What changed in this filing

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Item 1. Financial Statements

2024-08-01 compared with 2024-05-02 · 262 added, 157 removed, 554 unchanged (43% of the section changed)

3 unchanged sentences

(In thousands, except per share amounts)

March 31, 2024

June 30, 2024

December 31, 2023

19 unchanged sentences

Total current liabilities

Long-term debt, net

Deferred income taxes

15 unchanged sentences

CLARUS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands, except per share amounts)

Three Months Ended

March 31, 2024

March 31, 2023

June 30, 2024

June 30, 2023

Domestic sales

9 unchanged sentences

Operating loss

Interest income, net

Total other income, net

Loss before income tax

Income tax benefit

Loss from continuing operations

Discontinued operations, net of tax

Other comprehensive income (loss), net of tax:

Foreign currency translation adjustment

Unrealized gain on hedging activities

Other comprehensive income (loss)

Comprehensive loss

Loss from continuing operations per share:

Net loss per share:

Weighted average shares outstanding:

See accompanying notes to condensed consolidated financial statements .

CLARUS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands, except per share amounts)

Six Months Ended

June 30, 2024

June 30, 2023

Domestic sales

International sales

Cost of goods sold

Operating expenses

Selling, general and administrative

Restructuring charges

Transaction costs

Contingent consideration benefit

Legal costs and regulatory matter expenses

Total operating expenses

Operating loss

Other (expense) income

Interest income, net

Total other (expense) income, net

Total other income, net

Loss before income tax

2 unchanged sentences

Discontinued operations, net of tax

Net income (loss)

Other comprehensive loss, net of tax:

2 unchanged sentences

Other comprehensive loss

Comprehensive income

Comprehensive income (loss)

Loss from continuing operations per share:

Net income per share:

Net income (loss) per share:

Weighted average shares outstanding:

3 unchanged sentences

(In thousands)

Three Months Ended

March 31, 2024

March 31, 2023

Six Months Ended

June 30, 2024

June 30, 2023

Cash Flows From Operating Activities:

Adjustments to reconcile net income to net cash (used in) provided by operating activities:

Net income (loss)

Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:

Depreciation of property and equipment

2 unchanged sentences

Amortization of debt issuance costs

(Gain) loss on disposition of property and equipment

Gain on disposition of property and equipment

Noncash lease expense

2 unchanged sentences

Deferred income taxes

Changes in operating assets and liabilities, net of acquisitions:

Changes in operating assets and liabilities, net of disposition:

Accounts receivable

15 unchanged sentences

Purchase of treasury stock

Proceeds from exercise of options

Cash dividends paid

24 unchanged sentences

Balance, March 31, 2023

Other comprehensive loss

Cash dividends ($ 0.025 per share)

Purchase of treasury stock

Stock-based compensation expense

Proceeds from exercise of options

Balance, June 30, 2023

Treasury Stock

8 unchanged sentences

Balance, March 31, 2024

Other comprehensive income

Cash dividends ($ 0.025 per share)

Stock-based compensation expense

Proceeds from exercise of options

Balance, June 30, 2024

See accompanying notes to condensed consolidated financial statements .

3 unchanged sentences

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 March 31, 2024 and December 31, 2023 and for the three months ended March 31, 2024 and 2023, 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.

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, 2024 and December 31, 2023 and for the three and six months ended June 30, 2024 and 2023, 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 months ended March 31, 2024 are not necessarily indicative of the results to be obtained for the year ending December 31, 2024.

The results for the three and six months ended June 30, 2024 are not necessarily indicative of the results to be obtained for the year ending December 31, 2024.

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, 2023, filed with the Securities and Exchange Commission (the “SEC”) on March 7, 2024.

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 enthusiast markets.

Headquartered in Salt Lake City, Utah, we are a global leader in the design and development of best-in-class equipment and lifestyle products for outdoor enthusiasts.

Driven by our rich history of engineering and innovation, our objective is to provide safe, simple, effective and beautiful products so that our customers can maximize their outdoor pursuits and adventures.

Each of our brands has a long history of continuous product innovation for core and everyday users alike.

8 unchanged sentences

Certain reclassifications have been made to prior period financial statements to conform to the current period presentation.

Specifically, legal costs associated with specific legal matters which were recorded in selling, general, and administrative expenses are now presented in legal costs and regulatory matter expenses in the consolidated statements of comprehensive income.

See Note 16 for discussion regarding legal matters.

On September 13, 2023, Clarus entered into a Share Purchase Agreement (the “TRED Purchase Agreement”) to acquire TRED Outdoors Pty Ltd.

(“TRED”), which subsequently closed on October 9, 2023.

