UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended: June 30, 2023

☐ 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 ☒ 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 ☒ 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	☒	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 ☒

As of August 2, 2023, there were 37,470,470 shares of common stock, par value $0.0001, outstanding.

Table of Contents

INDEX

CLARUS CORPORATION


		Page
PART I	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	3

	Condensed Consolidated Balance Sheets – June 30, 2023 and December 31, 2022	3
	Condensed Consolidated Statements of Comprehensive Loss – Three months ended June 30, 2023 and 2022	4
	Condensed Consolidated Statements of Comprehensive Loss – Six months ended June 30, 2023 and 2022	5
	Condensed Consolidated Statements of Cash Flows – Six months ended June 30, 2023 and 2022	6
	Condensed Consolidated Statements of Stockholders’ Equity – Three and six months ended June 30, 2023 and 2022	7
	Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	37
Item 4.	Controls and Procedures	38

PART II	OTHER INFORMATION

Item 1.	Legal Proceedings	39
Item 1A.	Risk Factors	39
Item 6.	Exhibits	40
Signature Page		41

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CLARUS CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands, except per share amounts)


	June 30, 2023		December 31, 2022
Assets
Current assets
Cash	$	11,315	$	12,061
Accounts receivable, less allowance for
credit losses of $1,694 and $1,211		53,445		66,553
Inventories		148,963		147,072
Prepaid and other current assets		8,544		9,899
Income tax receivable		2,993		3,034
Total current assets		225,260		238,619

Property and equipment, net		41,919		43,010
Other intangible assets, net		47,792		55,255
Indefinite-lived intangible assets		81,976		82,901
Goodwill		62,437		62,993
Deferred income taxes		19,556		17,912
Other long-term assets		19,056		17,455
Total assets	$	497,996	$	518,145

Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable	$	24,639	$	27,052
Accrued liabilities		20,322		25,170
Income tax payable		386		421
Current portion of long-term debt		12,543		11,952
Total current liabilities		57,890		64,595

Long-term debt, net		114,685		127,082
Deferred income taxes		17,946		18,506
Other long-term liabilities		17,502		15,854
Total liabilities		208,023		226,037

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; 41,833 and 41,637 issued and 37,221 and 37,048 outstanding, respectively		4		4
Additional paid in capital		682,243		679,339
Accumulated deficit		(339,196)		(336,843)
Treasury stock, at cost		(32,929)		(32,707)
Accumulated other comprehensive loss		(20,149)		(17,685)
Total stockholders’ equity		289,973		292,108
Total liabilities and stockholders’ equity	$	497,996	$	518,145

See accompanying notes to condensed consolidated financial statements.

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CLARUS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Unaudited)

(In thousands, except per share amounts)


	Three Months Ended
	June 30, 2023		June 30, 2022

Sales
Domestic sales	$	46,656	$	64,073
International sales		37,072		50,860
Total sales		83,728		114,933

Cost of goods sold		52,974		71,251
Gross profit		30,754		43,682

Operating expenses
Selling, general and administrative		30,200		35,444
Restructuring charges		736		-
Transaction costs		59		821
Contingent consideration benefit		-		(374)

Total operating expenses		30,995		35,891

Operating (loss) income		(241)		7,791

Other income (expense)
Interest expense, net		(2,857)		(1,728)
Other, net		224		(1,343)

Total other expense, net		(2,633)		(3,071)

(Loss) income before income tax		(2,874)		4,720
Income tax (benefit) expense		(783)		956
Net (loss) income		(2,091)		3,764

Other comprehensive loss, net of tax:
Foreign currency translation adjustment		(1,389)		(17,632)
Unrealized gain on hedging activities		25		622
Other comprehensive loss		(1,364)		(17,010)
Comprehensive loss	$	(3,455)	$	(13,246)

Net (loss) income per share:
Basic	$	(0.06)	$	0.10
Diluted		(0.06)		0.09

Weighted average shares outstanding:
Basic		37,192		37,235
Diluted		37,192		39,697

See accompanying notes to condensed consolidated financial statements.

