What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-05-08 compared with 2024-11-07 · 96 added, 186 removed, 146 unchanged (66% of the section changed)

5 unchanged sentences

Potential risks and uncertainties that could cause the actual results of operations or financial condition of the Company to differ materially from those expressed or implied by forward-looking statements in this Quarterly Report on Form 10-Q include, but are not limited to, the overall level of consumer demand on our products;

general economic conditions and other factors affecting consumer confidence, preferences, and behavior, including, without limitation, the impact of inflation;

general economic conditions and other factors affecting consumer confidence, preferences, and behavior;

the potential impact of the uncertain macroeconomic environment on our financial results, including, but not limited to, the effects of sustained global inflationary pressures and interest rates, potential economic slowdowns or recessions, trade restrictions and regulatory changes, and global supply chain disruptions;

the effect of inflation on our business, including any future pricing actions taken in an effort to mitigate the effects of inflation and potential impacts on our revenue, operating margins and net income;

disruption and volatility in the global currency, capital and credit markets;

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the ability of the Company to execute and integrate acquisitions;

the Company’s exposure to product liability or product warranty claims and other loss contingencies, including, without limitation, recalls and liability claims relating to our avalanche beacon transceivers;

disruptions and other impacts to the Company’s business, as a result of an outbreak of disease or similar public health threat, such as the COVID 19 global pandemic, and government actions and restrictive measures implemented in response;

stability of the Company’s manufacturing facilities and suppliers, as well as consumer demand for our products, in light of disease epidemics and health-related concerns such as the COVID 19 global pandemic;

disruptions and other impacts to the Company’s business, as a result of an outbreak of disease or similar public health threat, and government actions and restrictive measures implemented in response;

stability of the Company’s manufacturing facilities and suppliers, as well as consumer demand for our products, in light of disease epidemics and health-related concerns;

the impact that global climate change trends may have on the Company and its suppliers and customers, increased focus on sustainability issues as a result of global climate change;

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the impact of adverse publicity about the Company and/or its brands and products, including without limitation, through social media or in connection with brand damaging events and/or public perception;

the potential impact of the Consumer Products Safety Commission’s investigation related to the Company’s reporting obligations under the Consumer Product Safety Act in connection with the Company’s recall of certain models of its avalanche transceivers on our business, results of operations, and financial condition;

the potential impact of the Consumer Products Safety Commission’s and the U.S.

Department of Justice’s investigations related to BDEL’s reporting obligations under the Consumer Product Safety Act in connection with BDEL’s recall of certain models of its avalanche transceivers on our business, results of operations, and financial condition;

fluctuations in the price, availability and quality of raw materials and contracted products as well as foreign currency fluctuations;

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our ability to obtain additional capital and funding on acceptable terms to meet our financial obligations as well as to support our business operations and growth strategy;

the possibility that a condition to closing of the sale of PIEPS may not be satisfied and the sale will not be consummated which could negatively impact the price of the Company’s shares of common stock or the business, results of operations, and financial condition of the Company;

and any material differences in the actual financial results of the Company’s past and future acquisitions, including the impact of acquisitions and any recognition of impairment or other charges relating to any such acquisitions on the Company’s future earnings per share.

More information on potential factors that could affect the Company’s financial results is included from time to time in the Company’s public reports filed with the Securities and Exchange Commission, including the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.

All forward-looking statements included in this Quarterly Report on Form 10-Q are based upon information available to the Company as of the date of this Quarterly Report on Form 10-Q, and speak only as of the date hereof.

CLARUS CORPORATION

1 unchanged sentence

(in thousands, except per share amounts)

obligation to update any forward-looking statements to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q.

Headquartered in Salt Lake City, Utah, Clarus is 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.

information on potential factors that could affect the Company’s financial results is included from time to time in the Company’s public reports filed with the Securities and Exchange Commission, including the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.

We assume no obligation to update any forward-looking statements to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q.

Headquartered in Salt Lake City, Utah, Clarus is 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.

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The brand is synonymous with premium performance, safety and reliability.

