What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2022-05-09 compared with 2021-11-08 · 167 added, 242 removed, 124 unchanged (77% of the section changed)

14 unchanged sentences

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;

the impact that global climate change trends may have on the Company and its suppliers and customers, increased focus on sustainability issues as a result of global climate change, the Company's ability to protect patents, trademarks and other intellectual property rights;

any breaches of, or interruptions in, our information systems;

4 unchanged sentences

ongoing disruptions and delays in the shipping and transportation of our products due to port congestion, container ship availability and/or other logistical challenges;

the impact of political unrest, natural disasters or other crises, terrorist acts, acts of war and/or military operations;

our ability to utilize our net operating loss carryforwards;

5 unchanged sentences

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.

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.

Headquartered in Salt Lake City, Utah, Clarus is 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.

1 unchanged sentence

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® and Rhino-Rack® brand names through outdoor specialty and online retailers, our own websites, distributors and original equipment manufacturers.

The Company’s products are principally sold globally under the Black Diamond®, Sierra®, Barnes® and Rhino-Rack® and MAXTRAX® brand names through outdoor specialty and online retailers, our own websites, distributors and original equipment manufacturers.

Our portfolio of iconic brands is well-positioned for sustainable, long-term growth underpinned by powerful industry trends across the outdoor and adventure sport end markets.

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

One of the key elements of our sustained financial performance is our persistent focus on brand building through product initiatives.

Our iconic brands are rooted in performance-defining technologies that enable our customers to have their best days outdoors.

We have a long history of technical innovation and product development, backed by an extensive patent portfolio that continues to evolve and

CLARUS CORPORATION

1 unchanged sentence

(in thousands, except per share amounts)

pistols that are used for precision target shooting, hunting and military and law enforcement purposes.

Rhino-Rack is a leading manufacturer of highly-engineered automotive roof racks, trays, mounting systems, luggage boxes, carriers and accessories with leading market share in Australia and New Zealand and a growing presence in the United States.

advance our markets.

We currently employ approximately 120 engineers across the portfolio, focusing on enhancing our customers’ performance in the most critical moments.

Our commitment to quality, rigorous safety, and ultimately best-in-class design is evidenced by outstanding industry recognition, as we have received numerous product awards across our portfolio of super fan brands.

Each of our brands represents a unique customer value proposition.

Supported by six decades of proven innovation, Black Diamond, is an established global leader in high-performance, activity-based climbing, skiing, and technical mountain sports equipment.

The brand is synonymous with premium performance, safety and reliability.

Our Sierra and Barnes brands have been leading specialty manufacturers of bullets and ammunition for over 50 years.

Since 1947, Sierra has been dedicated to manufacturing the highest-quality, most accurate bullets in the world for hunting and sport shooting enthusiasts.

Barnes traces its history back to 1932, and since 1989 has manufactured technologically-advanced lead-free bullets and premium ammunition for hunters, range shooters, military and law enforcement professionals.

Founded in 1992, our Rhino-Rack brand is a globally-recognized designer and distributor of highly-engineered automotive roof racks and accessories to enhance the outdoor enthusiast’s overlanding experience.

Founded in 2005, our MAXTRAX brand offers high-quality overlanding and off-road vehicle recovery and extraction tracks for the overland and off-road market.

Clarus, incorporated in Delaware in 1991, acquired Black Diamond Equipment, Ltd.

9 unchanged sentences

On July 1, 2021, the Company completed the acquisition of Australia-based Rhino-Rack Holdings Pty Ltd (“Rhino-Rack”).

On December 1, 2021, the Company completed the acquisition of Australia-based MaxTrax Australia Pty Ltd (“MAXTRAX”).

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 October 29, 2021, the Company announced that its Board of Directors approved the payment on November 19, 2021 of the Quarterly Cash Dividend of $0.025 to the record holders of shares of the Company’s common stock as of the close of business on November 8, 2021.

On April 29, 2022, the Company announced that its Board of Directors approved the payment on May 20, 2022 of the Quarterly Cash Dividend of $0.025 to the record holders of shares of the Company’s common stock as of the close of business on May 9, 2022.

Impact of COVID-19

The global outbreak of COVID-19 was declared a global pandemic by the World Health Organization and a national emergency by each of the U.S., European, and Australian governments 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., European, Australian and global economies, disrupted global supply chains, and resulted in significant transport restrictions and disruption of financial markets.

The impact of this global 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 nine months ended September 30, 2021, although to a lesser extent, as certain countries began to ease restrictions.

During the third quarter of 2021, the Australian government instituted a mandatory lockdown for its citizens.

This caused a decline in retail demand and a disruption in operations within our Rhino-Rack segment, which negatively impacted our sales and profitability for the third quarter of 2021.

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.

The global outbreak of COVID-19 was declared a pandemic by the World Health Organization and a national emergency by each of the U.S., European, and Australian governments in March 2020, with governments world-wide implementing safety measures restricting travel and requiring citizen lockdowns and self-confinements for quarantining purposes.

The COVID-19 pandemic has significantly impacted the global supply chain, with restrictions and limitations on related activities causing disruption and delay, along with increased raw material, storage, and shipping costs.

These disruptions and delays have strained domestic and international supply chains, which have affected and could continue to negatively affect the flow or availability of certain products.

These disruptions and delays have strained domestic and international supply chains, which have affected and could continue to negatively affect the flow or availability of certain critical raw materials and finished good products that the Company relies upon.

