What changed in this filing

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Item 1. Financial Statements

2025-05-08 compared with 2024-11-07 · 234 added, 357 removed, 474 unchanged (55% of the section changed)

3 unchanged sentences

(In thousands, except per share amounts)

September 30, 2024

March 31, 2025

December 31, 2024

4 unchanged sentences

Income tax receivable

Assets held for sale

Total current assets

8 unchanged sentences

Accrued liabilities

Income tax payable

Current portion of long-term debt

Liabilities held for sale

Total current liabilities

16 unchanged sentences

CLARUS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS )

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(In thousands, except per share amounts)

Three Months Ended

September 30, 2024

September 30, 2023

March 31, 2025

March 31, 2024

Domestic sales

15 unchanged sentences

Discontinued operations, net of tax

Net (loss) income

Other comprehensive income (loss), net of tax:

2 unchanged sentences

Other comprehensive income (loss)

Comprehensive income (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)

Nine Months Ended

September 30, 2024

September 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 income (expense)

Interest income, net

Total other income (expense), net

Loss before income tax

Income tax benefit

Loss from continuing operations

Discontinued operations, net of tax

Net income (loss)

Other comprehensive income (loss), net of tax:

Foreign currency translation adjustment

Unrealized gain on hedging activities

Other comprehensive income (loss)

Comprehensive income (loss)

Comprehensive (loss) income

Loss from continuing operations per share:

Net income (loss) per share:

Net (loss) income per share:

Weighted average shares outstanding:

3 unchanged sentences

(In thousands)

Nine Months Ended

September 30, 2024

September 30, 2023

Three Months Ended

March 31, 2025

March 31, 2024

Cash Flows From Operating Activities:

Net income (loss)

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

Net (loss) income

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation of property and equipment

1 unchanged sentence

Gain on sale of business

Accretion of notes payable

Amortization of debt issuance costs

Gain on disposition of property and equipment

Loss (gain) on disposition of property and equipment

Noncash lease expense

Contingent consideration benefit

Stock-based compensation

5 unchanged sentences

Accrued liabilities

Net cash (used in) provided by operating activities

Net cash used in operating activities

Cash Flows From Investing Activities:

3 unchanged sentences

Purchases of property and equipment

Net cash provided by (used in) investing activities

Net cash (used in) provided by investing activities

Cash Flows From Financing Activities:

2 unchanged sentences

Repayments on term loans and other debt

Proceeds from issuance of other debt

Proceeds from issuance of term loans and other debt

Purchase of treasury stock

Proceeds from exercise of options

Cash dividends paid

8 unchanged sentences

Supplemental Disclosures of Non-Cash Investing and Financing Activities:

Shares issued for business acquisitions

Property and equipment purchased with accounts payable

Intangible assets purchased with accounts payable

Purchases of property and equipment incurred but not paid

Lease liabilities arising from obtaining right-of-use assets

13 unchanged sentences

Balance, March 31, 2024

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

Other comprehensive loss

Cash dividends ($ 0.025 per share)

Stock-based compensation expense

Proceeds from exercise of options

Shares issued in business acquisition

Balance, September 30, 2023

Treasury Stock

2 unchanged sentences

Balance, December 31, 2024

Other comprehensive loss

Other comprehensive income

Cash dividends ( $ 0.025 per share)

3 unchanged sentences

Balance, March 31, 2025

Other comprehensive income

Cash dividends ($ 0.025 per share)

Stock-based compensation expense

Proceeds from exercise of options

Balance, June 30, 2024

Other comprehensive income

Cash dividends ($ 0.025 per share)

Stock-based compensation expense

Proceeds from exercise of options

Balance, September 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 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.

The accompanying unaudited condensed consolidated financial statements of Clarus Corporation and its subsidiaries (which may be collectively referred to as the “Company,” “Clarus,” “we,” “us” or “our”) as of March 31, 2025 and December 31, 2024 and for the three months ended March 31, 2025 and 2024, have been prepared in accordance with generally accepted accounting principles 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.

The results for the three months ended March 31, 2025 are not necessarily indicative of the results to be obtained for the year ending December 31, 2025.

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, 2024, filed with the Securities and Exchange Commission (the “SEC”) on March 6, 2025.

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.

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.

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.

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

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.

The preparation of consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements.

