Clarus Corp 10-Q

ITEM 1. FINANCIAL STATEMENTS ​ CLARUS CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (In thousands, except per share amounts) ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, 2023 December 31, 2022 Assets ​ ​ ​ ​ ​ ​ Current assets ​ ​ ​ ​ ​ ​ Cash ​ $ 11,315 ​ $ 12,061 Accounts receivable, less allowance for ​ ​ ​ ​ ​ ​ credit losses of $ 1,694 and $ 1,211 ​ ​ 53,445 ​ ​ 66,553 Inventories ​ ​ 148,963 ​ ​ 147,072 Prepaid and other current assets ​ ​ 8,544 ​ ​ 9,899 Income tax receivable ​ ​ 2,993 ​ ​ 3,034 Total current assets ​ ​ 225,260 ​ ​ 238,619 ​ ​ ​ ​ ​ ​ ​ Property and equipment, net ​ ​ 41,919 ​ ​ 43,010 Other intangible assets, net ​ ​ 47,792 ​ ​ 55,255 Indefinite-lived intangible assets ​ ​ 81,976 ​ ​ 82,901 Goodwill ​ ​ 62,437 ​ ​ 62,993 Deferred income taxes ​ ​ 19,556 ​ ​ 17,912 Other long-term assets ​ ​ 19,056 ​ ​ 17,455 Total assets ​ $ 497,996 ​ $ 518,145 ​ ​ ​ ​ ​ ​ ​ Liabilities and Stockholders’ Equity ​ ​ ​ ​ ​ ​ Current liabilities ​ ​ ​ ​ ​ ​ Accounts payable ​ $ 24,639 ​ $ 27,052 Accrued liabilities ​ ​ 20,322 ​ ​ 25,170 Income tax payable ​ ​ 386 ​ ​ 421 Current portion of long-term debt ​ ​ 12,543 ​ ​ 11,952 Total current liabilities ​ ​ 57,890 ​ ​ 64,595 ​ ​ ​ ​ ​ ​ ​ Long-term debt, net ​ ​ 114,685 ​ ​ 127,082 Deferred income taxes ​ ​ 17,946 ​ ​ 18,506 Other long-term liabilities ​ ​ 17,502 ​ ​ 15,854 Total liabilities ​ ​ 208,023 ​ ​ 226,037 ​ ​ ​ ​ ​ ​ ​ Stockholders’ Equity ​ ​ ​ ​ ​ ​ Preferred stock, $ 0.0001 par value per share; 5,000 shares authorized; none issued ​ ​ - ​ ​ - Common stock, $ 0.0001 par value per share; 100,000 shares authorized; 41,833 and 41,637 issued and 37,221 and 37,048 outstanding, respectively ​ ​ 4 ​ ​ 4 Additional paid in capital ​ ​ 682,243 ​ ​ 679,339 Accumulated deficit ​ ​ ( 339,196 ) ​ ​ ( 336,843 ) Treasury stock, at cost ​ ​ ( 32,929 ) ​ ​ ( 32,707 ) Accumulated other comprehensive loss ​ ​ ( 20,149 ) ​ ​ ( 17,685 ) Total stockholders’ equity ​ ​ 289,973 ​ ​ 292,108 Total liabilities and stockholders’ equity ​ $ 497,996 ​ $ 518,145 ​ See accompanying notes to condensed consolidated financial statements. ​ 3 Table of Contents CLARUS CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Unaudited) (In thousands, except per share amounts) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ June 30, 2023 June 30, 2022 ​ ​ ​ ​ ​ ​ ​ Sales ​ ​ ​ ​ ​ ​ Domestic sales ​ $ 46,656 ​ $ 64,073 International sales ​ ​ 37,072 ​ ​ 50,860 Total sales ​ ​ 83,728 ​ ​ 114,933 ​ ​ ​ ​ ​ ​ ​ Cost of goods sold ​ ​ 52,974 ​ ​ 71,251 Gross profit ​ ​ 30,754 ​ ​ 43,682 ​ ​ ​ ​ ​ ​ ​ Operating expenses ​ ​ ​ ​ ​ ​ Selling, general and administrative ​ ​ 30,200 ​ ​ 35,444 Restructuring charges ​ ​ 736 ​ ​ - Transaction costs ​ ​ 59 ​ ​ 821 Contingent consideration benefit ​ ​ - ​ ​ ( 374 ) ​ ​ ​ ​ ​ ​ ​ Total operating expenses ​ ​ 30,995 ​ ​ 35,891 ​ ​ ​ ​ ​ ​ ​ Operating (loss) income ​ ​ ( 241 ) ​ ​ 7,791 ​ ​ ​ ​ ​ ​ ​ Other income (expense) ​ ​ ​ ​ ​ ​ Interest expense, net ​ ​ ( 2,857 ) ​ ​ ( 1,728 ) Other, net ​ ​ 224 ​ ​ ( 1,343 ) ​ ​ ​ ​ ​ ​ ​ Total other expense, net ​ ​ ( 2,633 ) ​ ​ ( 3,071 ) ​ ​ ​ ​ ​ ​ ​ (Loss) income before income tax ​ ​ ( 2,874 ) ​ ​ 4,720 Income tax (benefit) expense ​ ​ ( 783 ) ​ ​ 956 Net (loss) income ​ ​ ( 2,091 ) ​ ​ 3,764 ​ ​ ​ ​ ​ ​ ​ Other comprehensive loss, net of tax: ​ ​ ​ ​ ​ ​ Foreign currency translation adjustment ​ ​ ( 1,389 ) ​ ​ ( 17,632 ) Unrealized gain on hedging activities ​ ​ 25 ​ ​ 622 Other comprehensive loss ​ ​ ( 1,364 ) ​ ​ ( 17,010 ) Comprehensive loss ​ $ ( 3,455 ) ​ $ ( 13,246 ) ​ ​ ​ ​ ​ ​ ​ Net (loss) income per share: ​ ​ ​ ​ ​ ​ Basic ​ $ ( 0.06 ) ​ $ 0.10 Diluted ​ ​ ( 0.06 ) ​ ​ 0.09 ​ ​ ​ ​ ​ ​ ​ Weighted average shares outstanding: ​ ​ ​ ​ ​ ​ Basic ​ ​ 37,192 ​ ​ 37,235 Diluted ​ ​ 37,192 ​ ​ 39,697 ​ See accompanying notes to condensed consolidated financial statements. ​ ​ 4 Table of Contents CLARUS CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Unaudited) (In thousands, except per share amounts) ​ ​ ​ ​ ​ ​ ​ ​ Six Months Ended ​ June 30, 2023 ​ June 30, 2022 ​ ​ ​ ​ ​ ​ Sales ​ ​ ​ ​ ​ Domestic sales $ 91,572 ​ $ 126,380 International sales ​ 89,540 ​ ​ 101,829 Total sales ​ 181,112 ​ ​ 228,209 ​ ​ ​ ​ ​ ​ Cost of goods sold ​ 114,337 ​ ​ 140,275 Gross profit ​ 66,775 ​ ​ 87,934 ​ ​ ​ ​ ​ ​ Operating expenses ​ ​ ​ ​ ​ Selling, general and administrative ​ 63,019 ​ ​ 69,619 Restructuring charges ​ 736 ​ ​ - Transaction costs ​ 133 ​ ​ 2,022 Contingent consideration (benefit) expense ​ ( 1,565 ) ​ ​ 389 ​ ​ ​ ​ ​ ​ Total operating expenses ​ 62,323 ​ ​ 72,030 ​ ​ ​ ​ ​ ​ Operating income ​ 4,452 ​ ​ 15,904 ​ ​ ​ ​ ​ ​ Other income (expense) ​ ​ ​ ​ ​ Interest expense, net ​ ( 5,603 ) ​ ​ ( 2,844 ) Other, net ​ 309 ​ ​ ( 1,410 ) ​ ​ ​ ​ ​ ​ Total other expense, net ​ ( 5,294 ) ​ ​ ( 4,254 ) ​ ​ ​ ​ ​ ​ (Loss) income before income tax ​ ( 842 ) ​ ​ 11,650 Income tax (benefit) expense ​ ( 349 ) ​ ​ 2,577 Net (loss) income ​ ( 493 ) ​ ​ 9,073 ​ ​ ​ ​ ​ ​ Other comprehensive loss, net of tax: ​ ​ ​ ​ ​ Foreign currency translation adjustment ​ ( 2,410 ) ​ ​ ( 11,555 ) Unrealized (loss) gain on hedging activities ​ ( 54 ) ​ ​ 708 Other comprehensive loss ​ ( 2,464 ) ​ ​ ( 10,847 ) Comprehensive loss $ ( 2,957 ) ​ $ ( 1,774 ) ​ ​ ​ ​ ​ ​ Net (loss) income per share: ​ ​ ​ ​ ​ Basic $ ( 0.01 ) ​ $ 0.24 Diluted ​ ( 0.01 ) ​ ​ 0.23 ​ ​ ​ ​ ​ ​ Weighted average shares outstanding: ​ ​ ​ ​ ​ Basic ​ 37,164 ​ ​ 37,199 Diluted ​ 37,164 ​ ​ 39,751 ​ See accompanying notes to condensed consolidated financial statements. ​ ​ 5 Table of Contents CLARUS CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Six Months Ended ​ June 30, 2023 June 30, 2022 Cash Flows From Operating Activities: ​ ​ ​ ​ ​ ​ Net (loss) income ​ $ ( 493 ) ​ $ 9,073 Adjustments to reconcile net income to net cash provided by (used in) operating activities: ​ ​ ​ ​ ​ ​ Depreciation of property and equipment ​ ​ 3,732 ​ ​ 3,709 Amortization of other intangible assets ​ ​ 6,499 ​ ​ 8,057 Amortization of debt issuance costs ​ ​ 464 ​ ​ 361 (Gain) loss on disposition of property and equipment ​ ​ ( 44 ) ​ ​ 18 Noncash lease expense ​ ​ 1,475 ​ ​ 1,652 Contingent consideration (benefit) expense ​ ​ ( 1,565 ) ​ ​ 365 Stock-based compensation ​ ​ 2,869 ​ ​ 6,922 Deferred income taxes ​ ​ ( 1,569 ) ​ ​ 276 Changes in operating assets and liabilities: ​ ​ ​ ​ ​ ​ Accounts receivable ​ ​ 10,495 ​ ​ ( 11,825 ) Inventories ​ ​ ( 1,953 ) ​ ​ ( 26,237 ) Prepaid and other assets ​ ​ 1,237 ​ ​ ( 380 ) Accounts payable ​ ​ 1,233 ​ ​ 5,288 Accrued liabilities ​ ​ ( 5,063 ) ​ ​ ( 443 ) Income taxes ​ ​ ( 31 ) ​ ​ ( 3,112 ) Net cash provided by (used in) operating activities ​ ​ 17,286 ​ ​ ( 6,276 ) ​ ​ ​ ​ ​ ​ ​ Cash Flows From Investing