What changed in this filing

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Item 1. Business

2024-03-07 compared with 2023-02-27 · 65 added, 105 removed, 203 unchanged (46% of the section changed)

Headquartered in Salt Lake City, Utah, Clarus Corporation (which may be referred to as the “Company,” “Clarus,” “we,” “our” or “us”) 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.

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.

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.

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

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

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

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 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.

We focus on enhancing our customers’ performance in the most critical moments.

Each of our brands represents a unique customer value proposition.

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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.

Our previously owned 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.

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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.

Founded in 2012, our TRED brand offers high-quality, reliable outdoor and recovery gear for the offroad, 4x4 automotive touring, camping and caravanning markets.

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

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(“SKINourishment”).

On October 2, 2020, the Company completed the acquisition of certain assets and liabilities constituting the Barnes business (“Barnes”).

On October 2, 2020, the Company completed the acquisition of certain assets and liabilities constituting the Barnes business.

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 October 9, 2023, the Company completed the acquisition of Australia-based TRED Outdoors Pty Ltd.

On February 29, 2024, the Company and Everest/Sapphire Acquisition, LLC, its wholly-owned subsidiary, completed the sale to Bullseye Acquisitions, LLC, an affiliate of JDH Capital Company, of all of the equity associated with the Company’s Precision Sport segment, which is comprised of the Company’s subsidiaries Sierra and Barnes Bullets – Mona, LLC (“Barnes”), pursuant to a Purchase and Sale Agreement dated as of December 29, 2023, by and among, Bullseye Acquisitions, LLC, Everest/Sapphire Acquisition, LLC and the Company (the “Precision Sport Purchase Agreement”).

Under the terms of the Precision Sport Purchase Agreement, the Company received net proceeds of approximately $37,871,000 in cash, after payment of certain fees and settlement of the Restated Credit Agreement, for all of the equity associated with the Company’s Precision Sport segment.

The activities of the Precision Sport segment have been segregated and reported as discontinued operations for all periods presented.

See Note 3 to our consolidated financial statements for financial information regarding discontinued operations.

Market Overview

Our brands participate in the outdoor-oriented lifestyle that has and is expected to benefit from favorable long-term growth trends.

The users of our products are loyal outdoor enthusiasts, including climbers, mountaineers, trail runners, skiers, mountain bikers, backpackers and campers, competitive shooters, hunters, adventure seekers, overlanders and other outdoor-inspired consumers.

The users of our products are loyal outdoor enthusiasts, including climbers, mountaineers, trail runners, skiers, mountain bikers, backpackers and campers, adventure seekers, overlanders and other outdoor-inspired consumers.

We believe we have a strong reputation for innovation, style, quality, design, safety and durability in our core product lines, positioning us for sustainable growth amidst the acceleration of our market opportunity.

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Following the emergence of the COVID-19 pandemic, we believe that outdoor participation and the desire for more localized vacation trips experienced an uplift as consumers actively sought activities that conform to local social distancing guidelines, and avoided air and rail travel.

We anticipate

that the continuing impact of rising energy costs and inflation, along with positive memories consumers have from their previous pandemic “staycations”, will continue this trend of localized travel.

We anticipate that the continuing impact of rising energy costs and inflation, along with positive memories consumers have from their previous pandemic “staycations”, will continue this trend of localized travel.

In addition, the popularity of pickups and, more recently, their sibling sport utility vehicles (“SUVs”) and crossover utility vehicles (“CUVs”) continues to rise.

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Per the 2022 issue of “SEMA Light-Truck Snapshot,” the light-truck segment — which includes pickups, vans, SUVs and CUVs — is forecast to account for 80% of all new passenger vehicle sales by 2028.

The demand for vehicles geared towards local travel is driving demand for extra luggage space and the automotive rack market, which is expected to directly benefit our Rhino-Rack and MAXTRAX brands.

The demand for vehicles geared towards local travel is driving demand for extra luggage space and the automotive rack market, which is expected to directly benefit our Rhino-Rack, MAXTRAX and TRED brands.

