to limit the number of 5% or more owners and therefore reduce the risk of a possible change of ownership under Section 382 of the Internal Revenue Code of 1986, as amended. Any such change of ownership under these rules would limit or eliminate the ability of the Company to use its existing NOLs for federal income tax purposes. However, there is no guaranty that the rights agreement will achieve the objective of preserving the value of the NOLs.

 

Conference Call

The Company will hold a conference call today at 5:00 p.m. Eastern time to discuss its third quarter 2020 results.

 

Date: Monday, November 9, 2020

Time: 5:00 p.m. Eastern time (3:00 p.m. Mountain time)

Toll-free dial-in number: 1-877-511-3707

International dial-in number: 1-786-815-8672

Conference ID: 9449518

 

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Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Gateway Investor Relations at 1-949-574-3860.

 

The conference call will be broadcast live and available for replay here and on the Company’s website at www.claruscorp.com.

 

A replay of the conference call will be available after 8:00 p.m. Eastern time on the same day through November 16, 2020.

 

Toll-free replay number: 1855-859-2056

International replay number: 1-404-537-3406

Replay ID: 9449518

 

About Clarus Corporation

Headquartered in Salt Lake City, Utah, Clarus Corporation is a leading developer, manufacturer and distributor of best-in class outdoor equipment and lifestyle products focused on the climb, ski, mountain, and sport markets. With a strong reputation for innovation, style, quality, design, safety and durability, Clarus’ portfolio of iconic brands includes Black Diamond®, Sierra®, Barnes®, PIEPS®, and SKINourishment® sold through specialty and online retailers, distributors and original equipment manufacturers throughout the U.S. and internationally. For additional information, please visit www.claruscorp.com or the brand websites at www.blackdiamondequipment.com, www.sierrabullets.com, www.barnesbullets.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) net (loss) income before non-cash items and related income per diluted share, and adjusted net income before non-cash items and related income per diluted share, (ii) earnings before interest, taxes, other income or expense, depreciation and amortization (“EBITDA”), and adjusted EBITDA, and (iii) free cash flow. The Company believes that the presentation of certain non-GAAP measures, i.e.: (i) net (loss) income before non-cash items and related income per diluted share, and adjusted net income before non-cash items and related income per diluted share, (ii) EBITDA and adjusted EBITDA, and (iii) 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. 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.

 

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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 release include, but are not limited to, the overall level of consumer demand on our 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; changes in governmental regulation, legislation or public opinion relating to the manufacture and sale of bullets and ammunition by our Sierra/Barnes segment, and the possession and use of firearms and ammunition by our 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 global 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 global pandemic; the impact that global climate change trends may have on the Company and its suppliers and customers; the Company's ability to protect patents, trademarks and other intellectual property rights; any breaches of, or interruptions in, our information systems; the ability of our information technology systems or information security systems to operate effectively, including as a result of security breaches, viruses, hackers, malware, natural disasters, vendor business interruptions or other causes; our ability to properly maintain, protect, repair or upgrade our information technology systems or information security systems, or problems with our transitioning to upgraded or replacement systems; the impact of adverse publicity about the Company and/or its brands, including without limitation, through social media or in connection with brand damaging events and/or public perception; fluctuations in the price, availability and quality of raw materials and contracted products as well as foreign currency fluctuations; our ability to utilize our net operating loss carryforwards; changes in tax laws and liabilities, tariffs, legal, regulatory, political and economic risks; and the Company’s ability to maintain a quarterly dividend. More information on potential factors that could affect the Company's financial results is included from time to time in the Company's public reports filed with the Securities and Exchange Commission, including the Company's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and 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:

John C. Walbrecht President

Tel 1-801-993-1344

john.walbrecht@claruscorp.com

 

or

 

Aaron J. Kuehne

Chief Administrative Officer and Chief Financial Officer

Tel 1-801-993-1364

aaron.kuehne@claruscorp.com

 

Investor Relations Contact:

Gateway Investor Relations Cody Slach

Tel 1-949-574-3860

CLAR@gatewayir.com

 

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CLARUS CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands, except per share amounts)

 

