Exhibit 99.1

 

 

Clarus Reports Third Quarter 2022 Results

 

– Sales in the Third Quarter of 2022 Increased 6% Year-Over-Year to $115.7 Million (up 9% on a Constant Currency Basis) –

 

SALT LAKE CITY, Utah – November 7, 2022 – Clarus Corporation (NASDAQ: CLAR) (“Clarus” and/or the “Company”), a global company focused on the outdoor and consumer enthusiast markets, reported financial results for the third quarter ended September 30, 2022.

 

Third Quarter 2022 Financial Summary vs. Same Year-Ago Quarter

 

Sales of $115.7 million increased 6.0%.
Gross margin was 34.1% compared to 36.0%.
Net income of $2.8 million, or $0.07 per diluted share, compared to $4.5 million, or $0.13 per diluted share.
Adjusted net income before non-cash items of $10.2 million, or $0.26 per diluted share, compared to $18.1 million, or $0.50 per diluted share.
Adjusted EBITDA of $15.1 million with an adjusted EBITDA margin of 13.0% compared to $19.2 million with an adjusted EBITDA margin of 17.7%.

 

Management Commentary

 

“Our portfolio of ‘Super Fan’ brands were largely resilient amid a challenging consumer backdrop," said Clarus President John Walbrecht. “Demand in both our Outdoor and Precision Sport segments remained intact during the quarter, demonstrating market share gains as activity-based, Super Fan consumer brands can gain market share even when macroeconomic challenges arise.

 

“In our Adventure segment, limited vehicle deliveries and higher-than-normal inventory in the channel persisted in our home market of Australia, and we began to experience challenging conditions in North America after a strong first half of the year. These headwinds were further exacerbated by volatile foreign currency markets. We believe these issues will be short-lived, and we see more opportunity than ever to ‘Innovate and Accelerate’ these brands on a global basis as overlanding continues to expand its addressable market.

 

“In total, we estimate foreign currency headwinds reduced our sales and Adjusted EBITDA by over $3.3 million in the third quarter. Higher freight costs also continued, lowering our profitability by $2.3 million during the third quarter. We believe higher freight costs to be transitory in nature as we are already experiencing an improved supply chain. As such, we expect to remain well-positioned to drive relative outperformance in this area given our agile approach across our businesses.

 

“As we look to the remainder of the year and into 2023, we believe we have a portfolio of brands that can continue to grow and gain market share, even in a weaker consumer environment. This is a key attribute of Super Fan brands, and we believe we are laying the foundation for long-term shareholder value creation.”

 

 

 

 

 

Third Quarter 2022 Financial Results

 

Sales in the third quarter increased 6% to $115.7 million compared to $109.0 million in the same year-ago quarter. The increase includes revenue contribution of $3.7 million from MAXTRAX, an acquisition completed on December 1, 2021. Organic sales were up 6% in the third quarter, MAXTRAX contributed 3% and foreign exchange was a 3% headwind. On a constant currency basis, total sales were up 9%.

 

Sales in the Outdoor segment increased 7%, or 11% on a constant currency basis, to $62.9 million compared to the same year-ago quarter due to strong demand, slightly offset by supply chain challenges associated with microchips that negatively impacted the Company’s ability to deliver its snow-safety products on time and in full. Precision Sport sales increased 13% to $34.2 million, reflecting continued strong demand and market share gains. Sales in the Adventure segment were $18.6 million, reflecting lower consumer demand given the challenging economic environment and constraints on new vehicle deliveries, which impacted new product sales both in the Australian and North American markets.

 

Gross margin in the third quarter was 34.1% compared to 36.0% in the year-ago quarter. Improvements in channel and product mix were more than offset by higher freight costs, as well as unfavorable foreign exchange movements. Higher freight costs had a negative impact on gross margin of 200 basis points, while foreign currency had a 180 basis point impact.

 

Selling, general and administrative expenses in the third quarter were $32.3 million compared to $31.3 million in the same year-ago quarter. The inclusion of MAXTRAX and higher go-to-market investments in the Outdoor segment were partially offset by lower non-cash stock-based compensation for performance awards.

 

Net income in the third quarter was $2.8 million, or $0.07 per diluted share, compared to net income of $4.5 million, or $0.13 per diluted share, in the prior year quarter.