Estimates also affect the reported amounts of revenue and expenses during the reporting period.

We continually evaluate our estimates and assumptions including those related to revenue recognition, income taxes and valuation of long-lived assets, goodwill and indefinite-lived intangible assets, and other intangible assets.

We base our estimates on historical experience 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

CLARUS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(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):

5 unchanged sentences

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.

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

CLARUS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(in thousands, except per share amounts)

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses, which requires a public entity to disclose, in the notes to the financial statements, specified information about certain costs and expenses on an annual and interim basis.

The guidance will require all entities to disclose the amounts of purchases of inventory, employee compensation, depreciation, and intangible asset amortization included in each relevant expense caption.

The guidance also requires disclosure of a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively, as well as disclosure of the total amount of selling expenses and, in annual reporting periods, an entity’s definition of selling expenses.

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

The amendments in ASU 2024-03 are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027.

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 December 5, 2024, Clarus and its wholly-owned subsidiary, Rhino-Rack USA LLC, entered into an Asset Purchase Agreement (the “RockyMounts Purchase Agreement”) with RockyMounts, Inc.

(the “Seller” or “RockyMounts”) and Robert C.

Noyes, pursuant to which the Company agreed to (i) acquire certain assets and liabilities of the Seller constituting the RockyMounts business, including equipment, inventory, intellectual property (including exclusive use of the brand name ROCKYMOUNTS and the tradename ROCKY MOUNTS INC.), software, domain names and social media accounts, and (ii) assume certain liabilities related to the RockyMounts assets, including all liabilities and obligations of the Seller under the Assigned Contracts (as defined in the RockyMounts Purchase Agreement), arising or to be performed after the closing of the RockyMounts Purchase Agreement.

Pursuant to the RockyMounts Purchase Agreement, the purchase price to be paid for the RockyMounts assets is up to $ 8,000 , which includes (i) $ 4,000 paid in cash at closing, subject to adjustment as set forth in the RockyMounts Purchase Agreement, (ii) the issuance of a promissory note by Rhino-Rack USA LLC in favor of the Seller in the original principal amount of $ 2,000 , payable on the one-year anniversary of the closing of the RockyMounts Purchase Agreement, and (iii) the payment of additional contingent consideration of up to $ 2,000 in cash upon the satisfaction of certain net sales targets (the “RockyMounts Contingent Consideration”).

The Company estimated the initial fair value of the RockyMounts Contingent Consideration to be $ 609 and recorded this liability within accrued liabilities.

See Note 11 for discussion regarding the valuation of the RockyMounts Contingent Consideration as of March 31, 2025.

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 Company believes the acquisition of RockyMounts 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 fair value estimates for the purchase price allocation for RockyMounts are based on the Company’s best estimates and assumptions as of the reporting date and are considered preliminary.

The fair value measurements of identifiable assets and liabilities, and the resulting goodwill related to the RockyMounts Acquisition are subject to change and the final purchase price allocations could be different from the amounts presented below.

We expect to finalize the valuations as soon as practicable, but not later than one year from the date of the acquisition.

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.

Goodwill for RockyMounts is included in the Adventure segment.

The goodwill consists largely of the growth and profitability expected from these acquisitions.

CLARUS CORPORATION

1 unchanged sentence

(in thousands, except per share amounts)

October 9, 2023

Number of Shares

December 5, 2024

Estimated Fair Value

Issuance of shares of Clarus Corporation

Contingent consideration

6 unchanged sentences

Accounts payable and accrued liabilities

Deferred income taxes

Total liabilities

4 unchanged sentences

(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.

In connection with the acquisition, the Company acquired exclusive rights to RockyMounts’ 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:

2 unchanged sentences

Product technologies

Intangibles not subject to amortization

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.

Non-compete agreements

The full amount of goodwill of $ 2,741 at RockyMounts is expected to be deductible for tax purposes.

No pre-existing relationships existed between the Company and RockyMounts or their sellers prior to the acquisition.

RockyMounts revenue and operating income are included in the Adventure segment.

Total revenue and net income of RockyMounts from the date of acquisition to December 31, 2024 were not material to the Company’s consolidated financial statements.

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”).

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, 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.

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 September 30, 2024, the working capital adjustment had been finalized, with no changes from the preliminary working capital adjustment.

As of December 31, 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 .