Rise of Overlanding .

Combining off-road driving with backcountry lifestyle activities, such as camping, hiking, kayaking and mountain biking, we believe that overlanding has driven a new niche in the light truck, SUV and CUV segment for enthusiasts and light truck manufacturers, which is expected to directly benefit our Rhino-Rack and MAXTRAX brands .

Per SEMA, overlanding, loosely defined, is the practice of exploring the backcountry in a purpose-built vehicle — generally, a high-clearance four-wheel drive — that is equipped to allow its occupants to remain self-sufficient for periods of time ranging from a few days to several weeks.

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The 2024 Paris Summer Olympics will also include sport climbing events.

Resurgence in Popularity of Hunting .

After several years of falling participation, we believe that hunting continues to experience a resurgence as a popular outdoor activity.

Additionally, the sport of hunting has experienced more diversity in participants, specifically women and younger people.

The investment in hunting equipment and required training courses is expected to drive sustained activity in the sport.

As the variety of outdoor sports activities continues to proliferate, and existing outdoor sports evolve and become more specialized, we believe there is demand in the marketplace to address the unique technical and performance needs of such enthusiasts.

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We intend to create new and innovative products, increase consumer and retailer awareness and demand for our products, and build stronger emotional brand connections with consumers over time across an increasing number of geographic markets.

Additionally, long-term growth is underpinned by powerful industry trends across the outdoor and consumer enthusiast markets.

Additionally, long-term growth is underpinned by powerful industry trends across the outdoor enthusiast markets.

Our growth initiatives include, but are not limited to the following:

Black Diamond Product Category Expansions.

Within our Outdoor segment, we intend to utilize our “innovate and accelerate” strategy to leverage our strong brand name, customer relationships, proven capacity to develop new innovative products and product extensions in each of our existing product categories, and to expand into new product categories.

Our new technologies are generally inspired by our continuing commitment to maximize the enjoyment and efficacy of the products for the outdoor sports for which we design.

We intend to focus on the expansion of our apparel and footwear categories, driving further innovation in lights, trekking poles, snow safety, and climbing hard goods, while broadening our appeal in gloves and packs.

Growth in International Markets.

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We have been able to gain market share by emphasizing our Black Diamond brand, positioning it as a global brand with American roots.

We believe there is also a significant opportunity to expand our Sierra and Barnes brands outside the U.S.

market through additional sales and marketing commitments.

The acquisition of Rhino-Rack adds a leading market position in Australia and New Zealand, with an opportunity to grow our presence in the U.S., currently less than 1% market share, through key partnerships with brick-and-mortar and online retailers alike, and enhanced brand awareness.

Our most recent acquisition, MAXTRAX,

has a leading market position in Australia and we believe it has a significant opportunity to grow in the U.S.

Our most recent acquisitions, MAXTRAX and TRED, have leading market positions in Australia and we believe they have a significant opportunity to grow in the U.S.

Acquisition of Complementary Businesses.

We expect to target acquisitions as a viable opportunity to gain access to new product group and customer channels, and increase penetration of existing markets.

We may also pursue acquisitions that diversify the Company within the outdoor and consumer enthusiast markets.

To the extent we pursue future acquisitions, we intend to focus on super-fan brands with recurring revenue, sustainable margins and strong cash flow generation.

We expect to target acquisitions as a viable opportunity to gain access to new product groups and customer channels, and increase penetration of existing markets.

We may also pursue acquisitions that diversify the Company within the outdoor enthusiast markets.

To the extent we pursue future acquisitions, we intend to focus on enthusiast brands with recurring revenue, sustainable margins and strong cash flow generation.

We anticipate financing future acquisitions prudently through a combination of cash on hand, operating cash flow, bank financings, and capital markets offerings.

Competitive Strengths

Authentic Portfolio of Iconic Super Fan Brands.

Authentic Portfolio of Iconic Enthusiast Brands.

