Clarus Corp 10-Q

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Forward-Looking Statements Please note that in this Quarterly Report on Form 10-Q Clarus Corporation (which may be referred to as the “Company,” “Clarus,” “we,” “our” or “us”) 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 Quarterly Report on Form 10-Q include, but are not limited to, the overall level of consumer demand on our products; general economic conditions and other factors affecting consumer confidence, preferences, and behavior; disruption and volatility in the global currency, capital and credit markets; the financial strength of the Company’s customers; the Company’s ability to implement its business strategy; the ability of the Company to execute and integrate acquisitions; changes in governmental regulation, legislation or public opinion relating to the manufacture and sale of bullets and ammunition by our Sierra segment, and the possession and use of firearms and ammunition by our customers; the Company’s exposure to product liability or product warranty claims and other loss contingencies; disruptions and other impacts to the Company’s business, as a result of the COVID-19 global pandemic and government actions and restrictive measures implemented in response; stability of the Company’s manufacturing facilities and suppliers, as well as consumer demand for our products, in light of disease epidemics and health-related concerns such as the COVID-19 global pandemic; the impact that global climate change trends may have on the Company and its suppliers and customers; the Company's ability to protect patents, trademarks and other intellectual property rights; any breaches of, or interruptions in, our information systems; the ability of our information technology systems or information security systems to operate effectively, including as a result of security breaches, viruses, hackers, malware, natural disasters, vendor business interruptions or other causes; our ability to properly maintain, protect, repair or upgrade our information technology systems or information security systems, or problems with our transitioning to upgraded or replacement systems; the impact of adverse publicity about the Company and/or its brands, including without limitation, through social media or in connection with brand damaging events and/or public perception; fluctuations in the price, availability and quality of raw materials and contracted products as well as foreign currency fluctuations; our ability to utilize our net operating loss carryforwards; changes in tax laws and liabilities, tariffs, legal, regulatory, political and economic risks; and the Company’s ability to maintain a quarterly dividend. More information on potential factors that could affect the Company’s financial results is included from time to time in the Company’s public reports filed with the Securities and Exchange Commission, including the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. All forward-looking statements included in this Quarterly Report on Form 10-Q are based upon information available to the Company as of the date of this Quarterly Report on Form 10-Q, 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 Quarterly Report on Form 10-Q. Overview Headquartered in Salt Lake City, Utah, Clarus, a company focused on the outdoor and consumer industries, is seeking opportunities to acquire and grow businesses that can generate attractive shareholder returns. The Company has net operating tax loss carryforwards which it is seeking to redeploy to maximize shareholder value. Clarus’ primary business is as a leading designer, developer, manufacturer and distributor of outdoor equipment and lifestyle products focused on the climb, ski, mountain, sport and skincare markets. The Company’s products are principally sold under the Black Diamond®, Sierra®, Barnes®, PIEPS® and SKINourishment® brand names through outdoor specialty and online retailers, distributors and original equipment manufacturers throughout the U.S. and internationally. Through our Black Diamond, PIEPS, and SKINourishment brands, we offer a broad range of products including: high-performance, activity-based apparel (such as shells, insulation, midlayers, pants and logowear); rock-climbing footwear and equipment (such as carabiners, protection devices, harnesses, belay devices, helmets, and ice-climbing gear); technical backpacks and high-end day packs; trekking poles; headlamps and lanterns; gloves and mittens; and skincare and other sport-enhancing products. We also offer advanced skis, ski poles, ski skins, and snow safety products, including avalanche airbag systems, avalanche transceivers, shovels, and probes. Through our Sierra and Barnes brands, we manufacture a wide range of high-performance bullets and ammunition for both rifles and pistols that are used for precision target shooting, hunting and military and law enforcement purposes. 