 

Adjusted net income in the third quarter, which excludes non-cash items and transaction costs, was $10.2 million, or $0.26 per diluted share, compared to $18.1 million, or $0.50 per diluted share, in the same year-ago quarter.

 

Adjusted EBITDA in the third quarter was $15.1 million, or an adjusted EBITDA margin of 13.0%, compared to $19.2 million, or an adjusted EBITDA margin of 17.7%, in the same year-ago quarter. The decline in adjusted EBITDA was driven by lower sales in the Adventure segment, as well as heightened freight costs and unfavorable movements in foreign exchange rates, partially offset by lower discretionary spending.

 

Net cash provided by operating activities for the three months ended September 30, 2022, was $(11.5) million compared to net cash provided of $(17.5) million in the prior year quarter. Capital expenditures in the third quarter of 2022 were $2.1 million compared to $2.4 million in the prior year quarter. Free cash flow for the third quarter of 2022 was $(13.6) million compared to $(19.8) million in the prior year quarter due to higher working capital, specifically accounts receivable.

 

 

 

 

 

Liquidity at September 30, 2022 vs. December 31, 2021

 

Cash and cash equivalents totaled $10.4 million compared to $19.5 million.
Total debt of $167.2 million compared to $141.5 million.
Remaining access to approximately $110 million on the Company’s revolving line of credit.
Net debt leverage ratio of 2.2x compared to 2.0x

 

Stock Repurchase Program

 

During the third quarter, the Company repurchased 527,277 shares of its common stock for approximately $7.2 million, or $13.60 per share, leaving approximately $42.8 million remaining on its $50 million stock repurchase program.

 

2022 Outlook

 

Given lower sales in the Adventure segment, as well as the volatile foreign currency market and higher freight costs, Clarus is revising its full-year 2022 outlook. Clarus now expects fiscal year 2022 sales to grow approximately 18% to $445.0 million ($470.0 million prior) compared to 2021. This includes the assumption that the strong U.S. dollar will be a $6 million sales headwind in the fourth quarter of 2022. By segment, the Company now expects Outdoor segment sales to increase 1% to approximately $223.0 million ($237.5 million previously). The Precision Sport segment is now expected to increase 18% to approximately $130.0 million ($127.5 million previously) and the Adventure segment is now expected to contribute approximately $92 million ($105 million previously).

 

The Company now expects adjusted EBITDA in 2022 to be approximately $64 million ($78 million prior), or an adjusted EBITDA margin of 14.4%. In addition, capital expenditures are now expected to be approximately $8.0 million ($9.0 million previously) and free cash flow is now expected to range between $0 to ($5) million ($30.0 to $40.0 million previously) for the full year 2022.

 

Net Operating Loss (NOL)

 

The Company estimates that it has available NOL carryforwards for U.S. federal income tax purposes of approximately $58.4 million, which includes $37.2 million of NOL carryforwards that expire on December 31, 2022. The Company expects to fully utilize the $37.2 million in the current year, prior to expiration. 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 2022 results.

 

Date: Monday, November 7, 2022

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

Registration Link: https://register.vevent.com/register/BI58988a2f2e7047f1bdd63c5e2f1a5f6b

 

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. If you have any difficulty connecting with the conference call, please contact Gateway Group 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 7:00 p.m. Eastern Time on the same day through November 7, 2023.

 

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 and consumer enthusiast markets. Our mission is to identify, acquire and grow outdoor “super fan” brands through our unique “innovate and accelerate” strategy. We define a “super fan” brand as a brand that creates the world’s pre-eminent, performance-defining product that the best-in-class user cannot live without. 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®, Sierra®, and Barnes® 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.maxtrax.com.au, www.sierrabullets.com, www.barnesbullets.com, www.pieps.com, or www.goclimbon.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) net 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, (iii) earnings before interest, taxes, other income or expense, depreciation and amortization (“EBITDA”), EBITDA margin, adjusted EBITDA, and adjusted EBTIDA 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) net 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, (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. 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 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 Contacts:

 

John C. Walbrecht

President

Tel 1-801-993-1344

john.walbrecht@claruscorp.com

 

Michael J. Yates

Chief Financial Officer

Tel 1-801-993-1304

mike.yates@claruscorp.com

 

Investor Relations Contact:

 

Gateway Group, Inc.

Cody Slach

Tel 1-949-574-3860

CLAR@gatewayir.com

 

 

 

 

 

CLARUS CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands, except per share amounts)

 

   September 30, 2022   December 31, 2021 
Assets          
Current assets          
Cash  $10,365   $19,465 
Accounts receivable, less allowance for credit losses of $1,200 and $811   76,468    66,180 
Inventories   155,206    129,354 
Prepaid and other current assets   14,586    11,831 
Income tax receivable   860    116 
Total current assets   257,485    226,946 
           
Property and equipment, net   42,140    42,826 
Other intangible assets, net   56,789    73,683 
Indefinite-lived intangible assets   119,201    128,271 
Goodwill   112,247    118,090 
Deferred income taxes   22,304    22,433 
Other long-term assets   17,775    19,578 
Total assets  $627,941   $631,827 
           
Liabilities and Stockholders' Equity          
Current liabilities          
Accounts payable  $23,640   $31,488 
Accrued liabilities   26,271    27,473 
Income tax payable   1,109    4,437 
Current portion of long-term debt   10,306    9,585 
Total current liabilities   61,326    72,983 
           
Long-term debt, net   156,852    131,948 
Deferred income taxes   30,704    35,280 
Other long-term liabilities   15,970    21,448 
Total liabilities   264,852    261,659 
           
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; 41,625 and 41,105 issued and 37,036 and 37,094 outstanding, respectively   4    4 
Additional paid in capital   677,120    662,996 
Accumulated deficit   (254,313)   (263,342)
Treasury stock, at cost   (32,707)   (24,440)
Accumulated other comprehensive loss   (27,015)   (5,050)
Total stockholders' equity   363,089    370,168 
Total liabilities and stockholders' equity  $627,941   $631,827 

 

 

 

 

 

CLARUS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands, except per share amounts)

 

   Three Months Ended 
   September 30, 2022   September 30, 2021 
Sales          
Domestic sales  $55,540   $61,259 
International sales   60,175    47,712 
Total sales   115,715    108,971 
           
Cost of goods sold   76,291    69,792 
Gross profit   39,424    39,179 
           
Operating expenses          
Selling, general and administrative   32,340    31,314 
Transaction costs   858    8,147 
Contingent consideration expense   104    - 
           
Total operating expenses   33,302    39,461 
           
Operating income (loss)   6,122    (282)
           
Other expense          
Interest expense, net   (2,216)   (1,476)
Other, net   (1,238)   338 
           
Total other expense, net   (3,454)   (1,138)
           
Income (loss) before income tax   2,668    (1,420)
Income tax benefit   (83)   (5,950)
Net income  $2,751   $4,530 
           
Net income per share:          
Basic  $0.07   $0.13 
Diluted   0.07    0.13 
           
Weighted average shares outstanding:          
Basic   37,369    33,800 
Diluted   39,580    36,164 

 

 

 

 

 

CLARUS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands, except per share amounts)

 

   Nine Months Ended 
   September 30, 2022   September 30, 2021 
Sales          
Domestic sales  $181,920   $160,708 
International sales   162,004    96,903 
Total sales   343,924    257,611 
           
Cost of goods sold   216,566    163,361 
Gross profit   127,358    94,250 
           
Operating expenses          
Selling, general and administrative   101,959    72,903 
Transaction costs   2,880    9,272 
Contingent consideration expense   493    - 
           
Total operating expenses   105,332    82,175 
           
Operating income   22,026    12,075 
           
Other expense          
Interest expense, net   (5,060)   (1,926)
Other, net   (2,648)   (4,263)
           
Total other expense, net   (7,708)   (6,189)
           
Income before income tax   14,318    5,886 
Income tax expense (benefit)   2,494    (6,161)
Net income  $11,824   $12,047 
           
Net income per share:          
Basic  $0.32   $0.37 
Diluted   0.30    0.35 
           
Weighted average shares outstanding:          
Basic   37,256    32,159 
Diluted   39,694    34,044 

 

 

 

 

 

CLARUS CORPORATION

RECONCILIATION FROM GROSS PROFIT TO ADJUSTED GROSS PROFIT

AND ADJUSTED GROSS MARGIN

 

THREE MONTHS ENDED

 

   September 30, 2022      September 30, 2021 
Gross profit as reported  $39,424   Gross profit as reported  $39,179 
    -   Plus impact of inventory fair value adjustment   3,099 
Adjusted gross profit  $39,424   Adjusted gross profit  $42,278 
              
Gross margin as reported   34.1%  Gross margin as reported   36.0%
              
Adjusted gross margin   34.1%  Adjusted gross margin   38.8%
              

 

NINE MONTHS ENDED

 

   September 30, 2022      September 30, 2021 
Gross profit as reported  $127,358   Gross profit as reported  $94,250 
Plus impact of inventory fair value adjustment   269   Plus impact of inventory fair value adjustment   3,460 
Adjusted gross profit  $127,627   Adjusted gross profit  $97,710 
              
Gross margin as reported   37.0%  Gross margin as reported   36.6%
              
Adjusted gross margin   37.1%  Adjusted gross margin   37.9%

 

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)

 

   Three Months Ended 
       Per Diluted       Per Diluted 
   September 30, 2022   Share   September 30, 2021   Share 
Net income  $2,751   $0.07   $4,530   $0.13 
                     
Amortization of intangibles   3,683    0.09    3,577    0.10 
Depreciation   2,091    0.05    1,631    0.05 
Amortization of debt issuance costs   232    0.01    173    0.00 
Stock-based compensation   2,220    0.06    3,064    0.08 
Inventory fair value of purchase accounting   -    -    3,099    0.09 
Income tax benefit   (83)   (0.00)   (5,950)   (0.16)
Cash paid for income taxes   (1,663)   (0.04)   -    - 
                     
Net income before non-cash items  $9,231   $0.23   $10,124   $0.28 
                     
Transaction costs   858    0.02    8,147    0.23 
Contingent consideration expense   104    0.00    -    - 
State cash taxes on adjustments   (21)   (0.00)   (202)   (0.01)
                     
Adjusted net income before non-cash items  $10,172   $0.26   $18,069   $0.50 

 

 

 

 

 

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, 2022   Share   September 30, 2021   Share 
Net income  $11,824   $0.30   $12,047   $0.35 
                     
Amortization of intangibles   11,740    0.30    5,971    0.18 
Depreciation   5,800    0.15    4,336    0.13 
Amortization of debt issuance costs   593    0.01    335    0.01 
Stock-based compensation   9,142    0.23    6,414    0.19 
Inventory fair value of purchase accounting   269    0.01    3,460    0.10 
Income tax expense (benefit)   2,494    0.06    (6,161)   (0.18)
Cash paid for income taxes   (7,155)   (0.18)   (353)   (0.01)
                     
Net income before non-cash items  $34,707   $0.87   $26,049   $0.77 
                     
Transaction costs   2,880    0.07    9,272    0.27 
Contingent consideration expense   493    0.01    -    - 
State cash taxes on adjustments   (74)   (0.00)   (230)   (0.01)
                     
Adjusted net income before non-cash items  $38,006   $0.96   $35,091   $1.03 

 

 

 

 

 

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, 2022   September 30, 2021 
Net income  $2,751   $4,530 
           
Income tax benefit   (83)   (5,950)
Other, net   1,238   (338)
Interest expense, net   2,216   1,476 
           
Operating income (loss)   6,122    (282)
           
Depreciation   2,091    1,631 
Amortization of intangibles   3,683    3,577 
           
EBITDA   11,896    4,926 
           
Transaction costs   858    8,147 
Contingent consideration expense   104    - 
Inventory fair value of purchase accounting   -    3,099 
Stock-based compensation   2,220    3,064 
           
Adjusted EBITDA  $15,078   $19,236 

 

 

 

 

 

CLARUS CORPORATION

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

(In thousands)

 

   Nine Months Ended 
   September 30, 2022   September 30, 2021 
Net (loss) income  $11,824   $12,047 
           
Income tax expense (benefit)   2,494    (6,161)
Other, net   2,648    4,263 
Interest expense, net   5,060    1,926 
           
Operating income   22,026    12,075 
           
Depreciation   5,800    4,336 
Amortization of intangibles   11,740    5,971 
           
EBITDA   39,566    22,382 
           
Transaction costs   2,880    9,272 
Contingent consideration expense   493    - 
Inventory fair value of purchase accounting   269    3,460 
Stock-based compensation   9,142    6,414 
           
Adjusted EBITDA  $52,350   $41,528