Activities: ​ ​ ​ ​ ​ ​ Proceeds from disposition of property and equipment ​ ​ 169 ​ ​ 298 Purchases of property and equipment ​ ​ ( 3,252 ) ​ ​ ( 4,072 ) Net cash used in investing activities ​ ​ ( 3,083 ) ​ ​ ( 3,774 ) ​ ​ ​ ​ ​ ​ ​ Cash Flows From Financing Activities: ​ ​ ​ ​ ​ ​ Proceeds from revolving credit facilities ​ ​ 19,801 ​ ​ 61,933 Repayments on revolving credit facilities ​ ​ ( 26,879 ) ​ ​ ( 54,961 ) Repayments on term loans ​ ​ ( 4,837 ) ​ ​ ( 123,542 ) Proceeds from issuance of term loans ​ ​ - ​ ​ 125,000 Payment of debt issuance costs ​ ​ - ​ ​ ( 1,210 ) Purchase of treasury stock ​ ​ ( 222 ) ​ ​ ( 1,097 ) Proceeds from exercise of options ​ ​ 35 ​ ​ 668 Cash dividends paid ​ ​ ( 1,860 ) ​ ​ ( 1,861 ) Net cash (used in) provided by financing activities ​ ​ ( 13,962 ) ​ ​ 4,930 ​ ​ ​ ​ ​ ​ ​ Effect of foreign exchange rates on cash ​ ​ ( 987 ) ​ ​ ( 457 ) ​ ​ ​ ​ ​ ​ ​ Change in cash ​ ​ ( 746 ) ​ ​ ( 5,577 ) Cash, beginning of year ​ ​ 12,061 ​ ​ 19,465 Cash, end of period ​ $ 11,315 ​ $ 13,888 ​ ​ ​ ​ ​ ​ ​ Supplemental Disclosure of Cash Flow Information: ​ ​ ​ ​ ​ ​ Cash paid for income taxes ​ $ 1,010 ​ $ 5,492 Cash paid for interest ​ $ 5,127 ​ $ 2,339 Supplemental Disclosures of Non-Cash Investing and Financing Activities: ​ ​ ​ ​ ​ ​ Property and equipment purchased with accounts payable ​ $ 159 ​ $ 607 Lease liabilities arising from obtaining right of use assets ​ $ 4,066 ​ $ 1,324 Unpaid debt issuance costs ​ $ — ​ $ 175 ​ See accompanying notes to condensed consolidated financial statements. ​ ​ 6 Table of Contents CLARUS CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited) (In thousands, except per share amounts) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other ​ Total ​ ​ Common Stock ​ Paid-In ​ Accumulated ​ Treasury Stock ​ Comprehensive ​ Stockholders’ ​ Shares Amount Capital Deficit Shares Amount Income (Loss) Equity ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance, December 31, 2021 ​ ​ 41,105 ​ $ 4 ​ $ 662,996 ​ $ ( 263,342 ) ​ ​ ( 4,011 ) ​ $ ( 24,440 ) ​ $ ( 5,050 ) ​ $ 370,168 Net income ​ ​ — ​ ​ — ​ ​ — ​ ​ 5,309 ​ ​ — ​ ​ — ​ ​ — ​ ​ 5,309 Other comprehensive income ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 6,163 ​ ​ 6,163 Cash dividends ($ 0.025 per share) ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 930 ) ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 930 ) Purchase of treasury stock ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 51 ) ​ ​ ( 1,097 ) ​ ​ — ​ ​ ( 1,097 ) Stock-based compensation expense ​ ​ — ​ ​ — ​ ​ 3,367 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 3,367 Proceeds from exercise of options ​ ​ 167 ​ ​ — ​ ​ 126 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 126 Balance, March 31, 2022 ​ ​ 41,272 ​ $ 4 ​ $ 666,489 ​ $ ( 258,963 ) ​ ​ ( 4,062 ) ​ $ ( 25,537 ) ​ $ 1,113 ​ $ 383,106 Net income ​ ​ — ​ ​ — ​ ​ — ​ ​ 3,764 ​ ​ — ​ ​ — ​ ​ — ​ ​ 3,764 Other comprehensive loss ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 17,010 ) ​ ​ ( 17,010 ) Cash dividends ($ 0.025 per share) ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 931 ) ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 931 ) Stock-based compensation expense ​ ​ — ​ ​ — ​ ​ 3,555 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 3,555 Proceeds from exercise of options ​ ​ 56 ​ ​ — ​ ​ 542 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 542 Balance, June 30, 2022 ​ ​ 41,328 ​ $ 4 ​ $ 670,586 ​ $ ( 256,130 ) ​ ​ ( 4,062 ) ​ $ ( 25,537 ) ​ $ ( 15,897 ) ​ $ 373,026 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other ​ Total ​ ​ Common Stock ​ Paid-In ​ Accumulated ​ Treasury Stock ​ Comprehensive ​ Stockholders’ ​ ​ Shares Amount Capital Deficit Shares Amount Loss Equity ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance, December 31, 2022 ​ ​ 41,637 ​ $ 4 ​ $ 679,339 ​ $ ( 336,843 ) ​ ​ ( 4,589 ) ​ $ ( 32,707 ) ​ $ ( 17,685 ) ​ $ 292,108 Net income ​ ​ — ​ ​ — ​ ​ — ​ ​ 1,598 ​ ​ — ​ ​ — ​ ​ — ​ ​ 1,598 Other comprehensive loss ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 1,100 ) ​ ​ ( 1,100 ) Cash dividends ($ 0.025 per share) ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 930 ) ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 930 ) Purchase of treasury stock ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 12 ) ​ ​ ( 118 ) ​ ​ — ​ ​ ( 118 ) Stock-based compensation expense ​ ​ — ​ ​ — ​ ​ 1,334 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 1,334 Proceeds from exercise of options ​ ​ 154 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Balance, March 31, 2023 ​ ​ 41,791 ​ $ 4 ​ $ 680,673 ​ $ ( 336,175 ) ​ ​ ( 4,601 ) ​ $ ( 32,825 ) ​ $ ( 18,785 ) ​ $ 292,892 Net loss ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 2,091 ) ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 2,091 ) Other comprehensive loss ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 1,364 ) ​ ​ ( 1,364 ) Cash dividends ($ 0.025 per share) ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 930 ) ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 930 ) Purchase of treasury stock ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 11 ) ​ ​ ( 104 ) ​ ​ — ​ ​ ( 104 ) Stock-based compensation expense ​ ​ — ​ ​ — ​ ​ 1,535 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 1,535 Proceeds from exercise of options ​ ​ 42 ​ ​ — ​ ​ 35 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 35 Balance, June 30, 2023 ​ ​ 41,833 ​ $ 4 ​ $ 682,243 ​ $ ( 339,196 ) ​ ​ ( 4,612 ) ​ $ ( 32,929 ) ​ $ ( 20,149 ) ​ $ 289,973 ​ See accompanying notes to condensed consolidated financial statements. ​ ​ ​ 7 Table of Contents CLARUS CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (in thousands, except per share amounts) ​ NOTE 1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accompanying unaudited condensed consolidated financial statements of Clarus Corporation and subsidiaries (which may be referred to as the “Company,” “Clarus,” “we,” “us” or “our”) as of June 30, 2023 and December 31, 2022 and for the three and six months ended June 30, 2023 and 2022, have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), instructions to the Quarterly Report on Form 10-Q, and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring adjustments, except otherwise disclosed) necessary for a fair presentation of the unaudited condensed consolidated financial statements have been included. The results for the three and six months ended June 30, 2023 are not necessarily indicative of the results to be obtained for the year ending December 31, 2023. These interim financial statements should be read in conjunction with the Company’s audited consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the Securities and Exchange Commission (the “SEC”) on February 27, 2023. Nature of Business Headquartered in Salt Lake City, Utah, we are a global leading designer, developer, manufacturer and distributor of best-in-class outdoor equipment and lifestyle products focused on the outdoor and consumer enthusiast markets. Our mission is to identify, acquire and grow outdoor “super fan” brands through our unique “innovate and accelerate” strategy. We define a “super fan” brand as a brand that creates the world’s pre-eminent, performance-defining product that the best-in-class user cannot live without. Each of our brands has a long history of continuous product innovation for core and everyday users alike. The Company’s products are principally sold globally under the Black Diamond®, Sierra®, Barnes®, Rhino-Rack® and MAXTRAX® brand names through outdoor specialty and online retailers, our own websites, distributors and original equipment manufacturers. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that effect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. The more significant estimates relate to the fair value of net assets acquired in business combinations, excess or obsolete inventory, allowance for credit losses, contingent consideration liabilities, and valuation of deferred tax assets, long-lived assets, goodwill and indefinite-lived intangible assets, and other intangible assets. We base our estimates on historical experience, projected future cash flows, and other assumptions that are believed to be reasonable under the circumstances. Actual results could differ from these estimates. ​ ​ NOTE 2. INVENTORIES Inventories, as of June 30, 2023 and December 31, 2022, were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, 2023 December 31, 2022 Finished goods ​ $ 111,169 ​ $ 107,453 Work-in-process ​ ​ 9,360 ​ ​ 8,719 Raw materials and supplies ​ ​ 28,434 ​ ​ 30,900 ​ ​ $ 148,963 ​ $ 147,072 ​ ​ 8 ​ Table of Contents CLARUS CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED (Unaudited) (in thousands, except per share amounts) ​ NOTE 3. PROPERTY AND EQUIPMENT Property and equipment, net, as of June 30, 2023 and December 31, 2022, were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, 2023 December 31, 2022 ​ ​ ​ ​ ​ ​ ​ Land ​ $ 4,160 ​ $ 4,160 Building and improvements ​ ​ 17,928 ​ ​ 17,357 Furniture and fixtures ​ ​ 8,384 ​ ​ 7,384 Computer hardware and software ​ ​ 8,785 ​ ​ 8,498 Machinery and equipment ​ ​ 39,349 ​ ​ 37,054 Construction in progress ​ ​ 3,279 ​ ​ 5,028 ​ ​ ​ 81,885 ​ ​ 79,481 Less accumulated depreciation ​ ​ ( 39,966 ) ​ ​ ( 36,471 ) ​ ​ $ 41,919 ​ $ 43,010 ​ Depreciation expense for the three months ended June 30, 2023 and 2022 was $ 1,941 and $ 1,877 , respectively, and for the six months ended June 30, 2023 and 2022 was $ 3,732 and $ 3,709 , respectively. ​ ​ NOTE 4. GOODWILL AND INTANGIBLE ASSETS Goodwill The following table summarizes the balances in goodwill by segment: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Outdoor Precision Sport Adventure Total ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Goodwill ​ $ 29,507 ​ $ 26,715 ​ $ 88,349 ​ $ 144,571 Accumulated goodwill impairment losses ​ ​ ( 29,507 ) ​ ​ — ​ ​ ( 52,071 ) ​ ​ ( 81,578 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at December 31, 2022 ​ ​ — ​ ​ 26,715 ​ ​ 36,278 ​ ​ 62,993 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Impact of foreign currency exchange rates ​ ​ — ​ ​ — ​ ​ ( 556 ) ​ ​ ( 556 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at June 30, 2023 ​ $ — ​ $ 26,715 ​ $ 35,722 ​ $ 62,437 ​ Indefinite-Lived Intangible Assets The following table summarizes the changes in indefinite-lived intangible assets: ​ ​ ​ ​ ​ Balance at December 31, 2022 $ 82,901 ​ ​ ​ ​ Impact of foreign currency exchange rates ​ ​ ( 925 ) ​ ​ ​ ​ Balance at June 30, 2023 ​ $ 81,976 ​ 9 Table of Contents CLARUS CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED (Unaudited) (in thousands, except per share amounts) ​ Trademarks classified as indefinite-lived intangible assets by brand as of June 30, 2023 and December 31, 2022, were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, 2023 December 31, 2022 Black Diamond ​ $ 19,600 ​ $ 19,600 PIEPS ​ ​ 3,038 ​ ​ 2,986 Sierra ​ ​ 18,900 ​ ​ 18,900 Barnes ​ ​ 5,600 ​ ​ 5,600 Rhino-Rack ​ ​ 25,041 ​ ​ 25,744 MAXTRAX ​ ​ 9,797 ​ ​ 10,071 ​ ​ $ 81,976 ​ $ 82,901 ​ Other Intangible Assets, net The following table summarizes the changes in gross other intangible assets: ​ ​ ​ ​ ​ Gross balance at December 31, 2022 $ 100,889 ​ ​ ​ ​ Impact of foreign currency exchange rates ​ ​ ( 1,406 ) ​ ​ ​ ​ Gross balance at June 30, 2023 ​ $ 99,483 ​ Other intangible assets, net of amortization as of June 30, 2023 and December 31, 2022, were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, 2023 ​ Gross Accumulated Amortization Net Weighted Average Useful Life Intangibles subject to amortization ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Customer relationships ​ $ 76,337 ​ $ ( 39,136 ) ​ $ 37,201 ​ ​ 13.8 years Product technologies ​ ​ 20,936 ​ ​ ( 10,706 ) ​ ​ 10,230 ​ ​ 10.2 years Tradename / trademark ​ ​ 1,263 ​ ​ ( 902 ) ​ ​ 361 ​ ​ 9.4 years Core technologies ​ ​ 947 ​ ​ ( 947 ) ​ ​ — ​ ​ 10.0 years ​ ​ $ 99,483 ​ $ ( 51,691 ) ​ $ 47,792 ​ ​ 13.0 years ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2022 ​ Gross Accumulated Amortization Net Weighted Average Useful Life ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Customer relationships ​ $ 77,370 ​ $ ( 34,653 ) ​ $ 42,717 ​ ​ 13.8 years Product technologies ​ ​ 21,309 ​ ​ ( 9,207 ) ​ ​ 12,102 ​ ​ 10.2 years Tradename / trademark ​ ​ 1,263 ​ ​ ( 827 ) ​ ​ 436 ​ ​ 9.4 years Core technologies ​ ​ 947 ​ ​ ( 947 ) ​ ​ — ​ ​ 10.0 years ​ ​ $ 100,889 ​ $ ( 45,634 ) ​ $ 55,255 ​ ​ 13.0 years ​ 10 Table of Contents CLARUS CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED (Unaudited) (in thousands, except per share amounts) ​ Amortization expense for the three months ended June 30, 2023 and 2022, was $ 3,223 and $ 3,937 , respectively, and for the six months ended June 30 2023 and 2022 was $ 6,499 and $ 8,057 . Future amortization expense for other intangible assets as of June 30, 2023 is as follows: ​ ​ ​ ​ ​ Years Ending December 31, Amortization Expense 2023 (excluding the six months ended June 30, 2023) ​ $ 6,140 2024 ​ ​ 10,557 2025 ​ ​ 8,545 2026 ​ ​ 6,557 2027 ​ ​ 4,789 2028 ​ ​ 3,415 Thereafter ​ ​ 7,789 ​ ​ $ 47,792 ​ ​ ​ ​ NOTE 5. ACCRUED LIABILITIES AND OTHER LONG-TERM LIABILITIES Accrued liabilities as of June 30, 2023 and December 31, 2022, were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, 2023 December 31, 2022 ​ ​ ​ ​ ​ ​ ​ Accrued payroll and related items ​ $ 4,886 ​ $ 5,363 