All United States dollar amounts contained herein are based on the exchange rates in effect for Australian dollars ($AUD) and the market value of the Company’s common stock at the time of closing of the acquisition of TRED (the “TRED Acquisition”).

Recent Accounting Pronouncements

Accounting Pronouncements issued and not yet adopted

In November 2023, the FASB issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures , which requires a public entity to disclose significant segment expenses and other segment items on an annual and interim basis and provide in interim periods all disclosures about a reportable

CLARUS CORPORATION

1 unchanged sentence

(in thousands, except per share amounts)

segment’s profit or loss and assets that are currently required annually.

The amendments in ASU 2023-07 are effective for all public entities for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

Early adoption is permitted.

The Company is currently evaluating the enhanced disclosure requirements, however it does not anticipate a material change to the consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures , which requires a public entity to disclose in its rate reconciliation table additional categories of information about federal, state and foreign income taxes and provide more details about the reconciling items in some categories if items meet a quantitative threshold.

The guidance will require all entities to disclose income taxes paid, net of refunds, disaggregated by federal (national), state and foreign taxes for annual periods and to disaggregate the information by jurisdiction based on a quantitative threshold.

The guidance makes several other changes to the disclosure requirements.

All entities are required to apply the guidance prospectively, with the option to apply it retrospectively.

The guidance is effective for public business entities for fiscal years beginning after December 15, 2024.

Early adoption is permitted.

The Company is currently evaluating the enhanced disclosure requirements, however it does not anticipate a material change to the consolidated financial statements.

On September 13, 2023, Clarus entered into a Share Purchase Agreement (the “TRED Purchase Agreement”) to acquire TRED Outdoors Pty Ltd.

(“TRED”), which subsequently closed on October 9, 2023.

The Company acquired TRED for an aggregate purchase price of $AUD 10,741 (approximately $ 6,849 ), subject to a post-closing adjustment, comprised of $AUD 8,875 (approximately $ 5,659 ) cash, 179 shares of the Company’s common stock valued at $ 1,069 , and additional consideration described below.

The TRED Purchase Agreement provides for the payment of additional contingent consideration of up to $AUD 1,000 (approximately $ 638 ) in cash upon the satisfaction of certain net sales targets (the “TRED Contingent Consideration”).

The Company estimated the initial fair value of the TRED Contingent Consideration to be $AUD 189 (approximately $ 121 ) and has recorded this liability within accrued liabilities.

See Note 11 for discussion regarding the valuation of the TRED Contingent Consideration as of March 31, 2024.

The Company estimated the initial fair value of the TRED Contingent Consideration to be $AUD 189 (approximately $ 121 ) and recorded this liability within accrued liabilities.

See Note 11 for discussion regarding the valuation of the TRED Contingent Consideration as of June 30, 2024.

The acquisition was accounted for as a business combination.

40 unchanged sentences

DISCONTINUED OPERATIONS

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”).

The Precision Sport segment is engaged in the business of designing, developing, manufacturing, and marketing bullets and ammunition to the military, law enforcement, and commercial/consumer markets.

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, comprised of the Company’s subsidiaries Sierra and 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”).

The Precision Sport segment engaged in the business of designing, developing, manufacturing, and marketing bullets and ammunition to the military, law enforcement, and commercial/consumer markets.

Under the terms of the Precision Sport Purchase Agreement, the Buyer agreed to pay $ 175,000 in cash, which is subject to a customary working capital adjustment.

The Company received $ 175,674 in cash under the terms of the Precision Sport Purchase Agreement, which included a preliminary working capital adjustment.

As of March 31, 2024, the working capital adjustment had not been finalized.

As of June 30, 2024, the working capital adjustment had not been finalized, and the Company is disputing Bullseye Acquisitions, LLC’s proposed determination of the final working capital adjustment.

The Company recognized a pre-tax gain on such sale of $ 40,585 .

21 unchanged sentences

Three Months Ended

March 31, 2024

March 31, 2023

Six Months Ended

June 30, 2024

June 30, 2023

June 30, 2024

June 30, 2023

Cost of goods sold

8 unchanged sentences

Income from discontinued operations, net of tax

CLARUS CORPORATION

1 unchanged sentence

(in thousands, except per share amounts)

discontinued operations in our condensed consolidated financial statements for the three months ended March 31, 2024 and 2023.

In connection with the sale of the Precision Sport segment, all interest expense related to outstanding debt that was required to be repaid with the proceeds received from the sale pursuant to the terms of the Company’s credit facility is allocated to discontinued operations in our condensed consolidated financial statements for the three and six months ended June 30, 2024 and 2023.