19 CLARUS CORPORATION MANAGEMENT DISCUSSION AND ANALYSIS (in thousands, except per share amounts) Clarus, incorporated in Delaware in 1991, acquired Black Diamond Equipment, Ltd. (“Black Diamond Equipment”) in May 2010 and changed its name to Black Diamond, Inc. in January 2011. In October 2012, we acquired PIEPS Holding GmbH and its subsidiaries (collectively, “PIEPS”). On August 14, 2017, the Company changed its name from Black Diamond, Inc. to Clarus Corporation and its stock ticker symbol from “BDE” to “CLAR” on the NASDAQ stock exchange. On August 21, 2017, the Company acquired Sierra Bullets, L.L.C. (“Sierra”). On November 6, 2018, the Company acquired the assets of SKINourishment, Inc. (“SKINourishment”). On October 2, 2020, the Company completed the acquisition of certain assets and liabilities constituting the Barnes business (“Barnes”) for a purchase price of $30,500. On August 6, 2018, the Company announced that its Board of Directors approved the initiation of a quarterly cash dividend program of $0.025 per share of the Company’s common stock (the “Quarterly Cash Dividend”) or $0.10 per share on an annualized basis. The declaration and payment of future Quarterly Cash Dividends is subject to the discretion of and approval of the Company’s Board of Directors. On May 1, 2020, the Company announced that, in light of the operational impact of the COVID-19 pandemic, its Board of Directors temporarily replaced its Quarterly Cash Dividend with a stock dividend (the “Quarterly Stock Dividend”). On October 19, 2020, the Company announced that its Board of Directors approved the reinstatement of its Quarterly Cash Dividend. On April 30, 2021, the Company announced that its Board of Directors approved the payment on May 21, 2021 of the Quarterly Cash Dividend to the record holders of shares of the Company’s common stock as of the close of business on May 10, 2021. Impact of COVID-19 The global outbreak of COVID-19 was declared a pandemic by the World Health Organization and a national emergency by the U.S. government in March 2020, with governments world-wide implementing safety measures restricting travel and requiring citizen lockdowns and self-confinements for quarantining purposes. This has negatively affected the U.S. and global economy, disrupted global supply chains, and resulted in significant transport restrictions and disruption of financial markets. The impact of this pandemic has created significant uncertainty in the global economy and has affected our business, employees, retail and distribution partners, suppliers, and customers. We experienced a decline in retail demand within our Black Diamond segment beginning in the second half of March 2020 through December 2020, which negatively impacted our sales and profitability during this period. This continued during the three months ended March 31, 2021, although to a lesser extent, as certain countries began to ease restrictions. We expect a continued impact on the Company’s sales and profitability in future periods. The duration of these trends and the magnitude of such impacts cannot be precisely estimated at this time, as they are affected by a number of factors (some of which are outside management’s control), including those presented in Part I, Item 1A. Risk Factors of our Annual Report on Form 10-K for the year ended December 31, 2020. Since the beginning of the pandemic, we have mitigated some of the negative impacts to our operating results by taking significant actions to improve our current operating results and liquidity position, including drawing on the credit facility, temporarily suspending share repurchases, temporarily suspending cash dividends, postponing non-essential capital expenditures, reducing operating costs, modulating production in line with demand, and substantially reducing discretionary spending. As the impact of the COVID-19 pandemic on the economy and our operations evolves, we will continue to assess the impact on the Company and respond accordingly. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was signed into law. The CARES Act established a program with provisions to allow U.S. companies to defer the employer’s portion of social security taxes between March 27, 2020 and December 31, 2020 and pay such taxes in two installments in 2021 and 2022. As permitted by the CARES Act, we have deferred payment of the employer’s portion of social security payroll tax payments. Critical Accounting Policies and Use of Estimates Management’s discussion of our financial condition and results of operations is based on the condensed consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). The preparation of the condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the condensed consolidated financial statements. Estimates also affect the reported amounts of revenues and expenses during the reporting periods. We continually evaluate our estimates and assumptions including those related to derivatives, revenue recognition, income taxes and valuation of long-lived assets, goodwill and other intangible assets. We base our estimates on historical experience and other assumptions that are believed to be reasonable under the circumstances. Actual results could differ from these estimates. 