   September 30, 2020   December 31, 2019 
Assets          
Current assets          
Cash  $17,027   $1,703 
Accounts receivable, less allowance for credit losses and          
doubtful accounts of $1,460 and $494, respectively   42,582    41,628 
Inventories   64,897    73,432 
Prepaid and other current assets   4,544    3,787 
Income tax receivable   532    322 
Total current assets   129,582    120,872 
           
Property and equipment, net   22,691    22,919 
Other intangible assets, net   13,610    15,816 
Indefinite lived intangible assets   41,772    41,630 
Goodwill   18,090    18,090 
Deferred income taxes   8,728    7,904 
Other long-term assets   33,365    3,034 
Total assets  $267,838   $230,265 
           
Liabilities and Stockholders' Equity          
Current liabilities          
Accounts payable and accrued liabilities  $29,157   $24,304 
Income tax payable   489    260 
Current portion of long-term debt   4,000    - 
Total current liabilities   33,646    24,564 
           
Long-term debt   37,062    22,670 
Deferred income taxes   1,219    1,224 
Other long-term liabilities   624    615 
Total liabilities   72,551    49,073 
           
Stockholders' Equity          
Preferred stock, $.0001 par value; 5,000          
shares authorized; none issued   -    - 
Common stock, $.0001 par value; 100,000 shares authorized;          
35,021 and 33,615 issued and 31,051 and 29,760 outstanding, respectively   4    3 
Additional paid in capital   511,331    492,353 
Accumulated deficit   (292,393)   (288,592)
Treasury stock, at cost   (23,789)   (22,269)
Accumulated other comprehensive income (loss)   134    (303)
Total stockholders' equity   195,287    181,192 
Total liabilities and stockholders' equity  $267,838   $230,265 

 

 

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CLARUS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(In thousands, except per share amounts) 

 

   Three Months Ended 
   September 30, 2020   September 30, 2019 
         
Sales          
Domestic sales  $34,686   $28,794 
International sales   29,805    31,409 
Total sales   64,491    60,203 
           
Cost of goods sold   42,822    39,646 
Gross profit   21,669    20,557 
           
Operating expenses          
Selling, general and administrative   18,674    16,443 
Transaction costs   1,440    37 
           
Total operating expenses   20,114    16,480 
           
Operating income   1,555    4,077 
           
Other income (expense)          
Interest expense, net   (232)   (353)
Other, net   449    (420)
           
Total other income (expense), net   217    (773)
           
Income before income tax   1,772    3,304 
Income tax expense (benefit)   589    (188)
Net income  $1,183   $3,492 
           
Net income per share:          
Basic  $0.04   $0.12 
Diluted   0.04    0.11 
           
Weighted average shares outstanding:          
Basic   29,983    29,876 
Diluted   30,986    31,077 

  

 

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CLARUS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands, except per share amounts)

 

   Nine Months Ended 
   September 30, 2020   September 30, 2019 
         
Sales          
Domestic sales  $83,493   $87,805 
International sales   64,567    80,610 
Total sales   148,060    168,415 
           
Cost of goods sold   97,243    109,810 
Gross profit   50,817    58,605 
           
Operating expenses          
Selling, general and administrative   50,537    51,215 
Restructuring charge   -    13 
Transaction costs   1,870    124 
           
Total operating expenses   52,407    51,352 
           
Operating (loss) income   (1,590)   7,253 
           
Other expense          
Interest expense, net   (800)   (978)
Other, net   324    (260)
           
Total other expense, net   (476)   (1,238)
           
(Loss) income before income tax   (2,066)   6,015 
Income tax benefit   (542)   (570)
Net (loss) income  $(1,524)  $6,585 
           
Net (loss) income per share:          
Basic  $(0.05)  $0.22 
Diluted   (0.05)   0.21 
           
Weighted average shares outstanding:          
Basic   29,854    29,841 
Diluted   29,854    30,999 

 

 

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CLARUS CORPORATION

RECONCILIATION FROM NET INCOME TO NET INCOME BEFORE NON-CASH ITEMS, ADJUSTED

NET INCOME BEFORE NON-CASH ITEMS AND RELATED EARNINGS PER DILUTED SHARE

(In thousands, except per share amounts)