Summarized cash flow information for the Precision Sport segment discontinued operations are as follows:

Three Months Ended

March 31, 2024

March 31, 2023

Six Months Ended

June 30, 2024

June 30, 2023

Depreciation of property and equipment

2 unchanged sentences

Purchase of property and equipment

Inventories, as of March 31, 2024 and December 31, 2023, were as follows:

March 31, 2024

Inventories, as of June 30, 2024 and December 31, 2023, were as follows:

June 30, 2024

December 31, 2023

3 unchanged sentences

PROPERTY AND EQUIPMENT

Property and equipment, net, as of March 31, 2024 and December 31, 2023, were as follows:

March 31, 2024

Property and equipment, net, as of June 30, 2024 and December 31, 2023, were as follows:

June 30, 2024

December 31, 2023

5 unchanged sentences

Less accumulated depreciation

Depreciation expense for continuing operations for the three months ended March 31, 2024 and 2023 was $ 1,026 and $ 939 , respectively.

Depreciation expense for continuing operations for the three months ended June 30, 2024 and 2023 was $ 1,045 and $ 1,080 , respectively, and for the six months ended June 30, 2024 and 2023 was $ 2,071 and $ 2,019 , respectively.

CLARUS CORPORATION

6 unchanged sentences

Impact of foreign currency exchange rates

Balance at March 31, 2024

Balance at June 30, 2024

Indefinite-Lived Intangible Assets

2 unchanged sentences

Impact of foreign currency exchange rates

Balance at March 31, 2024

Trademarks classified as indefinite-lived intangible assets by brand as of March 31, 2024 and December 31, 2023, were as follows:

March 31, 2024

Balance at June 30, 2024

Trademarks classified as indefinite-lived intangible assets by brand as of June 30, 2024 and December 31, 2023, were as follows:

June 30, 2024

December 31, 2023

3 unchanged sentences

Gross balance at December 31, 2023

Disposal of fully amortized other intangible assets

Impact of foreign currency exchange rates

Gross balance at March 31, 2024

Gross balance at June 30, 2024

CLARUS CORPORATION

1 unchanged sentence

(in thousands, except per share amounts)

Other intangible assets, net of amortization as of March 31, 2024 and December 31, 2023, were as follows:

March 31, 2024

Other intangible assets, net of amortization as of June 30, 2024 and December 31, 2023, were as follows:

June 30, 2024

Accumulated Amortization

10 unchanged sentences

Core technologies

Amortization expense for continuing operations for the three months ended March 31, 2024 and 2023, was $ 2,449 and $ 2,768 , respectively.

Future amortization expense for other intangible assets as of March 31, 2024 is as follows:

Amortization expense for continuing operations for the three months ended June 30, 2024 and 2023, was $ 2,451 and $ 2,714 , respectively, and for the six months ended June 30 2024 and 2023 was $ 4,900 and $ 5,482 , respectively.

Future amortization expense for other intangible assets as of June 30, 2024 is as follows:

Years Ending December 31,

Amortization Expense

2024 (excluding the three months ended March 31, 2024)

2024 (excluding the six months ended June 30, 2024)

CLARUS CORPORATION

2 unchanged sentences

ACCRUED LIABILITIES AND OTHER LONG-TERM LIABILITIES

Accrued liabilities as of March 31, 2024 and December 31, 2023, were as follows:

March 31, 2024

Accrued liabilities as of June 30, 2024 and December 31, 2023, were as follows:

June 30, 2024

December 31, 2023

6 unchanged sentences

Contingent consideration liabilities

Accrued CPSC regulatory matter

Restructuring liabilities

Other long-term liabilities as of March 31, 2024 and December 31, 2023, were as follows:

March 31, 2024

Other long-term liabilities as of June 30, 2024 and December 31, 2023, were as follows:

June 30, 2024

December 31, 2023

1 unchanged sentence

LONG-TERM DEBT

Long-term debt as of March 31, 2024 and December 31, 2023, was as follows:

March 31, 2024

Long-term debt as of June 30, 2024 and December 31, 2023, was as follows:

June 30, 2024

December 31, 2023

2 unchanged sentences

Term loan (c)

Debt issuance costs

Less current portion

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

(a) On February 29, 2024, upon the closing of the disposition of the Precision Sport segment, the Company terminated and paid off amounts outstanding under the revolving credit facility in full.

The Company paid interest monthly on any borrowings on the Restated Credit Agreement.

As of December 31, 2023, the interest rates ranged between approximately 7.7 % and 9.8 % .

(b) Foreign subsidiaries of the Company had term debt with financial institutions, which was repaid as of June 30, 2024.