Founded in 1992, our Rhino-Rack brand is a globally-recognized designer and distributor of highly-engineered automotive roof racks and accessories to enhance the outdoor enthusiast’s experience.

Founded in 1992, our Rhino-Rack brand is a globally-recognized designer and distributor of highly-engineered automotive roof racks and accessories to enhance the outdoor enthusiast’s overlanding experience.

Founded in 2005, our MAXTRAX brand offers high-quality overlanding and off-road vehicle recovery and extraction tracks for the overland and off-road market.

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

in May 2010 and changed its name to Black Diamond, Inc.

(“Black Diamond Equipment”) in May 2010 and changed its name to Black Diamond, Inc.

in January 2011.

In October 2012, we acquired PIEPS Holding GmbH and its subsidiaries.

In October 2012, we acquired PIEPS Holding GmbH and its subsidiaries (collectively, “PIEPS”).

On August 14, 2017, the Company changed its name from Black Diamond, Inc.

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On August 21, 2017, the Company acquired Sierra Bullets, L.L.C.

On November 6, 2018, the Company acquired the assets of SKINourishment, Inc.

(“SKINourishment”).

During the first quarter of 2024, the Company ceased operations of SKINourishment.

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

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

On December 5, 2024, the Company completed the acquisition of certain assets and liabilities constituting the RockyMounts business (“RockyMounts”).

On February 29, 2024, the Company completed the sale 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 (the “Precision Sport Purchase Agreement”).

Under the terms of the Precision Sport Purchase Agreement, the Company received approximately $175,674 in cash in exchange for all of the equity associated with the Company’s Precision Sport segment.

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

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

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

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

CLARUS CORPORATION

1 unchanged sentence

(in thousands, except per share amounts)

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

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.

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.

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

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 2024;

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, 2025;

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

Critical Accounting Policies and Use of Estimates

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Actual results could differ from these estimates.

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.

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 our 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.

There have been no significant changes to our critical accounting policies as described in our Annual Report on Form 10-K for the year ended December 31, 2024.

Recent Accounting Pronouncements

See “Recent Accounting Pronouncements” in Note 1 to our condensed consolidated financial statements.

CLARUS CORPORATION

1 unchanged sentence

(in thousands, except per share amounts)

Recent Accounting Pronouncements

See “Recent Accounting Pronouncements” in Note 1 to our condensed consolidated financial statements.

Results of Operations

Three Months Ended September 30, 2024 Compared to Three Months Ended September 30, 2023

The following presents a discussion of operations for the three months ended September 30, 2024, compared with the three months ended September 30, 2023.

Three Months Ended March 31, 2025 Compared to Three Months Ended March 31, 2024

The following presents a discussion of operations for the three months ended March 31, 2025, compared with the three months ended March 31, 2024.

Three Months Ended

September 30, 2024

September 30, 2023

March 31, 2025

March 31, 2024

Domestic sales

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Discontinued operations, net of tax

Net (loss) income

Total sales decreased $8,878, or 12.8%, to $60,433 during the three months ended March 31, 2025, compared to total sales of $69,311 during the three months ended March 31, 2024.

The decrease in sales was attributable to a decrease in sales at the Adventure and Outdoor segments of $6,178 and $2,700, respectively.

CLARUS CORPORATION

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(in thousands, except per share amounts)

Total sales decreased $14,187, or 17.4%, to $67,115 during the three months ended September 30, 2024, compared to total sales of $81,302 during the three months ended September 30, 2023.

The decrease in sales was attributable to a decrease in sales at the Outdoor and Adventure segments of $11,789 and $2,398, respectively.

Sales in the Adventure segment increased by $281 due to foreign exchange impact from the weakening of the U.S.

dollar against the Australian dollar during the three months ended September 30, 2024, compared to the prior period.

Sales in the Outdoor segment were reduced by $696 due to foreign exchange impact from the strengthening of the U.S.

dollar primarily against the euro during the three months ended September 30, 2024, compared to the prior period.

Sales in the Outdoor segment decreased due to weakness in our North American wholesale and direct to consumer (“DTC”) channels, independent global distributor (“IGD”) customers, and softness in our European markets, combined with the effects from our product simplification and SKU rationalization strategy.