We believe that our brands are iconic among devoted, active-outdoor enthusiasts with a strong reputation for innovation, style, quality, design, safety and durability.

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● Since 1957, our Black Diamond brand has been a global innovator in activity-based climbing, skiing, and mountain sports equipment.

 Our Sierra brand was founded in 1947 and, we believe, represents the most precise and accurate bullets and ammunition available for the hunting and sport shooting enthusiast.

 Our Barnes brand was founded in 1932 and produces some of the most technologically advanced lead- free bullets and premium ammunition.

● Our Rhino-Rack brand was founded in 1992 and has become well-respected and widely recognized for outdoor enthusiasts.

● Our MAXTRAX brand was founded in 2005 and has become the market leader in recovery boards for overlanding enthusiasts.

● Our TRED brand was founded in 2012 and offers high-quality, reliable outdoor and recovery gear for the offroad, 4x4 automotive touring, camping and caravanning markets.

Our brands also appeal to everyday customers seeking high-quality products for outdoor or urban and suburban living.

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Black Diamond Equipment is a global innovator in climbing, skiing and mountain sports equipment enabling peak performance for outdoor enthusiasts.

Employing approximately 70 engineers, the brand is synonymous with innovation, performance, safety and durability.

The brand is synonymous with innovation, performance, safety and durability.

Headquartered in Salt Lake City at the base of the Wasatch Mountains, Black Diamond products are created and tested locally on its alpine peaks, slopes, crags and trails.

Continuously recognized as an industry-leading innovator, Black Diamond has received over 500 industry awards over five years, including over 157 product awards in 2023 alone.

Headquartered in Sydney, Australia, Rhino-Rack has been a widely recognized, premier aftermarket automotive roof rack and accessories brand since 1992 with a leading market position in Australia.

Best known for its “north/south” roof rack design, Rhino-Rack’s product offering includes roof racks, luggage carriers, shade awnings, kayak carriers, bike carriers and load-securing accessories.

Rhino-Rack has a long track record of launching new, innovative products with state-of-the-art engineering serving and enhancing the outdoor enthusiast’s overlanding experience.

Rhino-Rack has a clearly defined growth strategy, underpinned by access to Clarus’ go-to-market playbook and key customer relationships.

Specifically, we believe there is significant opportunity to capture market share and further enhance brand awareness in North America, and globally, through partner and direct ecommerce growth, expansion of the dealer network and new distribution and brand-building partnerships.

Founded in 2005, MAXTRAX is considered the creator of the vehicle recovery board.

MAXTRAX has developed a product lineup consisting of high-quality vehicle recovery and extraction tracks, including its original MAXTRAX MKII recovery track.

All MAXTRAX vehicle recovery tracks are manufactured in Australia using its proprietary, Australian-sourced, engineering-grade and fiber-reinforced nylon.

MAXTRAX currently sells its products around the world to distributors, retailers, government agencies, third-party e-commerce sites and through its own website.

Founded in 2012, TRED, which stands for Totally Reliable Explorer Driven, is designed and built for the “Seriously Adventurous” and is passionately supported by customers and consumers who live and breathe the lifestyle.

TRED’s products, which are synonymous with quality and engineering, are all made in Australia using Australian-sourced and tested high-grade materials.

TRED is a trusted brand for key retailers and distributors primarily in Australia, with a growing export market including Canada, the Middle East, New Zealand, South Africa, and the U.S.

Precision Sport

The activities of the Precision Sport segment have been segregated and reported as discontinued operations for all periods presented.

See Note 3 to our consolidated financial statements for financial information regarding discontinued operations.

Sierra Bullets is dedicated to manufacturing the highest-quality, most accurate bullets and ammunition in the world.

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Sierra’s bullets and ammunition are used for precision target shooting, hunting and defense purposes.

Sierra's products have cultivated a significant consumer following recognized by iconic “green box” packaging and include globally recognized bullet brands such as Sierra® MatchKing®, Sierra® GameKing® and Sierra® BlitzKing® and ammunition brands such as GameChanger®, Prairie Enemy TM , Outdoor Master® and Sport Master®.

