clar-20220930x10q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended: September 30, 2022

¨ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from _________ to _________

Commission File Number: 001-34767

CLARUS CORPORATION

(Exact name of registrant as specified in its charter)

Delaware

58-1972600

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification Number)

2084 East 3900 South

Salt Lake City, Utah

84124

(Address of principal executive offices)

(Zip code)

(801) 278-5552

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, par value $.0001 per share	CLAR	NASDAQ Global Select Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	¨	Non-accelerated filer	¨

Accelerated filer	x	Smaller reporting company	¨

		Emerging growth company	¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

As of November 2, 2022, there were 37,036,468 shares of common stock, par value $0.0001, outstanding.

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS


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

See accompanying notes to condensed consolidated financial statements.

‎


CLARUS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(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

Other comprehensive loss, net of tax:
Foreign currency translation adjustment		(11,386)		(8,933)
Unrealized gain on hedging activities		268		268
Other comprehensive loss		(11,118)		(8,665)
Comprehensive loss	$	(8,367)	$	(4,135)

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

See accompanying notes to condensed consolidated financial statements.

‎


CLARUS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
(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

Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustment		(22,941)		(9,654)
Unrealized gain on hedging activities		976		1,272
Other comprehensive loss		(21,965)		(8,382)
Comprehensive (loss) income	$	(10,141)	$	3,665

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

See accompanying notes to condensed consolidated financial statements.

‎


CLARUS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)

		Nine Months Ended
		September 30, 2022		September 30, 2021
	Cash Flows From Operating Activities:
	Net income	$	11,824	$	12,047
	Adjustments to reconcile net income to net cash used in operating activities:
	Depreciation of property and equipment		5,800		4,336
	Amortization of other intangible assets		11,740		5,971
	Amortization of debt issuance costs		593		335
	Gain on disposition of property and equipment		(41)		(2)
	Noncash lease expense		2,412		1,507
	Contingent consideration expense		468		-
	Stock-based compensation		9,142		6,414
	Deferred income taxes		(410)		(7,006)
	Changes in operating assets and liabilities, net of acquisitions:
	Accounts receivable		(24,941)		(13,079)
	Inventories		(30,243)		(25,181)
	Prepaid and other assets		(2,126)		(5,912)
	Accounts payable		4,662		1,358
	Accrued liabilities		(2,756)		2,200
	Income taxes		(3,870)		(89)
	Net cash used in operating activities		(17,746)		(17,101)

	Cash Flows From Investing Activities:
	Purchase of businesses, net of cash received		-		(135,627)
	Proceeds from disposition of property and equipment		438		25
	Purchases of property and equipment		(6,216)		(5,579)
	Net cash used in investing activities		(5,778)		(141,181)

	Cash Flows From Financing Activities:
	Proceeds from revolving credit facilities		98,991		87,703
	Repayments on revolving credit facilities		(72,804)		(37,871)
	Repayments on term loans		(125,191)		(5,814)
	Proceeds from issuance of term loans		125,000		109,154
	Payment of debt issuance costs		(1,385)		(722)
	Purchase of treasury stock		(8,267)		(651)
	Proceeds from exercise of stock options		2,721		1,652
	Cash dividends paid		(2,795)		(2,410)
	Payment of contingent consideration		(943)		-


PART I	FINANCIAL INFORMATION	Page
Item 1.	Financial Statements (Unaudited)

	Condensed Consolidated Balance Sheets – September 30, 2022 and December 31, 2021	3
	Condensed Consolidated Statements of Comprehensive Loss – Three months ended September 30, 2022 and 2021	4
	Condensed Consolidated Statements of Comprehensive (Loss) Income – Nine months ended September 30, 2022 and 2021	5
	Condensed Consolidated Statements of Cash Flows – Nine months ended September 30, 2022 and 2021	6
	Condensed Consolidated Statements of Stockholders’ Equity – Three and nine months ended September 30, 2022 and 2021	7
	Notes to Condensed Consolidated Financial Statements	9
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	27
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	37
Item 4.	Controls and Procedures	37

PART II	OTHER INFORMATION

Item 1.	Legal Proceedings	39
Item 1A.	Risk Factors	39
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	40
Item 6.	Exhibits	41
Signature Page		42