Sales in the Adventure segment decreased due to lower demand from original equipment manufacturer (“OEM”) customers and challenging wholesale in the Australia and US markets, partially offset by a $1,237 increase from the TRED Outdoors acquisition.

Domestic sales decreased $6,058, or 19.9%, to $24,365 during the three months ended September 30, 2024, compared to domestic sales of $30,423 during the three months ended September 30, 2023.

The decrease in sales was attributable to decreases at the Outdoor and Adventure segments of $5,253 and $805, respectively.

International sales decreased $8,129, or 16.0%, to $42,750 during the three months ended September 30, 2024, compared to international sales of $50,879 during the three months ended September 30, 2023.

dollar primarily against the euro during the three months ended March 31, 2025, compared to the prior period.

Sales in the Adventure segment were reduced by $569 due to foreign exchange impact from the strengthening of the U.S.

dollar against the Australian dollar during the three months ended March 31, 2025, compared to the prior period.

Sales in the Adventure segment decreased due to significantly lower demand from global original equipment manufacturer (“OEM”) customers and a challenging wholesale market in Australia for both Rhino-Rack and MAXTRAX, combined with a prior year large wholesale customer in North America not reoccurring in the three months ended March 31, 2025, partially offset by a $1,342 increase from the RockyMounts acquisition.

Sales in the Outdoor segment decreased due to our product simplification and SKU rationalization strategy across Black Diamond, combined with the impact from the shift in timing for independent global distributor (“IGD”) revenues from the three months ended March 31, 2025.

Domestic sales decreased $3,475, or 12.3%, to $24,809 during the three months ended March 31, 2025, compared to domestic sales of $28,284 during the three months ended March 31, 2024.

The decrease in sales was attributable to decreases at the Outdoor and Adventure segments of $2,936 and $539, respectively.

International sales decreased $5,403, or 13.2%, to $35,624 during the three months ended March 31, 2025, compared to international sales of $41,027 during the three months ended March 31, 2024.

The decrease in sales was attributable to decreases at the Adventure segment of $5,639, partially offset by increases at the Outdoor segment of $236.

Cost of Goods Sold

Cost of goods sold decreased $10,400, or 19.3%, to $43,618 during the three months ended September 30, 2024, compared to cost of goods sold of $54,018 during the three months ended September 30, 2023.

Gross profit decreased $3,787, or 13.9%, to $23,497 during the three months ended September 30, 2024, compared to gross profit of $27,284 during the three months ended September 30, 2023.

Gross margin was 35.0% during the three months ended September 30, 2024, compared to a gross margin of 33.6% during the three months ended September 30, 2023.

Gross margin during the three months ended September 30, 2024 increased compared to the prior year as a result of favorable product mix at the Outdoor segment, as well as a favorable channel mix due to lower OEM sales and higher MAXTRAX revenue at the Adventure segment.

These increases were partially offset by an increase in polyfluoroalkyl substances (“PFAS”) related inventory reserve expenses at the Outdoor segment, as well as sales return reserve and rebate expenses at the Adventure segment.

Cost of goods sold decreased $4,821, or 10.8%, to $39,639 during the three months ended March 31, 2025, compared to cost of goods sold of $44,460 during the three months ended March 31, 2024.

Gross profit decreased $4,057, or 16.3%, to $20,794 during the three months ended March 31, 2025, compared to gross profit of $24,851 during the three months ended March 31, 2024.

Gross margin was 34.4% during the three months ended March 31, 2025, compared to a gross margin of 35.9% during the three months ended March 31, 2024.

Gross margin during the three months ended March 31, 2025, decreased compared to the prior year as a result of lower volumes and unfavorable product mix at the Outdoor and Adventure segments.

Specifically, the unfavorable product mix at Outdoor was related to high levels of discontinued merchandise that was sold during the quarter, including the vast majority of the remaining Per- and Polyfluoroalkyl Substances (“PFAS”) inventory.

The unfavorable product mix at Adventure was primarily driven by promotional sales efforts in North America.

This combined with lower wholesale volume at both Rhino-Rack and MAXTRAX in Australia drove the decline in gross margin compared to the three months ended March 31, 2024.

Selling, General and Administrative

Selling, general, and administrative expenses decreased $524, or 1.8%, to $27,880 during the three months ended September 30, 2024, compared to selling, general and administrative expenses of $28,404 during the three months ended September 30, 2023.

Selling, general and administrative expenses at the Outdoor segment decreased by $1,688 primarily as a result of lower retail expenses due to store closures and other expense reduction initiatives to manage costs.

Selling, general and administrative expenses at the Adventure segment increased by $1,212 primarily as a result of investments in global marketing and e-commerce initiatives to accelerate growth.

Selling, general, and administrative expenses decreased $1,599, or 5.7%, to $26,616 during the three months ended March 31, 2025, compared to selling, general and administrative expenses of $28,215 during the three months ended March 31, 2024.

Selling, general and administrative expenses at the Outdoor segment decreased by $1,042 primarily as a result of lower wages and digital marketing costs, as well as lower retail expenses at the Outdoor segment due to store closures and other expense reduction initiatives across both segments to manage costs.

Selling, general and administrative expenses at the Adventure segment decreased by $346 primarily as a result of lower marketing and amortization costs, combined with other expense reduction initiatives, partially offset by a write-off of internally developed software during the three months ended March 31, 2025.

CLARUS CORPORATION

2 unchanged sentences

Restructuring Charges

Restructuring charges decreased to $478 during the three months ended September 30, 2024, compared to restructuring charges of $1,076 during the three months ended September 30, 2023.

The restructuring charges incurred during the three months ended September 30, 2024 relate to benefits provided to employees who were terminated due to the Company’s reduction-in-force as part of its continued realignment of resources within the organization of $478.

Restructuring charges decreased to $173 during the three months ended March 31, 2025, compared to restructuring charges of $370 during the three months ended March 31, 2024.

The restructuring charges incurred during the three months ended March 31, 2025 relate to benefits provided to employees who were terminated due to the Company’s reduction-in-force as part of its continued realignment of resources within the organization of $143 and lease exit and contract termination costs of $30.

Transaction Costs

Transaction costs decreased to $103 during the three months ended September 30, 2024, compared to transaction costs of $400 during the three months ended September 30, 2023, which consisted of expenses related to the Company’s various acquisition efforts.

Transaction costs increased to $142 during the three months ended March 31, 2025, compared to transaction costs of $38 during the three months ended March 31, 2024, which consisted of expenses related to the Company’s various acquisition efforts.

Legal Costs and Regulatory Matter Expenses

Legal costs and regulatory matter expenses decreased to $394 during the three months ended September 30, 2024, compared to legal costs and regulatory matter expenses of $579 during the three months ended September 30, 2023, which consisted of expenses related to the Company’s specific legal matters.

Legal costs and regulatory matter expenses decreased to $625 during the three months ended March 31, 2025, compared to legal costs and regulatory matter expenses of $3,002 during the three months ended March 31, 2024, which consisted of expenses related to the Company’s specific legal matters.

See Note 16 to our condensed consolidated financial statements for financial information regarding specific legal matters.

Interest Income, net

Interest income, net increased to $373 during the three months ended September 30, 2024, compared to interest income, net of $19 during the three months ended September 30, 2023.

The increase in interest income recognized during the three months ended September 30, 2024, was due to interest income on higher cash balances.

Other, net, changed by $1,609, or 361.6%, to $1,164 during the three months ended September 30, 2024, compared to other, net of ($445) during the three months ended September 30, 2023.

Interest income, net decreased to $257 during the three months ended March 31, 2025, compared to interest income, net of $370 during the three months ended March 31, 2024.

The decrease in interest income recognized during the three months ended March 31, 2025, was due to lower interest rates, compared to the prior period.

Other, net, changed by $1,368, or 150.5%, to $459 during the three months ended March 31, 2025, compared to other, net of ($909) during the three months ended March 31, 2024.

The change in other, net, was primarily attributable to an increase in remeasurement gains recognized on the Company’s foreign denominated accounts receivable and accounts payable.

The change was partially offset by losses in mark-to-market adjustments on non-hedged foreign currency contracts during the three months ended September 30, 2024.

Income tax benefit decreased by $731, or 52.4%, to $664 during the three months ended September 30, 2024, compared to $1,395 during the same period in 2023.

Our effective income tax rate was a benefit of 17.4% for the three months ended September 30, 2024, and differed compared to the statutory tax rates primarily due to the impact of stock compensation and research and experimentation expenditures and credits.

For the three months ended September 30, 2023, our effective income tax rate was a benefit of 38.7% and differed compared to the statutory tax rates primarily due to the impact of stock compensation, research and experimentation expenditures and credits, and discrete stock option windfall benefits.

The change was partially offset by losses in mark-to-market adjustments on non-hedged foreign currency contracts during the three months ended March 31, 2025.

Income tax benefit decreased by $49, or 5.8%, to $802 during the three months ended March 31, 2025, compared to $851 during the same period in 2024.

Our effective income tax rate was a benefit of 13.3% for the three months ended March 31, 2025, and differed compared to the statutory tax rates primarily due to the impact of valuation allowance, stock compensation, and research and experimentation expenditures and credits.

For the three months ended March 31, 2024, our effective income tax rate was a benefit of 11.6% and differed compared to the statutory tax rates primarily due to the impact of stock compensation, research and experimentation expenditures and credits, and discrete stock option shortfalls.

Discontinued Operations

Net income from discontinued operations was $0 during the three months ended September 30, 2024, compared to net income from discontinued operations of $942 during the three months ended September 30, 2023.

Net income from discontinued operations was $0 during the three months ended March 31, 2025, compared to net income from discontinued operations of $28,346 during the three months ended March 31, 2024.

The change in net income from discontinued operations is due to the sale of the Precision Sport segment occurring during the three months ended March 31, 2024.

There was no activity in discontinued operations during the three months ended September 30, 2024.

CLARUS CORPORATION

MANAGEMENT DISCUSSION AND ANALYSIS

(in thousands, except per share amounts)

Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023

The following presents a discussion of operations for the nine months ended September 30, 2024, compared with the nine months ended September 30, 2023.

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)

Total sales decreased $16,607, or 7.9%, to $192,910 during the nine months ended September 30, 2024, compared to total sales of $209,517 during the nine months ended September 30, 2023.

The decrease in sales was attributable to a decrease in sales at the Outdoor segment of $21,422, partially offset by an increase in sales at the Adventure segment of $4,815.

CLARUS CORPORATION

MANAGEMENT DISCUSSION AND ANALYSIS

(in thousands, except per share amounts)

Sales in the Adventure segment were reduced by $611 due to foreign exchange impact from the strengthening of the U.S.

dollar against the Australian dollar during the nine months ended September 30, 2024, compared to the prior period.

Sales in the Outdoor segment increased by $256 due to foreign exchange impact from the weakening of the U.S.

dollar primarily against the euro during the nine months ended September 30, 2024, compared to the prior period.

Sales in the Outdoor segment decreased due to weakness in our European, IGD, and North American markets, combined with the effects from our product simplification and SKU rationalization strategy.

Sales in the Adventure segment increased due to higher demand from OEM customers, improved domestic MAXTRAX sales, and a $3,473 increase from the TRED Outdoors acquisition.

Domestic sales decreased $4,962, or 6.2%, to $75,583 during the nine months ended September 30, 2024, compared to domestic sales of $80,545 during the nine months ended September 30, 2023.

The decrease in sales was attributable to a decrease in sales at the Outdoor segment of $6,173, partially offset by an increase in sales at the Adventure segment of $1,211.

International sales decreased $11,645, or 9.0%, to $117,327 during the nine months ended September 30, 2024, compared to international sales of $128,972 during the nine months ended September 30, 2023.

The decrease in sales was attributable to a decrease in sales at the Outdoor segment of $15,249, partially offset by an increase in sales at the Adventure segment of $3,604.

Cost of Goods Sold

Cost of goods sold decreased $9,992, or 7.4%, to $124,156 during the nine months ended September 30, 2024, compared to cost of goods sold of $134,148 during the nine months ended September 30, 2023.

Gross profit decreased $6,615, or 8.8%, to $68,754 during the nine months ended September 30, 2024, compared to gross profit of $75,369 during the nine months ended September 30, 2023.

Gross margin was 35.6% during the nine months ended September 30, 2024, compared to a gross margin of 36.0% during the nine months ended September 30, 2023.

Gross margin during the nine months ended September 30, 2024, decreased compared to the prior year due to unfavorable PFAS-related inventory reserve expenses at the Outdoor segment, as well as an increase in sales return reserve and rebate expenses at the Adventure segment.

Selling, General and Administrative

Selling, general, and administrative expenses decreased $464, or 0.5%, to $84,176 during the nine months ended September 30, 2024, compared to selling, general and administrative expenses of $84,640 during the nine months ended September 30, 2023.

Selling, general and administrative expenses at the Outdoor segment decreased by $4,850 primarily as a result of lower retail expenses due to store closures and other expense reduction initiatives to manage costs.

Selling, general and administrative expenses at the Adventure segment increased by $3,753 primarily as a result of investments in global marketing, e-commerce initiatives, and organizational leadership to accelerate growth.

Restructuring Charges

Restructuring charges decreased to $1,009 during the nine months ended September 30, 2024, compared to restructuring charges of $1,812 during the nine months ended September 30, 2023.

The restructuring charges incurred during the nine months ended September 30, 2024 relate to benefits provided to employees who were terminated due to the Company’s reduction-in-force as part of its continued realignment of resources within the organization of $993 and lease exit and contract termination costs of $16.

CLARUS CORPORATION

MANAGEMENT DISCUSSION AND ANALYSIS

(in thousands, except per share amounts)

Transaction Costs

Transaction costs decreased to $168 during the nine months ended September 30, 2024, compared to transaction costs of $459 during the nine months ended September 30, 2023, which consisted of expenses related to the Company’s various acquisition efforts.

Contingent Consideration Benefit

Contingent consideration benefit decreased to $125 during the nine months ended September 30, 2024, compared to a contingent consideration benefit of $1,565 during the nine months ended September 30, 2023, which consisted of changes in the estimated fair value of contingent consideration liabilities associated with our acquisitions of MAXTRAX in 2021 and TRED in 2023.

Legal Costs and Regulatory Matter Expenses

Legal costs and regulatory matter expenses increased to $3,795 during the nine months ended September 30, 2024, compared to legal costs and regulatory matter expenses of $1,062 during the nine months ended September 30, 2023.

The increase in legal costs and regulatory matter expenses recognized during the nine months ended September 30, 2024 reflects the Company’s accrued liability for the outstanding regulatory matter with the United States Consumer Product Safety Commission and increased expenses related to the Company’s specific legal matters.

See Note 16 to our condensed consolidated financial statements for financial information regarding specific legal matters.

Interest Income, net

Interest income, net increased to $1,198 during the nine months ended September 30, 2024, compared to interest income, net of $32 during the nine months ended September 30, 2023.

The increase in interest income recognized during the nine months ended September 30, 2024, was due to interest income on higher cash balances.

Other, net, changed by $812, or 567.8%, to $669 during the nine months ended September 30, 2024, compared to other, net of ($143) during the nine months ended September 30, 2023.

The change in other, net, was primarily attributable to a decrease in remeasurement losses recognized on the Company’s foreign denominated accounts receivable and accounts payable.

The change was partially offset by a reduction in gains in mark-to-market adjustments on non-hedged foreign currency contracts during the nine months ended September 30, 2024.

Income tax benefit increased by $699, or 27.0%, to $3,290 during the nine months ended September 30, 2024, compared to $2,591 during the same period in 2023.

Our effective income tax rate was a benefit of 17.9% for the nine months ended September 30, 2024, and differed compared to the statutory tax rates primarily due to the impact of stock compensation and research and experimentation expenditures and credits.

