Clarus Reports Third Quarter 2024 Results
SALT LAKE CITY, Nov. 07, 2024 (GLOBE NEWSWIRE) -- Clarus Corporation (NASDAQ:CLAR) ("Clarus" and/or the "Company"), a global company focused on the outdoor enthusiast markets, reported financial results for the third quarter ended September 30, 2024.
Third Quarter 2024 Financial Summary vs. Same Year‐Ago Quarter (adjusted to reflect the reclassification of the Precision Sport segment as discontinued operations)
Sales of $67.1 million compared to $81.3 million.
Gross margin was 35.0% compared to 33.6%; adjusted gross margin of 37.8% compared to 33.6%.
Net loss, which includes the impact of discontinued operations, of $3.2 million, or $(0.08) per diluted share, compared to net loss of $1.3 million, or $(0.03) per diluted share.
Loss from continuing operations of $3.2 million, or $(0.08) per diluted share, compared to loss from continuing operations of $2.2 million, or $(0.06) per diluted share.
Adjusted EBITDA from continuing operations of $2.4 million with an adjusted EBITDA margin of 3.6% compared to $3.6 million with an adjusted EBITDA margin of 4.5%.
Management Commentary"While macroeconomic headwinds have continued to limit consumer demand in the near-term, our focus in the third quarter was on advancing our strategic plan to position Clarus for long-term profitable growth," said Warren Kanders, Clarus' Executive Chairman. "Specifically, in the Outdoor segment we continued to improve the quality and composition of our inventory to focus on the best and most profitable styles across categories. In line with our stated strategic objective, inventory was down 4% year-over-year. Our Adventure business performed in line with expectations for the first two months of the quarter, but results were ultimately affected by market softness in September in both North America and Australia/New Zealand."
Mr. Kanders added, "There remains significant work outstanding to execute our multi-year growth initiatives, but we believe we are on track at Outdoor as we continue to simplify the business operationally and drive SKU rationalization, despite the challenging global market conditions. Our objective to scale the Adventure segment to a global footprint has not yet come to fruition. We have established a strategic roadmap that we are executing on and remain confident that the significant investments we have made in 2024 will enable our Adventure businesses to accelerate traction, particularly in the US and international markets, and strengthen our global OEM initiatives. All of this is supported by a debt-free balance sheet, to take the next steps in our turnaround."
Third Quarter 2024 Financial ResultsSales in the third quarter were $67.1 million compared to $81.3 million in the same year‐ago quarter. This decrease was primarily driven by softness across all selling channels in Outdoor, as well as the effect from the product line simplification strategy. The decrease was further driven by lower Adventure segment sales, specifically in the OEM channel and challenging wholesale markets globally, partially offset by the benefit from the TRED Outdoors acquisition.
Sales in the Outdoor segment were $49.3 million, compared to $61.1 million in the year-ago quarter. Sales in the Adventure segment decreased 11.9% to $17.8 million, or $17.5 million on a constant currency basis, compared to $20.2 million in the year-ago quarter. Gross margin in the third quarter was 35.0% compared to 33.6% in the year‐ago quarter. The increase in gross margin was primarily due to favorable product mix at the Outdoor segment as a result of product simplification and SKU rationalization efforts, as well as a favorable channel mix due to lower OEM sales and higher MAXTRAX revenue at the Adventure segment. This was partially offset by an increase in polyfluoroalkyl substances ("PFAS") related inventory reserve expenses at the Outdoor segment, as well as sales return reserve and rebate expenses at the Adventure segment. Adjusted gross margin reflecting the PFAS related inventory reserve was 37.8% for the quarter.
Selling, general and administrative expenses in the third quarter were $27.9 million compared to $28.4 million in the same year‐ago quarter. The decrease was primarily a result of lower retail expenses due to store closures and other expense reduction initiatives to manage costs at the Outdoor segment. These decreases were partially offset by investments in global marketing and e-commerce initiatives to accelerate growth at the Adventure segment and incremental SG&A from the TRED Outdoors acquisition.
The loss from continuing operations in the third quarter of 2024 was $3.2 million, or $(0.08) per diluted share, compared to loss from continuing operations of $2.2 million, or $(0.06) per diluted share in the year-ago quarter. Loss from continuing operations in the third quarter included $0.4 million of charges relating to legal cost and regulatory matter expenses and $1.9 million of PFAS inventory reserves.
Adjusted income from continuing operations in the third quarter of 2024 was $1.9 million, or $0.05 per diluted share, compared to adjusted income from continuing operations of $1.8 million, or $0.05 per diluted share, in the year-ago quarter. Adjusted income from continuing operations excludes legal cost and regulatory matters expenses, PFAS inventory reserves, restructuring charges and transaction costs, as well as non-cash items for intangible amortization and stock-based compensation.
Adjusted EBITDA from continuing operations in the third quarter was $2.4 million, or an adjusted EBITDA margin of 3.6%, compared to adjusted EBITDA from continuing operations of $3.6 million, or an adjusted EBITDA margin of 4.5%, in the same year‐ago quarter.