Furthermore, significantly increased demand from online sales channels, including our website, has impacted our logistical operations, including our fulfillment and shipping functions, which has resulted in periodic delays in the delivery of our products.

The further spread of COVID-19, and the requirements to take action to help limit the spread of the illness, could impact our ability to carry out our business as usual and may materially adversely impact global economic conditions, our business, results of operations, cash flows, and financial condition.

For example, travel restrictions imposed as a result of the COVID-19 pandemic negatively impacted

We expect a continued impact on the Company’s sales and profitability in future periods due to the ongoing impact of the pandemic.

Risk Factors of our Annual Report on Form 10-K for the year ended December 31, 2021.

Critical Accounting Policies and Use of Estimates

Management’s discussion of our financial condition and results of operations is based on the consolidated financial statements, which have been prepared in accordance with U.S.

generally accepted accounting principles (“GAAP”).

The preparation of the consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure

CLARUS CORPORATION

1 unchanged sentence

(in thousands, except per share amounts)

certain of our product development initiatives, as we were unable to visit certain third-party manufacturers to review processes and procedures for new products and product enhancements.

The extent of the impact of COVID-19 on our business and financial results will depend on future developments, including the duration and severity of the outbreak (including the severity and transmission rates of new variants of the coronavirus) within the markets in which we and our manufacturers and suppliers operate, the timing, distribution, and efficacy of vaccines and other treatments, the related impact on consumer confidence and spending, and the effect of governmental regulations imposed in response to the pandemic, all of which are highly uncertain and ever-changing.

While we have experienced an increase in demand for our products due to the impact that the COVID-19 pandemic has had on consumer behaviors, including due to various stay-at-home orders and restrictions on dining options and restaurant closures, this increased demand may not be sustained following the pandemic, or if economic conditions worsen, which would negatively impact consumer spending.

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.

of contingent liabilities at the date of the consolidated financial statements.

Estimates also affect the reported amounts of revenues and expenses during the reporting periods.

9 unchanged sentences

Results of Operations

Condensed Consolidated Three Months Ended September 30, 2021 Compared to Condensed Consolidated Three Months Ended September 30, 2020

The following presents a discussion of condensed consolidated operations for the three months ended September 30, 2021, compared with the condensed consolidated three months ended September 30, 2020.

Three Months Ended March 31, 2022 Compared to Three Months Ended March 31, 2021

The following presents a discussion of operations for the three months ended March 31, 2022, compared with the three months ended March 31, 2021.

Three Months Ended

September 30, 2021

September 30, 2020

Domestic sales

International sales

Cost of goods sold

Operating expenses

Selling, general and administrative

Transaction costs

Total operating expenses

Operating (loss) income

Other (expense) income

Interest expense, net

Total other (expense) income, net

(Loss) income before income tax

Income tax (benefit) expense

Consolidated sales increased $44,480, or 69.0%, to $108,971, during the three months ended September 30, 2021, compared to consolidated sales of $64,491 during the three months ended September 30, 2020.

The increase in sales was attributable to the increase in the quantity of new and existing climb, mountain, and ski products sold during the period of $8,665.

Additionally, there was an increase in the quantity of new and existing sport products sold by Sierra of $2,028 and the inclusion of Barnes, which contributed $13,162.

The increase was also driven by the inclusion of adventure products sold by Rhino-Rack of $19,625.

We experienced an increase in sales of $1,000 due to the weakening of the U.S.

dollar against foreign currencies during the three months ended September 30, 2021, compared to the prior period.

Consolidated domestic sales increased $26,573, or 76.6%, to $61,259 during the three months ended September 30, 2021, compared to consolidated domestic sales of $34,686 during the three months ended September 30, 2020.

The increase in sales was attributable to the increase in the quantity of new and existing climb, mountain, and ski products sold during the period of $4,820.

Additionally, there was an increase in the quantity of new and existing sport products sold by Sierra of $2,496 and the inclusion of Barnes, which contributed $12,134.

The remaining increase was driven by the inclusion of adventure products sold by Rhino-Rack of $7,123.

Consolidated international sales increased $17,907, or 60.1%, to $47,712 during the three months ended September 30, 2021, compared to consolidated international sales of $29,805 during the three months ended September 30, 2020.

The increase in sales was primarily attributable to the increase in the quantity of new and existing climb, mountain, and ski products of $3,845 and the inclusion of Barnes,

CLARUS CORPORATION

MANAGEMENT DISCUSSION AND ANALYSIS

(in thousands, except per share amounts)

which contributed $1,028.

The increase was also driven by the inclusion of adventure products sold by Rhino-Rack of $12,502.

We experienced an increase in sales of $1,000 due to the weakening of the U.S.

dollar against foreign currencies during the three months ended September 30, 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 $468.

Cost of Goods Sold

Consolidated cost of goods sold increased $26,970 or 63.0%, to $69,792 during the three months ended September 30, 2021, compared to consolidated cost of goods sold of $42,822 during the three months ended September 30, 2020.

The increase in cost of goods sold was primarily attributable to an increase in the number of units sold.

Consolidated gross profit increased $17,510 or 80.8%, to $39,179 during the three months ended September 30, 2021, compared to consolidated gross profit of $21,669 during the three months ended September 30, 2020.