For the nine months ended September 30, 2023, our effective income tax rate was a benefit of 23.2% and differed compared to the statutory tax rates due to the impact of stock compensation, research and experimentation expenditures and credits, and discrete stock option windfall benefits.

Discontinued Operations

Net income from discontinued operations changed by $21,544, to $28,346 during the nine months ended September 30, 2024, compared to net income from discontinued operations of $6,802 during the nine months ended September 30, 2023.

The change in net income from discontinued operations was primarily attributable to the pre-tax gain on the sale of the

There was no activity in discontinued operations during the three months ended March 31, 2025.

CLARUS CORPORATION

1 unchanged sentence

(in thousands, except per share amounts)

Precision Sport segment of $40,585.

There was no activity in discontinued operations during the three months ended September 30, 2024.

Liquidity and Capital Resources

Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023

Three Months Ended March 31, 2025 Compared to Three Months Ended March 31, 2024

Our primary ongoing funding requirements are for working capital, expansion of our operations (both organically and through acquisitions) and general corporate needs, as well as investing in the various brands.

We plan to fund these activities through a combination of our future operating cash flows and cash on hand.

We plan to fund these activities through a combination of our future operating cash flows and net proceeds from the sale of our Precision Sport segment.

Upon the closing of the sale of the Precision Sport segment, the Company terminated and settled all outstanding borrowings on our revolving credit facility and term debt under the Credit Agreement with JPMorgan Chase Bank, N.A., as administrative agent and the lenders party thereto (the “Restated Credit Agreement”).

We believe that our liquidity requirements and contractual obligations for at least the next 12 months will be adequately covered by cash provided by operations and cash on hand.

Additionally, long-term contractual obligations are currently expected to be funded from cash from operations and cash on hand.

At September 30, 2024, we had total cash of $36,399, compared to total cash of $11,324 at December 31, 2023.

At September 30, 2024, the Company had $5,109 of the $36,399 in cash held by foreign entities, of which $3,819 is considered permanently reinvested.

The following presents a discussion of cash flows for the condensed consolidated nine months ended September 30, 2024 compared with the condensed consolidated nine months ended September 30, 2023.

Nine Months Ended

September 30, 2024

September 30, 2023

Net cash (used in) provided by operating activities

Net cash provided by (used in) investing activities

We believe that our liquidity requirements and contractual obligations for at least the next 12 months will be adequately covered by cash provided by operations and the net proceeds from the sale of the Precision Sport segment after the settlement of the Restated Credit Agreement.

Additionally, long-term contractual obligations are also currently expected to be funded from cash from operations and net proceeds from the sale of the Precision Sport segment after the settlement of the Restated Credit Agreement.

At March 31, 2025, we had total cash of $41,315, compared to total cash of $45,359 at December 31, 2024.

At March 31, 2025, the Company had $6,894 of the $41,315 in cash held by foreign entities, of which $5,524 is considered permanently reinvested.

The following presents a discussion of cash flows for the condensed consolidated three months ended March 31, 2025 compared with the condensed consolidated three months ended March 31, 2024.

Three Months Ended

March 31, 2025

March 31, 2024

Net cash used in operating activities

Net cash (used in) provided by investing activities

Net cash used in financing activities

4 unchanged sentences

Net Cash From Operating Activities

Net cash used in operating activities was $23,870 during the nine months ended September 30, 2024, compared to net cash provided by operating activities of $17,428 during the nine months ended September 30, 2023.

The change in net cash (used in) provided by operating activities during 2024 is primarily due to the gain on sale of $40,585 related to the disposition of the Precision Sport segment and an increase in cash outflows related to working capital of $18,859.

These were partially offset by an increase in net income and deferred income taxes, as well as a decrease in contingent consideration benefit during the nine months ended September 30, 2024, compared to the same period in 2023.

Net cash used in operating activities was $2,073 during the three months ended March 31, 2025, compared to net cash used in operating activities of $16,361 during the three months ended March 31, 2024.

