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: September 30, 2024

☐ 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 October 31, 2024, there were 38,362,162 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 – September 30, 2024 and December 31, 2023	3
	Condensed Consolidated Statements of Comprehensive Income (Loss) – Three months ended September 30, 2024 and 2023	4
	Condensed Consolidated Statements of Comprehensive Income (Loss) – Nine months ended September 30, 2024 and 2023	5
	Condensed Consolidated Statements of Cash Flows – Nine months ended September 30, 2024 and 2023	6
	Condensed Consolidated Statements of Stockholders’ Equity – Three and nine months ended September 30, 2024 and 2023	7
	Notes to Condensed Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	31
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	42
Item 4.	Controls and Procedures	42

PART II	OTHER INFORMATION

Item 1.	Legal Proceedings	43
Item 1A.	Risk Factors	44
Item 5.	Other information	45
Item 6.	Exhibits	46
Signature Page		47

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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)



	September 30, 2024		December 31, 2023
Assets
Current assets
Cash	$	36,399	$	11,324
Accounts receivable, less allowance for
credit losses of $1,569 and $1,412		54,337		53,971
Inventories		93,147		91,409
Prepaid and other current assets		6,707		4,865
Income tax receivable		983		892
Assets held for sale		-		137,284
Total current assets		191,573		299,745

Property and equipment, net		17,171		16,587
Other intangible assets, net		34,366		41,466
Indefinite-lived intangible assets		59,040		58,527
Goodwill		39,632		39,320
Deferred income taxes		19,192		22,869
Other long-term assets		14,364		16,824
Total assets	$	375,338	$	495,338

Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable	$	12,677	$	20,015
Accrued liabilities		23,325		24,580
Income tax payable		-		805
Current portion of long-term debt		-		119,790
Liabilities held for sale		-		5,744
Total current liabilities		36,002		170,934

Deferred income taxes		18,221		18,124
Other long-term liabilities		12,641		14,160
Total liabilities		66,864		203,218

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; 43,004 and 42,761 issued and 38,362 and 38,149 outstanding, respectively		4		4
Additional paid in capital		696,021		691,198
Accumulated deficit		(340,377)		(350,739)
Treasury stock, at cost		(33,114)		(32,929)
Accumulated other comprehensive loss		(14,060)		(15,414)
Total stockholders’ equity		308,474		292,120
Total liabilities and stockholders’ equity	$	375,338	$	495,338

See accompanying notes to condensed consolidated financial statements.

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CLARUS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

(In thousands, except per share amounts)


	Three Months Ended
	September 30, 2024		September 30, 2023

Sales
Domestic sales	$	24,365	$	30,423
International sales		42,750		50,879
Total sales		67,115		81,302

Cost of goods sold		43,618		54,018
Gross profit		23,497		27,284

Operating expenses
Selling, general and administrative		27,880		28,404
Restructuring charges		478		1,076
Transaction costs		103		400
Legal costs and regulatory matter expenses		394		579

Total operating expenses		28,855		30,459

Operating loss		(5,358)		(3,175)

Other income (expense)
Interest income, net		373		19
Other, net		1,164		(445)

Total other income (expense), net		1,537		(426)

Loss before income tax		(3,821)		(3,601)
Income tax benefit		(664)		(1,395)
Loss from continuing operations		(3,157)		(2,206)

Discontinued operations, net of tax		-		942

Net loss		(3,157)		(1,264)

Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment		3,665		(3,539)
Unrealized (loss) gain on hedging activities		(185)		401
Other comprehensive income (loss)		3,480		(3,138)
Comprehensive income (loss)	$	323	$	(4,402)

Loss from continuing operations per share:
Basic	$	(0.08)	$	(0.06)
Diluted		(0.08)		(0.06)

Net loss per share:
Basic	$	(0.08)	$	(0.03)
Diluted		(0.08)		(0.03)

Weighted average shares outstanding:
Basic		38,352		37,470
Diluted		38,352		37,470

See accompanying notes to condensed consolidated financial statements.

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CLARUS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

(In thousands, except per share amounts)



	Nine Months Ended
	September 30, 2024		September 30, 2023

Sales
Domestic sales	$	75,583	$	80,545
International sales		117,327		128,972
Total sales		192,910		209,517

Cost of goods sold		124,156		134,148
Gross profit		68,754		75,369

Operating expenses
Selling, general and administrative		84,176		84,640
Restructuring charges		1,009		1,812
Transaction costs		168		459
Contingent consideration benefit		(125)		(1,565)
Legal costs and regulatory matter expenses		3,795		1,062

Total operating expenses		89,023		86,408

Operating loss		(20,269)		(11,039)

Other income (expense)
Interest income, net		1,198		32
Other, net		669		(143)

Total other income (expense), net		1,867		(111)

Loss before income tax		(18,402)		(11,150)
Income tax benefit		(3,290)		(2,591)
Loss from continuing operations		(15,112)		(8,559)

Discontinued operations, net of tax		28,346		6,802

Net income (loss)		13,234		(1,757)

Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment		1,167		(5,949)
Unrealized gain on hedging activities		187		347
Other comprehensive income (loss)		1,354		(5,602)
Comprehensive income (loss)	$	14,588	$	(7,359)

Loss from continuing operations per share:
Basic	$	(0.39)	$	(0.23)
Diluted		(0.39)		(0.23)

Net income (loss) per share:
Basic	$	0.35	$	(0.05)
Diluted		0.35		(0.05)

Weighted average shares outstanding:
Basic		38,286		37,267
Diluted		38,286		37,267

See accompanying notes to condensed consolidated financial statements.