Consolidated gross margin was 36.0% during the three months ended September 30, 2021, compared to a consolidated gross margin of 33.6% during the three months ended September 30, 2020.

Consolidated gross margin during the three months ended September 30, 2021, increased compared to the prior year due to a favorable product mix in higher margin products and the favorable impacts related to foreign currency.

Gross margin also benefited from the inclusion of Barnes and Rhino-Rack.

However, the benefit from Rhino-Rack was offset by a decrease in gross margin of 2.8% due to the sale of Rhino-Rack inventory that was recorded at its fair value in purchase accounting during the three months ended September 30, 2021.

Selling, General and Administrative

Consolidated selling, general, and administrative expenses increased $12,640, or 67.7%, to $31,314 during the three months ended September 30, 2021, compared to consolidated selling, general and administrative expenses of $18,674 during the three months ended September 30, 2020.

The increase in selling, general and administrative expenses is due to the inclusion of Barnes and Rhino-Rack, which contributed $1,678 and $7,722, respectively.

The remaining increase was attributable to the Company’s investments in the brand related activities of sales, direct-to-consumer, marketing, and warehousing and logistics, focused on supporting its strategic initiatives around expanding distribution, elevating brand awareness and being easier to do business with.

The increase was partially offset by a decrease of stock compensation of $1,140 during the three months ended September 30, 2021 compared to the prior year.

Transaction Costs

Consolidated transaction expense increased to $8,147 during the three months ended September 30, 2021, compared to consolidated transaction costs of $1,440 during the three months ended September 30, 2020, which consisted of expenses related to the Company’s various acquisition efforts.

Interest Expense, net

Consolidated interest expense, net increased to $1,476 during the three months ended September 30, 2021, compared to consolidated interest expense, net of $232 during the three months ended September 30, 2020.

The increase in interest expense recognized during the three months ended September 30, 2021 was primarily associated with the increase in average outstanding debt amounts during the period compared to the prior year and the recording of certain debt issuance costs.

Consolidated other, net income changed by $111, or 24.7%, to $338 during the three months ended September 30, 2021, compared to consolidated other, net income of $449 during the three months ended September 30, 2020.

The decrease in other, net, was primarily attributable to a decrease in remeasurement gains recognized on the Company’s foreign denominated accounts receivable and accounts payable.

The decrease was partially offset by changes on mark-to-market adjustments on non-hedged foreign currency contracts.

Consolidated income tax changed by $6,539, or 1,110.2%, to a benefit of $5,950 during the three months ended September 30, 2021, compared to income tax expense of $589 during the same period in 2020.

Our effective income tax rate was a benefit of 419.0% for the three months ended September 30, 2021, and differed compared to the statutory tax rates due to a release of a partial valuation allowance of the deferred tax assets .

This release is primarily due to a change in accounting method which increased taxable income and the ability

CLARUS CORPORATION

MANAGEMENT DISCUSSION AND ANALYSIS

(in thousands, except per share amounts)

to utilize NOLs (defined below).

For the three months ended September 30, 2020, our effective income tax rate was an expense of 33.2% and was higher compared to the statutory tax rates due to permanent book to tax differences primarily related to incentive stock options.

Condensed Consolidated Nine Months Ended September 30, 2021 Compared to Condensed Consolidated Nine Months Ended September 30, 2020

The following presents a discussion of condensed consolidated operations for the nine months ended September 30, 2021, compared with the condensed consolidated nine months ended September 30, 2020.

Nine Months Ended

September 30, 2021

September 30, 2020

March 31, 2022

March 31, 2021

Domestic sales

4 unchanged sentences

Transaction costs

Contingent consideration expense

Total operating expenses

Operating income (loss)

Operating income

Other expense

1 unchanged sentence

Total other expense, net

Income (loss) before income tax

Income tax benefit

Net income (loss)

Consolidated sales increased $109,551, or 74.0%, to $257,611, during the nine months ended September 30, 2021, compared to consolidated sales of $148,060 during the nine months ended September 30, 2020.

The increase in sales was attributable to the increase in the quantity of new and existing climb, mountain, and ski products sold during the period of $37,083.

Additionally, there was an increase in the quantity of new and existing sport products sold by Sierra of $16,254 and the inclusion of Barnes, which contributed $33,316.

The increase was also driven by the inclusion of adventure products sold by Rhino-Rack of $19,625.

We experienced an increase in sales of $3,273 due to the weakening of the U.S.

dollar against foreign currencies during the nine months ended September 30, 2021, compared to the prior period.

Consolidated domestic sales increased $77,215, or 92.5%, to $160,708 during the nine months ended September 30, 2021, compared to consolidated domestic sales of $83,493 during the nine months ended September 30, 2020.

The increase in sales was attributable to the increase in the quantity of new and existing climb, mountain, and ski products sold during the period of $21,384.

Additionally, there was an increase in the quantity of new and existing sport products sold by Sierra of $17,861 and the inclusion of Barnes, which contributed $30,847.

The remaining increase was driven by the inclusion of adventure products sold by Rhino-Rack of $7,123.

Income before income tax

Income tax expense (benefit)

Total sales increased $37,945, or 50.4%, to $113,276, during the three months ended March 31, 2022, compared to total sales of $75,331 during the three months ended March 31, 2021.

The increase in sales was primarily attributable to $28,636 of sales from the inclusion of Rhino-Rack and MAXTRAX in the current period .

Additionally, there was an increase in the quantity of new and existing precision sport products sold of $9,583.