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CLARUS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Unaudited)

(In thousands, except per share amounts)


	Six Months Ended
	June 30, 2023		June 30, 2022

Sales
Domestic sales	$	91,572	$	126,380
International sales		89,540		101,829
Total sales		181,112		228,209

Cost of goods sold		114,337		140,275
Gross profit		66,775		87,934

Operating expenses
Selling, general and administrative		63,019		69,619
Restructuring charges		736		-
Transaction costs		133		2,022
Contingent consideration (benefit) expense		(1,565)		389

Total operating expenses		62,323		72,030

Operating income		4,452		15,904

Other income (expense)
Interest expense, net		(5,603)		(2,844)
Other, net		309		(1,410)

Total other expense, net		(5,294)		(4,254)

(Loss) income before income tax		(842)		11,650
Income tax (benefit) expense		(349)		2,577
Net (loss) income		(493)		9,073

Other comprehensive loss, net of tax:
Foreign currency translation adjustment		(2,410)		(11,555)
Unrealized (loss) gain on hedging activities		(54)		708
Other comprehensive loss		(2,464)		(10,847)
Comprehensive loss	$	(2,957)	$	(1,774)

Net (loss) income per share:
Basic	$	(0.01)	$	0.24
Diluted		(0.01)		0.23

Weighted average shares outstanding:
Basic		37,164		37,199
Diluted		37,164		39,751

See accompanying notes to condensed consolidated financial statements.

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CLARUS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)


	Six Months Ended
	June 30, 2023		June 30, 2022
Cash Flows From Operating Activities:
Net (loss) income	$	(493)	$	9,073
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation of property and equipment		3,732		3,709
Amortization of other intangible assets		6,499		8,057
Amortization of debt issuance costs		464		361
(Gain) loss on disposition of property and equipment		(44)		18
Noncash lease expense		1,475		1,652
Contingent consideration (benefit) expense		(1,565)		365
Stock-based compensation		2,869		6,922
Deferred income taxes		(1,569)		276
Changes in operating assets and liabilities:
Accounts receivable		10,495		(11,825)
Inventories		(1,953)		(26,237)
Prepaid and other assets		1,237		(380)
Accounts payable		1,233		5,288
Accrued liabilities		(5,063)		(443)
Income taxes		(31)		(3,112)
Net cash provided by (used in) operating activities		17,286		(6,276)

Cash Flows From Investing Activities:
Proceeds from disposition of property and equipment		169		298
Purchases of property and equipment		(3,252)		(4,072)
Net cash used in investing activities		(3,083)		(3,774)

Cash Flows From Financing Activities:
Proceeds from revolving credit facilities		19,801		61,933
Repayments on revolving credit facilities		(26,879)		(54,961)
Repayments on term loans		(4,837)		(123,542)
Proceeds from issuance of term loans		-		125,000
Payment of debt issuance costs		-		(1,210)
Purchase of treasury stock		(222)		(1,097)
Proceeds from exercise of options		35		668
Cash dividends paid		(1,860)		(1,861)
Net cash (used in) provided by financing activities		(13,962)		4,930

Effect of foreign exchange rates on cash		(987)		(457)

Change in cash		(746)		(5,577)
Cash, beginning of year		12,061		19,465
Cash, end of period	$	11,315	$	13,888

Supplemental Disclosure of Cash Flow Information:
Cash paid for income taxes	$	1,010	$	5,492
Cash paid for interest	$	5,127	$	2,339
Supplemental Disclosures of Non-Cash Investing and Financing Activities:
Property and equipment purchased with accounts payable	$	159	$	607
Lease liabilities arising from obtaining right of use assets	$	4,066	$	1,324
Unpaid debt issuance costs	$	—	$	175

See accompanying notes to condensed consolidated financial statements.

