Exhibit 99.2
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
The following unaudited pro forma condensed consolidated balance sheet and statements of operations are based upon the historical consolidated financial statements of Clarus Corporation (the “Company,” “Clarus,” “we,” or “our”). The unaudited pro forma condensed consolidated financial information has been prepared to illustrate the effect of the sale (the “Precision Sport Disposition”) by Clarus and Everest/Sapphire Acquisition, LLC (“Seller”), its wholly-owned subsidiary, of all of the equity associated with the Company’s Precision Sport segment, which is comprised of the Company’s subsidiaries Sierra Bullets, L.L.C. and Barnes Bullets – Mona, LLC, pursuant to a Purchase and Sale Agreement, dated as of December 29, 2023, by and among the Company and Seller, as the seller parties, and Bullseye Acquisitions, LLC, an affiliate of JDH Capital Company, as purchaser. The Precision Sport segment is engaged in the business of designing, developing, manufacturing, and marketing bullets and ammunition to the military, law enforcement, and commercial/consumer markets. For a detailed description of the Precision Sport Disposition please see Note 1 of the accompanying unaudited pro forma condensed consolidated financial information.
The unaudited pro forma condensed consolidated balance sheet as of September 30, 2023 has been prepared by including the unaudited historical condensed consolidated balance sheet of Clarus as of September 30, 2023, adjusted to reflect the pro forma effect as if the Precision Sport Disposition had been consummated on that date. The interim unaudited pro forma condensed consolidated statement of operations for the nine months ended September 30, 2023 and the unaudited pro forma condensed consolidated statement of operations for the year ended December 31, 2022 have been prepared by including the Company’s historical condensed consolidated statements of operations, adjusted to reflect the pro forma effect as if the Precision Sport Disposition had been consummated on January 1, 2022.
The historical consolidated financial statements referred to above for Clarus were included in its Quarterly Report on Form 10-Q for the nine months ended September 30, 2023 (unaudited) and Annual Report on Form 10-K for the year ended December 31, 2022, each previously filed with the Securities and Exchange Commission (the “SEC”). The accompanying unaudited pro forma condensed consolidated financial information and the historical consolidated financial information presented herein should be read in conjunction with the historical consolidated financial statements and notes thereto of Clarus.
The unaudited pro forma condensed consolidated balance sheet and statements of operations include pro forma adjustments which reflect transactions and events that (a) are directly attributable to the Precision Sport Disposition, (b) are factually supportable, and (c) with respect to the statements of operations, have a continuing impact on consolidated results of operations. The pro forma adjustments are described in the accompanying notes to the unaudited pro forma condensed consolidated financial information.
The unaudited pro forma condensed consolidated financial information was prepared for information purposes only and is not necessarily indicative of the financial position or results of operations that would have occurred if the Precision Sport Disposition had been completed on the dates indicated, nor is it indicative of the future financial position or results of operations of the Company. Assumptions and estimates underlying the pro forma adjustments are described in the accompanying notes, which should be read in conjunction with the unaudited pro forma condensed consolidated financial information. The accounting for the Precision Sport Disposition is dependent upon final balances related to the assets and liabilities at the closing date that have yet to progress to a stage where there is sufficient information for a definitive measurement. Due to the fact that the unaudited pro forma condensed consolidated financial information has been prepared based upon preliminary estimates, and account balances other than those on the actual Precision Sport Disposition closing date, the final amounts recorded for the Precision Sport Disposition may differ materially from the pro forma condensed consolidated financial information presented.
The unaudited pro forma condensed consolidated financial information does not reflect future events that may occur after the Precision Sport Disposition, including potential restructuring and related general and administrative cost savings. The pro forma adjustments are subject to change and are based upon currently available information.