The foreign subsidiaries paid interest monthly on any borrowings on the credit facility as well as monthly

CLARUS CORPORATION

1 unchanged sentence

(in thousands, except per share amounts)

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.

In conjunction with the Precision Sport Purchase Agreement dated December 29, 2023, all balances owing the lenders and the Administrative Agent were required to be paid off contemporaneously with the closing of the disposition of the Precision Sport segment which occurred on February 29, 2024.

Accordingly, all debt obligations were classified as current as of December 31, 2023 and were settled on February 29, 2024.

(a) On February 29, 2024, upon the closing of the disposition of the Precision Sport segment, the Company terminated and paid off amounts outstanding under the revolving credit facility in full.

The Company pays interest monthly on any borrowings on the Restated Credit Agreement.

As of December 31, 2023, the interest rates ranged between approximately 7.7 % and 9.8 % .

(b) Foreign subsidiaries of the Company term debt with financial institutions, which mature between August 8, 2024 and February 27, 2027.

The foreign subsidiaries paid interest monthly on any borrowings on the credit facility as well as monthly payments on the term debt.

As of March 31, 2024, the interest rates ranged between approximately 3.2 % and 7.0 % and as of December 31, 2023, the interest rate was approximately 3.2 % .

The term debt is secured by certain assets of the foreign subsidiaries.

payments on the term debt.

As of December 31, 2023, the interest rate was approximately 3.2 % .

The term debt was secured by certain assets of the foreign subsidiaries.

(c) On February 29, 2024, upon the closing of the disposition of the Precision Sport segment, the Company terminated and paid off amounts outstanding under the term loan in full.

The Company pays interest monthly on any borrowings on the Restated Credit Agreement.

The Company paid interest monthly on any borrowings on the Restated Credit Agreement.

As of December 31, 2023, the rate was approximately 7.7 % .

5 unchanged sentences

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 March 31, 2024, the Company’s derivative contracts had remaining maturities of less than one year .

At June 30, 2024, 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 all contracts with that counterparty.

As of March 31, 2024, there was no such exposure to the counterparties.

The Company’s exposure of counterparty credit risk is limited to the aggregate unrealized gain of $ 300 on all contracts as of March 31, 2024.

As of June 30, 2024, there was no such exposure to the counterparties.

The Company’s exposure of counterparty credit risk is limited to the aggregate unrealized gain of $ 344 on all contracts as of June 30, 2024.

The Company’s derivative counterparties have strong credit ratings and as a result, the Company does not require collateral to facilitate transactions.

CLARUS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(in thousands, except per share amounts)

The Company held the following contracts designated as hedging instruments as of March 31, 2024 and December 31, 2023:

March 31, 2024

The Company held the following contracts designated as hedging instruments as of June 30, 2024 and December 31, 2023:

June 30, 2024

Foreign exchange contracts - Canadian Dollars

8 unchanged sentences

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 $ 81 and $( 16 ) were reclassified to sales during the three months ended March 31, 2024 and 2023, respectively.

The following table presents the balance sheet classification and fair value of derivative instruments as of March 31, 2024 and December 31, 2023:

Gains (losses) of $ 136 and ($ 43 ) were reclassified to sales during the three months ended June 30, 2024 and 2023, respectively, and $ 217 and ($ 59 ) were reclassified to sales during the six months ended June 30, 2024 and 2023, respectively.

CLARUS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(in thousands, except per share amounts)

The following table presents the balance sheet classification and fair value of derivative instruments as of June 30, 2024 and December 31, 2023:

Classification

March 31, 2024

June 30, 2024

December 31, 2023

7 unchanged sentences

Other long-term liabilities

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, 2024:

Foreign Currency Translation Adjustments

Unrealized Gains (Losses) on Cash Flow Hedges

Balance as of March 31, 2024

Other comprehensive income before reclassifications

Amounts reclassified from other comprehensive loss

Net current period other comprehensive income

Balance as of June 30, 2024

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

Balance as of March 31, 2023

Other comprehensive loss before reclassifications

Amounts reclassified from other comprehensive loss

Net current period other comprehensive (loss) income

Balance as of June 30, 2023

CLARUS CORPORATION

1 unchanged sentence

(in thousands, except per share amounts)

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 March 31, 2024:

The following table sets forth the changes in AOCI, net of tax, for the six months ended June 30, 2024:

Foreign Currency Translation Adjustments

2 unchanged sentences

Other comprehensive (loss) income before reclassifications

Amounts reclassified from other comprehensive (loss) income

Amounts reclassified from other comprehensive loss

Net current period other comprehensive (loss) income

Balance as of March 31, 2024

The following table sets forth the changes in AOCI, net of tax, for the three months ended March 31, 2023:

Balance as of June 30, 2024

The following table sets forth the changes in AOCI, net of tax, for the six months ended June 30, 2023:

Foreign Currency Translation Adjustments

4 unchanged sentences

Net current period other comprehensive loss

Balance as of March 31, 2023

The effects on net income of amounts reclassified from unrealized gains (losses) on cash flow hedges for foreign exchange contracts for the three months ended March 31, 2024 and 2023, were as follows:

Gains (losses) reclassified from AOCI to the Consolidated Statements of Comprehensive Income

Balance as of June 30, 2023

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, 2024 and 2023, were as follows:

Gains (losses) reclassified from AOCI to the Consolidated Statements of Comprehensive Income (Loss)

Affected line item in the Consolidated

Three Months Ended

Statements of Comprehensive Income

March 31, 2024

March 31, 2023

Six Months Ended

Statements of Comprehensive Income (Loss)

June 30, 2024

June 30, 2023

June 30, 2024

June 30, 2023

Foreign exchange contracts:

12 unchanged sentences

Items Measured at Fair Value on a Recurring Basis

Assets and liabilities measured at fair value on a recurring basis at March 31, 2024 and December 31, 2023 were as follows:

March 31, 2024

Assets and liabilities measured at fair value on a recurring basis at June 30, 2024 and December 31, 2023 were as follows:

June 30, 2024

Designated forward exchange contracts

Contingent consideration liabilities

December 31, 2023

3 unchanged sentences

Derivative financial instruments are recorded at fair value based on current market pricing models.

No nonrecurring fair value measurements existed at March 31, 2024 and December 31, 2023.

No nonrecurring fair value measurements existed at June 30, 2024 and December 31, 2023.

The Company estimated the initial fair value of the contingent consideration liabilities primarily using the Monte-Carlo pricing model.

Significant unobservable inputs used in the valuation included a discount rate of 11.5 %.

Contingent consideration liabilities are subsequently remeasured at the estimated fair value at the end of each reporting period using

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 achievement,

CLARUS CORPORATION

1 unchanged sentence

(in thousands, except per share amounts)

financial projections of the acquired company, such as sales-based milestones and estimated probabilities of achievement, with the change in fair value recognized in contingent consideration benefit in the accompanying consolidated statements of comprehensive income for such period.

with the change in fair value recognized in contingent consideration benefit in the accompanying consolidated statements of comprehensive income (loss) 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.

1 unchanged sentence

Balance at December 31, 2023

Fair value adjustments

Impact of foreign currency exchange rates

Balance at March 31, 2024

Balance at June 30, 2024

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.

Our determination of fair value of the contingent consideration liabilities could change in future periods based on our ongoing evaluation of these significant unobservable inputs.

As of June 30, 2024, the net sales threshold required for the payment of the TRED contingent consideration is not expected to be met.

STOCKHOLDERS’ EQUITY

1 unchanged sentence

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 April 30, 2024 , the Company announced that its Board of Directors approved the payment on May 20, 2024 of the Quarterly Cash Dividend of $ 0.025 to the record holders of shares of the Company’s common stock as of the close of business on May 10, 2024 .

On July 30, 2024 , the Company announced that its Board of Directors approved the payment on August 19, 2024 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 9, 2024 .

EARNINGS (LOSS) PER SHARE

7 unchanged sentences

Three Months Ended

March 31, 2024

March 31, 2023

Six Months Ended

June 30, 2024

June 30, 2023

June 30, 2024

June 30, 2023

Weighted average shares outstanding - basic

3 unchanged sentences

Income from discontinued operations per share:

Net income per share:

For the three months ended March 31, 2024 and 2023, equity awards of 5,047 and 3,713 , respectively, were excluded from the calculation of earnings (loss) per share for these periods as they were anti-dilutive.

Net (loss) income per share:

For the three months ended June 30, 2024 and 2023, equity awards of 5,762 and 6,082 , respectively, and for the six months ended June 30, 2024 and 2023, equity awards of 5,405 and 6,058 , respectively, were excluded from the calculation of earnings (loss) per share for these periods as they were anti-dilutive.

STOCK-BASED COMPENSATION PLAN

4 unchanged sentences

Options Granted:

During the three months ended March 31, 2024, the Company issued stock options for an aggregate of 1,140 shares under the 2015 Plan to directors and employees of the Company.

All 1,140 options vest and become exercisable over a period of two years .

During the six months ended June 30, 2024, the Company issued stock options for an aggregate of 1,240 shares under the 2015 Plan to directors and employees of the Company.

Of the 1,240 options, 1,140 options vest and become exercisable over a period of two years and 100 vest in four equal consecutive quarterly tranches from the date of grant.

All of the issued stock options expire ten years from the date of the grant.

3 unchanged sentences

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 Three Months Ended March 31, 2024

Options Granted During the Six Months Ended June 30, 2024

Number of options

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Grant price (per share)

$ 6.75 - $ 6.81

Dividend yield

1.47 % - 1.48 %

Expected volatility (a)

50.3 % - 51.9 %

Risk-free interest rate

4.08 % - 4.57 %

Expected life (years) (b)

Weighted average fair value (per share)

$ 3.06 - $ 3.12

(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 three months ended March 31, 2024 was $ 3,486 , which will be recognized over the vesting period of the options.

The grant date fair value of the stock options granted during the six months ended June 30, 2024 was $ 3,798 , which will be recognized over the vesting period of the options.

Restricted Stock Awards Granted:

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The grant date fair value of the restricted stock awards was approximately $ 675 which will be amortized over the expected term of 2 years .

The total non-cash stock compensation expense for continuing operations related to restricted stock, stock options and stock awards recorded by the Company for the three months ended March 31, 2024 and 2023 was $ 1,178 and $ 1,286 , respectively.

For the three months ended March 31, 2024 and 2023, the majority of stock-based compensation costs were classified as selling, general and administrative expenses.

As of March 31, 2024, there were 1,152 unvested stock options and unrecognized compensation cost of $ 3,997 related to unvested stock options, as well as 1,600 unvested restricted stock awards and unrecognized compensation costs of $ 7,059 related to unvested restricted stock awards.

The total non-cash stock compensation expense for continuing operations related to restricted stock, stock options and stock awards recorded by the Company for the three months ended June 30, 2024 and 2023 was $ 1,528 and $ 1,486 , respectively, and for the six months ended June 30, 2024 and 2023 was $ 2,706 and $ 2,772 , respectively.

For the three and six months ended June 30, 2024 and 2023, the majority of stock-based compensation costs were classified as selling, general and administrative expenses.

As of June 30, 2024, there were 1,176 unvested stock options and unrecognized compensation cost of $ 3,604 related to unvested stock options, as well as 1,600 unvested restricted stock awards and unrecognized compensation costs of $ 6,159 related to unvested restricted stock awards.

RESTRUCTURING

Starting in 2023, the Company began incurring expenses to facilitate long-term sustainable growth through cost reduction actions, consisting of employee reductions, facility rationalization and contract termination costs.

During the three months ended March 31, 2024 and 2023, the Company incurred $ 370 and $ 0 , respectively, of restructuring charges related to these actions.

During the three months ended June 30, 2024 and 2023, the Company incurred $ 161 and $ 736 , respectively, and during the six months ended June 30, 2024 and 2023, the Company incurred $ 531 and $ 736 , respectively, of restructuring charges related to these actions.

The Company has incurred $ 3,754 of cumulative restructuring charges since the commencement of restructuring actions in 2023.

The Company accrues for restructuring costs when they are probable and reasonably estimable.

These costs include severance costs, exit costs, and other restructuring costs and are included in Restructuring charges in the condensed consolidated statements of comprehensive income.

Severance costs primarily consist of severance benefits through payroll continuation, conditional separation costs and employer tax liabilities, while exit costs primarily consist

These costs include severance costs, exit costs, and other restructuring costs and are included in Restructuring charges in the condensed

CLARUS CORPORATION

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(in thousands, except per share amounts)

of lease exit and contract termination costs.

consolidated statements of comprehensive income (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.

Other costs consist primarily of costs related to the discontinuance of certain product lines and are distinguishable and directly attributable to the Company’s restructuring initiative and not a result of external market factors associated with the ongoing business.

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The Company anticipates completing these restructuring activities in 2025.

The following table summarizes the restructuring charges, payments and the remaining liabilities related to restructuring costs at March 31, 2024, which are included within accrued liabilities in the condensed consolidated balance sheets:

The following table summarizes the restructuring charges, payments and the remaining liabilities related to restructuring costs at June 30, 2024, which are included within accrued liabilities in the condensed consolidated balance sheets:

Balance at December 31, 2023

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Asset impairments

Balance at March 31, 2024

Balance at June 30, 2024

COMMITMENTS, CONTINGENCIES AND LEGAL MATTERS

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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, except for the U.S.

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 position, results of operations or cash flows, except for the U.S.

Consumer Product Safety Commission (“CPSC”) matter discussed below.

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It is possible that, as additional information becomes available, the Company may subsequently determine that it may incur losses from such contingencies materially in excess of the amounts initially accrued by the Company which could have a material adverse effect on the Company’s liquidity, stock price, consolidated financial position, results of operations and/or cash flows.

Legal expenses incurred in the ordinary course of business are included in selling, general, and administrative expenses in the consolidated statements of comprehensive income except as described below.

See Part II, Item 1.

“Legal Proceedings.”

Consumer Product Safety Commission

In January 2021, Black Diamond Equipment, Ltd.

(“BDEL”) wrote to the U.S.

Consumer Product Safety Commission (“CPSC”) outlining its new cradle solution for certain models of its avalanche beacon transceivers to prevent such

CLARUS CORPORATION

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(in thousands, except per share amounts)

transceivers from switching unexpectedly out of “send” mode.

Consumer Product Safety Commission

In January 2021, Black Diamond Equipment, Ltd.

(“BDEL”) wrote to the U.S.

Consumer Product Safety Commission (“CPSC”) outlining its new cradle solution for certain models of its avalanche beacon transceivers to prevent such transceivers from switching unexpectedly out of “send” mode.

The proposed new cradle solution was designed to improve transceiver safety by locking the transceiver into “send” mode prior to use so that it would not switch unexpectedly out of “send” mode.

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The CPSC ultimately disagreed with our position and the agency staff has restated their recommendation for the monetary penalties which the Company intends to strongly contest and vigorously defend against.

Walbrecht, the former President of BDEL and the Company, received a letter from the CPSC dated June 25, 2024 alleging that in his personal capacity he knowingly violated the Consumer Product Safety Act by failing to timely report that the beacons in question contained a defect.

The staff of the CPSC recommended a $ 5,000 fine against Mr.

Walbrecht personally.

Pursuant to the Company’s by-laws, the Company has agreed to indemnify Mr.

Walbrecht and advance his legal fees, and he has provided an undertaking to the Company that the Company will be entitled to recover those expenses if it is ultimately determined that he was not entitled to indemnification.

Based on currently available information, the Company believes an unfavorable outcome is probable, however, we cannot reasonably estimate on what terms or if this matter will be resolved.

During the three months ended March 31, 2024, the Company recorded a liability of $ 2,500 representing the low end of the range of our estimated exposure.

The Company does not have a better estimate of the loss therefore the low-end of the range was recorded as an accrued liability during the first quarter of 2024 and a corresponding expense is included in legal costs and regulatory matter expenses in the consolidated statements of comprehensive income.

We believe it is reasonably possible that a change in our ability to estimate the amount of loss could occur in the near term and that the change in the estimate could be material.

In addition, as this matter is ongoing, the Company is currently unable to predict its duration, resources required or outcome, or the impact it may have on the Company’s liquidity, financial condition, results of operations and/or cash flows.

Any penalties imposed by the CPSC or other regulators, could be costly to us and could damage our business and reputation as well as have a material adverse effect on the Company’s liquidity, stock price, consolidated financial position, results of operations and/or cash flows.

During the three months ended March 31, 2024 and 2023, the Company incurred legal expenses of $ 205 and $ 55 , respectively, in efforts to resolve this matter.

These legal expenses are included in legal costs and regulatory matter expenses in the consolidated statements of comprehensive income.

During the six months ended June 30, 2024, the Company recorded a liability of $ 2,500 representing the low end of the range of our estimated exposure.

The Company does not have a better estimate of the loss;

therefore the low-end of the range was recorded as an accrued liability during the first quarter of 2024 and a corresponding expense is included in legal costs and regulatory matter expenses in the consolidated statements of comprehensive income (loss).

CLARUS CORPORATION

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(in thousands, except per share amounts)

We believe it is reasonably possible that a change in our ability to estimate the amount of loss could occur in the near term and that the change in the estimate could be material.

During the three months ended June 30, 2024 and 2023, the Company incurred legal expenses of $ 180 and $ 107 , respectively, and during the six months ended June 30, 2024 and 2023, the Company incurred legal expenses of $ 385 and $ 163 , respectively, in efforts to resolve this matter.

These legal expenses are included in legal costs and regulatory matter expenses in the consolidated statements of comprehensive income (loss).

Clarus Corporation against HAP Trading, LLC and Harsh A.

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On March 8, 2024, the Company filed a lawsuit in the United States District Court for the Southern District of New York against Caption Management, LLC, Caption Partners II LP, Caption GP, LLC, William Cooper and Jason Strasser (“Caption Management”), seeking disgorgement of profits from transactions in the Company’s stock and related derivative securities in violation of Section 16(b) of the Securities Exchange Act of 1934, as amended.

During the three months ended March 31, 2024, and 2023, the Company incurred legal expenses of $ 297 and $ 73 , respectively, in the efforts to bring the cases against HAP Trading and Caption Management to trial.

These legal expenses are included in legal costs and regulatory matter expenses in the consolidated statements of comprehensive income.

During the three months ended June 30, 2024, and 2023, the Company incurred legal expenses of $ 219 and $ 248 , respectively, and during the six months ended June 30, 2024 and 2023, the Company incurred legal expenses of $ 516 and $ 320 , respectively, in the efforts to bring the cases against HAP Trading and Caption Management to trial.

These legal expenses are included in legal costs and regulatory matter expenses in the consolidated statements of comprehensive income (loss).

The Company’s U.S.

federal statutory tax rate of 21 % and its foreign operations have statutory tax rates of approximately 23 % in Austria, 28 % in New Zealand, and 30 % in Australia.

The difference between the Company’s estimated effective tax rate of 11.6 % for the three months ended March 31, 2024, 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 shortfalls in the first quarter of 2024.

The difference between the Company’s estimated effective tax rate benefit of 24.4 % for the three months ended June 30, 2024, and the U.S.

federal statutory tax rate of 21 % was primarily due to the impact of stock compensation and research and experimentation expenditures and credits in the second quarter of 2024.

The difference between the Company’s estimated effective tax rate benefit of 18.0 % for the six months ended June 30, 2024, and the U.S.

federal statutory tax rate of 21 % was primarily due to the impact of stock compensation and research and experimentation expenditures and credits in the first half of 2024.

As of December 31, 2023, the Company’s gross deferred tax asset was $ 39,893 .

The Company has recorded a valuation allowance of $ 714 , resulting in a net deferred tax asset of $ 39,179 , before deferred tax liabilities of $ 34,434 .

The Company has provided a valuation allowance against a portion of the deferred tax assets as of March 31, 2024 and December 31, 2023, because the ultimate realization of those assets did not meet the more-likely-than-not criteria.

Part of the Company’s deferred tax assets consist of net operating loss carryforwards (“NOLs”) for federal tax purposes.

The Company has provided a valuation allowance against a portion of the deferred tax assets as of June 30, 2024 and December 31, 2023, because the ultimate realization of those assets did not meet the more-likely-than-not criteria.

Part of the Company’s

CLARUS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(in thousands, except per share amounts)

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.

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The need for a valuation allowance is reassessed at each interim reporting period.

As of June 30, 2024, we had approximately $ 17,000 in U.S.

net deferred tax assets.

These deferred tax assets are estimated to reverse into NOL carryforwards that can be used to offset taxable income and reduce income taxes payable in future periods.

At this time, we consider it more likely than not that we will have sufficient taxable income in future periods that will allow us to realize these deferred tax assets.

However, unless we can generate sufficient taxable income from our future operations, a valuation allowance to reduce our U.S.

deferred tax assets may be required, which would materially increase our expenses in the period the allowance is recognized and have a material adverse effect on our results of operations and consolidated financial position.

As of December 31, 2023, the Company had NOLs and research and experimentation credit for U.S.

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Federal income taxes.

CLARUS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(in thousands, except per share amounts)

NOLs available to offset taxable income, subject to compliance with Section 382 of the Code, begin to expire based upon the following schedule:

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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);

rock-climbing footwear and equipment (such

CLARUS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(in thousands, except per share amounts)

as carabiners, protection devices, harnesses, belay devices, helmets, and ice-climbing gear);

technical backpacks and high-end day packs;

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While there are multiple products sold, the terms and nature of revenue recognition policy is similar for all segments.

CLARUS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(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

March 31, 2024

March 31, 2023

Six Months Ended

June 30, 2024

June 30, 2023

June 30, 2024

June 30, 2023

Sales to external customers:

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Total sales to external customers

Segment operating income:

Total segment operating income

Segment operating (loss) income:

Total segment operating (loss) income

Corporate costs

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There were no intercompany sales between the Outdoor and Adventure segments for the periods presented.

Total assets by segment, as of March 31, 2024 and December 31, 2023, were as follows:

March 31, 2024

December 31, 2023

CLARUS CORPORATION

1 unchanged sentence

(in thousands, except per share amounts)

Total assets by segment, as of June 30, 2024 and December 31, 2023, were as follows:

June 30, 2024

December 31, 2023

Capital expenditures, depreciation and amortization by segment is as follows.

Three Months Ended

March 31, 2024

March 31, 2023

Six Months Ended

June 30, 2024

June 30, 2023

June 30, 2024

June 30, 2023

Capital expenditures:

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

What changed 10-Q

Item 1. Financial Statements