There was also an increase in the quantity of new and existing outdoor products sold during the period of $253.

This was partially offset by a decrease in sales of $527 due to the strengthening of the U.S.

dollar against foreign currencies during the three months ended March 31, 2022, compared to the prior period.

Domestic sales increased $14,734, or 31.0%, to $62,307 during the three months ended March 31, 2022, compared to domestic sales of $47,573 during the three months ended March 31, 2021.

The increase in sales was primarily attributable to $9,235 of sales from the inclusion of Rhino-Rack and MAXTRAX in the current period.

Additionally, there was an increase in the quantity of new and existing precision sport products sold of $5,630.

This was partially offset by a decrease in the quantity of new and existing outdoor products sold during the period of $131.

International sales increased $23,211, or 83.6%, to $50,969 during the three months ended March 31, 2022, compared to international sales of $27,758 during the three months ended March 31, 2021.

The increase in sales was primarily attributable to $19,401 of sales from the inclusion of Rhino-Rack and MAXTRAX in the current period.

Additionally, there was an increase in the quantity of new and existing precision sport products sold of $3,953.

There was also an increase in the quantity of new and existing outdoor products sold during the period of $384.

This was partially offset by a decrease in sales of $527 due to the strengthening of the U.S.

dollar against

CLARUS CORPORATION

1 unchanged sentence

(in thousands, except per share amounts)

Consolidated international sales increased $32,336, or 50.1%, to $96,903 during the nine months ended September 30, 2021, compared to consolidated international sales of $64,567 during the nine months ended September 30, 2020.

The increase in sales was primarily attributable to the increase in the quantity of new and existing climb, mountain, and ski products of $15,699 and the inclusion of Barnes, which contributed $2,469.

The increase was also driven by the inclusion of adventure products sold by Rhino-Rack of $12,502.

We experienced an increase in sales of $3,273 due to the weakening of the U.S.

dollar against foreign currencies during the nine months ended September 30, 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 $1,607.

foreign currencies during the three months ended March 31, 2022, compared to the prior period.

Cost of Goods Sold

Consolidated cost of goods sold increased $66,118 or 68.0%, to $163,361 during the nine months ended September 30, 2021, compared to consolidated cost of goods sold of $97,243 during the nine months ended September 30, 2020.

Cost of goods sold increased $20,743 or 43.0%, to $69,024 during the three months ended March 31, 2022, compared to cost of goods sold of $48,281 during the three months ended March 31, 2021.

The increase in cost of goods sold was primarily attributable to an increase in the number of units sold.

Consolidated gross profit increased $43,433 or 85.5%, to $94,250 during the nine months ended September 30, 2021, compared to consolidated gross profit of $50,817 during the nine months ended September 30, 2020.

Consolidated gross margin was 36.6% during the nine months ended September 30, 2021, compared to a consolidated gross margin of 34.3% during the nine months ended September 30, 2020.

Consolidated gross margin during the nine months ended September 30, 2021, increased compared to the prior year due to a favorable product mix in higher margin products and the favorable impacts related to foreign currency.

Gross margin also benefited from the inclusion of Barnes and Rhino-Rack;

however, this benefit was offset by a decrease in gross margin of 1.3% due to the sale of Barnes and Rhino-Rack inventory that was recorded at its fair value in purchase accounting during the year ended December 31, 2020 and three months ended September 30, 2021, respectively.

Gross profit increased $17,202 or 63.6%, to $44,252 during the three months ended March 31, 2022, compared to gross profit of $27,050 during the three months ended March 31, 2021.

Gross margin was 39.1% during the three months ended March 31, 2022, compared to a gross margin of 35.9% during the three months ended March 31, 2021.

Gross margin during the three months ended March 31, 2022, increased compared to the prior year due to a favorable product mix from higher margin products.

Gross margin also benefited from the inclusion of Rhino-Rack and MAXTRAX.

However, the benefit from MAXTRAX was offset by a decrease in gross margin of 0.2% due to the sale of MAXTRAX inventory that was recorded at its fair value in purchase accounting during the three months ended March 31, 2022.

Selling, General and Administrative

Consolidated selling, general, and administrative expenses increased $22,366, or 44.3%, to $72,903 during the nine months ended September 30, 2021, compared to consolidated selling, general and administrative expenses of $50,537 during the nine months ended September 30, 2020.

The increase in selling, general and administrative expenses is due to the inclusion of Barnes and Rhino-Rack, which contributed $5,008 and $7,722, respectively, and an increase of stock compensation of $981 during the nine months ended September 30, 2021 compared to the prior year.

Selling, general, and administrative expenses increased $13,290, or 63.6%, to $34,175 during the three months ended March 31, 2022, compared to selling, general and administrative expenses of $20,885 during the three months ended March 31, 2021.

The increase in selling, general and administrative expenses is due to the inclusion of Rhino-Rack and MAXTRAX, which contributed $8,142 and $1,231, respectively.

Transaction Costs

Consolidated transaction expense increased to $9,272 during the nine months ended September 30, 2021, compared to consolidated transaction costs of $1,870 during the nine months ended September 30, 2020, which consisted of expenses related to the Company’s various acquisition efforts.

Transaction expense increased to $1,201 during the three months ended March 31, 2022, compared to transaction costs of $476 during the three months ended March 31, 2021, which consisted of expenses related to the Company’s various acquisition efforts.