Accrued bonus ​ ​ 878 ​ ​ 1,006 Designated forward exchange contracts ​ ​ 189 ​ ​ — Accrued warranty ​ ​ 1,245 ​ ​ 1,465 Current lease liabilities ​ ​ 2,764 ​ ​ 2,836 Accrued commissions ​ ​ 488 ​ ​ 343 Contingent consideration liabilities ​ ​ — ​ ​ 1,595 Accrued excise tax ​ ​ 793 ​ ​ 977 Other ​ ​ 9,079 ​ ​ 11,585 ​ ​ $ 20,322 ​ $ 25,170 ​ Other long-term liabilities as of June 30, 2023 and December 31, 2022, were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, 2023 December 31, 2022 ​ ​ ​ ​ ​ ​ ​ Long-term lease liability ​ $ 14,587 ​ $ 12,825 Deferred stock consideration for business acquisition ​ ​ 2,069 ​ ​ 2,127 Other ​ ​ 846 ​ ​ 902 ​ ​ $ 17,502 ​ $ 15,854 ​ ​ ​ 11 Table of Contents CLARUS CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED (Unaudited) (in thousands, except per share amounts) ​ NOTE 6. LONG-TERM DEBT Long-term debt as of June 30, 2023 and December 31, 2022, was as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, 2023 December 31, 2022 ​ ​ ​ ​ ​ ​ ​ Revolving credit facility (a) ​ $ 11,884 ​ $ 18,049 Other debt (b) ​ ​ 75 ​ ​ 1,134 Term loan (c) ​ ​ 115,625 ​ ​ 120,311 Debt issuance costs ​ ​ ( 356 ) ​ ​ ( 460 ) ​ ​ ​ 127,228 ​ ​ 139,034 Less current portion ​ ​ ( 12,543 ) ​ ​ ( 11,952 ) ​ ​ $ 114,685 ​ $ 127,082 ​ On April 18, 2022 (the “Effective Date”), the Company and certain of its direct and indirect subsidiaries entered into an Amended and Restated Credit Agreement with JPMorgan Chase Bank, N.A., as administrative agent and the lenders party thereto (the “Restated Credit Agreement”). 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 Company, 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 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. All obligations under the Restated Credit Agreement are secured by our subsidiary equity interests, as well as accounts receivable, inventory, intellectual property and certain other assets owned by the Company. The Restated Credit Agreement contains restrictions on the Company’s ability to pay dividends or make distributions or other restricted payments if certain conditions in the Restated Credit Agreement are not fulfilled. The Restated Credit Agreement also includes other 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 June 30, 2023. (a) As of June 30, 2023, the Company had drawn $ 11,884 on the revolving loan, with a maturity date of April 18, 2027 . Approximately $ 32,000 in additional funds were available to borrow on the revolving loan at June 30, 2023, while maintaining compliance with the consolidated total leverage ratio per the Restated Credit Agreement of 3.75 to 1. The Company pays interest monthly on any borrowings on the Restated Credit Agreement. As of June 30, 2023 and December 31, 2022, the rates were approximately 7.5 % and 6.3 % , respectively. (b) Foreign subsidiaries of the Company have a revolving credit facility and term debt with financial institutions which mature between November 16, 2023 and August 8, 2024 . The foreign subsidiaries pay interest monthly on any borrowings on the credit facilities as well as monthly payments on the term debt. As of June 30, 2023, the interest rates ranged between approximately 3.1 % and 3.2 % and as of December 31, 2022, the interest rates ranged between approximately 1.3 % and 4.0 % . The credit facilities are secured by certain assets of the foreign subsidiaries. The revolving credit facility was settled and closed as of March 31, 2023 and had no amounts outstanding. 12 Table of Contents CLARUS CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED (Unaudited) (in thousands, except per share amounts) ​ (c) The Company is required to repay the term loan through quarterly payments of $ 1,563 each beginning with June 30, 2022 , increasing to $ 3,125 each beginning with June 30, 2023 , and any remaining obligations will be repaid in full on the maturity date of the Restated Credit Agreement of April 18, 2027 . The Company pays interest monthly on any borrowings on the Restated Credit Agreement. As of June 30, 2023 and December 31, 2022, the rates were approximately 7.5 % and 6.3 % , respectively. ​ ​ NOTE 7. DERIVATIVE FINANCIAL INSTRUMENTS The Company’s primary exchange rate risk management objective is to mitigate the uncertainty of anticipated cash flows attributable to changes in foreign currency exchange rates. The Company primarily focuses on mitigating changes in cash flows resulting from sales denominated in currencies other than the U.S. dollar. The Company manages this risk primarily by using currency forward and option contracts. If the anticipated transactions are deemed probable, the resulting relationships are formally designated as cash flow hedges. The Company accounts for these contracts as cash flow hedges and tests effectiveness by determining whether changes in the expected cash flow of the derivative offset, within a range, changes in the expected cash flow of the hedged item. At June 30, 2023, the Company’s derivative contracts had remaining maturities of less than one year . The counterparties to these transactions had both long-term and short-term investment grade credit ratings. The maximum net exposure of the Company’s credit risk to the counterparties is generally limited to the aggregate unrealized loss of $ 180 on all contracts at June 30, 2023. The Company’s exposure of counterparty credit risk is limited to the aggregate unrealized gain of all contracts with that counterparty. At June 30, 2023, there was no such exposure to the counterparties. The Company’s derivative counterparties have strong credit ratings and as a result, the Company does not require collateral to facilitate transactions. The Company held the following contracts designated as hedging instruments as of June 30, 2023 and December 31, 2022: ​ ​ ​ ​ ​ ​ ​ ​ June 30, 2023 ​ Notional Latest ​ ​ Amount ​ Maturity ​ ​ ​ ​ ​ Foreign exchange contracts - Canadian Dollars ​ $ 3,894 ​ February 2024 Foreign exchange contracts - Euros ​ € 16,276 ​ February 2024 ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2022 ​ Notional Latest ​ ​ Amount ​ Maturity ​ ​ ​ ​ ​ Foreign exchange contracts - Canadian Dollars ​ $ 2,807 ​ February 2023 Foreign exchange contracts - Euros ​ € 20,760 ​ February 2024 ​ For contracts that qualify as effective hedge instruments, the effective portion of gains and losses resulting from changes in fair value of the instruments are included in accumulated other comprehensive loss and reclassified to sales in the period the underlying hedged transaction is recognized in earnings. Gains (losses) of $( 43 ) and $ 610 were reclassified to sales during the three months ended June 30, 2023 and 2022, respectively, and $( 59 ) and $ 863 were reclassified to sales during the six months ended June 30, 2023 and 2022, respectively. 