Sierra’s products have cultivated a significant consumer following recognized by iconic “green box” packaging and include globally recognized bullet brands such as Sierra® MatchKing®, Sierra® GameKing® and Sierra® BlitzKing® and ammunition brands such as GameChanger®, Prairie Enemy TM , Outdoor Master® and Sport Master®.

Barnes Bullets is an industry leader in all-copper bullet technology and innovation.

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This reputation is defined by innovative design, advanced manufacturing techniques and a core focus on the end-user.

As a result, Barnes has generated a strong consumer following supported by its globally recognized bullet brands such as Barnes® TSX®, X Bullet®, Varmint Grenade® and Expander® and

ammunition brands VOR-TX® and TAC-XPD®.

As a result, Barnes has generated a strong consumer following supported by its globally recognized bullet brands such as Barnes® TSX®, X Bullet®, Varmint Grenade® and Expander® and ammunition brands VOR-TX® and TAC-XPD®.

With its products being sold through its online store, a variety of retailers and international distributors, Barnes’ customers include hunters, range shooters, military and law enforcement professionals around the world.

Headquartered in Sydney, Australia, Rhino-Rack has been a widely recognized, premier aftermarket automotive roof rack and accessories brand since 1992 with a leading market position in Australia.

Employing approximately 20 engineers, Rhino-Rack has a long track record of launching new, innovative products with state-of-the-art engineering serving and enhancing the outdoor enthusiast’s overlanding experience.

Rhino-Rack has a clearly defined growth strategy, underpinned by access to Clarus’ go-to-market playbook and key customer relationships.

Founded in 2005, MAXTRAX is considered the creator of the vehicle recovery board.

MAXTRAX has developed a product lineup consisting of high-quality vehicle recovery and extraction tracks, including its original MAXTRAX MKII recovery track.

All MAXTRAX vehicle recovery tracks are manufactured in Australia using its proprietary, Australian-sourced, engineering-grade and fiber-reinforced nylon.

MAXTRAX currently sells its products around the world to distributors, retailers, government agencies, third-party e-commerce sites and through its own website.

Product Innovation and Development Capabilities at Clarus .

We have a long history of technical innovation and product development, with over 300 patents and over 100 patents pending worldwide.

We have a long history of technical innovation and product development.

Our employees’ passion and intimacy with our core outdoor activities generates new and boundary-pushing concepts and products, which we believe provides a significant advantage that will drive our Company to new levels.

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We believe that our vertically integrated design and development process and enthusiastic employee base provide us with a competitive advantage to continue to drive future innovation for our Company and the markets we serve.

Our innovation pipeline is supported by approximately 120 engineers and additional quality control employees / associates.

Experienced and Incentivized Senior Management Team.

The members of our Board of Directors and our executive officers, including Mr.

Warren Kanders, are substantial stockholders of the Company, and beneficially own approximately 24.3% of our outstanding common stock as of February 22, 2023, which we believe aligns the interests of our Board of Directors and our executive officers with that of our stockholders.

Warren Kanders, are substantial stockholders of the Company, and beneficially own approximately 20.2% of our outstanding common stock as of March 4, 2024, which we believe aligns the interests of our Board of Directors and our executive officers with that of our stockholders.

Growth-oriented Capital Structure.

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Operating Segments

We operate our business structure within three segments.

We operated our business within three segments until the sale of the Precision Sport segment on February 29, 2024.

After the sale of the Precision Sport segment, we will operate the business within two segments.

These segments are defined based on the internal financial reporting used by our chief operating decision maker to allocate resources and assess performance.

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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, which includes Black Diamond Equipment and PIEPS, 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:

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headlamps and lanterns;

and skincare and other sport-enhancing products.

and gloves and mittens.

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.

● Our Adventure segment, which includes Rhino-Rack, MAXTRAX and TRED, 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.

See Note 18 to our consolidated financial statements for financial information regarding our segments.

