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, 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 November 1, 2023, there were 38,149,409 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, 2023 and December 31, 2022	3
	Condensed Consolidated Statements of Comprehensive Loss – Three months ended September 30, 2023 and 2022	4
	Condensed Consolidated Statements of Comprehensive Loss – Nine months ended September 30, 2023 and 2022	5
	Condensed Consolidated Statements of Cash Flows – Nine months ended September 30, 2023 and 2022	6
	Condensed Consolidated Statements of Stockholders’ Equity – Three and Nine months ended September 30, 2023 and 2022	7
	Notes to Condensed Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	40
Item 4.	Controls and Procedures	41

PART II	OTHER INFORMATION

Item 1.	Legal Proceedings	42
Item 1A.	Risk Factors	43
Item 6.	Exhibits	46
Signature Page		47

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CLARUS CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands, except per share amounts)


	September 30, 2023		December 31, 2022
Assets
Current assets
Cash	$	8,024	$	12,061
Accounts receivable, less allowance for
credit losses of $1,576 and $1,211		72,601		66,553
Inventories		140,460		147,072
Prepaid and other current assets		7,155		9,899
Income tax receivable		2,444		3,034
Total current assets		230,684		238,619

Property and equipment, net		41,131		43,010
Other intangible assets, net		44,305		55,255
Indefinite-lived intangible assets		80,936		82,901
Goodwill		61,895		62,993
Deferred income taxes		20,333		17,912
Other long-term assets		17,942		17,455
Total assets	$	497,226	$	518,145

Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable	$	28,864	$	27,052
Accrued liabilities		22,435		25,170
Income tax payable		-		421
Current portion of long-term debt		12,566		11,952
Total current liabilities		63,865		64,595

Long-term debt, net		110,077		127,082
Deferred income taxes		17,534		18,506
Other long-term liabilities		14,480		15,854
Total liabilities		205,956		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; 42,582 and 41,637 issued and 37,970 and 37,048 outstanding, respectively		4		4
Additional paid in capital		688,878		679,339
Accumulated deficit		(341,396)		(336,843)
Treasury stock, at cost		(32,929)		(32,707)
Accumulated other comprehensive loss		(23,287)		(17,685)
Total stockholders’ equity		291,270		292,108
Total liabilities and stockholders’ equity	$	497,226	$	518,145

See accompanying notes to condensed consolidated financial statements.

Table of Contents

CLARUS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Unaudited)

(In thousands, except per share amounts)


	Three Months Ended
	September 30, 2023		September 30, 2022

Sales
Domestic sales	$	44,152	$	55,540
International sales		55,923		60,175
Total sales		100,075		115,715

Cost of goods sold		64,527		76,291
Gross profit		35,548		39,424

Operating expenses
Selling, general and administrative		31,790		32,340
Restructuring charges		1,099		-
Transaction costs		842		858
Contingent consideration expense		-		104

Total operating expenses		33,731		33,302

Operating income		1,817		6,122

Other expense
Interest expense, net		(2,842)		(2,216)
Other, net		(443)		(1,238)

Total other expense, net		(3,285)		(3,454)

(Loss) income before income tax		(1,468)		2,668
Income tax benefit		(204)		(83)
Net (loss) income		(1,264)		2,751

Other comprehensive loss, net of tax:
Foreign currency translation adjustment		(3,539)		(11,386)
Unrealized gain on hedging activities		401		268
Other comprehensive loss		(3,138)		(11,118)
Comprehensive loss	$	(4,402)	$	(8,367)

Net (loss) income per share:
Basic	$	(0.03)	$	0.07
Diluted		(0.03)		0.07

Weighted average shares outstanding:
Basic		37,470		37,369
Diluted		37,470		39,580

See accompanying notes to condensed consolidated financial statements.