The change in net cash used in operating activities during 2025 is primarily due to the gain on sale of $40,585 during the three months ended March 31, 2024 related to the disposition of the Precision Sport segment and a decrease in cash outflows related to working capital of $8,899.

These were partially offset by a decrease in net income and deferred income taxes during the three months ended March 31, 2025, compared to the same period in 2024.

CLARUS CORPORATION

1 unchanged sentence

(in thousands, except per share amounts)

Free cash flow, defined as net cash (used in) provided by operating activities less capital expenditures, of ($28,395) was used during the nine months ended September 30, 2024 compared to $12,933 generated during the same period in 2023.

Free cash flow, defined as net cash used in operating activities less capital expenditures, of $3,254 was used during the three months ended March 31, 2025 compared to $18,258 used during the same period in 2024.

The Company believes that the non-GAAP measure, free cash flow, provides an understanding of the capital required by the Company to expand its asset base.

A reconciliation of free cash flows to the nearest comparable GAAP financial measure is set forth below:

Nine Months Ended

September 30, 2024

September 30, 2023

Net cash (used in) provided by operating activities

Three Months Ended

March 31, 2025

March 31, 2024

Net cash used in operating activities

Purchase of property and equipment

1 unchanged sentence

Net Cash From Investing Activities

Net cash provided by investing activities was $171,144 during the nine months ended September 30, 2024, compared to net cash used in investing activities of $4,549 during the nine months ended September 30, 2023.

The increase in cash provided during the nine months ended September 30, 2024 is primarily due to the cash received related to the disposition of the Precision Sport segment, compared to the same period in 2023.

Net cash used in investing activities was $1,181 during the three months ended March 31, 2025, compared to net cash provided by investing activities of $173,608 during the three months ended March 31, 2024.

The change in cash (used in) provided by investing activities during the three months ended March 31, 2025 is primarily due to the cash received related to the disposition of the Precision Sport segment during the three months ended March 31, 2024.

Net Cash From Financing Activities

Net cash used in financing activities was $122,281 during the nine months ended September 30, 2024, compared to net cash used in financing activities of $16,191 during the nine months ended September 30, 2023.

The change in net cash used in financing activities during the nine months ended September 30, 2024, compared to the same period in 2023 was primarily due to the settlement of all outstanding borrowings on our revolving credit facility and term debt under the Restated Credit Agreement.

Net cash used in financing activities was $1,001 during the three months ended March 31, 2025, compared to net cash used in financing activities of $120,848 during the three months ended March 31, 2024.

The change in net cash used in financing activities during the three months ended March 31, 2025, compared to the same period in 2024 was primarily due to the settlement of all outstanding borrowings on our revolving credit facility and term debt under the Restated Credit Agreement during the three months ended March 31, 2024.

Net Operating Loss

1 unchanged sentence

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.

The Company has $7,699 of NOLs, of which, $0 expire on December 31, 2024.

These NOLs are subject to compliance with Section 382 of the Internal Revenue Code of 1986 (“Code”), as amended.

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.

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

Part of the Company’s deferred tax assets consist of net operating loss carryforwards for federal tax purposes.

If a change in control were to occur, these could be limited under Section 382 of the Code.

As of September 30, 2024, we had approximately $18,000 in U.S.

net deferred tax assets.

The Company has provided a full valuation allowance against all of the net U.S.

deferred tax assets as of December 31, 2024, because the ultimate realization of those assets does not meet the more-likely-than-not criteria.

The majority of the Company’s deferred tax assets consist of research and experimentation credits and capitalized costs for federal tax purposes.

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.

If a change in control were to occur, these future NOLs could be limited under Section 382 of the Internal Revenue Code of 1986 (“Code”), as amended.

Credit Agreement

Upon the closing of the sale of the Precision Sport segment on February 29, 2024, the Company terminated and settled all outstanding borrowings on our revolving credit facility and term debt under the Restated Credit Agreement.

CLARUS CORPORATION

1 unchanged sentence

(in thousands, except per share amounts)

Credit Agreement

Off-Balance Sheet Arrangements

5 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 2. Management’s Discussion and Analysis