Our products span 36 single product categories and include a wide variety of technical outdoor equipment and lifestyle products for a wide range of outdoor enthusiasts, including climbers, mountaineers, trail runners, skiers, backpackers and campers, competitive shooters, hunters and other outdoor-inspired consumers.

Also, see Note 3 to our consolidated financial statements for financial information regarding our Precision Sport segment which is now classified as discontinued operations.

Our products span a large assortment of product categories and include a wide variety of technical outdoor equipment and lifestyle products for a wide range of outdoor enthusiasts, including climbers, mountaineers, trail runners, skiers, backpackers and campers, competitive shooters, hunters and other outdoor-inspired consumers.

We design many of our products for extreme applications, such as high-altitude mountaineering, ice and rock climbing, as well as backcountry skiing and alpine touring.

We also manufacture high-quality bullets and ammunition with the tightest tolerances in the industry that enhance the performance of competitive shooters and hunters.

We also previously manufactured high-quality bullets and ammunition with the tightest tolerances in the industry that enhance the performance of competitive shooters and hunters.

We manufacture highly-engineered automotive roof racks, trays, mounting systems, luggage boxes, carriers, recovery tracks and accessories.

We have also developed skincare products, such as lotions, lip balm, and sunscreen, as well as sport-enhancing supplements, nutrition, and other products using natural, organic or alternative ingredients.

Generally, we divide our product offerings into the following three primary categories:

Our outdoor line consists of apparel, footwear, headlamps, lights, trekking poles, gloves, packs, avalanche airbags, poles, avalanche safety devices, and equipment such as carabiners, harnesses, protection devices, and various other climbing, mountaineering, hiking, and backcountry accessories and products.

Our outdoor line represented approximately 50% of our sales during the year ended December 31, 2022.

● Precision Sport:

Our precision sport line consists of premium quality high-precision bullets and ammunition used in competitive shooting, hunting and other applications and environments.

Our precision sport line represented approximately 29% of our sales during the year ended December 31, 2022.

Our former precision sport line consists of premium quality high-precision bullets and ammunition used in competitive shooting, hunting and other applications and environments.

Our adventure line consists of highly-engineered automotive roof racks, trays, mounting systems, luggage boxes, carriers, recovery tracks and accessories.

Our adventure line represented approximately 21% of our sales during the year ended December 31, 2022.

Product Design and Development

We conduct our product research, evaluation, and design activities at our locations in Salt Lake City, Utah;

Sedalia, Missouri;

Lebring, Austria;

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We expense research and development costs as incurred in selling, general, and administrative expenses.

As of December 31, 2022, we had 110 employees dedicated to research and development.

We market and distribute our products in over 50 countries, primarily through independent specialty stores and specialty chains, premium sporting goods and outdoor recreation stores, distributors and OEMs in the United States, Canada, Europe, Middle East, Asia, Australia, New Zealand, Africa, and South America.

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Our culture of continuous improvement and implementation of industry best practices allows us to continue to increase productivity, reduce costs, and bring new innovative products to the market.

The Black Diamond Equipment, PIEPS, Rhino-Rack, and MAXTRAX manufacturing and distribution operations are ISO 9001–2015 certified and are audited annually by an independent certifying agency to ensure quality management systems meet the requirements of ISO 9001–2015, and to ensure that certified products meet all necessary performance certification requirements.

Sierra and Barnes are members of the Sporting Arms & Ammunition Manufacturers’ Institute and employ best-in-class proprietary manufacturing processes with respect to each one of its products.

These processes are performed in-house and include control of bullet jacket wall concentricity utilizing strict quality control standards overseen by experienced employees, yielding what we believe to be the tightest tolerances in the industry.

We manufacture approximately 25% to 30% of our products, including nearly all protection devices for climbing and all bullets, in our facilities in the United States.

The remaining approximately 70% to 75% of our products are also manufactured to our specifications in third-party, independently-owned facilities.