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CLARUS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

(In thousands, except per share amounts)


													Accumulated
					Additional								Other		Total
	Common Stock				Paid-In		Accumulated		Treasury Stock				Comprehensive		Stockholders’
	Shares		Amount		Capital		Deficit		Shares		Amount		Income (Loss)		Equity

Balance, December 31, 2021		41,105	$	4	$	662,996	$	(263,342)		(4,011)	$	(24,440)	$	(5,050)	$	370,168
Net income		—		—		—		5,309		—		—		—		5,309
Other comprehensive income		—		—		—		—		—		—		6,163		6,163
Cash dividends ($0.025 per share)		—		—		—		(930)		—		—		—		(930)
Purchase of treasury stock		—		—		—		—		(51)		(1,097)		—		(1,097)
Stock-based compensation expense		—		—		3,367		—		—		—		—		3,367
Proceeds from exercise of options		167		—		126		—		—		—		—		126
Balance, March 31, 2022		41,272	$	4	$	666,489	$	(258,963)		(4,062)	$	(25,537)	$	1,113	$	383,106
Net income		—		—		—		3,764		—		—		—		3,764
Other comprehensive loss		—		—		—		—		—		—		(17,010)		(17,010)
Cash dividends ($0.025 per share)		—		—		—		(931)		—		—		—		(931)
Stock-based compensation expense		—		—		3,555		—		—		—		—		3,555
Proceeds from exercise of options		56		—		542		—		—		—		—		542
Balance, June 30, 2022		41,328	$	4	$	670,586	$	(256,130)		(4,062)	$	(25,537)	$	(15,897)	$	373,026

													Accumulated
					Additional								Other		Total
	Common Stock				Paid-In		Accumulated		Treasury Stock				Comprehensive		Stockholders’
	Shares		Amount		Capital		Deficit		Shares		Amount		Loss		Equity

Balance, December 31, 2022		41,637	$	4	$	679,339	$	(336,843)		(4,589)	$	(32,707)	$	(17,685)	$	292,108
Net income		—		—		—		1,598		—		—		—		1,598
Other comprehensive loss		—		—		—		—		—		—		(1,100)		(1,100)
Cash dividends ($0.025 per share)		—		—		—		(930)		—		—		—		(930)
Purchase of treasury stock		—		—		—		—		(12)		(118)		—		(118)
Stock-based compensation expense		—		—		1,334		—		—		—		—		1,334
Proceeds from exercise of options		154		—		—		—		—		—		—		—
Balance, March 31, 2023		41,791	$	4	$	680,673	$	(336,175)		(4,601)	$	(32,825)	$	(18,785)	$	292,892
Net loss		—		—		—		(2,091)		—		—		—		(2,091)
Other comprehensive loss		—		—		—		—		—		—		(1,364)		(1,364)
Cash dividends ($0.025 per share)		—		—		—		(930)		—		—		—		(930)
Purchase of treasury stock		—		—		—		—		(11)		(104)		—		(104)
Stock-based compensation expense		—		—		1,535		—		—		—		—		1,535
Proceeds from exercise of options		42		—		35		—		—		—		—		35
Balance, June 30, 2023		41,833	$	4	$	682,243	$	(339,196)		(4,612)	$	(32,929)	$	(20,149)	$	289,973

See accompanying notes to condensed consolidated financial statements.

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CLARUS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(in thousands, except per share amounts)

NOTE 1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying unaudited condensed consolidated financial statements of Clarus Corporation and subsidiaries (which may be referred to as the “Company,” “Clarus,” “we,” “us” or “our”) as of June 30, 2023 and December 31, 2022 and for the three and six months ended June 30, 2023 and 2022, have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), instructions to the Quarterly Report on Form 10-Q, and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring adjustments, except otherwise disclosed) necessary for a fair presentation of the unaudited condensed consolidated financial statements have been included. The results for the three and six months ended June 30, 2023 are not necessarily indicative of the results to be obtained for the year ending December 31, 2023. These interim financial statements should be read in conjunction with the Company’s audited consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the Securities and Exchange Commission (the “SEC”) on February 27, 2023.