13 Table of Contents CLARUS CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED (Unaudited) (in thousands, except per share amounts) ​ The following table presents the balance sheet classification and fair value of derivative instruments as of June 30, 2023 and December 31, 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Classification June 30, 2023 December 31, 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ Derivative instruments in asset positions: ​ ​ ​ ​ ​ ​ ​ ​ Designated forward exchange contracts ​ Prepaid and other current assets ​ $ 9 ​ $ 357 ​ ​ ​ ​ ​ ​ ​ ​ ​ Derivative instruments in liability positions: ​ ​ ​ ​ ​ ​ ​ ​ Designated forward exchange contracts ​ Accrued liabilities ​ $ 189 ​ $ — Designated forward exchange contracts ​ Other long-term liabilities ​ $ — ​ $ 6 ​ ​ ​ ​ NOTE 8. ACCUMULATED OTHER COMPREHENSIVE LOSS Accumulated other comprehensive loss (“AOCI”) primarily consists of foreign currency translation adjustments and changes in our forward foreign exchange contracts. The following table sets forth the changes in AOCI, net of tax, for the three months ended June 30, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Foreign Currency Translation Adjustments Unrealized Gains (Losses) on Cash Flow Hedges Total ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance as of March 31, 2023 ​ $ ( 18,649 ) ​ $ ( 136 ) ​ $ ( 18,785 ) Other comprehensive loss before reclassifications ​ ​ ( 1,389 ) ​ ​ ( 9 ) ​ ​ ( 1,398 ) Amounts reclassified from other comprehensive loss ​ ​ — ​ ​ 34 ​ ​ 34 Net current period other comprehensive (loss) income ​ ​ ( 1,389 ) ​ ​ 25 ​ ​ ( 1,364 ) Balance as of June 30, 2023 ​ $ ( 20,038 ) ​ $ ( 111 ) ​ $ ( 20,149 ) ​ The following table sets forth the changes in AOCI, net of tax, for the three months ended June 30, 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Foreign Currency Translation Adjustments Unrealized Gains (Losses) on Cash Flow Hedges Total ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance as of March 31, 2022 ​ $ 836 ​ $ 277 ​ $ 1,113 Other comprehensive (loss) income before reclassifications ​ ​ ( 17,632 ) ​ ​ 1,091 ​ ​ ( 16,541 ) Amounts reclassified from other comprehensive income ​ ​ — ​ ​ ( 469 ) ​ ​ ( 469 ) Net current period other comprehensive (loss) income ​ ​ ( 17,632 ) ​ ​ 622 ​ ​ ( 17,010 ) Balance as of June 30, 2022 ​ $ ( 16,796 ) ​ $ 899 ​ $ ( 15,897 ) ​ 14 Table of Contents CLARUS CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED (Unaudited) (in thousands, except per share amounts) ​ The following table sets forth the changes in AOCI, net of tax, for the six months ended June 30, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Foreign Currency Translation Adjustments Unrealized Gains (Losses) on Cash Flow Hedges Total ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance as of December 31, 2022 ​ $ ( 17,628 ) ​ $ ( 57 ) ​ $ ( 17,685 ) Other comprehensive loss before reclassifications ​ ​ ( 2,410 ) ​ ​ ( 100 ) ​ ​ ( 2,510 ) Amounts reclassified from other comprehensive loss ​ ​ — ​ ​ 46 ​ ​ 46 Net current period other comprehensive loss ​ ​ ( 2,410 ) ​ ​ ( 54 ) ​ ​ ( 2,464 ) Balance as of June 30, 2023 ​ $ ( 20,038 ) ​ $ ( 111 ) ​ $ ( 20,149 ) ​ ​ The following table sets forth the changes in AOCI, net of tax, for the six months ended June 30, 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Foreign Currency Translation Adjustments Unrealized Gains (Losses) on Cash Flow Hedges Total ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance as of December 31, 2021 ​ $ ( 5,241 ) ​ $ 191 ​ $ ( 5,050 ) Other comprehensive (loss) income before reclassifications ​ ​ ( 11,555 ) ​ ​ 1,371 ​ ​ ( 10,184 ) Amounts reclassified from other comprehensive loss ​ ​ — ​ ​ ( 663 ) ​ ​ ( 663 ) Net current period other comprehensive (loss) income ​ ​ ( 11,555 ) ​ ​ 708 ​ ​ ( 10,847 ) Balance as of June 30, 2022 ​ $ ( 16,796 ) ​ $ 899 ​ $ ( 15,897 ) ​ ​ The effects on net income of amounts reclassified from unrealized gains (losses) on cash flow hedges for foreign exchange contracts for the three and six months ended June 30, 2023 and 2022, were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gains (losses) reclassified from AOCI to the Consolidated Statements of Comprehensive Loss Affected line item in the Consolidated ​ Three Months Ended ​ Six Months Ended Statements of Comprehensive Loss June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022 Foreign exchange contracts: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Sales ​ $ ( 43 ) ​ $ 610 ​ $ ( 59 ) ​ $ 863 Less: Income tax (benefit) expense ​ ​ ( 9 ) ​ ​ 141 ​ ​ ( 13 ) ​ ​ 200 Amount reclassified, net of tax ​ $ ( 34 ) ​ $ 469 ​ $ ( 46 ) ​ $ 663 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total reclassifications from AOCI ​ $ ( 34 ) ​ $ 469 ​ $ ( 46 ) ​ $ 663 ​ ​ ​ ​ 15 Table of Contents CLARUS CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED (Unaudited) (in thousands, except per share amounts) ​ NOTE 9. FAIR VALUE MEASUREMENTS We measure certain financial assets and liabilities at fair value on a recurring basis. Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants, under a three-tier fair value hierarchy that prioritizes the inputs used in measuring fair value as follows: Level 1 - inputs to the valuation methodology are quoted market prices for identical assets or liabilities in active markets. Level 2 - inputs to the valuation methodology include quoted prices in markets that are not active or model inputs that are observable either directly or indirectly for substantially the full term of the asset or liability. Level 3 - inputs to the valuation methodology are based on prices or valuation techniques that are unobservable. Items Measured at Fair Value on a Recurring Basis Assets and liabilities measured at fair value on a recurring basis at June 30, 2023 and December 31, 2022 were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, 2023 ​ Level 1 Level 2 Level 3 Total ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Assets ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Designated forward exchange contracts ​ $ — ​ $ 9 ​ $ — ​ $ 9 ​ ​ $ — ​ $ 9 ​ $ — ​ $ 9 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Liabilities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Designated forward exchange contracts ​ $ — ​ $ 189 ​ $ — ​ $ 189 ​ ​ $ — ​ $ 189 ​ $ — ​ $ 189 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2022 ​ Level 1 Level 2 Level 3 Total ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Assets ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Designated forward exchange contracts ​ $ — ​ $ 357 ​ $ — ​ $ 357 ​ ​ $ — ​ $ 357 ​ $ — ​ $ 357 