20 CLARUS CORPORATION MANAGEMENT DISCUSSION AND ANALYSIS (in thousands, except per share amounts) There have been no significant changes to our critical accounting policies as described in our Annual Report on Form 10-K for the year ended December 31, 2020. Accounting Pronouncements Issued Not Yet Adopted See “Accounting Pronouncements Not Yet Adopted” in Note 1 of the unaudited condensed consolidated financial statements. ‎ 21 CLARUS CORPORATION MANAGEMENT DISCUSSION AND ANALYSIS (in thousands, except per share amounts) Results of Operations Condensed Consolidated Three Months Ended March 31, 2021 Compared to Condensed Consolidated Three Months Ended March 31, 2020 The following presents a discussion of condensed consolidated operations for the three months ended March 31, 2021, compared with the condensed consolidated three months ended March 31, 2020. Three Months Ended March 31, 2021 March 31, 2020 Sales Domestic sales $ 47,573 $ 28,548 International sales 27,758 25,007 Total sales 75,331 53,555 Cost of goods sold 48,281 35,043 Gross profit 27,050 18,512 Operating expenses Selling, general and administrative 20,885 17,370 Transaction costs 476 250 Total operating expenses 21,361 17,620 Operating income 5,689 892 Other expense Interest expense, net (238) (311) Other, net (140) (531) Total other expense, net (378) (842) Income before income tax 5,311 50 Income tax (benefit) expense (366) 14 Net income $ 5,677 $ 36 Sales Consolidated sales increased $21,776, or 40.7%, to $75,331, during the three months ended March 31, 2021, compared to consolidated sales of $53,555 during the three months ended March 31, 2020. The increase in sales was primarily attributable to the increase in the quantity of new and existing sport products sold by Sierra of $7,290 and the inclusion of Barnes, which contributed $8,485. The quantity of new and existing climb, mountain, and ski products also increased during the period. We experienced an increase in sales of $1,142 due to the weakening of the U.S. dollar against foreign currencies during the three months ended March 31, 2021, compared to the prior period. Consolidated domestic sales increased $19,025, or 66.6%, to $47,573 during the three months ended March 31, 2021, compared to consolidated domestic sales of $28,548 during the three months ended March 31, 2020. The increase in sales was primarily attributable to the increase in the quantity of new and existing sport products sold by Sierra of $8,241 and the inclusion of Barnes, which contributed $7,712. The quantity of new and existing climb, mountain, and ski products also increased during the period. Consolidated international sales increased $2,751, or 11.0%, to $27,758 during the three months ended March 31, 2021, compared to consolidated international sales of $25,007 during the three months ended March 31, 2020. The increase in sales was primarily attributable to the increase in the quantity of new and existing climb, mountain, and ski products and the inclusion of Barnes, which contributed $773. We experienced an increase in sales of $1,142 due to the weakening of the U.S. dollar against foreign currencies during the three months ended March 31, 2021 compared to the prior period. The increase was partially offset by a decrease in the quantity of new and existing sport products sold by Sierra of $951. 22 CLARUS CORPORATION MANAGEMENT DISCUSSION AND ANALYSIS (in thousands, except per share amounts) Cost of Goods Sold Consolidated cost of goods sold increased $13,238 or 37.8%, to $48,281 during the three months ended March 31, 2021, compared to consolidated cost of goods sold of $35,043 during the three months ended March 31, 2020. The increase in cost of goods sold was primarily attributable to an increase in the number of units sold. Gross Profit Consolidated gross profit increased $8,538 or 46.1%, to $27,050 during the three months ended March 31, 2021, compared to consolidated gross profit of $18,512 during the three months ended March 31, 2020. Consolidated gross margin was 35.9% during the three months ended March 31, 2021, compared to a consolidated gross margin of 34.6% during the three months ended March 31, 2020. Consolidated gross margin during the three months ended March 31, 2021, increased compared to the prior year due to a favorable product mix in higher margin products. Gross margin benefited from the inclusion of Barnes; however, this benefit was offset by a decrease in gross margin of 0.5% due to the sale of Barnes inventory that was recorded at