Clarus Corp 10-Q

ITEM 1. FINANCIAL STATEMENTS ​ CLARUS CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (In thousands, except per share amounts) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2024 December 31, 2023 Assets ​ ​ ​ ​ ​ Current assets ​ ​ ​ ​ ​ Cash $ 36,399 ​ $ 11,324 Accounts receivable, less allowance for ​ ​ ​ ​ ​ credit losses of $ 1,569 and $ 1,412 ​ 54,337 ​ ​ 53,971 Inventories ​ 93,147 ​ ​ 91,409 Prepaid and other current assets ​ 6,707 ​ ​ 4,865 Income tax receivable ​ 983 ​ ​ 892 Assets held for sale ​ - ​ ​ 137,284 Total current assets ​ 191,573 ​ ​ 299,745 ​ ​ ​ ​ ​ ​ Property and equipment, net ​ 17,171 ​ ​ 16,587 Other intangible assets, net ​ 34,366 ​ ​ 41,466 Indefinite-lived intangible assets ​ 59,040 ​ ​ 58,527 Goodwill ​ 39,632 ​ ​ 39,320 Deferred income taxes ​ 19,192 ​ ​ 22,869 Other long-term assets ​ 14,364 ​ ​ 16,824 Total assets $ 375,338 ​ $ 495,338 ​ ​ ​ ​ ​ ​ Liabilities and Stockholders’ Equity ​ ​ ​ ​ ​ Current liabilities ​ ​ ​ ​ ​ Accounts payable $ 12,677 ​ $ 20,015 Accrued liabilities ​ 23,325 ​ ​ 24,580 Income tax payable ​ - ​ ​ 805 Current portion of long-term debt ​ - ​ ​ 119,790 Liabilities held for sale ​ - ​ ​ 5,744 Total current liabilities ​ 36,002 ​ ​ 170,934 ​ ​ ​ ​ ​ ​ Deferred income taxes ​ 18,221 ​ ​ 18,124 Other long-term liabilities ​ 12,641 ​ ​ 14,160 Total liabilities ​ 66,864 ​ ​ 203,218 ​ ​ ​ ​ ​ ​ Stockholders’ Equity ​ ​ ​ ​ ​ Preferred stock, $ 0.0001 par value per share; 5,000 shares authorized; none issued ​ - ​ ​ - Common stock, $ 0.0001 par value per share; 100,000 shares authorized; 43,004 and 42,761 issued and 38,362 and 38,149 outstanding, respectively ​ 4 ​ ​ 4 Additional paid in capital ​ 696,021 ​ ​ 691,198 Accumulated deficit ​ ( 340,377 ) ​ ​ ( 350,739 ) Treasury stock, at cost ​ ( 33,114 ) ​ ​ ( 32,929 ) Accumulated other comprehensive loss ​ ( 14,060 ) ​ ​ ( 15,414 ) Total stockholders’ equity ​ 308,474 ​ ​ 292,120 Total liabilities and stockholders’ equity $ 375,338 ​ $ 495,338 ​ See accompanying notes to condensed consolidated financial statements. ​ 3 Table of Contents CLARUS CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS ) (Unaudited) (In thousands, except per share amounts) ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ September 30, 2024 September 30, 2023 ​ ​ ​ ​ ​ ​ Sales ​ ​ ​ ​ ​ Domestic sales $ 24,365 ​ $ 30,423 International sales ​ 42,750 ​ ​ 50,879 Total sales ​ 67,115 ​ ​ 81,302 ​ ​ ​ ​ ​ ​ Cost of goods sold ​ 43,618 ​ ​ 54,018 Gross profit ​ 23,497 ​ ​ 27,284 ​ ​ ​ ​ ​ ​ Operating expenses ​ ​ ​ ​ ​ Selling, general and administrative ​ 27,880 ​ ​ 28,404 Restructuring charges ​ 478 ​ ​ 1,076 Transaction costs ​ 103 ​ ​ 400 Legal costs and regulatory matter expenses ​ 394 ​ ​ 579 ​ ​ ​ ​ ​ ​ Total operating expenses ​ 28,855 ​ ​ 30,459 ​ ​ ​ ​ ​ ​ Operating loss ​ ( 5,358 ) ​ ​ ( 3,175 ) ​ ​ ​ ​ ​ ​ Other income (expense) ​ ​ ​ ​ ​ Interest income, net ​ 373 ​ ​ 19 Other, net ​ 1,164 ​ ​ ( 445 ) ​ ​ ​ ​ ​ ​ Total other income (expense), net ​ 1,537 ​ ​ ( 426 ) ​ ​ ​ ​ ​ ​ Loss before income tax ​ ( 3,821 ) ​ ​ ( 3,601 ) Income tax benefit ​ ( 664 ) ​ ​ ( 1,395 ) Loss from continuing operations ​ ( 3,157 ) ​ ​ ( 2,206 ) ​ ​ ​ ​ ​ ​ Discontinued operations, net of tax ​ - ​ ​ 942 ​ ​ ​ ​ ​ ​ Net loss ​ ( 3,157 ) ​ ​ ( 1,264 ) ​ ​ ​ ​ ​ ​ Other comprehensive income (loss), net of tax: ​ ​ ​ ​ ​ Foreign currency translation adjustment ​ 3,665 ​ ​ ( 3,539 ) Unrealized (loss) gain on hedging activities ​ ( 185 ) ​ ​ 401 Other comprehensive income (loss) ​ 3,480 ​ ​ ( 3,138 ) Comprehensive income (loss) $ 323 ​ $ ( 4,402 ) ​ ​ ​ ​ ​ ​ Loss from continuing operations per share: ​ ​ ​ ​ ​ Basic $ ( 0.08 ) ​ $ ( 0.06 ) Diluted ​ ( 0.08 ) ​ ​ ( 0.06 ) ​ ​ ​ ​ ​ ​ Net loss per share: ​ ​ ​ ​ ​ Basic $ ( 0.08 ) ​ $ ( 0.03 ) Diluted ​ ( 0.08 ) ​ ​ ( 0.03 ) ​ ​ ​ ​ ​ ​ Weighted average shares outstanding: ​ ​ ​ ​ ​ Basic ​ 38,352 ​ ​ 37,470 Diluted ​ 38,352 ​ ​ 37,470 ​ See accompanying notes to condensed consolidated financial statements . ​ 4 Table of Contents ​ ​ CLARUS CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited) (In thousands, except per share amounts) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended ​ September 30, 2024 ​ September 30, 2023 ​ ​ ​ ​ ​ ​ Sales ​ ​ ​ ​ ​ Domestic sales $ 75,583 ​ $ 80,545 International sales ​ 117,327 ​ ​ 128,972 Total sales ​ 192,910 ​ ​ 209,517 ​ ​ ​ ​ ​ ​ Cost of goods sold ​ 124,156 ​ ​ 134,148 Gross profit ​ 68,754 ​ ​ 75,369 ​ ​ ​ ​ ​ ​ Operating expenses ​ ​ ​ ​ ​ Selling, general and administrative ​ 84,176 ​ ​ 84,640 Restructuring charges ​ 1,009 ​ ​ 1,812 Transaction costs ​ 168 ​ ​ 459 Contingent consideration benefit ​ ( 125 ) ​ ​ ( 1,565 ) Legal costs and regulatory matter expenses ​ 3,795 ​ ​ 1,062 ​ ​ ​ ​ ​ ​ Total operating expenses ​ 89,023 ​ ​ 86,408 ​ ​ ​ ​ ​ ​ Operating loss ​ ( 20,269 ) ​ ​ ( 11,039 ) ​ ​ ​ ​ ​ ​ Other income (expense) ​ ​ ​ ​ ​ Interest income, net ​ 1,198 ​ ​ 32 Other, net ​ 669 ​ ​ ( 143 ) ​ ​ ​ ​ ​ ​ Total other income (expense), net ​ 1,867 ​ ​ ( 111 ) ​ ​ ​ ​ ​ ​ Loss before income tax ​ ( 18,402 ) ​ ​ ( 11,150 ) Income tax benefit ​ ( 3,290 ) ​ ​ ( 2,591 ) Loss from continuing operations ​ ( 15,112 ) ​ ​ ( 8,559 ) ​ ​ ​ ​ ​ ​ Discontinued operations, net of tax ​ 28,346 ​ ​ 6,802 ​ ​ ​ ​ ​ ​ Net income (loss) ​ 13,234 ​ ​ ( 1,757 ) ​ ​ ​ ​ ​ ​ Other comprehensive income (loss), net of tax: ​ ​ ​ ​ ​ Foreign currency translation adjustment ​ 1,167 ​ ​ ( 5,949 ) Unrealized gain on hedging activities ​ 187 ​ ​ 347 Other comprehensive income (loss) ​ 1,354 ​ ​ ( 5,602 ) Comprehensive income (loss) $ 14,588 ​ $ ( 7,359 ) ​ ​ ​ ​ ​ ​ Loss from continuing operations per share: ​ ​ ​ ​ ​ Basic $ ( 0.39 ) ​ $ ( 0.23 ) Diluted ​ ( 0.39 ) ​ ​ ( 0.23 ) ​ ​ ​ ​ ​ ​ Net income (loss) per share: ​ ​ ​ ​ ​ Basic $ 0.35 ​ $ ( 0.05 ) Diluted ​ 0.35 ​ ​ ( 0.05 ) ​ ​ ​ ​ ​ ​ Weighted average shares outstanding: ​ ​ ​ ​ ​ Basic ​ 38,286 ​ ​ 37,267 Diluted ​ 38,286 ​ ​ 37,267 ​ See accompanying notes to condensed consolidated financial statements . 5 Table of Contents ​ CLARUS CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended ​ September 30, 2024 September 30, 2023 Cash Flows From Operating Activities: ​ ​ ​ ​ ​ Net income (loss) $ 13,234 ​ $ ( 1,757 ) Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities: ​ ​ ​ ​ ​ Depreciation of property and equipment ​ 3,051 ​ ​ 5,675 Amortization of other intangible assets ​ 7,316 ​ ​ 9,560 Gain on sale of business ​ ( 40,585 ) ​ ​ - Amortization of debt issuance costs ​ 1,209 ​ ​ 696 Gain on disposition of property and equipment ​ ( 138 ) ​ ​ ( 43 ) Noncash lease expense ​ 2,284 ​ ​ 2,290 Contingent consideration benefit ​ ( 125 ) ​ ​ ( 1,565 ) Stock-based compensation ​ 4,258 ​ ​ 4,037 Deferred income taxes ​ 3,441 ​ ​ ( 2,509 ) Changes in operating assets and liabilities, net of disposition: ​ ​ ​ ​ ​ Accounts receivable ​ 778 ​ ​ ( 6,247 ) Inventories ​ ( 4,703 ) ​ ​ 5,408 Prepaid and other assets ​ ( 543 ) ​ ​ 3,239 Accounts payable ​ ( 7,940 ) ​ ​ 2,165 Accrued liabilities ​ ( 4,549 ) ​ ​ ( 3,589 ) Income taxes ​ ( 858 ) ​ ​ 68 Net cash (used in) provided by operating activities ​ ( 23,870 ) ​ ​ 17,428 ​ ​ ​ ​ ​ ​ Cash Flows From Investing Activities: ​ ​ ​ ​ ​ Proceeds from the sale of business ​ 175,674 ​ ​ - Proceeds from disposition of property and equipment ​ 245 ​ ​ 196 Purchase of intangible assets ​ ( 250 ) ​ ​ ( 250 ) Purchases of property and equipment ​ ( 4,525 ) ​ ​ ( 4,495 ) Net cash provided by (used in) investing activities ​ 171,144 ​ ​ ( 4,549 ) ​ ​ ​ ​ ​ ​ Cash Flows From Financing Activities: ​ ​ ​ ​ ​ Proceeds from revolving credit facilities ​ 31,205 ​ ​ 29,195 Repayments on revolving credit facilities ​ ( 41,580 ) ​ ​ ( 37,836 ) Repayments on term loans and other debt ​ ( 109,463 ) ​ ​ ( 7,967 ) Proceeds from issuance of other debt ​ 49 ​ ​ - Purchase of treasury stock ​ ( 185 ) ​ ​ ( 222 ) Proceeds from exercise of options ​ 565 ​ ​ 3,435 Cash dividends paid ​ ( 2,872 ) ​ ​ ( 2,796 ) Net cash used in financing activities ​ ( 122,281 ) ​ ​ ( 16,191 ) ​ ​ ​ ​ ​ ​ Effect of foreign exchange rates on cash ​ 82 ​ ​ ( 725 ) ​ ​ ​ ​ ​ ​ Change in cash ​ 25,075 ​ ​ ( 4,037 ) Cash, beginning of year ​ 11,324 ​ ​ 12,061 Cash, end of period $ 36,399 ​ $ 8,024 ​ ​ ​ ​ ​ ​ Supplemental Disclosure of Cash Flow Information: ​ ​ ​ ​ ​ Cash paid for income taxes $ 2,284 ​ $ 1,831 Cash paid for interest $ 1,947 ​ $ 7,736 Supplemental Disclosures of Non-Cash Investing and Financing Activities: ​ ​ ​ ​ ​ Shares issued for business acquisitions $ - ​ $ 2,067 Property and equipment purchased with accounts payable $ 131 ​ $ 232 Intangible assets purchased with accounts payable $ - ​ $ 250 Lease liabilities arising from obtaining right-of-use assets $ 991 ​ $ 4,211 ​ See accompanying notes to condensed consolidated financial statements. ​ ​ 6 Table of Contents CLARUS CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited) (In thousands, except per share amounts) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other ​ Total ​ ​ Common Stock ​ Paid-In ​ Accumulated ​ Treasury Stock ​ Comprehensive ​ Stockholders’ ​ Shares Amount Capital Deficit Shares Amount Loss Equity ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance, December 31, 2022 ​ ​ 41,637 ​ $ 4 ​ $ 679,339 ​ $ ( 336,843 ) ​ ​ ( 4,589 ) ​ $ ( 32,707 ) ​ $ ( 17,685 ) ​ $ 292,108 Net income ​ ​ - ​ ​ - ​ ​ - ​ ​ 1,598 ​ ​ - ​ ​ - ​ ​ - ​ ​ 1,598 Other comprehensive loss ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ ( 1,100 ) ​ ​ ( 1,100 ) Cash dividends ($ 0.025 per share) ​ ​ - ​ ​ - ​ ​ - ​ ​ ( 930 ) ​ ​ - ​ ​ - ​ ​ - ​ ​ ( 930 ) Purchase of treasury stock ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ ( 12 ) ​ ​ ( 118 ) ​ ​ - ​ ​ ( 118 ) Stock-based compensation expense ​ ​ - ​ ​ - ​ ​ 1,334 ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ 1,334 Proceeds from exercise of options ​ ​ 154 ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - Balance, March 31, 2023 ​ ​ 41,791 ​ $ 4 ​ $ 680,673 ​ $ ( 336,175 ) ​ ​ ( 4,601 ) ​ $ ( 32,825 ) ​ $ ( 18,785 ) ​ $ 292,892 Net loss ​ ​ - ​ ​ - ​ ​ - ​ ​ ( 2,091 ) ​ ​ - ​ ​ - ​ ​ - ​ ​ ( 2,091 ) Other comprehensive loss ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ ( 1,364 ) ​ ​ ( 1,364 ) Cash dividends ($ 0.025 per share) ​ ​ - ​ ​ - ​ ​ - ​ ​ ( 930 ) ​ ​ - ​ ​ - ​ ​ - ​ ​ ( 930 ) Purchase of treasury stock ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ ( 11 ) ​ ​ ( 104 ) ​ ​ - ​ ​ ( 104 ) Stock-based compensation expense ​ ​ - ​ ​ - ​ ​ 1,535 ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ 1,535 Proceeds from exercise of options ​ ​ 42 ​ ​ - ​ ​ 35 ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ 35 Balance, June 30, 2023 ​ ​ 41,833 ​ $ 4 ​ $ 682,243 ​ $ ( 339,196 ) ​ ​ ( 4,612 ) ​ $ ( 32,929 ) ​ $ ( 20,149 ) ​ $ 289,973 Net loss ​ ​ - ​ ​ - ​ ​ - ​ ​ ( 1,264 ) ​ ​ - ​ ​ - ​ ​ - ​ ​ ( 1,264 ) Other comprehensive loss ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ ( 3,138 ) ​ ​ ( 3,138 ) Cash dividends ($ 0.025 per share) ​ ​ - ​ ​ - ​ ​ - ​ ​ ( 936 ) ​ ​ - ​ ​ - ​ ​ - ​ ​ ( 936 ) Stock-based compensation expense ​ ​ - ​ ​ - ​ ​ 1,168 ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ 1,168 Proceeds from exercise of options ​ ​ 500 ​ ​ - ​ ​ 3,400 ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ 3,400 Shares issued in business acquisition ​ ​ 249 ​ ​ - ​ ​ 2,067 ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ 2,067 Balance, September 30, 2023 ​ ​ 42,582 ​ $ 4 ​ $ 688,878 ​ $ ( 341,396 ) ​ ​ ( 4,612 ) ​ $ ( 32,929 ) ​ $ ( 23,287 ) ​ $ 291,270 ​ 7 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other ​ Total ​ ​ Common Stock ​ Paid-In ​ Accumulated ​ Treasury Stock ​ Comprehensive ​ Stockholders’ ​ ​ Shares Amount Capital Deficit Shares Amount Loss Equity ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance, December 31, 2023 ​ ​ 42,761 ​ $ 4 ​ $ 691,198 ​ $ ( 350,739 ) ​ ​ ( 4,612 ) ​ $ ( 32,929 ) ​ $ ( 15,414 ) ​ $ 292,120 Net income ​ ​ - ​ ​ - ​ ​ - ​ ​ 21,884 ​ ​ - ​ ​ - ​ ​ - ​ ​ 21,884 Other comprehensive loss ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ ( 3,671 ) ​ ​ ( 3,671 ) Cash dividends ($ 0.025 per share) ​ ​ - ​ ​ - ​ ​ - ​ ​ ( 956 ) ​ ​ - ​ ​ - ​ ​ - ​ ​ ( 956 ) Purchase of treasury stock ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ ( 30 ) ​ ​ ( 185 ) ​ ​ - ​ ​ ( 185 ) Stock-based compensation expense ​ ​ - ​ ​ - ​ ​ 1,183 ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ 1,183 Proceeds from exercise of options ​ ​ 117 ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - Balance, March 31, 2024 ​ ​ 42,878 ​ $ 4 ​ $ 692,381 ​ $ ( 329,811 ) ​ ​ ( 4,642 ) ​ $ ( 33,114 ) ​ $ ( 19,085 ) ​ $ 310,375 Net loss ​ ​ - ​ ​ - ​ ​ - ​ ​ ( 5,493 ) ​ ​ - ​ ​ - ​ ​ - ​ ​ ( 5,493 ) Other comprehensive income ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ 1,545 ​ ​ 1,545 Cash dividends ($ 0.025 per share) ​ ​ - ​ ​ - ​ ​ - ​ ​ ( 957 ) ​ ​ - ​ ​ - ​ ​ - ​ ​ ( 957 ) Stock-based compensation expense ​ ​ - ​ ​ - ​ ​ 1,528 ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ 1,528 Proceeds from exercise of options ​ ​ 62 ​ ​ - ​ ​ 285 ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ 285 Balance, June 30, 2024 ​ ​ 42,940 ​ $ 4 ​ $ 694,194 ​ $ ( 336,261 ) ​ ​ ( 4,642 ) ​ $ ( 33,114 ) ​ $ ( 17,540 ) ​ $ 307,283 Net loss ​ ​ - ​ ​ - ​ ​ - ​ ​ ( 3,157 ) ​ ​ - ​ ​ - ​ ​ - ​ ​ ( 3,157 ) Other comprehensive income ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ 3,480 ​ ​ 3,480 Cash dividends ($ 0.025 per share) ​ ​ - ​ ​ - ​ ​ - ​ ​ ( 959 ) ​ ​ - ​ ​ - ​ ​ - ​ ​ ( 959 ) Stock-based compensation expense ​ ​ - ​ ​ - ​ ​ 1,547 ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ 1,547 Proceeds from exercise of options ​ ​ 64 ​ ​ - ​ ​ 280 ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ 280 Balance, September 30, 2024 ​ ​ 43,004 ​ $ 4 ​ $ 696,021 ​ $ ( 340,377 ) ​ ​ ( 4,642 ) ​ $ ( 33,114 ) ​ $ ( 14,060 ) ​ $ 308,474 ​ See accompanying notes to condensed consolidated financial statements . ​ ​ ​ 8 Table of Contents CLARUS CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (in thousands, except per share amounts) ​ NOTE 1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accompanying unaudited condensed consolidated financial statements of Clarus Corporation and subsidiaries (which may be referred to as the “Company,” “Clarus,” “we,” “us” or “our”) as of September 30, 2024 and December 31, 2023 and for the three and nine months ended September 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 and nine months ended September 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 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. 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. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. The more significant estimates relate to the fair value of net assets acquired in business combinations, provision for excess or obsolete inventory, allowance for credit losses, and valuation of contingent consideration liabilities, deferred tax assets, long-lived assets, goodwill and indefinite-lived intangible assets, and other intangible assets. We base our estimates on historical experience, projected future cash flows, and other assumptions that are believed to be reasonable under the circumstances. Actual results could differ from these estimates. ​ Reclassifications ​ 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 (loss). See Note 16 for discussion regarding legal matters. ​ 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 9 Table of Contents CLARUS CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED (Unaudited) (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. ​ ​ NOTE 2. ACQUISITIONS TRED 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”). 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 recorded this liability within accrued liabilities. See Note 11 for discussion regarding the valuation of the TRED Contingent Consideration as of September 30, 2024. The acquisition was accounted for as a business combination. The Company believes the acquisition of TRED will provide the Company with a greater combined global revenue base, increased gross margins, profitability and free cash flows, and access to increased liquidity to further acquire and grow businesses. The following table is a reconciliation to the fair value of the purchase consideration and how the purchase consideration is allocated to assets acquired and liabilities assumed which have been estimated at their fair values. The fair value measurements for the acquisition of TRED have been completed. The excess of purchase consideration over the assets acquired and liabilities assumed is recorded as goodwill. Goodwill for TRED is included in the Adventure segment. The goodwill consists largely of the growth and profitability expected from the acquisition. ​ 10 Table of Contents CLARUS CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED (Unaudited) (in thousands, except per share amounts) ​ ​ ​ ​ ​ ​ ​ ​ ​ TRED ​ ​ October 9, 2023 ​ ​ Number of Shares ​ Estimated Fair Value ​ ​ ​ ​ ​ ​ Cash paid ​ - ​ $ 5,659 ​ ​ ​ ​ ​ ​ Issuance of shares of Clarus Corporation ​ 179 ​ ​ 1,069 ​ ​ ​ ​ ​ ​ Contingent consideration ​ - ​ ​ 121 ​ ​ ​ ​ ​ ​ Total purchase consideration ​ 179 ​ $ 6,849 ​ ​ ​ ​ ​ ​ Assets acquired and liabilities assumed ​ ​ ​ ​ ​ Assets ​ ​ ​ ​ ​ Cash ​ ​ ​ $ 11 Accounts receivable ​ ​ ​ ​ 1,000 Inventories ​ ​ ​ ​ 1,006 Prepaid and other current assets ​ ​ ​ ​ 11 Property and equipment ​ ​ ​ ​ 195 Other intangible assets ​ ​ ​ ​ 3,305 Goodwill ​ ​ ​ ​ 2,832 Total assets ​ ​ ​ ​ 8,360 ​ ​ ​ ​ ​ ​ Liabilities ​ ​ ​ ​ ​ Accounts payable and accrued liabilities ​ ​ ​ ​ 638 Deferred income taxes ​ ​ ​ ​ 873 Total liabilities ​ ​ ​ ​ 1,511 ​ ​ ​ ​ ​ ​ Net Book Value Acquired ​ ​ ​ $ 6,849 ​ The estimated fair value of inventory was recorded at expected sales price less cost to sell plus a reasonable profit margin for selling efforts. ​ 11 Table of Contents CLARUS CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED (Unaudited) (in thousands, except per share amounts) ​ In connection with the acquisitions, the Company acquired exclusive rights to TRED’s trademarks, customer relationships, product technologies, and tradenames. The amounts assigned to each class of intangible asset, other than goodwill acquired, and the related average useful lives are as follows: ​ ​ ​ ​ ​ ​ ​ TRED ​ ​ ​ Average ​ Gross Useful Life ​ ​ ​ ​ ​ Intangibles subject to amortization ​ ​ ​ ​ Customer relationships $ 1,249 ​ 8.0 years Product technologies ​ 394 ​ 6.0 years Tradenames ​ 1,662 ​ 12.0 years Intangibles not subject to amortization ​ ​ ​ ​ Trademarks ​ - ​ N/A ​ $ 3,305 ​ 9.8 years ​ Goodwill of $ 2,832 is expected to be non-deductible for tax purposes. No pre-existing relationships existed between the Company and TRED or its sellers prior to the acquisition. TRED revenue and operating income are included in the Adventure segment. Total revenue and net income of TRED from the date of acquisition to December 31, 2023 were not material to the Company’s condensed consolidated financial statements. ​ NOTE 3. 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, 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 was 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 September 30, 2024, the working capital adjustment had been finalized, with no changes from the preliminary working capital adjustment. The Company recognized a pre-tax gain on such sale of $ 40,585 . The activities of the Precision Sport segment have been segregated and reported as discontinued operations for all periods presented. 12 Table of Contents CLARUS CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED (Unaudited) (in thousands, except per share amounts) ​ The carrying amounts of the assets and liabilities of the Precision Sport segment were classified as held for sale in our consolidated balance sheets as of December 31, 2023. The asset and liability balances as of December 31, 2023 were classified as current as we anticipated the sale of these assets and liabilities within a one year period. The carrying amounts were as follows: ​ ​ ​ ​ ​ ​ ​ December 31, 2023 ​ ​ ​ ​ Accounts receivable, net ​ $ 9,914 Inventories ​ ​ 44,208 Prepaid and other current assets ​ ​ 2,931 Total current assets held for sale ​ ​ 57,053 ​ ​ ​ ​ Property and equipment, net ​ ​ 24,075 Other intangible assets, net ​ ​ 4,926 Indefinite-lived intangible assets ​ ​ 24,500 Goodwill ​ ​ 26,715 Other long-term assets ​ ​ 15 Total assets held for sale ​ $ 137,284 ​ ​ ​ ​ Accounts payable ​ $ 2,441 Accrued liabilities ​ ​ 3,303 Total current liabilities held for sale ​ ​ 5,744 ​ ​ ​ ​ Total liabilities held for sale ​ $ 5,744 ​ Summarized results of discontinued operations for the Precision Sport segment are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Nine Months Ended ​ ​ September 30, 2024 ​ September 30, 2023 ​ September 30, 2024 ​ September 30, 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ Sales ​ $ - ​ $ 18,773 ​ $ 10,585 ​ $ 71,670 Cost of goods sold ​ ​ - ​ ​ ( 10,509 ) ​ ​ ( 6,543 ) ​ ​ ( 44,716 ) Selling, general and administrative ​ ​ - ​ ​ ( 2,807 ) ​ ​ ( 2,062 ) ​ ​ ( 9,107 ) Restructuring charges ​ ​ - ​ ​ ( 23 ) ​ ​ ( 3 ) ​ ​ ( 23 ) Transaction costs ​ ​ - ​ ​ ( 442 ) ​ ​ ( 3,440 ) ​ ​ ( 516 ) Interest expense, net ​ ​ - ​ ​ ( 2,861 ) ​ ​ ( 2,455 ) ​ ​ ( 8,477 ) Other, net ​ ​ - ​ ​ 2 ​ ​ ( 38 ) ​ ​ 9 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (Loss) income from operations of discontinued operations ​ ​ - ​ ​ 2,133 ​ ​ ( 3,956 ) ​ ​ 8,840 Gain on sale of discontinued operations ​ ​ - ​ ​ - ​ ​ 40,585 ​ ​ - ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income from discontinued operations before taxes ​ ​ - ​ ​ 2,133 ​ ​ 36,629 ​ ​ 8,840 Income tax expense ​ ​ - ​ ​ 1,191 ​ ​ 8,283 ​ ​ 2,038 Income from discontinued operations, net of tax ​ $ - ​ $ 942 ​ $ 28,346 ​ $ 6,802 ​ 13 Table of Contents CLARUS CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED (Unaudited) (in thousands, except per share amounts) ​ 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 nine months ended September 30, 2024 and 2023. Summarized cash flow information for the Precision Sport segment discontinued operations are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended ​ ​ September 30, 2024 ​ September 30, 2023 ​ ​ ​ ​ ​ ​ ​ Depreciation of property and equipment ​ $ - ​ $ 2,611 Amortization of intangible assets ​ ​ - ​ ​ 1,525 Stock-based compensation ​ ​ 5 ​ ​ 114 Purchase of property and equipment ​ ​ 886 ​ ​ 1,814 ​ ​ NOTE 4. INVENTORIES Inventories, as of September 30, 2024 and December 31, 2023, were as follows: ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2024 December 31, 2023 Finished goods $ 81,462 ​ $ 78,887 Work-in-process ​ 401 ​ ​ 295 Raw materials and supplies ​ 11,284 ​ ​ 12,227 ​ $ 93,147 ​ $ 91,409 ​ ​ NOTE 5. PROPERTY AND EQUIPMENT Property and equipment, net, as of September 30, 2024 and December 31, 2023, were as follows: ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2024 December 31, 2023 ​ ​ ​ ​ ​ ​ Land $ 2,850 ​ $ 2,850 Building and improvements ​ 6,487 ​ ​ 6,476 Furniture and fixtures ​ 5,877 ​ ​ 6,195 Computer hardware and software ​ 8,771 ​ ​ 8,092 Machinery and equipment ​ 19,197 ​ ​ 18,119 Construction in progress ​ 2,530 ​ ​ 1,224 ​ ​ 45,712 ​ ​ 42,956 Less accumulated depreciation ​ ( 28,541 ) ​ ​ ( 26,369 ) ​ $ 17,171 ​ $ 16,587 ​ Depreciation expense for continuing operations for the three months ended September 30, 2024 and 2023 was $ 980 and $ 1,045 , respectively, and for the nine months ended September 30, 2024 and 2023 was $ 3,051 and $ 3,064 , respectively. ​ ​ 14 Table of Contents CLARUS CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED (Unaudited) (in thousands, except per share amounts) ​ NOTE 6. GOODWILL AND INTANGIBLE ASSETS Goodwill The following table summarizes the balances in goodwill by segment: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Outdoor Adventure Total ​ ​ ​ ​ ​ ​ ​ ​ ​ Goodwill $ 29,507 ​ $ 91,375 ​ $ 120,882 Accumulated goodwill impairments ​ ( 29,507 ) ​ ​ ( 52,071 ) ​ ​ ( 81,578 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at December 31, 2023 $ - ​ $ 39,320 ​ $ 39,320 ​ ​ ​ ​ ​ ​ ​ ​ ​ Impact of foreign currency exchange rates ​ - ​ ​ 312 ​ ​ 312 ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at September 30, 2024 $ - ​ $ 39,632 ​ $ 39,632 ​ No impairments were recorded for goodwill or intangible assets during the nine months ended September 30, 2024. However, factors such as a sustained decline in revenues and cash flows, or other adverse changes in macroeconomic conditions, including our current and future share price, could result in an impairment charge to our Adventure reporting unit in a future reporting period. The Company performs its annual impairment assessment during the fourth quarter of 2024. ​ Indefinite-Lived Intangible Assets The following table summarizes the changes in indefinite-lived intangible assets: ​ ​ ​ ​ Balance at December 31, 2023 $ 58,527 ​ ​ ​ Impact of foreign currency exchange rates ​ 513 ​ ​ ​ Balance at September 30, 2024 $ 59,040 ​ Trademarks classified as indefinite-lived intangible assets by brand as of September 30, 2024 and December 31, 2023, were as follows: ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2024 December 31, 2023 Black Diamond $ 19,600 ​ $ 19,600 PIEPS ​ 3,115 ​ ​ 3,080 Rhino-Rack ​ 26,110 ​ ​ 25,767 MAXTRAX ​ 10,215 ​ ​ 10,080 ​ $ 59,040 ​ $ 58,527 ​ 15 Table of Contents CLARUS CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED (Unaudited) (in thousands, except per share amounts) ​ Other Intangible Assets, net The following table summarizes the changes in gross other intangible assets: ​ ​ ​ ​ Gross balance at December 31, 2023 $ 82,103 ​ ​ ​ Disposal of fully amortized other intangible assets ​ ( 163 ) Impact of foreign currency exchange rates ​ 821 ​ ​ ​ Gross balance at September 30, 2024 $ 82,761 ​ Other intangible assets, net of amortization as of September 30, 2024 and December 31, 2023, were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2024 ​ Gross Accumulated Amortization Net Weighted Average Useful Life Intangibles subject to amortization ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Customer relationships $ 61,786 ​ $ ( 36,161 ) ​ $ 25,625 ​ ​ 13.8 years Product technologies ​ 18,229 ​ ​ ( 11,132 ) ​ ​ 7,097 ​ ​ 10.0 years Tradenames ​ 1,799 ​ ​ ( 155 ) ​ ​ 1,644 ​ ​ 12.0 years Core technologies ​ 947 ​ ​ ( 947 ) ​ ​ - ​ ​ 10.0 years ​ $ 82,761 ​ $ ( 48,395 ) ​ $ 34,366 ​ ​ 12.9 years ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2023 ​ Gross Accumulated Amortization Net Weighted Average Useful Life ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Customer relationships $ 61,215 ​ $ ( 30,478 ) ​ $ 30,737 ​ ​ 13.8 years Product technologies ​ 18,003 ​ ​ ( 9,014 ) ​ ​ 8,989 ​ ​ 10.0 years Tradenames ​ 1,938 ​ ​ ( 198 ) ​ ​ 1,740 ​ ​ 11.4 years Core technologies ​ 947 ​ ​ ( 947 ) ​ ​ - ​ ​ 10.0 years ​ $ 82,103 ​ $ ( 40,637 ) ​ $ 41,466 ​ ​ 12.9 years ​ Amortization expense for continuing operations for the three months ended September 30, 2024 and 2023, was $ 2,416 and $ 2,553 , respectively, and for the nine months ended September 30, 2024 and 2023 was $ 7,316 and $ 8,035 , respectively. Future amortization expense for other intangible assets as of September 30, 2024 is as follows: ​ ​ ​ ​ ​ Years Ending December 31, Amortization Expense 2024 (excluding the nine months ended September 30, 2024) ​ $ 2,475 2025 ​ ​ 8,413 2026 ​ ​ 6,583 2027 ​ ​ 4,806 2028 ​ ​ 3,538 2029 ​ ​ 2,655 Thereafter ​ ​ 5,896 ​ ​ $ 34,366 ​ ​ 16 Table of Contents CLARUS CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED (Unaudited) (in thousands, except per share amounts) ​ ​ ​ NOTE 7. ACCRUED LIABILITIES AND OTHER LONG-TERM LIABILITIES Accrued liabilities as of September 30, 2024 and December 31, 2023, were as follows: ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2024 December 31, 2023 ​ ​ ​ ​ ​ ​ Accrued payroll and related items $ 4,062 ​ $ 3,964 Accrued bonus ​ 1,617 ​ ​ 2,047 Designated forward exchange contracts ​ 47 ​ ​ 221 Accrued warranty ​ 1,536 ​ ​ 1,648 Current lease liabilities ​ 3,005 ​ ​ 3,179 Accrued commissions ​ 810 ​ ​ 344 Contingent consideration liabilities ​ - ​ ​ 129 Accrued CPSC regulatory matter ​ 2,500 ​ ​ - Restructuring liabilities ​ 268 ​ ​ 1,246 Other ​ 9,480 ​ ​ 11,802 ​ $ 23,325 ​ $ 24,580 ​ Other long-term liabilities as of September 30, 2024 and December 31, 2023, were as follows: ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2024 December 31, 2023 ​ ​ ​ ​ ​ ​ Long-term lease liability $ 11,485 ​ $ 13,030 Other ​ 1,156 ​ ​ 1,130 ​ $ 12,641 ​ $ 14,160 ​ ​ ​ ​ NOTE 8. LONG-TERM DEBT Long-term debt as of September 30, 2024 and December 31, 2023, was as follows: ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2024 December 31, 2023 ​ ​ ​ ​ ​ ​ Revolving credit facility (a) $ - ​ $ 10,375 Other debt (b) ​ - ​ ​ 40 Term loan (c) ​ - ​ ​ 109,375 ​ ​ - ​ ​ 119,790 Less current portion ​ - ​ ​ ( 119,790 ) ​ $ - ​ $ - ​ (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, and pursuant to the Credit Agreement with JPMorgan Chase Bank, N.A., as administrative agent and the lenders party thereto (the “Restated Credit Agreement”), 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 % . 17 Table of Contents CLARUS CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED (Unaudited) (in thousands, except per share amounts) ​ (b) Foreign subsidiaries of the Company had term debt with financial institutions, which was repaid as of September 30, 2024. The foreign subsidiaries paid interest monthly on any borrowings on the credit facility as well as monthly 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 paid interest monthly on any borrowings on the Restated Credit Agreement. As of December 31, 2023, the rate was approximately 7.7 % . ​ ​ NOTE 9. DERIVATIVE FINANCIAL INSTRUMENTS The Company’s primary exchange rate risk management objective is to mitigate the uncertainty of anticipated cash flows attributable to changes in foreign currency exchange rates. The Company primarily focuses on mitigating changes in cash flows resulting from sales denominated in currencies other than the U.S. dollar. The Company manages this risk primarily by using currency forward and option contracts. If the anticipated transactions are deemed probable, the resulting relationships are formally designated as cash flow hedges. The Company accounts for these contracts as cash flow hedges and tests effectiveness by determining whether changes in the expected cash flow of the derivative offset, within a range, changes in the expected cash flow of the hedged item. At September 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, which was $ 13 as of September 30, 2024. The Company’s exposure of counterparty credit risk is limited to the aggregate unrealized gain on all contracts. As of September 30, 2024, there was no such exposure to the counterparties. The Company’s derivative counterparties have strong credit ratings and as a result, the Company does not require collateral to facilitate transactions. The Company held the following contracts designated as hedging instruments as of September 30, 2024 and December 31, 2023: ​ ​ ​ ​ ​ ​ September 30, 2024 ​ Notional Latest ​ Amount ​ Maturity ​ ​ ​ ​ Foreign exchange contracts - Canadian Dollars $ 3,574 ​ February 2025 Foreign exchange contracts - Euros € 13,296 ​ August 2025 ​ ​ ​ ​ ​ ​ December 31, 2023 ​ Notional Latest ​ Amount ​ Maturity ​ ​ ​ ​ Foreign exchange contracts - Canadian Dollars $ 7,925 ​ February 2025 Foreign exchange contracts - Euros € 20,612 ​ February 2025 ​ 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 of $ 14 and $ 226 were reclassified to sales during the three months ended September 30, 2024 and 2023, respectively, and $ 231 and $ 167 were reclassified to sales during the nine months ended September 30, 2024 and 2023, respectively. 18 Table of Contents CLARUS CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED (Unaudited) (in thousands, except per share amounts) ​ The following table presents the balance sheet classification and fair value of derivative instruments as of September 30, 2024 and December 31, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Classification September 30, 2024 December 31, 2023 ​ ​ ​ ​ ​ ​ ​ ​ Derivative instruments in asset positions: ​ ​ ​ ​ ​ ​ ​ Designated forward exchange contracts Prepaid and other current assets ​ $ 34 ​ $ - ​ ​ ​ ​ ​ ​ ​ ​ Derivative instruments in liability positions: ​ ​ ​ ​ ​ ​ ​ Designated forward exchange contracts Accrued liabilities ​ $ 47 ​ $ 221 Designated forward exchange contracts Other long-term liabilities ​ $ - ​ $ 35 ​ ​ ​ ​ NOTE 10. 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 September 30, 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Foreign Currency Translation Adjustments Unrealized Gains (Losses) on Cash Flow Hedges Total ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance as of June 30, 2024 $ ( 17,721 ) ​ $ 181 ​ $ ( 17,540 ) Other comprehensive income (loss) before reclassifications ​ 3,665 ​ ​ ( 174 ) ​ ​ 3,491 Amounts reclassified from other comprehensive income (loss) ​ - ​ ​ ( 11 ) ​ ​ ( 11 ) Net current period other comprehensive income (loss) ​ 3,665 ​ ​ ( 185 ) ​ ​ 3,480 Balance as of September 30, 2024 $ ( 14,056 ) ​ $ ( 4 ) ​ $ ( 14,060 ) ​ The following table sets forth the changes in AOCI, net of tax, for the three months ended September 30, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Foreign Currency Translation Adjustments Unrealized Gains (Losses) on Cash Flow Hedges Total ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance as of June 30, 2023 $ ( 20,038 ) ​ $ ( 111 ) ​ $ ( 20,149 ) Other comprehensive (loss) income before reclassifications ​ ( 3,539 ) ​ ​ 576 ​ ​ ( 2,963 ) Amounts reclassified from other comprehensive loss ​ - ​ ​ ( 175 ) ​ ​ ( 175 ) Net current period other comprehensive (loss) income ​ ( 3,539 ) ​ ​ 401 ​ ​ ( 3,138 ) Balance as of September 30, 2023 $ ( 23,577 ) ​ $ 290 ​ $ ( 23,287 ) 19 Table of Contents CLARUS CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED (Unaudited) (in thousands, except per share amounts) ​ ​ The following table sets forth the changes in AOCI, net of tax, for the nine months ended September 30, 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Foreign Currency Translation Adjustments Unrealized Gains (Losses) on Cash Flow Hedges Total ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance as of December 31, 2023 $ ( 15,223 ) ​ $ ( 191 ) ​ $ ( 15,414 ) Other comprehensive income before reclassifications ​ 1,167 ​ ​ 365 ​ ​ 1,532 Amounts reclassified from other comprehensive income (loss) ​ - ​ ​ ( 178 ) ​ ​ ( 178 ) Net current period other comprehensive income ​ 1,167 ​ ​ 187 ​ ​ 1,354 Balance as of September 30, 2024 $ ( 14,056 ) ​ $ ( 4 ) ​ $ ( 14,060 ) ​ The following table sets forth the changes in AOCI, net of tax, for the nine months ended September 30, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Foreign Currency Translation Adjustments Unrealized Gains (Losses) on Cash Flow Hedges Total ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance as of December 31, 2022 $ ( 17,628 ) ​ $ ( 57 ) ​ $ ( 17,685 ) Other comprehensive (loss) income before reclassifications ​ ( 5,949 ) ​ ​ 476 ​ ​ ( 5,473 ) Amounts reclassified from other comprehensive loss ​ - ​ ​ ( 129 ) ​ ​ ( 129 ) Net current period other comprehensive (loss) income ​ ( 5,949 ) ​ ​ 347 ​ ​ ( 5,602 ) Balance as of September 30, 2023 $ ( 23,577 ) ​ $ 290 ​ $ ( 23,287 ) ​ The effects on net income of amounts reclassified from unrealized gains (losses) on cash flow hedges for foreign exchange contracts for the three and nine months ended September 30, 2024 and 2023, were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gains reclassified from AOCI to the Consolidated Statements of Comprehensive Income (Loss) Affected line item in the Consolidated Three Months Ended ​ Nine Months Ended Statements of Comprehensive Income (Loss) September 30, 2024 September 30, 2023 September 30, 2024 September 30, 2023 Foreign exchange contracts: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Sales $ 14 ​ $ 226 ​ $ 231 ​ $ 167 Less: Income tax expense ​ 3 ​ ​ 51 ​ ​ 53 ​ ​ 38 Amount reclassified, net of tax $ 11 ​ $ 175 ​ $ 178 ​ $ 129 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total reclassifications from AOCI $ 11 ​ $ 175 ​ $ 178 ​ $ 129 ​ ​ ​ ​ 20 Table of Contents CLARUS CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED (Unaudited) (in thousands, except per share amounts) ​ NOTE 11. FAIR VALUE MEASUREMENTS We measure certain financial assets and liabilities at fair value on a recurring basis. Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants, under a three-tier fair value hierarchy that prioritizes the inputs used in measuring fair value as follows: Level 1 - inputs to the valuation methodology are quoted market prices for identical assets or liabilities in active markets. Level 2 - inputs to the valuation methodology include quoted prices in markets that are not active or model inputs that are observable either directly or indirectly for substantially the full term of the asset or liability. Level 3 - inputs to the valuation methodology are based on prices or valuation techniques that are unobservable. Items Measured at Fair Value on a Recurring Basis Assets and liabilities measured at fair value on a recurring basis at September 30, 2024 and December 31, 2023 were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2024 ​ Level 1 Level 2 Level 3 Total ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Assets ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Designated forward exchange contracts ​ $ - ​ $ 34 ​ $ - ​ $ 34 ​ ​ $ - ​ $ 34 ​ $ - ​ $ 34 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Liabilities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Designated forward exchange contracts ​ $ - ​ $ 47 ​ $ - ​ $ 47 ​ ​ $ - ​ $ 47 ​ $ - ​ $ 47 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2023 ​ Level 1 Level 2 Level 3 Total ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Assets ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Designated forward exchange contracts ​ $ - ​ $ - ​ $ - ​ $ - ​ ​ $ - ​ $ - ​ $ - ​ $ - ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Liabilities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Designated forward exchange contracts ​ $ - ​ $ 256 ​ $ - ​ $ 256 Contingent consideration liabilities ​ $ - ​ $ - ​ $ 129 ​ $ 129 ​ ​ $ - ​ $ 256 ​ $ 129 ​ $ 385 ​ Derivative financial instruments are recorded at fair value based on current market pricing models. No nonrecurring fair value measurements existed at September 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 21 Table of Contents CLARUS CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED (Unaudited) (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 (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. The following table summarizes the changes in contingent consideration liabilities: ​ ​ ​ ​ ​ TRED ​ ​ ​ Balance at December 31, 2023 $ 129 ​ ​ ​ Fair value adjustments ​ ( 125 ) Impact of foreign currency exchange rates ​ ( 4 ) ​ ​ ​ Balance at September 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 result 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 September 30, 2024, the net sales threshold required for the payment of the TRED contingent consideration is not expected to be met. ​ NOTE 12. STOCKHOLDERS’ EQUITY On August 6, 2018, the Company announced that its Board of Directors approved the initiation of a quarterly cash dividend program of $ 0.025 per share of the Company’s common stock (the “Quarterly Cash Dividend”) or $ 0.10 per share on an annualized basis. The declaration and payment of future Quarterly Cash Dividends is subject to the discretion of and approval of the Company’s Board of Directors. On November 6, 2024 , the Company announced that its Board of Directors approved the payment on November 27, 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 November 18, 2024 . ​ ​ NOTE 13. EARNINGS (LOSS) PER SHARE Basic earnings (loss) per share is computed by dividing earnings (loss) by the weighted average number of common shares outstanding during each period. Diluted earnings (loss) per share is computed by dividing earnings (loss) by the total of the weighted average number of shares of common stock outstanding during each period, plus the effect of dilutive outstanding stock options and unvested restricted stock grants. Potentially dilutive securities are excluded from the computation of diluted earnings (loss) per share if their effect is anti-dilutive to the loss from continuing operations. 22 Table of Contents CLARUS CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED (Unaudited) (in thousands, except per share amounts) ​ The following table is a reconciliation of basic and diluted shares of common stock outstanding used in the calculation of earnings (loss) per share: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Nine Months Ended ​ September 30, 2024 September 30, 2023 September 30, 2024 September 30, 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted average shares outstanding - basic ​ 38,352 ​ ​ 37,470 ​ ​ 38,286 ​ ​ 37,267 Effect of dilutive stock awards ​ - ​ ​ - ​ ​ - ​ ​ - Weighted average shares outstanding - diluted ​ 38,352 ​ ​ 37,470 ​ ​ 38,286 ​ ​ 37,267 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Loss from continuing operations per share: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic $ ( 0.08 ) ​ $ ( 0.06 ) ​ $ ( 0.39 ) ​ $ ( 0.23 ) Diluted ​ ( 0.08 ) ​ ​ ( 0.06 ) ​ ​ ( 0.39 ) ​ ​ ( 0.23 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income from discontinued operations per share: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic $ - ​ $ 0.03 ​ $ 0.74 ​ $ 0.18 Diluted ​ - ​ ​ 0.03 ​ ​ 0.74 ​ ​ 0.18 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net (loss) income per share: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic $ ( 0.08 ) ​ $ ( 0.03 ) ​ $ 0.35 ​ $ ( 0.05 ) Diluted ​ ( 0.08 ) ​ ​ ( 0.03 ) ​ ​ 0.35 ​ ​ ( 0.05 ) ​ For the three months ended September 30, 2024 and 2023, equity awards of 5,762 and 4,922 , respectively, and for the nine months ended September 30, 2024 and 2023, equity awards of 5,217 and 5,613 , respectively, were excluded from the calculation of earnings (loss) per share for these periods as they were anti-dilutive. ​ ​ NOTE 14. STOCK-BASED COMPENSATION PLAN Under the Company’s current 2015 Stock Incentive Plan (the “2015 Plan”), the Company’s Board of Directors has flexibility to determine the type and amount of awards to be granted to eligible participants, who must be employees, directors, officers or consultants of the Company or its subsidiaries. The 2015 Plan allows for grants of incentive stock options, nonqualified stock options, restricted stock awards, stock appreciation rights, and restricted units. The aggregate number of shares of common stock that may be granted through awards under the 2015 Plan to any employee in any calendar year may not exceed 500 shares. The 2015 Plan will continue in effect until December 2025 unless terminated sooner. ​ Options Granted: ​ During the nine months ended September 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. ​ 23 Table of Contents CLARUS CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED (Unaudited) (in thousands, except per share amounts) ​ For computing the fair value of the stock-based awards, the fair value of each option grant has been estimated as of the date of grant using the Black-Scholes option-pricing model with the following assumptions: ​ Options Granted During the Nine Months Ended September 30, 2024 ​ ​ ​ ​ Number of options ​ 1,240 Option vesting period ​ 1 - 2 Years 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) ​ 5.31 - 5.75 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 nine months ended September 30, 2024 was $ 3,798 , which will be recognized over the vesting period of the options. Restricted Stock Awards Granted: On March 11, 2024, the Company issued and granted employees restricted stock awards of 100 restricted shares under the 2015 Plan, of which 50 and 50 shares will vest and become nonforfeitable on each March 11, 2025 and March 11, 2026, respectively. As these restricted stock awards vest over time, the fair value of the restricted stock was estimated as of the date of grant using the grant price of $ 6.75 per share. 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 September 30, 2024 and 2023 was $ 1,547 and $ 1,151 , respectively, and for the nine months ended September 30, 2024 and 2023 was $ 4,253 and $ 3,923 , respectively. For the three and nine months ended September 30, 2024 and 2023, the majority of stock-based compensation costs were classified as selling, general and administrative expenses. As of September 30, 2024, there were 1,146 unvested stock options and unrecognized compensation cost of $ 2,849 related to unvested stock options, as well as 1,600 unvested restricted stock awards and unrecognized compensation costs of $ 5,249 related to unvested restricted stock awards. ​ ​ NOTE 15. 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 September 30, 2024 and 2023, the Company incurred $ 478 and $ 1,076 , respectively, and during the nine months ended September 30, 2024 and 2023, the Company incurred $ 1,009 and $ 1,812 , respectively, of restructuring charges related to these actions. The Company has incurred $ 4,232 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 24 Table of Contents CLARUS CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED (Unaudited) (in thousands, except per share amounts) ​ charges in the condensed 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. We estimate that we will continue to incur restructuring costs related to employee-related costs and facility exit costs during the year 2024; however, the Company cannot estimate the total amount expected to be incurred as cost reduction actions continue to be evaluated. 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 September 30, 2024, which are included within accrued liabilities in the condensed consolidated balance sheets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Outdoor ​ Adventure ​ Corporate ​ Total Balance at December 31, 2023 ​ $ 1,246 ​ $ - ​ $ - ​ $ 1,246 Charges to expense: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Employee termination benefits ​ ​ 544 ​ ​ 449 ​ ​ - ​ ​ 993 Exit costs ​ ​ 16 ​ ​ - ​ ​ - ​ ​ 16 Total restructuring charges ​ $ 560 ​ $ 449 ​ $ - ​ $ 1,009 Cash payments and non-cash charges: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash payments ​ ​ ( 1,616 ) ​ ​ ( 348 ) ​ ​ - ​ ​ ( 1,964 ) Asset impairments ​ ​ ( 23 ) ​ ​ - ​ ​ - ​ ​ ( 23 ) Balance at September 30, 2024 ​ $ 167 ​ $ 101 ​ $ - ​ $ 268 ​ ​ ​ NOTE 16. COMMITMENTS, CONTINGENCIES AND LEGAL MATTERS As a consumer goods manufacturer and distributor, the Company faces the risk of product liability and related lawsuits involving claims for substantial money damages, product recall actions and higher than anticipated rates of warranty returns or other returns of goods. The Company is therefore vulnerable to various personal injury and property damage lawsuits relating to its products and incidental to its business. The Company is involved in various legal disputes and other legal proceedings that arise from time to time in the ordinary course of business. Anticipated costs related to litigation matters are accrued when it is both probable that a liability has been incurred and the amount can be reasonably estimated. Based on currently available information, the Company does not believe that it is reasonably possible that the disposition of any of the legal disputes the Company or its subsidiaries is currently involved in will have a material adverse effect upon the Company’s consolidated financial position, results of operations or cash flows, except for the U.S. Consumer Product Safety Commission (“CPSC”) matter discussed below. There is a reasonable possibility of loss from contingencies in excess of the amounts accrued by the Company in the accompanying condensed consolidated balance sheets; however, the actual amounts of such possible losses cannot currently be reasonably estimated by the Company. 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 (loss) except as described below. See Part II, Item 1. “Legal Proceedings.” ​ 25 Table of Contents CLARUS CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED (Unaudited) (in thousands, except per share amounts) ​ U.S. Consumer Product Safety Commission In January 2021, Black Diamond Equipment, Ltd. (“BDEL”) wrote to the 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. BDEL also requested approval for the CPSC Fast-Track Program for a voluntary product recall to implement this cradle solution. The CPSC approved the recall and entered into a Corrective Action Plan agreement with BDEL in March 2021. BDEL received a letter from the CPSC, dated October 28, 2021, stating that the CPSC is investigating whether BDEL has timely complied with the reporting requirements of Section 15(b) of the Consumer Protection Safety Act and related regulations regarding certain models of avalanche transceivers switching unexpectedly out of “send” mode. Separately, on April 21, 2022, BDEL filed a Section 15(b) report and applied for Fast-Track consideration for a voluntary recall, consisting of free repair or replacement of such malfunctioning models of avalanche transceivers, which would not switch from “send” mode to “search” mode due to an electronic malfunction in the reed switch or foil. The CPSC approved the recall and entered into a Corrective Action Plan agreement with BDEL in August 2022. BDEL received a letter from the CPSC, dated January 17, 2023, stating that the CPSC is investigating whether BDEL has timely complied with the reporting requirements of Section 15(b) of the Consumer Protection Safety Act and related regulations regarding the malfunction in the reed switch or foil in certain models of avalanche transceivers switching out of “search” mode. BDEL responded to the CPSC’s investigation by letter dated March 31, 2023, accompanied with documents responsive to the CPSC’s requests. The CPSC asked for further clarification and documents, and BDEL sent a responsive letter accompanied by additional documents on June 23, 2023. On September 6, 2023, the CPSC requested further clarification and information regarding the reed switch issue, to which BDEL responded on October 6 and 13, 2023. By letters dated October 12, 2023 and December 18, 2023, BDEL was notified by the CPSC that the agency staff has concluded BDEL failed to timely meet our statutory reporting obligations under the Consumer Product Safety Act with respect to certain models of BDEL’s avalanche transceivers switching unexpectedly out of “send” mode and certain models of BDEL’s avalanche transceivers not switching from “send” mode into “search” mode, that BDEL made a material misrepresentation in a report to the CPSC, and that the agency staff intends to recommend that the CPSC impose civil monetary penalties of $ 16,135 and $ 9,000 , respectively, for the two matters described above. On November 20, 2023 and February 8, 2024, respectively, BDEL submitted a comprehensive response disputing the CPSC’s findings and conclusions in the October 12, 2023 and December 18, 2023 letters, including the amount of any potential penalties. 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. John C. 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 the occurrence resulting in beacons switching unexpectedly out of “send” mode. 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 pay 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. On August 26, 2024, Mr. Walbrecht’s independent counsel responded to the CPSC, denying the allegations of its June 25 letter and rejecting its demand for a penalty. Based on currently available information, the Company believes an unfavorable outcome with the CPSC is probable, however, we cannot reasonably estimate on what terms this matter will be resolved. During the nine months ended September 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 26 Table of Contents CLARUS CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED (Unaudited) (in thousands, except per share amounts) ​ 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). 