Table of Contents

CLARUS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Unaudited)

(In thousands, except per share amounts)


	Nine Months Ended
	September 30, 2023		September 30, 2022

Sales
Domestic sales	$	135,724	$	181,920
International sales		145,463		162,004
Total sales		281,187		343,924

Cost of goods sold		178,864		216,566
Gross profit		102,323		127,358

Operating expenses
Selling, general and administrative		94,809		101,959
Restructuring charges		1,835		-
Transaction costs		975		2,880
Contingent consideration (benefit) expense		(1,565)		493

Total operating expenses		96,054		105,332

Operating income		6,269		22,026

Other expense
Interest expense, net		(8,445)		(5,060)
Other, net		(134)		(2,648)

Total other expense, net		(8,579)		(7,708)

(Loss) income before income tax		(2,310)		14,318
Income tax (benefit) expense		(553)		2,494
Net (loss) income		(1,757)		11,824

Other comprehensive loss, net of tax:
Foreign currency translation adjustment		(5,949)		(22,941)
Unrealized gain on hedging activities		347		976
Other comprehensive loss		(5,602)		(21,965)
Comprehensive loss	$	(7,359)	$	(10,141)

Net (loss) income per share:
Basic	$	(0.05)	$	0.32
Diluted		(0.05)		0.30

Weighted average shares outstanding:
Basic		37,267		37,256
Diluted		37,267		39,694

See accompanying notes to condensed consolidated financial statements.

Table of Contents

CLARUS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)


	Nine Months Ended
	September 30, 2023		September 30, 2022
Cash Flows From Operating Activities:
Net (loss) income	$	(1,757)	$	11,824
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
Depreciation of property and equipment		5,675		5,800
Amortization of other intangible assets		9,560		11,740
Amortization of debt issuance costs		696		593
Gain on disposition of property and equipment		(43)		(41)
Noncash lease expense		2,290		2,412
Contingent consideration (benefit) expense		(1,565)		468
Stock-based compensation		4,037		9,142
Deferred income taxes		(2,509)		(410)
Changes in operating assets and liabilities:
Accounts receivable		(6,247)		(24,941)
Inventories		5,408		(30,243)
Prepaid and other assets		3,239		(2,126)
Accounts payable		2,165		4,662
Accrued liabilities		(3,589)		(2,756)
Income taxes		68		(3,870)
Net cash provided by (used in) operating activities		17,428		(17,746)

Cash Flows From Investing Activities:
Proceeds from disposition of property and equipment		196		438
Purchase of intangible assets		(250)		-
Purchases of property and equipment		(4,495)		(6,216)
Net cash used in investing activities		(4,549)		(5,778)

Cash Flows From Financing Activities:
Proceeds from revolving credit facilities		29,195		98,991
Repayments on revolving credit facilities		(37,836)		(72,804)
Repayments on term loans		(7,967)		(125,191)
Proceeds from issuance of term loans		-		125,000
Payment of debt issuance costs		-		(1,385)
Purchase of treasury stock		(222)		(8,267)
Proceeds from exercise of options		3,435		2,721
Cash dividends paid		(2,796)		(2,795)
Payment of contingent consideration		-		(943)
Net cash (used in) provided by financing activities		(16,191)		15,327

Effect of foreign exchange rates on cash		(725)		(903)

Change in cash		(4,037)		(9,100)
Cash, beginning of year		12,061		19,465
Cash, end of period	$	8,024	$	10,365

Supplemental Disclosure of Cash Flow Information:
Cash paid for income taxes	$	1,831	$	7,155
Cash paid for interest	$	7,736	$	4,107
Supplemental Disclosures of Non-Cash Investing and Financing Activities:
Shares issued for business acquisitions	$	2,067	$	2,261
Property and equipment purchased with accounts payable	$	232	$	127
Intangible assets purchased with accounts payable	$	250	$	-
Lease liabilities arising from obtaining right of use assets	$	4,211	$	1,324

See accompanying notes to condensed consolidated financial statements.

Table of Contents

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
Net income		-		-		-		2,751		-		-		-		2,751
Other comprehensive loss		-		-		-		-		-		-		(11,118)		(11,118)
Cash dividends ($0.025 per share)		-		-		-		(934)		-		-		-		(934)
Purchase of treasury stock		-		-		-		-		(527)		(7,170)		-		(7,170)
Stock-based compensation expense		-		-		2,220		-		-		-		-		2,220
Proceeds from exercise of options		189		-		2,053		-		-		-		-		2,053
Shares issued in business acquisition		108		-		2,261		-		-		-		-		2,261
Balance, September 30, 2022		41,625	$	4	$	677,120	$	(254,313)		(4,589)	$	(32,707)	$	(27,015)	$	363,089

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, 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

See accompanying notes to condensed consolidated financial statements.

Table of Contents

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, 2023 and December 31, 2022 and for the three and nine months ended September 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 nine months ended September 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, 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.

NOTE 2. INVENTORIES

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

September 30, 2023

December 31, 2022

Finished goods

Work-in-process