3 unchanged sentences

(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

Prepaid and other current assets

Total current assets held for sale

Property and equipment, net

Other intangible assets, net

Indefinite-lived intangible assets

Other long-term assets

Total assets held for sale

Accounts payable

Accrued liabilities

Total current liabilities held for sale

Total liabilities held for sale

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

March 31, 2024

Cost of goods sold

8 unchanged sentences

Income from discontinued operations, net of tax

CLARUS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(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

Amortization of intangible assets

Three Months Ended

March 31, 2024

Stock-based compensation

Purchase of property and equipment

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

September 30, 2024

Inventories, as of March 31, 2025 and December 31, 2024, were as follows:

March 31, 2025

December 31, 2024

2 unchanged sentences

Raw materials and supplies

CLARUS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(in thousands, except per share amounts)

PROPERTY AND EQUIPMENT

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

September 30, 2024

Property and equipment, net, as of March 31, 2025 and December 31, 2024, were as follows:

March 31, 2025

December 31, 2024

5 unchanged sentences

Less accumulated depreciation

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.

CLARUS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(in thousands, except per share amounts)

Depreciation expense for continuing operations for the three months ended March 31, 2025 and 2024 was $ 883 and $ 1,026 , respectively.

GOODWILL AND INTANGIBLE ASSETS

2 unchanged sentences

Balance at December 31, 2024

Impact of foreign currency exchange rates

Balance at September 30, 2024

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.

Balance at March 31, 2025

Indefinite-Lived Intangible Assets

2 unchanged sentences

Impact of foreign currency exchange rates

Balance at September 30, 2024

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

Balance at March 31, 2025

CLARUS CORPORATION

1 unchanged sentence

(in thousands, except per share amounts)

Trademarks classified as indefinite-lived intangible assets by brand as of March 31, 2025 and December 31, 2024, were as follows:

March 31, 2025

December 31, 2024

Black Diamond

Other Intangible Assets, net

1 unchanged sentence

Gross balance at December 31, 2024

Disposal of fully amortized other intangible assets

Impact of foreign currency exchange rates

Gross balance at September 30, 2024

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

September 30, 2024

Gross balance at March 31, 2025

Other intangible assets, net of amortization as of March 31, 2025 and December 31, 2024, were as follows:

March 31, 2025

Accumulated Amortization

3 unchanged sentences

Product technologies

Core technologies

Non-compete agreements

CLARUS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(in thousands, except per share amounts)

December 31, 2024

4 unchanged sentences

Core technologies

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:

Amortization expense for continuing operations for the three months ended March 31, 2025 and 2024, was $ 2,224 and $ 2,449 , respectively.

Future amortization expense for other intangible assets as of March 31, 2025 is as follows:

Years Ending December 31,

Amortization Expense

2024 (excluding the nine months ended September 30, 2024)

CLARUS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(in thousands, except per share amounts)

2025 (excluding the three months ended March 31, 2025)

ACCRUED LIABILITIES AND OTHER LONG-TERM LIABILITIES

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

September 30, 2024

Accrued liabilities as of March 31, 2025 and December 31, 2024, were as follows:

March 31, 2025

December 31, 2024

8 unchanged sentences

Restructuring liabilities

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

September 30, 2024

CLARUS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(in thousands, except per share amounts)

Other long-term liabilities as of March 31, 2025 and December 31, 2024, were as follows:

March 31, 2025

December 31, 2024

Long-term lease liability

Contingent consideration liability

LONG-TERM DEBT

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

September 30, 2024

Long-term debt as of March 31, 2025 and December 31, 2024, was as follows:

March 31, 2025

December 31, 2024

5 unchanged sentences

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 % .

CLARUS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(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.

(b) On December 5, 2024, pursuant to the RockyMounts Purchase Agreement, Clarus and its wholly-owned subsidiary, Rhino-Rack USA LLC, issued a promissory note in favor of RockyMounts, Inc.

in the principal amount of $ 2,000 , payable on December 5, 2025.

Imputed interest is included within the principal amount and the fair value of the note was $ 1,878 on the date of issuance.

As of March 31, 2025 and December 31, 2024, the borrowing rate was 6.5 % .

Foreign subsidiaries of the Company had term debt with financial institutions, which was repaid as of December 31, 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.