CLARUS CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 2023
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
| Historical | Pro Forma Adjustments | Pro Forma | ||||||||||||||
| Assets | ||||||||||||||||
| Current assets | ||||||||||||||||
| Cash | $ | 8,024 | $ | 48,112 | A | $ | 56,136 | |||||||||
| Accounts receivable, net | 72,601 | (12,418 | ) | B | 60,183 | |||||||||||
| Inventories | 140,460 | (44,943 | ) | B | 95,517 | |||||||||||
| Prepaid and other current assets | 7,155 | (1,866 | ) | B | 5,289 | |||||||||||
| Income tax receivable | 2,444 | (324 | ) | C | 2,120 | |||||||||||
| Total current assets | 230,684 | (11,439 | ) | 219,245 | ||||||||||||
| Property and equipment, net | 41,131 | (24,682 | ) | B | 16,449 | |||||||||||
| Other intangible assets, net | 44,305 | (5,434 | ) | B | 38,871 | |||||||||||
| Indefinite lived intangible assets | 80,936 | (24,500 | ) | B | 56,436 | |||||||||||
| Goodwill | 61,895 | (26,715 | ) | B | 35,180 | |||||||||||
| Deferred income taxes | 20,333 | (11,169 | ) | C | 9,164 | |||||||||||
| Other long-term assets | 17,942 | (15 | ) | B | 17,927 | |||||||||||
| Total assets | $ | 497,226 | $ | (103,954 | ) | $ | 393,272 | |||||||||
| Liabilities and Stockholders' Equity | ||||||||||||||||
| Current liabilities | ||||||||||||||||
| Accounts payable | $ | 28,864 | $ | (2,491 | ) | B | $ | 26,373 | ||||||||
| Accrued liabilities | 22,435 | (3,049 | ) | B | 19,386 | |||||||||||
| Current portion of long-term debt | 12,566 | (12,500 | ) | A | 66 | |||||||||||
| Total current liabilities | 63,865 | (18,040 | ) | 45,825 | ||||||||||||
| Long-term debt | 110,077 | (110,077 | ) | A | - | |||||||||||
| Deferred income taxes | 17,534 | - | 17,534 | |||||||||||||
| Other long-term liabilities | 14,480 | - | 14,480 | |||||||||||||
| Total liabilities | 205,956 | (128,117 | ) | 77,839 | ||||||||||||
| Stockholders' Equity | ||||||||||||||||
| Preferred stock, $.0001 par value; 5,000 shares authorized; none issued | - | - | - | |||||||||||||
| Common stock, $.0001 par value; 100,000 shares authorized; 42,582 and 41,637 issued and 37,970 and 37,048 outstanding, respectively | 4 | - | 4 | |||||||||||||
| Additional paid in capital | 688,878 | - | 688,878 | |||||||||||||
| Accumulated deficit | (341,396 | ) | 24,163 | D | (317,233 | ) | ||||||||||
| Treasury stock, at cost | (32,929 | ) | - | (32,929 | ) | |||||||||||
| Accumulated other comprehensive loss | (23,287 | ) | - | (23,287 | ) | |||||||||||
| Total stockholders' equity | 291,270 | 24,163 | 315,433 | |||||||||||||
| Total liabilities and stockholders' equity | $ | 497,226 | $ | (103,954 | ) | $ | 393,272 | |||||||||
See notes to unaudited pro forma condensed consolidated financial information.
CLARUS CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2022
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
| Historical | Pro Forma Adjustments | Pro Forma | ||||||||||||||
| Sales | ||||||||||||||||
| Domestic sales | $ | 238,144 | $ | (105,326 | ) | E | $ | 132,818 | ||||||||
| International sales | 209,962 | (27,529 | ) | E | 182,433 | |||||||||||
| Total sales | 448,106 | (132,855 | ) | 315,251 | ||||||||||||
| Cost of goods sold | 284,690 | (79,392 | ) | E | 205,298 | |||||||||||
| Gross profit | 163,416 | (53,463 | ) | 109,953 | ||||||||||||
| Operating expenses | ||||||||||||||||
| Selling, general and administrative | 135,039 | (14,225 | ) | E | 120,814 | |||||||||||
| Transaction costs | 2,967 | (149 | ) | F | 2,818 | |||||||||||
| Contingent consideration expense | 493 | - | 493 | |||||||||||||
| Impairment of goodwill and indefinite-lived intangible assets | 92,311 | - | 92,311 | |||||||||||||
| Total operating expenses | 230,810 | (14,374 | ) | 216,436 | ||||||||||||
| Operating loss | (67,394 | ) | (39,089 | ) | (106,483 | ) | ||||||||||
| Other expense | ||||||||||||||||
| Interest expense, net | (7,895 | ) | 7,895 | A | - | |||||||||||
| Other, net | (1,842 | ) | 807 | E | (1,035 | ) | ||||||||||
| Total other expense, net | (9,737 | ) | 8,702 | (1,035 | ) | |||||||||||
| Loss before income tax | (77,131 | ) | (30,387 | ) | (107,518 | ) | ||||||||||
| Income tax benefit | (7,351 | ) | (7,365 | ) | G | (14,716 | ) | |||||||||
| Loss from continuing operations | $ | (69,780 | ) | $ | (23,022 | ) | $ | (92,802 | ) | |||||||
| Loss from continuing operations per share: | ||||||||||||||||
| Basic | $ | (1.88 | ) | $ | (2.49 | ) | ||||||||||
| Diluted | (1.88 | ) | (2.49 | ) | ||||||||||||
| Weighted average shares outstanding: | ||||||||||||||||
| Basic | 37,201 | 37,201 | ||||||||||||||
| Diluted | 37,201 | 37,201 | ||||||||||||||
See notes to unaudited pro forma condensed consolidated financial information.