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Liabilities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Designated forward exchange contracts ​ $ — ​ $ 6 ​ $ — ​ $ 6 Contingent consideration liabilities ​ $ — ​ $ — ​ $ 1,595 ​ $ 1,595 ​ ​ $ — ​ $ 6 ​ $ 1,595 ​ $ 1,601 ​ Derivative financial instruments are recorded at fair value based on current market pricing models. No nonrecurring fair value measurements existed at June 30, 2023 and December 31, 2022. The Company estimated the initial fair value of the contingent consideration liabilities primarily using a series of call options. Significant unobservable inputs used in the valuation included discount rates ranging from 4.8 % to 8.0 %. Contingent consideration liabilities are subsequently remeasured at the estimated fair value at the end of each reporting period using financial projections of the acquired company, such as sales-based milestones and estimated probabilities of 16 Table of Contents CLARUS CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED (Unaudited) (in thousands, except per share amounts) ​ achievement, with the change in fair value recognized in contingent consideration benefit in the accompanying consolidated statements of comprehensive (loss) income for such period. We measure the initial liability and remeasure the liability on a recurring basis using Level 3 inputs as defined under authoritative guidance for fair value measurements. The following table summarizes the changes in contingent consideration liabilities: ​ ​ ​ ​ ​ ​ MAXTRAX ​ ​ ​ ​ Balance at December 31, 2022 ​ $ 1,595 Fair value adjustments ​ ​ ( 1,565 ) Contingent consideration payments ​ ​ — Impact of foreign currency exchange rates ​ ​ ( 30 ) Balance at June 30, 2023 ​ $ — ​ As the contingent consideration liabilities are remeasured to fair value each reporting period, significant increases or decreases in projected sales, discount rates or the time until payment is made could have resulted in a significantly lower or higher fair value measurement. The net sales threshold required for the final payment of the MAXTRAX Contingent Consideration was not met during the measurement period ended June 30, 2023. ​ NOTE 10. STOCKHOLDERS’ EQUITY 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 August 3, 2023 , the Company announced that its Board of Directors approved the payment on August 25, 2023 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 August 14, 2023 . ​ ​ NOTE 11. EARNINGS (LOSS) PER SHARE Basic earnings (loss) per share is computed by dividing earnings (loss) by the weighted average number of common shares outstanding during each period. Diluted earnings (loss) per share is computed by dividing earnings (loss) by the total of the weighted average number of shares of common stock outstanding during each period, plus the effect of dilutive outstanding stock options and unvested restricted stock grants. Potentially dilutive securities are excluded from the computation of diluted earnings (loss) per share if their effect is anti-dilutive to the loss from continuing operations. 17 Table of Contents CLARUS CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED (Unaudited) (in thousands, except per share amounts) ​ The following table is a reconciliation of basic and diluted shares of common stock outstanding used in the calculation of earnings (loss) per share: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Six Months Ended ​ June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted average shares outstanding - basic ​ ​ 37,192 ​ ​ 37,235 ​ ​ 37,164 ​ ​ 37,199 Effect of dilutive stock awards ​ ​ — ​ ​ 2,241 ​ ​ — ​ ​ 2,338 Effect of dilutive deferred stock consideration for business acquisition ​ ​ — ​ ​ 221 ​ ​ — ​ ​ 214 Weighted average shares outstanding - diluted ​ ​ 37,192 ​ ​ 39,697 ​ ​ 37,164 ​ ​ 39,751 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net (loss) income per share: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic ​ $ ( 0.06 ) ​ $ 0.10 ​ $ ( 0.01 ) ​ $ 0.24 Diluted ​ ​ ( 0.06 ) ​ ​ 0.09 ​ ​ ( 0.01 ) ​ ​ 0.23 ​ For the three months ended June 30, 2023 and 2022, equity awards of 6,082 and 1,638 , respectively, and for the six months ended June 30, 2023 and 2022, equity awards of 6,058 and 1,484 , respectively, were excluded from the calculation of earnings (loss) per share for these periods as they were anti-dilutive. ​ ​ NOTE 12. STOCK-BASED COMPENSATION PLAN Under the Company’s current 2015 Stock Incentive Plan (the “2015 Plan”), the Company’s Board of Directors has flexibility to determine the type and amount of awards to be granted to eligible participants, who must be employees, directors, officers or consultants of the Company or its subsidiaries. The 2015 Plan allows for grants of incentive stock options, nonqualified stock options, restricted stock awards, stock appreciation rights, and restricted units. The aggregate number of shares of common stock that may be granted through awards under the 2015 Plan to any employee in any calendar year may not exceed 500 shares. The 2015 Plan will continue in effect until December 2025 unless terminated sooner. ​ Options Granted: ​ During the six months ended June 30, 2023, the Company issued stock options for an aggregate of 75 shares under the 2015 Plan to directors of the Company. All 75 options vest and become exercisable over a period of one year . All of the issued stock options expire ten years from the date of the grant. ​ 18 Table of Contents CLARUS CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED (Unaudited) (in thousands, except per share amounts) ​ For computing the fair value of the stock-based awards, the fair value of each option grant has been estimated as of the date of grant using the Black-Scholes option-pricing model with the following assumptions: ​ Options Granted During the Six Months Ended June 30, 2023 ​ ​ ​ ​ Number of options ​ 75 Option vesting period ​ 1 Year Grant price (per share) ​ $ 7.91 Dividend yield ​ 1.26 % Expected volatility (a) ​ 47.80 % Risk-free interest rate ​ 3.69 % Expected life (years) (b) ​ 5.31 Weighted average fair value (per share) ​ $ 2.48 ​ (a) Expected volatility is based upon the Company’s historical volatility. ​ (b) The expected term was determined based upon the underlying terms of the awards and the category and employment history of employee award recipient. ​ ​ The grant date fair value of the stock options granted during the six months ended June 30, 2023 was $ 186 , which will be recognized over the vesting period of the options. Market Condition Restricted Shares Granted: On March 14, 2023, the Company awarded the Executive Chairman 500 restricted shares under the 2015 Plan, of which 250 and 250 shares will vest if, on