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CLARUS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)



	Nine Months Ended
	September 30, 2024		September 30, 2023
Cash Flows From Operating Activities:
Net income (loss)	$	13,234	$	(1,757)
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:
Depreciation of property and equipment		3,051		5,675
Amortization of other intangible assets		7,316		9,560
Gain on sale of business		(40,585)		-
Amortization of debt issuance costs		1,209		696
Gain on disposition of property and equipment		(138)		(43)
Noncash lease expense		2,284		2,290
Contingent consideration benefit		(125)		(1,565)
Stock-based compensation		4,258		4,037
Deferred income taxes		3,441		(2,509)
Changes in operating assets and liabilities, net of disposition:
Accounts receivable		778		(6,247)
Inventories		(4,703)		5,408
Prepaid and other assets		(543)		3,239
Accounts payable		(7,940)		2,165
Accrued liabilities		(4,549)		(3,589)
Income taxes		(858)		68
Net cash (used in) provided by operating activities		(23,870)		17,428

Cash Flows From Investing Activities:
Proceeds from the sale of business		175,674		-
Proceeds from disposition of property and equipment		245		196
Purchase of intangible assets		(250)		(250)
Purchases of property and equipment		(4,525)		(4,495)
Net cash provided by (used in) investing activities		171,144		(4,549)

Cash Flows From Financing Activities:
Proceeds from revolving credit facilities		31,205		29,195
Repayments on revolving credit facilities		(41,580)		(37,836)
Repayments on term loans and other debt		(109,463)		(7,967)
Proceeds from issuance of other debt		49		-
Purchase of treasury stock		(185)		(222)
Proceeds from exercise of options		565		3,435
Cash dividends paid		(2,872)		(2,796)
Net cash used in financing activities		(122,281)		(16,191)

Effect of foreign exchange rates on cash		82		(725)

Change in cash		25,075		(4,037)
Cash, beginning of year		11,324		12,061
Cash, end of period	$	36,399	$	8,024

Supplemental Disclosure of Cash Flow Information:
Cash paid for income taxes	$	2,284	$	1,831
Cash paid for interest	$	1,947	$	7,736
Supplemental Disclosures of Non-Cash Investing and Financing Activities:
Shares issued for business acquisitions	$	-	$	2,067
Property and equipment purchased with accounts payable	$	131	$	232
Intangible assets purchased with accounts payable	$	-	$	250
Lease liabilities arising from obtaining right-of-use assets	$	991	$	4,211

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		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
Net loss		-		-		-		(1,264)		-		-		-		(1,264)
Other comprehensive loss		-		-		-		-		-		-		(3,138)		(3,138)
Cash dividends ($0.025 per share)		-		-		-		(936)		-		-		-		(936)
Stock-based compensation expense		-		-		1,168		-		-		-		-		1,168
Proceeds from exercise of options		500		-		3,400		-		-		-		-		3,400
Shares issued in business acquisition		249		-		2,067		-		-		-		-		2,067
Balance, September 30, 2023		42,582	$	4	$	688,878	$	(341,396)		(4,612)	$	(32,929)	$	(23,287)	$	291,270

Table of Contents


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

Balance, December 31, 2023		42,761	$	4	$	691,198	$	(350,739)		(4,612)	$	(32,929)	$	(15,414)	$	292,120
Net income		-		-		-		21,884		-		-		-		21,884
Other comprehensive loss		-		-		-		-		-		-		(3,671)		(3,671)
Cash dividends ($0.025 per share)		-		-		-		(956)		-		-		-		(956)
Purchase of treasury stock		-		-		-		-		(30)		(185)		-		(185)
Stock-based compensation expense		-		-		1,183		-		-		-		-		1,183
Proceeds from exercise of options		117		-		-		-		-		-		-		-
Balance, March 31, 2024		42,878	$	4	$	692,381	$	(329,811)		(4,642)	$	(33,114)	$	(19,085)	$	310,375
Net loss		-		-		-		(5,493)		-		-		-		(5,493)
Other comprehensive income		-		-		-		-		-		-		1,545		1,545
Cash dividends ($0.025 per share)		-		-		-		(957)		-		-		-		(957)
Stock-based compensation expense		-		-		1,528		-		-		-		-		1,528
Proceeds from exercise of options		62		-		285		-		-		-		-		285
Balance, June 30, 2024		42,940	$	4	$	694,194	$	(336,261)		(4,642)	$	(33,114)	$	(17,540)	$	307,283
Net loss		-		-		-		(3,157)		-		-		-		(3,157)
Other comprehensive income		-		-		-		-		-		-		3,480		3,480
Cash dividends ($0.025 per share)		-		-		-		(959)		-		-		-		(959)
Stock-based compensation expense		-		-		1,547		-		-		-		-		1,547
Proceeds from exercise of options		64		-		280		-		-		-		-		280
Balance, September 30, 2024		43,004	$	4	$	696,021	$	(340,377)		(4,642)	$	(33,114)	$	(14,060)	$	308,474

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 September 30, 2024 and December 31, 2023 and for the three and nine months ended September 30, 2024 and 2023, 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 nine months ended September 30, 2024 are not necessarily indicative of the results to be obtained for the year ending December 31, 2024. 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, 2023, filed with the Securities and Exchange Commission (the “SEC”) on March 7, 2024.

Nature of Business

Headquartered in Salt Lake City, Utah, we are a global leader in the design and development of best-in-class equipment and lifestyle products for outdoor enthusiasts. Driven by our rich history of engineering and innovation, our objective is to provide safe, simple, effective and beautiful products so that our customers can maximize their outdoor pursuits and adventures. 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®, and TRED Outdoors® 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 affect 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, provision for excess or obsolete inventory, allowance for credit losses, and valuation of contingent consideration liabilities, 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.

Reclassifications

Certain reclassifications have been made to prior period financial statements to conform to the current period presentation. Specifically, legal costs associated with specific legal matters which were recorded in selling, general, and administrative expenses are now presented in legal costs and regulatory matter expenses in the consolidated statements of comprehensive income (loss). See Note 16 for discussion regarding legal matters.

Recent Accounting Pronouncements

Accounting Pronouncements issued and not yet adopted

In November 2023, the FASB issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires a public entity to disclose significant segment expenses and other segment items on an annual and interim basis and provide in interim periods all disclosures about a reportable

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CLARUS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(Unaudited)

(in thousands, except per share amounts)

segment’s profit or loss and assets that are currently required annually. The amendments in ASU 2023-07 are effective for all public entities for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company is currently evaluating the enhanced disclosure requirements; however, it does not anticipate a material change to the consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires a public entity to disclose in its rate reconciliation table additional categories of information about federal, state and foreign income taxes and provide more details about the reconciling items in some categories if items meet a quantitative threshold. The guidance will require all entities to disclose income taxes paid, net of refunds, disaggregated by federal (national), state and foreign taxes for annual periods and to disaggregate the information by jurisdiction based on a quantitative threshold. The guidance makes several other changes to the disclosure requirements. All entities are required to apply the guidance prospectively, with the option to apply it retrospectively. The guidance is effective for public business entities for fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company is currently evaluating the enhanced disclosure requirements; however, it does not anticipate a material change to the consolidated financial statements.

NOTE 2. ACQUISITIONS

TRED

On September 13, 2023, Clarus entered into a Share Purchase Agreement (the “TRED Purchase Agreement”) to acquire TRED Outdoors Pty Ltd. (“TRED”), which subsequently closed on October 9, 2023. All United States dollar amounts contained herein are based on the exchange rates in effect for Australian dollars ($AUD) and the market value of the Company’s common stock at the time of closing of the acquisition of TRED (the “TRED Acquisition”).

The Company acquired TRED for an aggregate purchase price of $AUD 10,741 (approximately $6,849), subject to a post-closing adjustment, comprised of $AUD 8,875 (approximately $5,659) cash, 179 shares of the Company’s common stock valued at $1,069, and additional consideration described below. The TRED Purchase Agreement provides for the payment of additional contingent consideration of up to $AUD 1,000 (approximately $638) in cash upon the satisfaction of certain net sales targets (the “TRED Contingent Consideration”). The Company estimated the initial fair value of the TRED Contingent Consideration to be $AUD 189 (approximately $121) and recorded this liability within accrued liabilities. See Note 11 for discussion regarding the valuation of the TRED Contingent Consideration as of September 30, 2024. The acquisition was accounted for as a business combination.

The Company believes the acquisition of TRED will provide the Company with a greater combined global revenue base, increased gross margins, profitability and free cash flows, and access to increased liquidity to further acquire and grow businesses.

The following table is a reconciliation to the fair value of the purchase consideration and how the purchase consideration is allocated to assets acquired and liabilities assumed which have been estimated at their fair values. The fair value measurements for the acquisition of TRED have been completed. The excess of purchase consideration over the assets acquired and liabilities assumed is recorded as goodwill. Goodwill for TRED is included in the Adventure segment. The goodwill consists largely of the growth and profitability expected from the acquisition.