1 unchanged sentence

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

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

DERIVATIVE FINANCIAL INSTRUMENTS

The Company’s primary exchange rate risk management objective is to mitigate the uncertainty of anticipated cash flows attributable to changes in foreign currency exchange rates.

The Company’s primary exchange rate risk management objective is to attempt 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.

The Company manages this risk primarily by using currency forward and option contracts.

The Company manages

CLARUS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(in thousands, except per share amounts)

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 .

At March 31, 2025, 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.

As of March 31, 2025, 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

The Company held the following contracts designated as hedging instruments as of March 31, 2025 and December 31, 2024:

March 31, 2025

Foreign exchange contracts - Canadian Dollars

1 unchanged sentence

Foreign exchange contracts - Euros

February 2026

December 31, 2024

2 unchanged sentences

Foreign exchange contracts - Euros

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.

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 September 30, 2024 and December 31, 2023:

Gains of $ 76 and $ 81 were reclassified to sales during the three months ended March 31, 2025 and 2024, respectively.

The following table presents the balance sheet classification and fair value of derivative instruments as of March 31, 2025 and December 31, 2024:

Classification

September 30, 2024

March 31, 2025

December 31, 2024

5 unchanged sentences

Accrued liabilities

Designated forward exchange contracts

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 September 30, 2024:

Foreign Currency Translation Adjustments

Unrealized Gains (Losses) on Cash Flow Hedges

Balance as of June 30, 2024

Other comprehensive income (loss) before reclassifications

Amounts reclassified from other comprehensive income (loss)

Net current period other comprehensive income (loss)

Balance as of September 30, 2024

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

Balance as of June 30, 2023

Other comprehensive (loss) income before reclassifications

Amounts reclassified from other comprehensive loss

Net current period other comprehensive (loss) income

Balance as of September 30, 2023

CLARUS CORPORATION

1 unchanged sentence

(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:

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, 2025:

Foreign Currency Translation Adjustments

1 unchanged sentence

Balance as of December 31, 2024

Other comprehensive income before reclassifications

Other comprehensive income (loss) before reclassifications

Amounts reclassified from other comprehensive income (loss)

Net current period other comprehensive income

Balance as of September 30, 2024

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

Net current period other comprehensive income (loss)

Balance as of March 31, 2025

The following table sets forth the changes in AOCI, net of tax, for the three months ended March 31, 2024:

Foreign Currency Translation Adjustments

2 unchanged sentences

Other comprehensive (loss) income before reclassifications

Amounts reclassified from other comprehensive loss

Amounts reclassified from other comprehensive (loss) income

Net current period other comprehensive (loss) income

Balance as of September 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 nine months ended September 30, 2024 and 2023, were as follows:

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

Balance as of March 31, 2024

The effects on net income of amounts reclassified from unrealized gains on cash flow hedges for foreign exchange contracts for the three months ended March 31, 2025 and 2024, were as follows:

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

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

Statements of Comprehensive (Loss) Income

March 31, 2025

March 31, 2024

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 September 30, 2024 and December 31, 2023 were as follows:

September 30, 2024

Assets and liabilities measured at fair value on a recurring basis at March 31, 2025 and December 31, 2024 were as follows:

March 31, 2025

Designated forward exchange contracts

Contingent consideration liabilities

December 31, 2024

Designated forward exchange contracts

Contingent consideration liabilities

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

Significant unobservable inputs used in the valuations of contingent consideration liabilities related to the acquisitions of RockyMounts and TRED included discount rates of 13.0 % and 11.5 %, respectively.

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 (loss) for such period.

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

We measure the initial liability and remeasure the liability on a recurring basis using Level 3 inputs as defined under authoritative guidance for fair value measurements.

2 unchanged sentences

Fair value adjustments

Impact of foreign currency exchange rates

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.

Balance at March 31, 2025

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

As of March 31, 2025, 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 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 .

On May 6, 2025 , the Company announced that its Board of Directors approved the payment on May 28, 2025 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 19, 2025 .

EARNINGS (LOSS) PER SHARE

7 unchanged sentences

Three Months Ended

Nine Months Ended

September 30, 2024

September 30, 2023

September 30, 2024

September 30, 2023

March 31, 2025

March 31, 2024

Weighted average shares outstanding - basic

4 unchanged sentences

Net (loss) income per share:

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.