Contingent Consideration Expense

Contingent consideration expense increased to $763 during the three months ended March 31, 2022, compared to $0 contingent consideration expense during the three months ended March 31, 2021, which consisted of changes in estimated fair value of contingent consideration liabilities.

Interest Expense, net

Consolidated interest expense, net increased to $1,926 during the nine months ended September 30, 2021, compared to consolidated interest expense, net of $800 during the nine months ended September 30, 2020.

The increase in interest expense recognized during the nine months ended September 30, 2021 was primarily associated with the increase in average outstanding debt amounts during the period compared to the prior year and the recording of certain debt issuance costs.

Consolidated other, net expense changed $4,587, or 1,415.7%, to $4,263 during the nine months ended September 30, 2021, compared to consolidated other, net income of $324 during the nine months ended September 30, 2020.

The change in other, net, was primarily attributable to changes on mark-to-market adjustments on non-hedged foreign currency contracts, including contracts associated with the purchase price of Rhino-Rack, as well as a decrease in remeasurement losses recognized on the Company’s foreign denominated accounts receivable and accounts payable.

Interest expense, net increased to $1,116 during the three months ended March 31, 2022, compared to interest expense, net of $238 during the three months ended March 31, 2021.

The increase in interest expense recognized during the three months ended March 31, 2022 was primarily associated with the increase in the average outstanding debt amounts during the period compared to the prior year and the recording of certain debt issuance costs.

Other, net changed by $73, or 52.1%, to $67 during the three months ended March 31, 2022, compared to other, net of $140 during the three months ended March 31, 2021.

The change in other, net, was primarily attributable to a decrease in remeasurement losses recognized on the Company’s foreign denominated accounts receivable and accounts payable.

The decrease was partially offset by changes on mark-to-market adjustments on non-hedged foreign currency contracts.

Income tax expense changed by $1,987, or 542.9%, to an expense of $1,621 during the three months ended March 31, 2022, compared to a benefit of $366 during the same period in 2021.

Our effective income tax rate was 23.4% for the three months ended March 31, 2022, and differed compared to the statutory tax rates due to the impact of foreign earnings taxed at applicable statutory rates and

CLARUS CORPORATION

1 unchanged sentence

(in thousands, except per share amounts)

Consolidated income tax benefit increased $5,619, or 1,036.7%, to a benefit of $6,161 during the nine months ended September 30, 2021, compared to income tax benefit of $542 during the same period in 2020.

Our effective income tax rate was a benefit of 104.7% for the nine months ended September 30, 2021, differed compared to the statutory tax rates due to a release of a partial valuation allowance of the deferred tax assets.

This release is primarily due to a change in accounting method which increased taxable income and the ability to utilize NOLs (defined below).

For the nine months ended September 30, 2020, our effective income tax rate was a benefit of 26.2% and was higher compared to the statutory tax rates due to permanent book to tax differences primarily related to incentive stock options.

permanent book to tax differences related to incentive stock options and officer compensation limitations .

For the three months ended March 31, 2021, our effective income tax rate was (6.9%) 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.

Liquidity and Capital Resources

Condensed Consolidated Nine Months Ended September 30, 2021 Compared to Condensed Consolidated Nine Months Ended September 30, 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 $34,600 available to borrow at September 30, 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., European, Australian 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, the Company and certain of its direct and indirect subsidiaries (each, a “Loan Party” and, collectively, the “Loan Parties”) entered into Amendment No.

Three Months Ended March 31, 2022 Compared to Three Months Ended March 31, 2021

We plan to fund these activities through a combination of our future operating cash flows and revolving credit facility which had approximately $69,519 available to borrow at March 31, 2022.

We believe that our liquidity requirements and contractual obligations for at least the next 12 months will be adequately covered by cash provided by operations and our existing revolving credit facility.

Additionally, long-term contractual obligations are also currently expected to be funded from cash from operations and availability under our existing credit facilities.

On January 3, 2022, the Company entered into Amendment No.

4 (“Amendment No.

3”) to that certain Credit Agreement, dated May 3, 2019, as amended by Amendment No.

1 dated May 28, 2019 and Amendment No.

2 dated November 12, 2020, with JPMorgan Chase Bank, N.A., as administrative agent, and the lenders from time to time party thereto (collectively, the “Credit Agreement”).

T he Credit Agreement increased the aggregate amount of the term loan facility thereunder to $125,000 and increased the maximum amount of the revolving loan facility thereunder to $100,000.

The term loan facility was fully borrowed at the closing of Amendment No.

3 on July 1, 2021.

The Company is required to repay the term loan through quarterly payments of $1,563 each beginning with September 30, 2021, increasing to $3,125 beginning September 30, 2022, and any remaining obligations will be repaid in full on the maturity date of the Credit Agreement of May 3, 2024.

4”), as previously amended, with JPMorgan Chase Bank, N.A., as administrative agent, and the lenders from time to time party thereto (collectively, the “Credit Agreement”).

Amendment No.

3 also removed the previously agreed upon ability of the Company to issue debt securities that may be convertible into equity interests of the Company in an aggregate principal amount of up to $125,000 and also increased the maximum consolidated total leverage ratio permitted under the Credit Agreement to 4.25:1.00.

Subsequent to the balance sheet date, the Company entered into an underwriting agreement relating to the public offer and sale of 2,750 shares of the Company’s common stock as well as a 30-day option to purchase up to 413 additional shares of common stock.