CLARUS CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
| Historical | Pro Forma Adjustments | Pro Forma | ||||||||||||||
| Sales | ||||||||||||||||
| Domestic sales | $ | 135,724 | $ | (55,179 | ) | E | $ | 80,545 | ||||||||
| International sales | 145,463 | (16,491 | ) | E | 128,972 | |||||||||||
| Total sales | 281,187 | (71,670 | ) | 209,517 | ||||||||||||
| Cost of goods sold | 178,864 | (44,716 | ) | E | 134,148 | |||||||||||
| Gross profit | 102,323 | (26,954 | ) | 75,369 | ||||||||||||
| Operating expenses | ||||||||||||||||
| Selling, general and administrative | 94,809 | (9,107 | ) | E | 85,702 | |||||||||||
| Restructuring charge | 1,835 | (23 | ) | F | 1,812 | |||||||||||
| Transaction costs | 975 | (516 | ) | F | 459 | |||||||||||
| Contingent consideration benefit | (1,565 | ) | - | (1,565 | ) | |||||||||||
| Total operating expenses | 96,054 | (9,646 | ) | 86,408 | ||||||||||||
| Operating loss | 6,269 | (17,308 | ) | (11,039 | ) | |||||||||||
| Other expense | ||||||||||||||||
| Interest expense, net | (8,445 | ) | 8,477 | A | 32 | |||||||||||
| Other, net | (134 | ) | (9 | ) | E | (143 | ) | |||||||||
| Total other expense, net | (8,579 | ) | 8,468 | (111 | ) | |||||||||||
| Loss before income tax | (2,310 | ) | (8,840 | ) | (11,150 | ) | ||||||||||
| Income tax benefit | (553 | ) | (2,038 | ) | G | (2,591 | ) | |||||||||
| Loss from continuing operations | (1,757 | ) | (6,802 | ) | (8,559 | ) | ||||||||||
| Loss from continuing operations per share: | ||||||||||||||||
| Basic | $ | (0.05 | ) | $ | (0.23 | ) | ||||||||||
| Diluted | (0.05 | ) | (0.23 | ) | ||||||||||||
| Weighted average shares outstanding: | ||||||||||||||||
| Basic | 37,267 | 37,267 | ||||||||||||||
| Diluted | 37,267 | 37,267 | ||||||||||||||
See notes to unaudited pro forma condensed consolidated financial information.