its fair value in purchase accounting during the year ended December 31, 2020. Selling, General and Administrative Consolidated selling, general, and administrative expenses increased $3,515, or 20.2%, to $20,885 during the three months ended March 31, 2021, compared to consolidated selling, general and administrative expenses of $17,370 during the three months ended March 31, 2020. The increase in selling, general and administrative expenses is due to the inclusion of Barnes, which contributed $1,852, and an increase of stock compensation of $911 during the three months ended March 31, 2021 compared to the prior year. The remaining increase was attributable to the Company’s investments in the brand related activities of sales, direct-to-consumer, and warehousing and logistics, focused on supporting its strategic initiatives around elevating brand awareness and being easier to do business with. Transaction Costs Consolidated transaction expense increased to $476 during the three months ended March 31, 2021, compared to consolidated transaction costs of $250 during the three months ended March 31, 2020, which consisted of expenses related to the Company’s various acquisition efforts. Interest Expense, net Consolidated interest expense, net during the three months ended March 31, 2021 remained relatively consistent with consolidated interest expense, net, during the three months ended March 31, 2020. Other, net Consolidated other, net expense decreased $391, or 73.6%, to $140 during the three months ended March 31, 2021, compared to consolidated other, net expense of $531 during the three months ended March 31, 2020. The decrease in other, net, was primarily attributable to a decrease in remeasurement losses recognized on the Company’s foreign denominated accounts receivable and accounts payable. This decrease was partially offset by changes on mark-to-market adjustments on non-hedged foreign currency contracts. Income Taxes Consolidated income tax decreased $380, or 2,714.3%, to a benefit of $366 during the three months ended March 31, 2021, compared to income tax expense of $14 during the same period in 2020. Our effective income tax rate was a benefit of 6.9% for the three months ended March 31, 2021, and differed compared to the statutory tax rates due to a release of a partial valuation allowance of the deferred tax assets and a discrete charge recorded during the period . For the three months ended March 31, 2020, our effective income tax rate was 28.0% and was higher compared to the statutory tax rates due to an increase in the valuation allowance related to the current year R&D tax credits lower compared to the statutory tax rates due to a stock compensation windfall. 23 CLARUS CORPORATION MANAGEMENT DISCUSSION AND ANALYSIS (in thousands, except per share amounts) Liquidity and Capital Resources Condensed Consolidated Three Months Ended March 31, 2021 Compared to Condensed Consolidated Three Months Ended March 31, 2020 Our primary ongoing funding requirements are for working capital, expansion of our operations (both organically and through acquisitions) and general corporate needs, as well as investing activities associated with the expansion into new product categories. We plan to fund these activities through a combination of our future operating cash flows and revolving credit facility which had approximately $49,300 available to borrow at March 31, 2021. We believe that our liquidity requirements for at least the next 12 months will be adequately covered by cash provided by operations and our existing revolving credit facility. However, as the impact of the COVID-19 pandemic on the economy and our operations evolves, we will continue to assess our liquidity needs. The COVID-19 pandemic has negatively affected the U.S. and global economies, disrupted global supply chains, and resulted in significant travel and transport restrictions and disruption of financial markets. An extended period of global supply chain and economic disruption could materially affect our business, results of operations, ability to meet debt covenants, access to sources of liquidity and financial condition. Given the economic uncertainty as a result of the pandemic, we have taken actions to improve our current liquidity position, including drawing on the credit facility, suspending share repurchases and cash dividends, postponing nonessential capital expenditures, reducing operating costs, modulating production in line with demand, initiating workforce reductions and furloughs, and substantially reducing discretionary spending. Further, on April 30, 2020, we borrowed $20,000 under the term loan portion of the Credit Agreement (as defined below) to increase our overall liquidity. The Company is required to repay the term loan through quarterly payments of $1,000 each beginning with September 30, 2020, and any remaining obligations will be repaid in