For the three months ended March 31, 2025 and 2024, equity awards of 4,265 and 5,047 , 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 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.

During the three months ended March 31, 2025, the Company issued stock option awards for an aggregate of 550 shares of Common Stock under the 2015 Plan to directors and employees of the Company.

Of the 550 stock options, 500 stock options shall vest and become exercisable one year from the date of the grant and 50 stock options shall vest and become exercisable over a period of three years from the date of the 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 Nine Months Ended September 30, 2024

Options Granted During the Three Months Ended March 31, 2025

Number of options

1 unchanged sentence

Grant price (per share)

$ 6.75 - $ 6.81

Dividend yield

1.47 % - 1.48 %

Expected volatility (a)

7 unchanged sentences

(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.

The grant date fair value of the stock options granted during the three months ended March 31, 2025 was $ 940 , which will be recognized over the vesting period of the options.

During the three months ended March 31, 2025, the Company did no t issue any restricted stock awards under the 2015 Plan to directors and employees of the Company.

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, 2025 and 2024 was $ 1,469 and $ 1,178 , respectively.

For the three months ended March 31, 2025 and 2024, the majority of stock-based compensation costs were classified as selling, general and administrative expenses.

As of March 31, 2025, there were 1,057 unvested stock options and unrecognized compensation cost of $ 2,500 related to unvested stock options, as well as 1,050 unvested restricted stock awards and unrecognized compensation costs of $ 3,449 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 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.

During the three months ended March 31, 2025 and 2024, the Company incurred $ 173 and $ 370 , respectively, of restructuring charges related to these actions.

The Company has incurred $ 5,344 of cumulative restructuring charges since the commencement of our 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

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

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 ended December 31,

CLARUS CORPORATION

1 unchanged sentence

(in thousands, except per share amounts)

charges in the condensed consolidated statements of comprehensive income (loss).

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:

The Company anticipates completing these restructuring activities in the year ended December 31, 2025.

The following table summarizes the restructuring charges, payments and the remaining liabilities related to restructuring costs at March 31, 2025, which are included within accrued liabilities in the condensed consolidated balance sheets:

Balance at December 31, 2024

4 unchanged sentences

Cash payments

Asset impairments

Balance at September 30, 2024

Balance at March 31, 2025

COMMITMENTS, CONTINGENCIES AND LEGAL MATTERS

4 unchanged sentences

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.

Consumer Product Safety Commission (“CPSC”) and Department of Justice 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;

1 unchanged sentence

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.”

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

CLARUS CORPORATION

3 unchanged sentences

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.

(“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.

8 unchanged sentences

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.

By letters dated October 12, 2023 and December 18, 2023, respectively, BDEL was notified by the CPSC that the agency staff had concluded that BDEL failed to timely meet its statutory reporting obligations under the Consumer Product Safety Act with respect to certain models of avalanche transmitters distributed by BDEL switching unexpectedly out of “send” mode and certain models of avalanche transmitters distributed by BDEL 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.

The CPSC ultimately disagreed with our position and the agency voted to refer the matter to the U.S.

Department of Justice for further proceedings.

The Company and BDEL intend to strongly contest and vigorously defend against any claims which may be asserted against them by the Department of Justice or the CPSC.

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.

5 unchanged sentences

Walbrecht’s independent counsel responded to the CPSC, denying the allegations of its June 25, 2024, 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

On January 23, 2025, the Company and BDEL were each served with grand jury subpoenas from the United States Department of Justice requiring the production of documents relating to avalanche transmitters distributed by BDEL.

The Company and BDEL intend to cooperate with this investigation.

CLARUS CORPORATION

1 unchanged sentence

(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).

On March 13, 2025, the Company received a letter from the CPSC requesting various categories of documents and information in connection with an investigation into whether BDEL sold products that were subject to a recall.

The Company is cooperating with this investigation.

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 with the CPSC or the U.S.

Department of Justice.

During the year ended December 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 (loss) 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.

1 unchanged sentence

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).

During the three months ended March 31, 2025 and 2024, the Company incurred legal expenses of $ 578 and $ 205 , 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 (loss) income.

Clarus Corporation v.

2 unchanged sentences

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.

On March 14, 2025, the Court issued an Opinion and Order granting the defendants’ motion for summary judgment on the ground that they qualified for the market making exemption under Section 16(d) of the Exchange Act.

On April 11, 2025, the Company filed a timely Notice of Appeal.

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).

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 short-swing 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.

Defendants filed a motion to dismiss and on March 24, 2025, the Court issued an Order and Opinion denying the motion to dismiss and directing the defendants to answer the Complaint and proceed to discovery.

During the three months ended March 31, 2025 and 2024, the Company incurred legal expenses of $ 47 and $ 297 , 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 (loss) income.

CLARUS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(in thousands, except per share amounts)

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.

The difference between the Company’s estimated effective tax rate benefit of 13.3 % for the three months ended March 31, 2025, and the U.S.

federal statutory tax rate of 21 % was primarily due to the impact of valuation allowance, stock compensation, and research and experimentation expenditures and credits in the first quarter of 2025.

As of December 31, 2024, the Company’s gross deferred tax asset was $ 35,658 .

The Company has recorded a valuation allowance of $ 23,344 , resulting in a net deferred tax asset of $ 12,314 , before deferred tax liabilities of $ 24,488 .

CLARUS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(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.

As of March 31, 2025 and December 31, 2024, the Company has provided a full valuation allowance against all of the U.S.

deferred tax assets 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.

4 unchanged sentences

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, 2024, the Company had NOLs and research and experimentation credit for U.S.

federal income tax purposes of $ 0 and $ 5,439 , 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

2027 and beyond

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.

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

The Company’s CODM is the Executive Chairman and Director (Principal Executive Officer).

The CODM allocates resources based on revenue and operating income primarily through the annual budget and periodic forecasting process.

The CODM considers budget-to-actual variances when making decisions about allocating capital and personnel to the segments.

Corporate costs consist of corporate office expenses including compensation, benefits, non-cash stock compensation expense, transaction costs, and other administrative costs, as well as charges related to certain legal and regulatory matters, that are managed at a corporate level and are not included within segment results when evaluating performance or allocating resources.

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

CLARUS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(in thousands, except per share amounts)

Our Outdoor segment offers a broad range of products including:

5 unchanged sentences

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.

We also offer advanced

CLARUS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(in thousands, except per share amounts)

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, bicycle racks, and accessories in Australia and New Zealand and a growing presence in the United States and Europe.

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.

1 unchanged sentence

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:

Three Months Ended March 31, 2025

Domestic sales

International sales

Total Outdoor

Cost of goods sold

Inventory fair value of purchase accounting

Selling, general and administrative

Restructuring charges

Transaction costs

Legal costs and regulatory matter expenses

Segment operating income (loss)

Corporate costs

Interest income, net

Loss before income tax

Three Months Ended March 31, 2024

Domestic sales

International sales

Total Adventure

Total sales to external customers

Segment operating (loss) income:

Total segment operating (loss) income

Cost of goods sold

PFAS and other inventory reserves

Selling, general and administrative

Restructuring charges

Legal costs and regulatory matter expenses

Segment operating loss

Corporate costs

1 unchanged sentence

Loss before income tax

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

CLARUS CORPORATION

1 unchanged sentence

(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

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

Total assets by segment, as of March 31, 2025 and December 31, 2024, were as follows:

March 31, 2025

December 31, 2024

1 unchanged sentence

Three Months Ended

Nine Months Ended

September 30, 2024

September 30, 2023

September 30, 2024

September 30, 2023

March 31, 2025

March 31, 2024

Capital expenditures:

4 unchanged sentences

Total amortization

SUBSEQUENT EVENT

On May 8, 2025, BD European Holdings, LLC, a Delaware limited liability company and wholly owned subsidiary of the Company, entered into a Share Purchase and Transfer Agreement to sell Black Diamond Austria GmbH and its operating subsidiary, PIEPS GmbH, to a private investment firm for a total purchase price of € 7,800 or approximately $ 8,400 including cash and debt.

The agreement governing the sale has been executed by the parties and will become binding upon receipt by the notary in Austria of the original of the signed power of attorney of the purchaser, a copy of which has already been provided to the notary.

The Company expects the transaction to close before the end of the third quarter of 2025 subject to customary closing conditions and other regulatory matters, including foreign direct investment requirements.

CLARUS CORPORATION

2 unchanged sentences

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

What changed 10-Q

Item 1. Financial Statements