 

   Three Months Ended 
       Per Diluted       Per Diluted 
   September 30, 2020   Share   September 30, 2019   Share 
                 
                 
Net income  $1,183   $0.04   $3,492   $0.11 
                     
Amortization of intangibles   753    0.02    888    0.03 
Depreciation   1,140    0.04    1,090    0.04 
Amortization of debt issuance costs   76    0.00    74    0.00 
Stock-based compensation   4,204    0.14    678    0.02 
Income tax expense (benefit)   589    0.02    (188)   (0.01)
Cash paid for income taxes   (152)   (0.00)   (28)   (0.00)
                     
Net income before non-cash items  $7,793   $0.25   $6,006   $0.19 
                     
Transaction costs   1,440    0.05    37    0.00 
State cash taxes on adjustments   (45)   (0.00)   (1)   (0.00)
AMT cash taxes on adjustments   (28)   (0.00)   (1)   (0.00)
                     
Adjusted net income before non-cash items  $9,160   $0.30   $6,041   $0.19 

 

CLARUS CORPORATION

RECONCILIATION FROM NET (LOSS) INCOME TO NET INCOME BEFORE NON-CASH ITEMS, ADJUSTED

NET INCOME BEFORE NON-CASH ITEMS AND RELATED EARNINGS PER DILUTED SHARE

(In thousands, except per share amounts)

 

   Nine Months Ended 
       Per Diluted       Per Diluted 
   September 30, 2020   Share   September 30, 2019   Share 
                 
                 
Net (loss) income  $(1,524)  $(0.05)  $6,585   $0.21 
                     
Amortization of intangibles   2,290    0.08    2,665    0.09 
Depreciation   3,405    0.11    3,332    0.11 
Amortization of debt issuance costs   230    0.01    206    0.01 
Stock-based compensation   5,433    0.18    2,246    0.07 
Income tax benefit   (542)   (0.02)   (570)   (0.02)
Cash paid for income taxes   (418)   (0.01)   (131)   (0.00)
                     
Net income before non-cash items  $8,874   $0.30   $14,333   $0.46 
                     
Restructuring charge   -    -    13    0.00 
Transaction costs   1,870    0.06    124    0.00 
State cash taxes on adjustments   (58)   (0.00)   (5)   (0.00)
AMT cash taxes on adjustments   (36)   (0.00)   (3)   (0.00)
                     
Adjusted net income before non-cash items  $10,650   $0.36   $14,462   $0.47 

 

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CLARUS CORPORATION

RECONCILIATION FROM NET INCOME TO EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION, AND AMORTIZATION (EBITDA), AND ADJUSTED EBITDA 

(In thousands)

 

   Three Months Ended 
   September 30, 2020   September 30, 2019 
         
         
Net income  $1,183   $3,492 
           
Income tax expense (benefit)   589    (188)
Other, net   (449)   420 
Interest expense, net   232    353 
           
Operating income   1,555    4,077 
           
Depreciation   1,140    1,090 
Amortization of intangibles   753    888 
           
EBITDA  $3,448   $6,055 
           
Transaction costs   1,440    37 
Stock-based compensation   4,204    678 
           
Adjusted EBITDA  $9,092   $6,770 

 

 

CLARUS CORPORATION

RECONCILIATION FROM NET (LOSS) INCOME TO EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION, AND AMORTIZATION (EBITDA), AND ADJUSTED EBITDA 

(In thousands)

 

   Nine Months Ended 
   September 30, 2020   September 30, 2019 
         
         
Net (loss) income  $(1,524)  $6,585 
           
Income tax benefit   (542)   (570)
Other, net   (324)   260 
Interest expense, net   800    978 
           
Operating (loss) income   (1,590)   7,253 
           
Depreciation   3,405    3,332 
Amortization of intangibles   2,290    2,665 
           
EBITDA  $4,105   $13,250 
           
Restructuring charge   -    13 
Transaction costs   1,870    124 
Stock-based compensation   5,433    2,246 
           
Adjusted EBITDA  $11,408   $15,633 

 

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