Clarus Corporation
Notes to Unaudited Pro Forma Condensed Consolidated Financial Information
(In thousands, except per share amounts)
1 Description of Transaction
On February 29, 2024, Clarus Corporation (the “Company,” “Clarus,” “we,” or “our”) and Everest/Sapphire Acquisition, LLC, its wholly-owned subsidiary, completed the sale (“Precision Sport Disposition”) to Bullseye Acquisitions, LLC (the “Buyer”), an affiliate of JDH Capital Company, of all of the equity associated with the Company’s Precision Sport segment, which is comprised of the Company’s subsidiaries Sierra Bullets, L.L.C. and Barnes Bullets – Mona, LLC, pursuant to a Purchase and Sale Agreement dated as of December 29, 2023, by and among Bullseye Acquisitions, LLC, as buyer, and Everest/Sapphire Acquisition, LLC and the Company, as the seller parties (the “Precision Sport Purchase Agreement”). The Precision Sport segment is engaged in the business of designing, developing, manufacturing, and marketing bullets and ammunition to the military, law enforcement, and commercial/consumer markets. Under the terms of the Precision Sport Purchase Agreement, the Buyer paid $175,000 in cash (before purchase price adjustments of $742 relating to estimated net working capital) for the Precision Sport Disposition.
2 Basis of Presentation
The unaudited pro forma condensed consolidated balance sheet and statements of operations are based upon the historical consolidated financial statements of Clarus, which were included in its Annual Report on Form 10-K for the fiscal year ended December 31, 2022, and its Quarterly Report on Form 10-Q for the nine months ended September 30, 2023, each previously filed with the Securities and Exchange Commission. The unaudited pro forma condensed consolidated balance sheet as of September 30, 2023 has been prepared by including the unaudited historical condensed consolidated balance sheet of Clarus as of September 30, 2023, adjusted to reflect the pro forma effect as if the Precision Sport Disposition had been consummated on that date. The interim unaudited pro forma condensed consolidated statement of operations for the nine months ended September 30, 2023 and the unaudited pro forma condensed consolidated statement of operations for the year ended December 31, 2022 have been prepared by including the Company’s historical condensed consolidated statements of operations, adjusted to reflect the pro forma effect as if the Precision Sport Disposition had been consummated on January 1, 2022.
3 Pro Forma Adjustments
The pro forma adjustments reflect transactions and events that (a) are directly attributable to the Precision Sport Disposition, (b) are factually supportable, and (c) with respect to the statements of operations, have a continuing impact on consolidated results of operations. The pro forma adjustments are based on available information and certain assumptions the Company believes are reasonable.
The following pro forma adjustments are included in the unaudited pro forma condensed consolidated balance sheet and/or the unaudited pro forma condensed consolidated statements of operations:
| A | Reflects cash proceeds of the $175,000 sale price (before purchase price adjustments of $742 relating to estimated net working capital). This is offset by estimated direct transaction expenses of $4,959, cash held by the Precision Sport segment of $94, and the repayment of the Company’s revolving credit facility and the term loan with JPMorgan Chase Bank, N.A., as administrative agent, totaling $122,577. The effect of the payment on the revolving credit facility and the term loan is a decrease in interest expense of $7,895 and $8,477 for the year ended December 31, 2022 and the nine months ended September 30, 2023, respectively. |
| B | Reflects the elimination of assets and liabilities included in the Precision Sport Disposition. |
| C | Reflects the related income tax impacts created by the Precision Sport Disposition. |
| D | Reflects the effect on accumulated deficit related to the estimated gain on sale and related tax impacts attributable to the Company due to the Precision Sport Disposition. |
| E | Reflects the elimination of the Precision Sport segment’s historical revenues and expenses. |
Clarus Corporation
Notes to Unaudited Pro Forma Condensed Consolidated Financial Information
(In thousands, except per share amounts)
| F | Total Precision Sport segment related transaction costs of $149 and $516 for the year ended December 31, 2022 and the nine months ended September 30, 2023, respectively, have been removed from the interim unaudited pro forma condensed consolidated statement of operations as they reflect non-recurring charges directly related to the Precision Sport Disposition. Similarly, restructuring costs incurred at the Precision Sport segment of $23 during the nine months ended September 30, 2023 have been removed. |
| G | The income tax effect resulting from the pro forma effect of the Precision Sport Disposition based on the statutory tax rates in effect. |
4 Gain on Sale
The gain on the Precision Sport Disposition, as if the transaction had been completed on September 30, 2023, is estimated at $49,976 with a related tax expense of $11,493. The gain on sale is not considered in the pro forma condensed consolidated statements of operations as it is a nonrecurring credit. The actual amount of the gain will be based on the balances as of the closing date and may differ materially from the pro forma gain amount.