Nature of Business

Headquartered in Salt Lake City, Utah, we are 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®, Sierra®, Barnes®, Rhino-Rack® and MAXTRAX® brand names through outdoor specialty and online retailers, our own websites, distributors and original equipment manufacturers.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that effect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. The more significant estimates relate to the fair value of net assets acquired in business combinations, excess or obsolete inventory, allowance for credit losses, contingent consideration liabilities, and valuation of deferred tax assets, long-lived assets, goodwill and indefinite-lived intangible assets, and other intangible assets. We base our estimates on historical experience, projected future cash flows, and other assumptions that are believed to be reasonable under the circumstances. Actual results could differ from these estimates.

NOTE 2. INVENTORIES

Inventories, as of June 30, 2023 and December 31, 2022, were as follows:


	June 30, 2023		December 31, 2022
Finished goods	$	111,169	$	107,453
Work-in-process		9,360		8,719
Raw materials and supplies		28,434		30,900
	$	148,963	$	147,072

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CLARUS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(Unaudited)

(in thousands, except per share amounts)

NOTE 3. PROPERTY AND EQUIPMENT

Property and equipment, net, as of June 30, 2023 and December 31, 2022, were as follows:


	June 30, 2023		December 31, 2022

Land	$	4,160	$	4,160
Building and improvements		17,928		17,357
Furniture and fixtures		8,384		7,384
Computer hardware and software		8,785		8,498
Machinery and equipment		39,349		37,054
Construction in progress		3,279		5,028
		81,885		79,481
Less accumulated depreciation		(39,966)		(36,471)
	$	41,919	$	43,010

Depreciation expense for the three months ended June 30, 2023 and 2022 was $1,941 and $1,877, respectively, and for the six months ended June 30, 2023 and 2022 was $3,732 and $3,709, respectively.

NOTE 4. GOODWILL AND INTANGIBLE ASSETS

Goodwill

The following table summarizes the balances in goodwill by segment:


	Outdoor		Precision Sport		Adventure		Total

Goodwill	$	29,507	$	26,715	$	88,349	$	144,571
Accumulated goodwill impairment losses		(29,507)		—		(52,071)		(81,578)

Balance at December 31, 2022		—		26,715		36,278		62,993

Impact of foreign currency exchange rates		—		—		(556)		(556)

Balance at June 30, 2023	$	—	$	26,715	$	35,722	$	62,437

Indefinite-Lived Intangible Assets

The following table summarizes the changes in indefinite-lived intangible assets:


Balance at December 31, 2022	$	82,901

Impact of foreign currency exchange rates		(925)

Balance at June 30, 2023	$	81,976

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CLARUS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(Unaudited)

(in thousands, except per share amounts)

Trademarks classified as indefinite-lived intangible assets by brand as of June 30, 2023 and December 31, 2022, were as follows:


	June 30, 2023		December 31, 2022
Black Diamond	$	19,600	$	19,600
PIEPS		3,038		2,986
Sierra		18,900		18,900
Barnes		5,600		5,600
Rhino-Rack		25,041		25,744
MAXTRAX		9,797		10,071
	$	81,976	$	82,901

Other Intangible Assets, net

The following table summarizes the changes in gross other intangible assets:


Gross balance at December 31, 2022	$	100,889

Impact of foreign currency exchange rates		(1,406)

Gross balance at June 30, 2023	$	99,483

Other intangible assets, net of amortization as of June 30, 2023 and December 31, 2022, were as follows:


	June 30, 2023
	Gross		Accumulated Amortization		Net		Weighted Average Useful Life
Intangibles subject to amortization
Customer relationships	$	76,337	$	(39,136)	$	37,201		13.8 years
Product technologies		20,936		(10,706)		10,230		10.2 years
Tradename / trademark		1,263		(902)		361		9.4 years
Core technologies		947		(947)		—		10.0 years