or before March 14, 2033, the Fair Market Value (as defined in the Plan) of the Company’s common stock shall have equaled or exceeded $ 15.00 and $ 18.00 per share for twenty consecutive trading days, respectively. As the vesting terms of the restricted shares include a market condition, the fair value of the restricted stock was estimated as of the date of grant using the Monte-Carlo pricing model with the following assumptions: ​ ​ ​ ​ ​ March 14, 2023 ​ ​ ​ Number issued ​ 500 Vesting period ​ $ 15.00 - $ 18.00 stock price target Grant price (per share) ​ $ 9.60 Dividend yield ​ 1.04 % Expected volatility ​ 45.2 % Risk-free interest rate ​ 3.64 % Expected term (years) ​ 2.56 - 3.22 Weighted average fair value (per share) ​ $ 7.84 - $ 8.34 ​ Using these assumptions, the grant date fair value of the restricted stock awards was approximately $ 4,046 and the expected term was between 2.56 and 3.22 years. The total non-cash stock compensation expense related to restricted stock, stock options and stock awards recorded by the Company for the three months ended June 30, 2023 and 2022 was $ 1,535 and $ 3,555 , respectively, and for the six months ended June 30, 2023 and 2022 was $ 2,869 and $ 6,922 , respectively. For the three and six months ended June 30, 2023 and 2022, the majority of stock-based compensation costs were classified as selling, general and administrative expenses. 19 Table of Contents CLARUS CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED (Unaudited) (in thousands, except per share amounts) ​ As of June 30, 2023, there were 535 unvested stock options and unrecognized compensation cost of $ 2,145 related to unvested stock options, as well as 1,717 unvested restricted stock awards and unrecognized compensation costs of $ 9,905 related to unvested restricted stock awards. ​ ​ NOTE 13. RESTRUCTURING From time to time, the Company incurs expenses to facilitate long-term sustainable growth through cost reduction actions, consisting of employee reductions, facility rationalization and contract termination costs. These costs include severance costs, exit costs and inventory write-offs and are included in Restructuring charges in the Condensed Consolidated Statements of Comprehensive Loss. Severance costs primarily consist of severance benefits through payroll continuation, conditional separation costs and employer tax liabilities, while exit costs primarily consist of lease exit and contract termination costs. Write-offs of inventory were distinguishable and directly attributable to the Company’s restructuring initiative and not a result of external market factors associated with the ongoing business. Pre-tax restructuring charges by segment for the three and six months ended June 30, 2023 were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three and Six Months Ended June 30, 2023 ​ ​ Outdoor ​ Precision Sport ​ Adventure ​ Corporate ​ Total Employee termination benefits ​ $ 134 ​ $ - ​ $ 174 ​ $ 163 ​ $ 471 Exit costs ​ ​ 65 ​ ​ - ​ ​ - ​ ​ - ​ ​ 65 Inventory write-offs ​ ​ 200 ​ ​ - ​ ​ - ​ ​ - ​ ​ 200 Total restructuring charges ​ $ 399 ​ $ - ​ $ 174 ​ $ 163 ​ $ 736 ​ There were no significant accruals recorded as of June 30, 2023 related to the Company’s restructuring initiatives. ​ ​ NOTE 14. COMMITMENTS AND CONTINGENCIES As a consumer goods manufacturer and distributor, the Company faces the risk of product liability and related lawsuits involving claims for substantial money damages, product recall actions and higher than anticipated rates of warranty returns or other returns of goods. The Company is therefore vulnerable to various personal injury and property damage lawsuits relating to its products and incidental to its business. The Company is involved in various legal disputes and other legal proceedings that arise from time to time in the ordinary course of business. Anticipated costs related to litigation matters are accrued when it is both probable that a liability has been incurred and the amount can be reasonably estimated. Based on currently available information, the Company does not believe that it is reasonably possible that the disposition of any of the legal disputes the Company or its subsidiaries is currently involved in will have a material adverse effect upon the Company’s consolidated financial condition, results of operations or cash flows. There is a reasonable possibility of loss from contingencies in excess of the amounts accrued by the Company in the accompanying condensed consolidated balance sheets; however, the actual amounts of such possible losses cannot currently be reasonably estimated by the Company at this time. It is possible that, as additional information becomes available, the impact on the Company could have a different effect. ​ ​ ​ 20 Table of Contents CLARUS CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED (Unaudited) (in thousands, except per share amounts) ​ NOTE 15. INCOME TAXES The Company’s U.S. federal statutory tax rate of 21 % and its foreign operations have statutory tax rates of approximately 24 % in Austria, 28 % in New Zealand, and 30 % in Australia. The difference between the Company’s estimated effective tax rates of 27.2 % for the three months ended June 30, 2023, and the U.S. federal statutory tax rate of 21 % was primarily due to the impact of stock compensation, research and experimentation expenditures and credits, and discrete stock option windfall benefits in the second quarter of 2023. The difference between the Company’s estimated effective tax rates of 41.4 % for the six months ended June 30, 2023, and the U.S. federal statutory tax rate of 21 % was primarily due to the impact of stock compensation, research and experimentation expenditures and credits, and discrete stock option windfall benefits in the first half of 2023. As of December 31, 2022, the Company’s gross deferred tax asset was $ 32,972 . The Company has recorded a valuation allowance of $ 3,323 , resulting in a net deferred tax asset of $ 29,649 , before deferred tax liabilities of $ 30,243 . The Company has provided a valuation allowance against a portion of the deferred tax assets as of June 30, 2023 and December 31, 2022, because the ultimate realization of those assets did not meet the more-likely-than-not criteria. The majority of the Company’s deferred tax assets consist of net operating loss carryforwards (“NOLs”) 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. In assessing the realizability of deferred income tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible and net operating loss and credit carryforwards expire. The estimates and judgments associated with the Company’s valuation allowance on deferred tax assets are considered critical due to the