The closing of the offering of 2,750 shares of common stock as well as the 413 additional shares of common stock occurred on October 29, 2021 and November 2, 2021, respectively.

The net proceeds to the Company from the offering were approximately $80,264 before expenses and after deducting the applicable underwriting discounts and commissions.

The Company intends to use a portion of the net proceeds of the offering for the repayment in full of approximately $65,000 in aggregate principal amount under the revolving loan facility available pursuant to the Credit Agreement and the remaining portion of the net proceeds from the offering for general corporate purposes, including capital expenditures and potential acquisitions.

At September 30, 2021, we had total cash of $10,170, compared to a cash balance of $17,789 at December 31, 2020, which was substantially controlled by the Company’s U.S.

At September 30, 2021, the Company had $4,888 of the $10,170 in cash held by foreign entities, of which $2,995 is considered permanently reinvested.

CLARUS CORPORATION

MANAGEMENT DISCUSSION AND ANALYSIS

(in thousands, except per share amounts)

The following presents a discussion of cash flows for the condensed consolidated nine months ended September 30, 2021 compared with the condensed consolidated nine months ended September 30, 2020.

Nine Months Ended

September 30, 2021

September 30, 2020

Net cash (used in) provided by operating activities

4, among other things, permits (i) the Company to borrow in Australian Dollars and New Zealand Dollars in order to support the operations of the Company in Australia and New Zealand and (ii) provides for addbacks to EBITDA, for debt covenant purposes, (as defined in the Credit Agreement) under the Credit Agreement for expenses relating to activities in respect of acquisitions, dispositions, investments and financings (whether or not these transactions are actually consummated).

The maximum consolidated total leverage ratio permitted under the Credit Agreement is 4.25:1.00.

At March 31, 2022, we had total cash of $16,451, compared to a cash balance of $19,465 at December 31, 2021.

At March 31, 2022, the Company had $11,577 of the $16,451 in cash held by foreign entities, of which $9,375 is considered permanently reinvested.

The following presents a discussion of cash flows for the condensed consolidated three months ended March 31, 2022 compared with the condensed consolidated three months ended March 31, 2021.

Three Months Ended

March 31, 2022

March 31, 2021

Net cash used in operating activities

Net cash used in investing activities

Net cash provided by financing activities

Net cash provided by (used in) financing activities

Effect of foreign exchange rates on cash

3 unchanged sentences

Net Cash From Operating Activities

Consolidated net cash used in operating activities was $17,101 during the nine months ended September 30, 2021, compared to consolidated net cash provided by operating activities of $21,048 during the nine months ended September 30, 2020.

The change in net cash used in operating activities during 2021 is primarily due to an increase in net operating assets, or non-cash working capital, of $52,207, partially offset by an increase in net income during the nine months ended September 30, 2021, compared to the same period in 2020.

Free cash flow, defined as net cash (used in) provided by operating activities less capital expenditures, of ($22,680) was used during the nine months ended September 30, 2021 compared to $17,442 generated during the same period in 2020.

Net cash used in operating activities was $10,795 during the three months ended March 31, 2022, compared to net cash used in operating activities of $2,518 during the three months ended March 31, 2021.

The change in net cash used in operating activities during 2022 is primarily due to an increase in net operating assets, or non-cash working capital, of $15,586, partially offset by an increase in amortization and stock compensation during the three months ended March 31, 2022, compared to the same period in 2021.

Free cash flow, defined as net cash (used in) provided by operating activities less capital expenditures, of ($12,695) was used during the three months ended March 31, 2022 compared to ($3,865) used during the same period in 2021.

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:

Nine Months Ended

September 30, 2021

September 30, 2020

Net cash (used in) provided by operating activities

CLARUS CORPORATION

MANAGEMENT DISCUSSION AND ANALYSIS

(in thousands, except per share amounts)

Three Months Ended

March 31, 2022

March 31, 2021

Net cash used in operating activities

Purchase of property and equipment

1 unchanged sentence

Net Cash From Investing Activities

Consolidated net cash used in investing activities was $141,181 during the nine months ended September 30, 2021, compared to $33,779 during the nine months ended September 30, 2020.

The increase in cash used during the nine months ended September 30, 2021 is due to the acquisition of Rhino-Rack and an increase in purchases of property and equipment, compared to the same period in 2020.

Net cash used in investing activities was $1,900 during the three months ended March 31, 2022, compared to $1,347 during the three months ended March 31, 2021.

The increase in cash used during the three months ended March 31, 2022 is due to an increase in purchases of property and equipment, compared to the same period in 2021.

Net Cash From Financing Activities

Consolidated net cash provided by financing activities was $151,041 during the nine months ended September 30, 2021, compared to net cash provided of $27,956 during the nine months ended September 30, 2020.

The increase in cash used during the nine months ended September 30, 2021 compared to the same period in 2020 was primarily due to the net proceeds to the revolving line of credit and draws of the term loan under Amendment No.3 described below.

Cash provided by financing activities during the nine months ended September 30, 2020 was primarily due to the proceeds of $20,000 borrowed under the term loan and net proceeds from the sale of common stock, offset by net repayment to the revolving line of credit.

Net cash provided by financing activities was $8,467 during the three months ended March 31, 2022, compared to net cash used of $7,196 during the three months ended March 31, 2021.