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 September 30, 2024 and 2023, the Company incurred legal expenses of $ 194 and $ 53 , respectively, and during the nine months ended September 30, 2024 and 2023, the Company incurred legal expenses of $ 579 and $ 216 , 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 v. HAP Trading, LLC and Harsh A. Padia On September 23, 2022, the Company filed a lawsuit in the United States District Court for the Southern District of New York against HAP Trading, LLC and Harsh A. Padia (“HAP Trading”), seeking disgorgement of profits from transactions in the Company’s common stock and related derivative securities in violation of Section 16(b) of the Securities Exchange Act of 1934, as amended. Clarus Corporation v. Caption Management, LLC, et al. 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 September 30, 2024, and 2023, the Company incurred legal expenses of $ 200 and $ 526 , respectively, and during the nine months ended September 30, 2024 and 2023, the Company incurred legal expenses of $ 716 and $ 846 , 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). ​ ​ NOTE 17. INCOME TAXES The Company’s U.S. federal statutory tax rate is 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 benefit of 17.4 % for the three months ended September 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 third quarter of 2024. The difference between the Company’s estimated effective tax rate benefit of 17.9 % for the nine months ended September 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 three quarters 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 27 Table of Contents CLARUS CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED (Unaudited) (in thousands, except per share amounts) ​ has provided a valuation allowance against a portion of the deferred tax assets as of September 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 deferred tax assets consist of net operating loss carryforwards (“NOLs”) for federal tax purposes. If a change in control were to occur, these could be limited under Section 382 of the Internal Revenue Code of 1986 (“Code”), as amended. In assessing the realizability of deferred income tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible and net operating loss and credit carryforwards expire. The estimates and judgments associated with the Company’s valuation allowance on deferred tax assets are considered critical due to the amount of deferred tax assets recorded by the Company on its consolidated balance sheets and the judgment required in determining the Company’s future taxable income. The need for a valuation allowance is reassessed at each interim reporting period. As of September 30, 2024, we had approximately $ 18,000 in U.S. net deferred tax assets. These deferred tax assets are expected 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 income tax expense 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. federal income tax purposes of $ 7,699 and $ 2,997 , respectively. The Company believes its U.S. Federal NOLs will offset a portion of its future U.S. Federal income taxes. NOLs available to offset taxable income, subject to compliance with Section 382 of the Code, begin to expire based upon the following schedule: ​ ​ ​ ​ ​ Net Operating Loss Carryforward Expiration Dates December 31, 2023 ​ ​ ​ ​ Expiration Dates December 31, Net Operating Loss Amount 2024 ​ $ - 2025 ​ ​ - 2026 ​ ​ - 2027 and beyond ​ ​ 7,699 Total ​ $ 7,699 ​ ​ ​ ​ NOTE 18. SEGMENT INFORMATION We operate our business structure 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. Certain significant selling and general and administrative expenses are not allocated to the segments including non-cash stock compensation expense. Each segment is described below: ● Our Outdoor segment, which includes Black Diamond Equipment 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 28 Table of Contents CLARUS CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED (Unaudited) (in thousands, except per share amounts) ​ activities. Our Outdoor segment offers a broad range of products including: high-performance, activity-based apparel (such as shells, insulation, midlayers, pants and logowear); rock-climbing footwear and equipment (such as carabiners, protection devices, harnesses, belay devices, helmets, and ice-climbing gear); technical backpacks and high-end day packs; trekking poles; headlamps and lanterns; 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 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. As noted above, the Company has a wide variety of technical outdoor equipment and lifestyle products that are sold to a variety of customers in multiple end markets. While there are multiple products sold, the terms and nature of revenue recognition policy is similar for all segments. 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 ​ Nine Months Ended ​ September 30, 2024 September 30, 2023 September 30, 2024 September 30, 2023 Sales to external customers: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Outdoor ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Domestic sales $ 21,704 ​ $ 26,957 ​ $ 64,218 ​ $ 70,391 International sales ​ 27,583 ​ ​ 34,119 ​ ​ 68,278 ​ ​ 83,527 Total Outdoor ​ 49,287 ​ ​ 61,076 ​ ​ 132,496 ​ ​ 153,918 Adventure ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Domestic sales ​ 2,661 ​ ​ 3,466 ​ ​ 11,365 ​ ​ 10,154 International sales ​ 15,167 ​ ​ 16,760 ​ ​ 49,049 ​ ​ 45,445 Total Adventure ​ 17,828 ​ ​ 20,226 ​ ​ 60,414 ​ ​ 55,599 Total sales to external customers ​ 67,115 ​ ​ 81,302 ​ ​ 192,910 ​ ​ 209,517 Segment operating (loss) income: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Outdoor ​ 1,210 ​ ​ 1,581 ​ ​ ( 2,896 ) ​ ​ 1,847 Adventure ​ ( 2,507 ) ​ ​ ( 40 ) ​ ​ ( 4,544 ) ​ ​ ( 140 ) Total segment operating (loss) income ​ ( 1,297 ) ​ ​ 1,541 ​ ​ ( 7,440 ) ​ ​ 1,707 Corporate costs ​ ( 4,061 ) ​ ​ ( 4,716 ) ​ ​ ( 12,829 ) ​ ​ ( 12,746 ) Interest income, net ​ 373 ​ ​ 19 ​ ​ 1,198 ​ ​ 32 Other, net ​ 1,164 ​ ​ ( 445 ) ​ ​ 669 ​ ​ ( 143 ) Loss before income tax $ ( 3,821 ) ​ $ ( 3,601 ) ​ $ ( 18,402 ) ​ $ ( 11,150 ) ​ There were no intercompany sales between the Outdoor and Adventure segments for the periods presented. 29 Table of Contents CLARUS CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED (Unaudited) (in thousands, except per share amounts) ​ Total assets by segment, as of September 30, 2024 and December 31, 2023, were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2024 December 31, 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Outdoor ​ ​ ​ ​ ​ ​ $ 168,242 ​ $ 163,083 Adventure ​ ​ ​ ​ ​ ​ ​ 175,366 ​ ​ 185,023 Corporate ​ ​ ​ ​ ​ ​ ​ 31,730 ​ ​ 9,948 ​ ​ ​ ​ ​ ​ ​ $ 375,338 ​ $ 358,054 ​ Capital expenditures, depreciation and amortization by segment is as follows. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Nine Months Ended ​ September 30, 2024 September 30, 2023 September 30, 2024 September 30, 2023 Capital expenditures: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Outdoor $ 563 ​ $ 345 ​ $ 2,070 ​ $ 1,123 Adventure ​ 487 ​ ​ 490 ​ ​ 1,554 ​ ​ 1,558 Total capital expenditures $ 1,050 ​ $ 835 ​ $ 3,624 ​ $ 2,681 Depreciation: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Outdoor $ 640 ​ $ 720 ​ $ 1,974 ​ $ 2,133 Adventure ​ 340 ​ ​ 325 ​ ​ 1,077 ​ ​ 931 Total depreciation $ 980 ​ $ 1,045 ​ $ 3,051 ​ $ 3,064 Amortization: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Outdoor $ 286 ​ $ 258 ​ $ 857 ​ $ 772 Adventure ​ 2,130 ​ ​ 2,295 ​ ​ 6,459 ​ ​ 7,263 Total amortization $ 2,416 ​ $ 2,553 ​ $ 7,316 ​ $ 8,035 ​ ​ ​ ​ ​ ​ ​ 30 Table of Contents CLARUS CORPORATION MANAGEMENT DISCUSSION AND ANALYSIS (in thousands, except per share amounts) ​