full on the maturity date of the Credit Agreement of May 3, 2024. On November 12, 2020, the Company and certain of its direct and indirect domestic subsidiaries (each, a “Borrower” and, collectively, the “Borrowers”) entered into Amendment No. 2 (the “Amendment No. 2”) to that certain Credit Agreement, dated May 3, 2019 with JPMorgan Chase Bank, N.A., as administrative agent, and the lenders from time to time party thereto (as amended, the “Credit Agreement”). Amendment No. 2 increased the maximum consolidated total leverage ratio permitted under the Credit Agreement to 4.00:1.00 from 3.00:1.00. In addition, Amendment No. 2 permits, among other things, the issuance by the Company of debt securities, that may be convertible into equity interests of the Company, in an aggregate principal amount of up to $125,000, and eliminates the requirement that the proceeds therefrom be used to prepay any revolving loans or term loans under the Credit Agreement. At March 31, 2021, we had total cash of $6,525, compared to a cash balance of $17,789 at December 31, 2020, which was substantially controlled by the Company’s U.S. entities. At March 31, 2021, the Company had $3,846 of the $6,525 in cash held by foreign entities, of which $1,309 is considered permanently reinvested. The following presents a discussion of cash flows for the condensed consolidated three months ended March 31, 2021 compared with the condensed consolidated three months ended March 31, 2020. Three Months Ended March 31, 2021 March 31, 2020 Net cash (used in) provided by operating activities $ (2,518) $ 3,499 Net cash used in investing activities (1,347) (1,299) Net cash (used in) provided by financing activities (7,196) 8,649 Effect of foreign exchange rates on cash (203) 244 Change in cash (11,264) 11,093 Cash, beginning of year 17,789 1,703 Cash, end of period $ 6,525 $ 12,796 Net Cash From Operating Activities Consolidated net cash used in operating activities was $2,518 during the three months ended March 31, 2021, compared to consolidated net cash provided by operating activities of $3,499 during the three months ended March 31, 2020. The decrease in net cash provided by operating activities to net cash used in operating activities during 2021 is primarily due to an increase in net operating assets, or non-cash working capital, of $12,700, partially offset by an increase in net income during the three months ended March 31, 2021, compared to the same period in 2020. 24 CLARUS CORPORATION MANAGEMENT DISCUSSION AND ANALYSIS (in thousands, except per share amounts) Free cash flow, defined as net cash (used in) provided by operating activities less capital expenditures, of ($3,865) was used during the three months ended March 31, 2021 compared to $2,197 generated during the same period in 2020. The Company believes that the non-GAAP measure, free cash flow, provides an understanding of the capital required by the Company to expand its asset base. A reconciliation of free cash flows to comparable GAAP financial measures is set forth below: Three Months Ended March 31, 2021 March 31, 2020 Net cash (used in) provided by operating activities $ (2,518) $ 3,499 Purchase of property and equipment (1,347) (1,302) Free cash flow $ (3,865) $ 2,197 Net Cash From Investing Activities Consolidated net cash used in investing activities was $1,347 during the three months ended March 31, 2021, compared to $1,299 during the three months ended March 31, 2020. The increase in cash used during the three months ended March 31, 2021 is due to an increase in purchases of property and equipment, compared to the same period in 2020. Net Cash From Financing Activities Consolidated net cash used in financing activities was $7,196 during the three months ended March 31, 2021, compared to net cash provided of $8,649 during the three months ended March 31, 2020. The increase in cash used during the three months ended March 31, 2021 compared to the same period in 2020 was primarily due to the net repayments to the revolving line of credit and repayments of the term loan. Net Operating Loss As of December 31, 2020, the Company had net operating loss carryforwards (“NOLs”) and research and experimentation credit for U.S. federal income tax purposes of $120,309 and $1,889, respectively. The Company believes its U.S. Federal NOLs will substantially offset its future U.S. Federal income taxes until expiration. The majority of the Company’s pre-tax income is currently earned and expected to be earned in the U.S., or taxed in the U.S. as Subpart F income and will be offset with the NOLs. $120,309 of net operating losses available to offset taxable income does not expire until 2022 or later, subject to compliance with Section 382 of the Internal Revenue Code of 1986, as amended. As of December 31, 2020, the Company’s gross deferred tax asset was $40,538. The Company has recorded a valuation allowance of $22,348, resulting in a net deferred tax asset of $18,190, before deferred tax liabilities of $8,304. The Company has provided a valuation allowance against a portion of the net deferred tax assets as of December 31, 2020, because the ultimate realization of those assets does not meet the more-likely-than-not criteria. The majority of the Company’s deferred tax assets consist of net operating loss carryforwards for federal tax purposes. If a change in control were to occur, these could be limited under Section 382 of the Internal Revenue Code of 1986 (“Code”), as amended. Credit Agreement On May 3, 2019, the Company, Borrowers and the other loan parties party thereto entered into the Credit Agreement for borrowings of up to $60,000 under a revolving credit facility (including up to $5,000 for letters of credit), and borrowings of up to $40,000 under a term loan facility that is available to be drawn until May 3, 2020. The Credit Agreement also permits the Borrowers, subject to certain requirements, to arrange with lenders for an aggregate of up to $50,000 of additional revolving and/or term loan commitments (both of which are currently uncommitted), for potential aggregate revolving and term loan commitments under the Credit Agreement of up to $150,000. The Credit Agreement matures on May 3, 2024. On November 12, 2020, the Borrowers entered into Amendment No. 2 of the Credit Agreement. Amendment No. 2 increased the maximum consolidated total leverage ratio permitted under the Credit Agreement to 4.00:1.00 from 3.00:1.00. In addition, Amendment No. 2 permits, among other things, the issuance by the Company of debt securities, that may be convertible into equity interests of the Company, in an aggregate principal amount of up to $125,000, and eliminates the requirement that the proceeds therefrom be used to prepay any revolving loans or term loans under the Credit Agreement. The Borrowers may elect to have the revolving and term loans under the Credit Agreement bear interest at an alternate base rate or a Eurodollar rate plus an applicable rate. The applicable rate for these borrowings will range from 0.50% to 1.25% per annum, in the case 25 CLARUS CORPORATION MANAGEMENT DISCUSSION AND ANALYSIS (in thousands, except per share amounts) of alternate base rate borrowings, and 1.50% to 2.25% per annum, in the case of Eurodollar borrowings. The applicable rate was initially 0.875% per annum, in the case of alternate base rate borrowings, and 1.875% per annum, in the case of Eurodollar borrowings; however, it may be adjusted from time to time based upon the level of the Company’s consolidated total leverage ratio. The Credit Agreement also requires the Borrowers to pay a commitment fee on the unused portion of the revolving and term loan commitments. Such commitment fee will range between 0.15% and 0.25% per annum, and is also based upon the level of the Company’s consolidated total leverage ratio. All obligations under the Credit Agreement are secured by 100% of our domestic, and 65% of our foreign, subsidiary equity interests, as well as accounts receivable, inventory, intellectual property and certain other assets owned by the Company. The Credit Agreement contains restrictions on the Company’s ability to pay dividends or make distributions or other restricted payments if certain conditions in the Credit Agreement are not fulfilled . The Credit Agreement includes customary affirmative and negative covenants, including financial covenants relating to the Company’s consolidated total leverage ratio and fixed charge coverage ratio. The Company was in compliance with the debt covenants set forth in the Credit Agreement as of March 31, 2021. As of March 31, 2021, the Company had drawn approximately $10,651 of the $60,000 revolving loan commitment that was available for borrowing under the Credit Agreement, and $17,000 outstanding under the term loan commitment. As of March 31, 2021, the interest rate for each loan was 1.6250% . On April 30, 2020, the Company borrowed $20,000 under the term loan facility and used the proceeds to pay down amounts outstanding under the revolving portion of the Credit Agreement. The Company is required to repay the term loan through quarterly payments of $1,000 each beginning with September 30, 2020, and any remaining obligations will be repaid in full on the maturity date of the Credit Agreement of May 3, 2024 . Off-Balance Sheet Arrangements We do not engage in any transactions or have relationships or other arrangements with unconsolidated entities. These include special purpose and similar entities or other off-balance sheet arrangements. We also do not engage in energy, weather or other commodity-based contracts. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK There has not been any material change in the market risk disclosure contained in our Annual Report on Form 10-K for the year ended December 31, 2020.