The Black Diamond Equipment, PIEPS, and Rhino-Rack manufacturing and distribution operations are ISO 9001–2015 certified and are audited annually by an independent certifying agency to ensure quality management systems meet the requirements of ISO 9001–2015, and to ensure that certified products meet all necessary performance certification requirements.

We manufacture nearly all of the Black Diamond Equipment protection devices for climbing in our facilities in the United States.

All other products are manufactured to our specifications in third-party, independently-owned facilities.

We keep employees and agents on-site or via regular visits at these third-party, independently-owned facilities to ensure that our products are manufactured to meet our specifications.

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We source raw materials, components, finished goods from a variety of suppliers.

Our primary materials include copper, lead, aluminum, steel, nylon, corrugated cardboard for packaging, metal, plastic and electrical components, and various textiles, foams, and fabrics.

Our primary materials include aluminum, steel, nylon, corrugated cardboard for packaging, metal, plastic and electrical components, and various textiles, foams, and fabrics.

The raw materials and components used to manufacture our products are generally available from numerous suppliers in quantities sufficient to meet normal requirements.

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Our outdoor products and accessories, such as apparel, footwear, trekking poles, headlamps, gloves, backpacks, transceivers, protection, carabiners, helmets, and harnesses, compete with products from companies such as The North Face, Patagonia, La Sportiva, Prana, Hestra, Osprey, Arc’Teryx, Petzl, and Mammut.

Our highly-engineered automotive roof racks, trays, mounting systems, luggage boxes, carriers, recovery tracks and accessories compete with products from companies such as Thule, Dometic, Yakima, and Front Runner.

● Precision Sport:

We sell bullets and ammunition to both retailers and distributors for sale to consumers.

We supply bullets to OEMs who also manufacture bullets.

Our former Precision Sport segment sells bullets and ammunition to both retailers and distributors for sale to consumers as well as supplies bullets to OEMs who also manufacture bullets.

Such companies include Vista (Federal Ammunition, CCI, and Remington), Nammo, Hornady, Fiocchi, and Olin (Winchester).

In addition, in certain categories we compete with certain of our large wholesale customers who focus on the outdoor market, such as REI, Mountain Equipment Co-op and Decathlon, which manufacture, market and distribute their own climbing, mountaineering, and skiing products under their own private labels.

Intellectual Property

We believe our registered and pending word and icon trademarks worldwide, including the Black Diamond and Diamond “C” logos, Black Diamond®, ATC ®, Camalot®, AvaLung ®, FlickLock®, Ascension™, Time is Life®, Hexentric®, Stopper®, Dawn Patrol®, Bibler®, “Use.Design.Build.Engineer.Repeat”®, Sierra®, Sierra® MatchKing®, Sierra® GameKing®, Sierra® BlitzKing®, Barnes®, TSX®, X Bullet®, VOR-TX®, PIEPS®, Rhino-Rack®, and Maxtrax® create international brand recognition for our products.

Bibler®, “Use.Design.Build.Engineer.Repeat”®, PIEPS®, Rhino-Rack®, Maxtrax®, and TRED® create international brand recognition for our products.

Solely for convenience, our trademarks and tradenames referred to in this report may appear without the ® and ™ symbols, but those references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights, or the right of the applicable licensor to these trademarks and tradenames.

We believe our brands have an established reputation for innovation, style, quality, design, safety, and durability, and accordingly, we actively monitor and police our brands against infringement to ensure their viability and enforceability.

In addition to trademarks, we hold over 300 patents and over 100 patents pending worldwide for a wide variety of technologies across our product lines.

Our success with our proprietary products is generally derived from our “first mover” advantage in the market as well as our commitment to protecting our current and future proprietary technologies and products, which acts as a deterrent to infringement of our intellectual property rights.

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In addition, patent rights may not prevent our competitors from developing, using or selling products that are in similar product niches as ours.

The Company’s products are outdoor activity-based, however, there are not significant seasonal variations in sales and profitability.

In 2022, approximately 51% of our sales were in the first half of the year while approximately 49% of our sales occurred in the second half of the year.