Net cash used in operating activities for the three months ended September 30, 2024, was $8.3 million compared to net cash provided by operating activities of $0.1 million in the prior year quarter. Capital expenditures in the third quarter of 2024 were $1.1 million compared to $1.2 million in the prior year quarter. Free cash flow for the third quarter of 2024 was an outflow of $9.4 million compared to an outflow of $1.1 million in the prior year quarter.
Liquidity at September 30, 2024 vs. December 31, 2023
Cash and cash equivalents totaled $36.4 million compared to $11.3 million.
Total debt of $0.0 million compared to $119.8 million.
2024 OutlookThe Company now expects fiscal year 2024 sales to range between $260 million to $266 million. Due to softer global revenue and the continued investments in the Adventure segment to scale the business, the Company now expects adjusted EBITDA of approximately $7 million to $9 million, or an adjusted EBITDA margin of 3.0% at the mid-point of revenue and adjusted EBITDA. In addition, the Company now expects capital expenditures to range between $5.0 million to $6.0 million, of which $0.9 million related to Precision Sport prior to disposal, and free cash flow to range between $(6) million to $(8) million for the full year 2024, which includes approximately $7.0 of cash outflow related to the Precision Sport disposal.
Net Operating Loss (NOL)The Company has net operating loss carryforwards ("NOLs") for U.S. federal income tax purposes of $7.7 million which we expect to fully utilize in 2024.
Conference CallThe Company will hold a conference call today at 5:00 p.m. Eastern time to discuss its third quarter 2024 results.
Date: Thursday, November 7, 2024Time: 5:00 pm ETRegistration Link: https://register.vevent.com/register/BI55fc3dd7523c4a8e885ce228015f2987
To access the call by phone, please register via the live call registration link above and you will be provided with dial-in instructions and details. The conference call will be broadcast live and available for replay here and on the Company's website at www.claruscorp.com.
About Clarus Corporation Headquartered in Salt Lake City, Utah, Clarus Corporation is 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®, TRED Outdoors® brand names through outdoor specialty and online retailers, our own websites, distributors, and original equipment manufacturers.
Use of Non‐GAAP MeasuresThe Company reports its financial results in accordance with U.S. generally accepted accounting principles ("GAAP"). This press release contains the non-GAAP measures: (i) adjusted gross margin and adjusted gross profit, (ii) adjusted (loss) income from continuing operations and related earnings (loss) per diluted share, (iii) earnings before interest, taxes, other income or expense, depreciation and amortization ("EBITDA"), EBITDA margin, adjusted EBITDA, and adjusted EBITDA margin, and (iv) free cash flow (defined as net cash provided by operating activities less capital expenditures). The Company believes that the presentation of certain non-GAAP measures, i.e.: (i) adjusted gross margin and adjusted gross profit, (ii) adjusted (loss) income from continuing operations and related earnings (loss) per diluted share , (iii) EBITDA, EBITDA margin, adjusted EBITDA and adjusted EBITDA margin, and (iv) free cash flow, provide useful information for the understanding of its ongoing operations and enables investors to focus on period-over-period operating performance, and thereby enhances the user's overall understanding of the Company's current financial performance relative to past performance and provides, along with the nearest GAAP measures, a baseline for modeling future earnings expectations. Non-GAAP measures are reconciled to comparable GAAP financial measures within this press release. We do not provide a reconciliation of the non-GAAP guidance measures Adjusted EBITDA and/or Adjusted EBITDA Margin for the fiscal year 2024 to net income for the fiscal year 2024, the most comparable GAAP financial measure, due to the inherent difficulty of forecasting certain types of expenses and gains, without unreasonable effort, which affect net income but not Adjusted EBITDA and/or Adjusted EBITDA Margin. The Company cautions that non-GAAP measures should be considered in addition to, but not as a substitute for, the Company's reported GAAP results. Additionally, the Company notes that there can be no assurance that the above referenced non-GAAP financial measures are comparable to similarly titled financial measures used by other publicly traded companies.
Forward-Looking StatementsPlease note that in this press release we may use words such as "appears," "anticipates," "believes," "plans," "expects," "intends," "future," and similar expressions which constitute forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are made based on our expectations and beliefs concerning future events impacting the Company and therefore involve a number of risks and uncertainties. We caution that forward-looking statements are not guarantees and that actual results could differ materially from those expressed or implied in the forward-looking statements. Potential risks and uncertainties that could cause the actual results of operations or financial condition of the Company to differ materially from those expressed or implied by forward-looking statements in this press release, include, but are not limited to, those risks and uncertainties more fully described from time to time in the Company's public reports filed with the Securities and Exchange Commission, including under the section titled "Risk Factors" in the Company's Annual Report on Form 10-K, and/or Quarterly Reports on Form 10-Q, as well as in the Company's Current Reports on Form 8-K. All forward-looking statements included in this press release are based upon information available to the Company as of the date of this press release and speak only as of the date hereof. We assume no obligation to update any forward- looking statements to reflect events or circumstances after the date of this press release.
Company Contact:Michael J. YatesChief Financial
Investor Relations:The IGB GroupLeon Berman / Matt BerkowitzTel 1-212-477-8438 / /
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
CLARUS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF 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
)
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
CLARUS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(Unaudited)
(In thousands, except per share amounts)
Nine Months Ended
September 30, 2024
September 30, 2023
Sales
Domestic sales
$