The increase in cash provided during the three months ended March 31, 2022, compared to the same period in 2021 was primarily due to the net proceeds to the revolving line of credit.

Cash used by financing activities during the three months ended March 31, 2021 was primarily due to the net repayments to the revolving line of credit and repayments of the term loan.

Net Operating Loss

4 unchanged sentences

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

CLARUS CORPORATION

MANAGEMENT DISCUSSION AND ANALYSIS

(in thousands, except per share amounts)

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.

The Company has $60,712 of NOLs, of which, $39,507 expire on December 31, 2022.

These NOLs are subject to compliance with Section 382 of the Internal Revenue Code of 1986, as amended.

As of December 31, 2021, the Company’s gross deferred tax asset was $38,184.

4 unchanged sentences

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.

On July 1, 2021, the Borrowers entered into Amendment No.

3 of the Credit Agreement.

Amendment No.

3 increased the aggregate amount of the term loan facility thereunder to $125,000 and increased the maximum amount of the revolving loan facility thereunder to $100,000.

The term loan facility was fully borrowed at the closing of Amendment No.

3 on July 1, 2021 in connection with the Rhino-Rack Acquisition.

The Credit Agreement continues to permit 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 $275,000.

Amendment No.

3 provides for additional subsidiaries of the Company to guarantee and provide collateral for the loans under the Credit Agreement, including certain of its newly formed or newly acquired Australian subsidiaries in connection with the Rhino-Rack Acquisition.

Amendment No.

3 did not change the maturity date which remains May 3, 2024.

The Borrowers may elect to have the revolving and term loans under the Credit Agreement bear interest at an alternate base rate or a Term Benchmark rate plus an applicable rate.

As of March 31, 2022, the Company had drawn approximately $30,481 of the $100,000 revolving loan commitment that was available for borrowing under the Existing Credit Agreement, and $120,313 was outstanding under the term loan commitment.

As of March 31, 2022, the interest rate for each loan was 2.3750% .

The Company was in compliance with the debt covenants set forth in the Existing Credit Agreement as of March 31, 2022.

On April 18, 2022 (the “Effective Date”), the Company, Black Diamond Retail, Inc., Black Diamond Retail – Alaska, LLC, Sierra Bullets, L.L.C., SKINourishment, LLC, Black Diamond Retail – Colorado, LLC, Black Diamond Retail – Montana, LLC, Black Diamond Retail – Wyoming, LLC, Barnes Bullets-Mona, LLC, Black Diamond Retail – Oregon, LLC, Black Diamond Retail – Vermont, LLC (collectively with the Company, the “Borrowers”) and the other loan parties party thereto (together with the Borrowers, the “Loan Parties”) entered into an Amended and Restated Credit Agreement with JPMorgan Chase Bank, N.A., as administrative agent (the “Administrative Agent”) and the lenders party thereto (the “Restated Credit Agreement”) pursuant to which the existing Credit Agreement, dated as of May 3, 2019 (as amended prior to the Effective Date, the “Existing Credit Agreement”) by and among the Company, the lenders and loan parties from time to time party thereto and the Administrative Agent was amended and restated in its entirety.

Each of the Loan Parties, other than the Company, is a direct or indirect subsidiary of the Company.

The Restated Credit Agreement provides for borrowings of up to $300,000 under a secured revolving credit facility (the “Revolving Loans”) (including up to $5,000 for letters of credit), and borrowings of up to $125,000 under a secured term loan facility (the “Term Loans”).

The Restated Credit Agreement also permits the Borrowers, subject to certain requirements, to arrange with lenders for an aggregate of up to $175,000 of additional revolving and/or term loan commitments (both of which are currently uncommitted), for potential aggregate revolving and term loan commitments under the Restated Credit Agreement of up to $600,000.

The proceeds of loans made under the Restated Credit Agreement may be used for working capital and general corporate purposes, including acquisitions

CLARUS CORPORATION

MANAGEMENT DISCUSSION AND ANALYSIS

(in thousands, except per share amounts)

permitted under the Restated Credit Agreement.

The Restated Credit Agreement matures on April 18, 2027 (the “Maturity Date”), at which time the revolving commitments thereunder will terminate and all outstanding Revolving Loans and Term Loans, together with all accrued and unpaid interest thereon, must be repaid.

The Term Loans were fully drawn on the Effective Date and cannot be reborrowed.

The Restated Credit Agreement provides for quarterly amortization payments of the Term Loans on the last business day of each March, June, September and December, commencing on June 30, 2022.

Through and including the payment due on March 31, 2023, the scheduled amortization payment is $1,563 per quarter, and each scheduled amortization payment due thereafter through the Maturity Date is $3,125 per quarter.

The Borrowers may elect to have the Revolving Loans and Term Loans under the Restated Credit Agreement bear interest at an applicable rate plus either:

(i) in the case of alternate base rate borrowings, a rate per annum generally equal to the greatest of:

the prime rate in effect on such day;

0.50% plus the greater of the Federal Reserve Bank of New York’s effective federal funds rate or the Federal Reserve Bank of New York’s overnight bank funding rate in effect on such day;

1.00% plus the adjusted term SOFR rate for a 1-month interest period;

provided that, in certain circumstances where the alternate base rate is being used as an alternate rate of interest, the alternate base rate shall be determined only according to (a) and (b), and shall be subject to a 1.00% floor;

(ii) in the case of term benchmark borrowings, a rate per annum as follows:

for borrowings denominated in U.S.