While the Company’s products are outdoor activity-based, there are no significant seasonal variations in sales and profitability.

In 2023, approximately 45% of our sales from continuing operations were in the first half of the year while approximately 55% of our sales from continuing operations occurred in the second half of the year.

Working capital requirements vary throughout the year.

Working capital generally increases to support peak manufacturing and shipping periods and then decreases as accounts receivable are collected.

However, throughout 2022, the Company leveraged our balance sheet to secure additional inventory across all of our brands to ensure the right inventory is available to meet customer demand.

However, throughout 2023, the Company leveraged our balance sheet to secure additional inventory across all of our brands to ensure the right inventory was available to meet customer demand.

Environmental Matters

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Regulatory Matters

The manufacture, sale, and purchase of ammunition by our Precision Sport segment are subject to extensive federal, state, local, and foreign governmental laws.

Our Precision Sport segment is also subject to the rules and regulations of the US Bureau of Alcohol, Tobacco, Firearms and Explosives (“ATF”) and various state and international agencies that control the manufacture, export, import, distribution and sale of firearms, explosives, and ammunition.

Such regulations may adversely affect demand for the products sold by our Precision Sport segment by imposing limitations that increase the costs or limit the availability of its products.

The failure to comply with applicable rules and regulations may result in the limitation of our growth or business activities and could result in the revocation of licenses necessary for business conducted by the Precision Sport segment.

Applicable laws and regulations provide for the following:

 require the licensing of all persons manufacturing, exporting, importing, or selling ammunition as a business;

 require serialization, labeling, and tracking of the acquisition and disposition of certain types of ammunition;

 regulate the interstate sale of certain ammunition

 restrict or prohibit the ownership, use, or sale of specified categories of ammunition;

 require registries of so-called “ballistic images” of ammunition fired from new guns;

 govern the sale, export, and distribution of ammunition;

 regulate the use and storage of gun powder or other energetic materials;

 regulate the employment of personnel with certain criminal convictions;

 restrict access to ammunition manufacturing facilities for certain individuals from other countries or with criminal convictions;

 require compliance with International Traffic in Arms Regulations

The handling of our technical data and the international sale of products sold by our Precision Sport segment may also be regulated by the U.S.

Department of State and Department of Commerce.

These agencies can impose civil and criminal penalties, including denying the export of the products sold by our Precision Sport segment, for failure to comply with applicable laws and regulations.

Bills have been introduced in Congress to establish, and to consider the feasibility of establishing, a nationwide database recording so-called “ballistic images” of ammunition fired from new guns.

Should such a mandatory database be established, the cost to us, our distributors, and our customers could be significant, depending on the type of firearms and ballistic information included in the database.

Bills have been introduced in Congress in the past several years that would affect the manufacture and sale of ammunition, including bills to regulate its manufacture, importation, and sale.

We believe that existing federal, state, and local legislation relating to the regulation of firearms and ammunition have not had a material adverse effect on our sales of these products.

However, the regulation of firearms and ammunition may become more restrictive in the future, and any such developments might have a material adverse effect on our business, operating results, financial condition, and cash flows.

In addition, regulatory proposals, even if never enacted, may affect firearms or ammunition sales as a result of consumer perceptions.

In addition, our SKINourishment business is subject to substantial government regulation.

Our SKINourishment business is subject to substantial government regulation.

This government regulation includes regulation in the United States and other countries regarding the research, development, formulation, manufacture and marketing of our SKINourishment skincare products.

Human Capital

As of December 31, 2022 , we had a total of over 900 employees worldwide.

As of December 31, 2023, our continuing operations had a total of over 500 employees worldwide.

Of these employees, 80 were engaged in manufacturing, 250 in sales, marketing, product management and customer support, 60 in administrative functions (IT, Finance, HR, Legal and Compliance, etc.), 100 in R&D, engineering technology, manufacturing engineering and project management, 40 retail store associates and 20 in various executive and corporate functions.

22 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-K

Item 1. Business