amount of deferred tax assets recorded by the Company on its consolidated balance sheet and the judgment required in determining the Company’s future taxable income. The need for a valuation allowance is reassessed at each interim reporting period. As of December 31, 2022, the Company had NOLs and research and experimentation credit for U.S. federal income tax purposes of $ 17,663 and $ 2,651 , respectively. The Company believes its U.S. Federal NOLs will substantially offset its future U.S. Federal income taxes until expiration. NOLs available to offset taxable income, subject to compliance with Section 382 of the Code, begin to expire based upon the following schedule: ​ ​ ​ ​ ​ Net Operating Loss Carryforward Expiration Dates December 31, 2022 ​ ​ ​ ​ Expiration Dates December 31, Net Operating Loss Amount 2023 ​ $ 1,851 2024 ​ ​ 3,566 2025 ​ ​ 1,708 2026 and beyond ​ ​ 10,538 Total ​ $ 17,663 ​ ​ ​ ​ 21 Table of Contents CLARUS CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED (Unaudited) (in thousands, except per share amounts) ​ NOTE 16. SEGMENT INFORMATION We operate our business structure within three segments. These segments are defined based on the internal financial reporting used by our chief operating decision maker to allocate resources and assess performance. Certain significant selling and general and administrative expenses are not allocated to the segments including non-cash stock compensation expense. Each segment is described below: ● Our Outdoor segment, which includes Black Diamond Equipment, PIEPS, and SKINourishment, is a global leader in designing, manufacturing, and marketing innovative outdoor engineered equipment and apparel for climbing, mountaineering, trail running, backpacking, skiing, and a wide range of other year-round outdoor recreation activities. Our Outdoor segment offers 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. ● Our Precision Sport segment, which includes Sierra and Barnes, includes two iconic American manufacturers of a wide range of high-performance bullets and ammunition for both rifles and pistols. These bullets are used for precision target shooting, hunting and military and law enforcement purposes. ● Our Adventure segment, which includes Rhino-Rack and MAXTRAX, is a manufacturer of highly-engineered automotive roof racks, trays, mounting systems, luggage boxes, carriers, recovery boards and accessories in Australia and New Zealand and a growing presence in the United States. As noted above, the Company has a wide variety of technical outdoor equipment and lifestyle products that are sold to a variety of customers in multiple end markets. While there are multiple products sold, the terms and nature of revenue recognition policy is similar for all segments. 22 Table of Contents CLARUS CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED (Unaudited) (in thousands, except per share amounts) ​ Financial information for our segments, as well as revenue by geography, which the Company believes provides a meaningful depiction how the nature, timing and uncertainty of revenue are affected by economic factors, is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Six Months Ended ​ June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022 Sales to external customers: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Outdoor ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Domestic sales ​ $ 21,869 ​ $ 27,293 ​ $ 43,434 ​ $ 52,922 International sales ​ ​ 18,198 ​ ​ 25,311 ​ ​ 49,408 ​ ​ 51,204 Total Outdoor ​ ​ 40,067 ​ ​ 52,604 ​ ​ 92,842 ​ ​ 104,126 Precision Sport ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Domestic sales ​ ​ 20,731 ​ ​ 27,193 ​ ​ 41,450 ​ ​ 54,636 International sales ​ ​ 5,060 ​ ​ 7,994 ​ ​ 11,447 ​ ​ 13,669 Total Precision Sport ​ ​ 25,791 ​ ​ 35,187 ​ ​ 52,897 ​ ​ 68,305 Adventure ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Domestic sales ​ ​ 4,056 ​ ​ 9,587 ​ ​ 6,688 ​ ​ 18,822 International sales ​ ​ 13,814 ​ ​ 17,555 ​ ​ 28,685 ​ ​ 36,956 Total Adventure ​ ​ 17,870 ​ ​ 27,142 ​ ​ 35,373 ​ ​ 55,778 Total sales to external customers ​ ​ 83,728 ​ ​ 114,933 ​ ​ 181,112 ​ ​ 228,209 Segment operating (loss) income: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Outdoor ​ ​ ( 1,224 ) ​ ​ 1,471 ​ ​ 266 ​ ​ 3,359 Precision Sport ​ ​ 5,263 ​ ​ 12,235 ​ ​ 12,488 ​ ​ 24,015 Adventure ​ ​ ( 503 ) ​ ​ 644 ​ ​ ( 1,651 ) ​ ​ 2,768 Total segment operating income ​ ​ 3,536 ​ ​ 14,350 ​ ​ 11,103 ​ ​ 30,142 Restructuring charges ​ ​ 736 ​ ​ — ​ ​ 736 ​ ​ — Transaction costs ​ ​ ( 59 ) ​ ​ ( 821 ) ​ ​ ( 133 ) ​ ​ ( 2,022 ) Contingent consideration benefit (expense) ​ ​ — ​ ​ 374 ​ ​ 1,565 ​ ​ ( 389 ) Corporate and other expenses ​ ​ ( 4,230 ) ​ ​ ( 7,455 ) ​ ​ ( 8,510 ) ​ ​ ( 13,237 ) Interest expense, net ​ ​ ( 2,857 ) ​ ​ ( 1,728 ) ​ ​ ( 5,603 ) ​ ​ ( 2,844 ) (Loss) income before income tax ​ $ ( 2,874 ) ​ $ 4,720 ​ $ ( 842 ) ​ $ 11,650 ​ There were no intercompany sales between the Outdoor, Precision Sport, and Adventure segments for the periods presented. Total assets by segment, as of June 30, 2023 and December 31, 2022, were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, 2023 December 31, 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Outdoor ​ ​ ​ ​ ​ ​ ​ $ 164,413 ​ $ 175,820 Precision Sport ​ ​ ​ ​ ​ ​ ​ ​ 138,728 ​ ​ 144,224 Adventure ​ ​ ​ ​ ​ ​ ​ ​ 171,927 ​ ​ 181,867 Corporate ​ ​ ​ ​ ​ ​ ​ ​ 22,928 ​ ​ 16,234 ​ ​ ​ ​ ​ ​ ​ ​ $ 497,996 ​ $ 518,145 ​ 23 Table of Contents CLARUS CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED (Unaudited) (in thousands, except per share amounts) ​ Capital expenditures, depreciation and amortization by segment is as follows. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Six Months Ended ​ June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022 Capital expenditures: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Outdoor ​ $ 455 ​ $ 1,089 ​ $ 778 ​ $ 2,325 Precision Sport ​ ​ 667 ​ ​ 772 ​ ​ 1,406 ​ ​ 1,222 Adventure ​ ​ 659 ​ ​ 311 ​ ​ 1,068 ​ ​ 525 Total capital expenditures ​ $ 1,781 ​ $ 2,172 ​ $ 3,252 ​ $ 4,072 Depreciation: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Outdoor ​ $ 740 ​ $ 829 ​ $ 1,413 ​ $ 1,646 Precision Sport ​ ​ 861 ​ ​ 812 ​ ​ 1,713 ​ ​ 1,593 Adventure ​ ​ 340 ​ ​ 236 ​ ​ 606 ​ ​ 470 Total depreciation ​ $ 1,941 ​ $ 1,877 ​ $ 3,732 ​ $ 3,709 Amortization: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Outdoor ​ $ 256 ​ $ 250 ​ $ 514 ​ $ 505 Precision Sport ​ ​ 509 ​ ​ 693 ​ ​ 1,017 ​ ​ 1,385 Adventure ​ ​ 2,458 ​ ​ 2,994 ​ ​ 4,968 ​ ​ 6,167 Total amortization ​ $ 3,223 ​ $ 3,937 ​ $ 6,499 ​ $ 8,057 ​ ​ ​ ​ ​ 24 Table of Contents CLARUS CORPORATION MANAGEMENT DISCUSSION AND ANALYSIS (in thousands, except per share amounts) ​