Dollars, the term SOFR rate (based on one, three or six-month interest periods) plus 0.10%, subject to a 0.00% floor;

for borrowings denominated in a Foreign Currency, the applicable rate for such Foreign Currency set forth in the Restated Credit Agreement.

The applicable rate for these borrowings will range from 0.50% to 1.625% per annum, in the case of alternate base rate borrowings, and 1.50% to 2.625% per annum, in the case of term benchmark 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 Term Benchmark 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 0.30% 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 September 30, 2021.

As of September 30, 2021, the Company had drawn approximately $65,412 of the $100,000 revolving loan commitment that was available for borrowing under the Credit Agreement, and $123,437 outstanding under the term loan commitment.

As of September 30, 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

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 term benchmark borrowings, however, these initial applicable rates may be adjusted from time to time based upon the level of the Company’s consolidated total leverage ratio, which is more fully discussed in the Restated Credit Agreement.

If one or more of the above interest rates are not determinable, or under certain other circumstances set forth in the Restated Credit Agreement, a substitute or alternative interest rate may apply under the Restated Credit Agreement.

The Restated Credit Agreement also requires the Borrowers to pay a commitment fee on the unused portion of the revolving loan commitments.

Such commitment fee will range between 0.15% and 0.30% per annum, and is also based upon the level of the Company’s consolidated total leverage ratio, which is more fully discussed in the Restated Credit Agreement.

The Company is also obligated to pay other customary closing fees, arrangement fees, administration fees and letter of credit fees for a credit facility of this size and type.

The Restated Credit Agreement contains customary affirmative and negative covenants, including limitations on the ability of the Company and its subsidiaries to perform the following, subject to certain customary exceptions, qualifications and “baskets”:

(i) incur additional debt;

(ii) create liens;

(iii) engage in mergers, consolidations, certain divisions, liquidations or dissolutions other than in certain permitted instances as described in the Restated Credit Agreement;

(iv) substantially change the business conducted by the Company and its subsidiaries;

(v) make certain investments, loans, advances, guarantees and acquisitions other than in certain permitted instances as described in the Restated Credit Agreement;

(vi) sell assets;

(vii) pay dividends or make distributions or other restricted payments if certain conditions in the Restated Credit Agreement are not fulfilled;

(viii) prepay other indebtedness;

(ix) engage in certain transactions with affiliates;

(x) enter into agreements that restrict dividends from subsidiaries or the ability of subsidiaries to grant liens upon their assets;

(xi) amend certain charter documents and material agreements governing subordinated indebtedness;

(xii) permit the consolidated total leverage ratio, which is to be determined for each quarter end on a trailing twelve month basis, from exceeding a limit of 3:75 to 1, provided, that, subject to certain terms and conditions set forth in the Restated Credit Agreement, so long as no Event of Default (as defined in the Restated Credit Agreement) exists at such time or would result therefrom, the Company may elect to increase the maximum consolidated total leverage ratio permitted under the Restated Credit Agreement to 4.25:1.00 for a period of four

CLARUS CORPORATION

1 unchanged sentence

(in thousands, except per share amounts)

used the proceeds to pay down amounts outstanding under the revolving portion of the Credit Agreement.

On July 1, 2021, the term loan facility was fully borrowed at the closing of Amendment No.

consecutive fiscal quarters in connection with any acquisition permitted under the Restated Credit Agreement for which the aggregate consideration is greater than or equal to $60,000;

and (xiii) permit the consolidated fixed charge coverage ratio, which is to be determined for each quarter end on a trailing twelve month basis, to be less than 1.25 to 1.

The Restated Credit Agreement also contains customary events of default, including, but not limited to:

(i) failure to pay amounts due under the Restated Credit Agreement;

(ii) materially incorrect representations and warranties;

(iii) failure to comply with covenants;

(iv) change of control;

and (v) default under other indebtedness aggregating at least $3,000.

The obligations of each Loan Party under the Restated Credit Agreement are guaranteed by each other Loan Party.

All obligations under the Restated Credit Agreement, and the guarantees of those obligations (as well as banking services obligations and certain swap agreements), are secured by pledges and liens on 100% of the equity interests of domestic subsidiaries, either 100% or 65% of the equity interests of certain foreign subsidiaries, and the accounts receivable, inventory, intellectual property and certain real property or other assets of the Loan Parties pursuant to (i) a Pledge and Security Agreement, dated as of May 3, 2019, by and among certain of the Loan Parties and the Administrative Agent (as amended from time to time prior to the Effective Date, the “PSA”), (ii) a General Security Deed, dated as of August 30, 2021, by and among certain of the Loan Parties and the Administrative Agent (the “Oscar GSD”), (iii) a General Security Deed, dated as of January 31, 2022, by and among certain of the Loan Parties and the Administrative Agent (the “Simpson GSD”) or (iv) a mortgage or other applicable security agreement or instrument.

Each of the PSA, the Oscar GSD and the Simpson GSD was reaffirmed by the Loan Parties on the Effective Date pursuant to a Reaffirmation Agreement dated as of the Effective Date by and among the Administrative Agent and the Loan Parties (the “Reaffirmation Agreement”) pursuant to which each Loan Party ratified and reaffirmed its obligations to the Lenders in connection with entering into the Restated Credit Agreement.

Off-Balance Sheet Arrangements

5 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis