What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-07-31 compared with 2025-05-08 · 162 added, 71 removed, 171 unchanged (58% of the section changed)

11 unchanged sentences

the Company’s ability to implement its business strategy;

the ability of the Company to execute and integrate acquisitions;

the Company’s ability to execute and integrate acquisitions, as well as to complete dispositions and effectively manage the associated separation and transition risks, including those related to the recent sale of PIEPS;

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

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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.

and any material differences in the actual financial results of the Company’s past and future acquisitions and dispositions, including the impact of such transactions and any related recognition of impairment or other charges, such as the recent impairment recognized in the Outdoor segment, on the Company’s future earnings per share.

More information on potential factors that could affect the

CLARUS CORPORATION

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(in thousands, except per share amounts)

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.

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.

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Each of our brands represents a unique customer value proposition.

Supported by six decades of proven innovation, Black Diamond is an established global leader in high-performance, activity-based climbing, skiing, and technical mountain sports equipment.

Supported by six decades of proven innovation, our Black Diamond brand is an established global leader in high-performance, activity-based climbing, skiing, and technical mountain sports equipment.

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

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

Similarly, TRED, founded in 2012, is a trusted brand for key retailers and distributors in the overlanding and off-road vehicle recovery market.

Similarly, our TRED brand, founded in 2012, is a trusted brand for key retailers and distributors in the overlanding and off-road vehicle recovery market.

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

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

On July 11, 2025, the Company completed the sale of Black Diamond Austria GmbH and its operating subsidiary, PIEPS GmbH (together, “PIEPS”), to a private investment firm for a total purchase price of €7,800 (approximately $8,400), including cash and assumed debt.

The transaction was effected pursuant to a Share Purchase and Transfer Agreement entered into on May 8, 2025, by BD European Holdings, LLC, a Delaware limited liability company and wholly owned subsidiary of the Company.

See Note 4 to our condensed consolidated financial statements for financial information regarding assets and liabilities held for sale.

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 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.

On July 30, 2025, the Company announced that its Board of Directors approved the payment on August 20, 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 August 11, 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 March 31, 2025 and 2024, the Company incurred $173 and $370, respectively, of restructuring charges related to these actions.

During the three months ended June 30, 2025 and 2024, the Company incurred $161 and $161, respectively, and during the six months ended June 30, 2025 and 2024, the Company incurred $334 and $531, respectively, of restructuring charges related to these actions.

The Company has incurred $5,505 of cumulative restructuring charges since the commencement of our restructuring actions in 2023.

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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, 2025;

We estimate that we will continue to incur restructuring costs related to employee-related costs and facility exit costs during the year ending 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 the year ended December 31, 2025.

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

Critical Accounting Policies and Use of Estimates

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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

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(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 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 June 30, 2025 Compared to Three Months Ended June 30, 2024

The following presents a discussion of operations for the three months ended June 30, 2025, compared with the three months ended June 30, 2024.

Three Months Ended

March 31, 2025

March 31, 2024

June 30, 2025

June 30, 2024

Domestic sales

5 unchanged sentences

Transaction costs

Contingent consideration benefit

Legal costs and regulatory matter expenses

Impairment of indefinite-lived intangible assets

Total operating expenses

Operating loss

Interest income, net

Total other income, net

Loss before income tax

Income tax benefit

Total sales decreased $1,237, or 2.2%, to $55,247 during the three months ended June 30, 2025, compared to total sales of $56,484 during the three months ended June 30, 2024.

The decrease in sales was attributable to a decrease in sales at the Adventure segment of $1,712, partially offset by an increase in sales at the Outdoor segment of $475.

CLARUS CORPORATION

MANAGEMENT DISCUSSION AND ANALYSIS

(in thousands, except per share amounts)

Sales in the Outdoor segment were reduced by $99 due to foreign exchange impact from the strengthening of the U.S.

dollar primarily against the euro during the three months ended June 30, 2025, compared to the prior period.

Sales in the Adventure segment were reduced by $364 due to foreign exchange impact from the strengthening of the U.S.

dollar against the Australian dollar during the three months ended June 30, 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 Rhino-Rack, partially offset by a $2,099 increase from the RockyMounts acquisition and higher promotional sales in North America.

Sales in the Outdoor segment increased due to a shift in timing for independent global distributor (“IGD”) revenues into the three months ended June 30, 2025, partially offset by decreases in our direct-to-consumer channels in both North America and Europe.

Domestic sales increased $1,790, or 7.8%, to $24,724 during the three months ended June 30, 2025, compared to domestic sales of $22,934 during the three months ended June 30, 2024.

The increase in sales was attributable to an increase in sales at the Adventure segment of $2,053, partially offset by a decrease in sales at the Outdoor segment of $263.

International sales decreased $3,027, or 9.0%, to $30,523 during the three months ended June 30, 2025, compared to international sales of $33,550 during the three months ended June 30, 2024.

The decrease in sales was attributable to a decrease in sales at the Adventure segment of $3,765, partially offset by an increase in sales at the Outdoor segment of $738.

Cost of Goods Sold

Cost of goods sold decreased $511, or 1.4%, to $35,567 during the three months ended June 30, 2025, compared to cost of goods sold of $36,078 during the three months ended June 30, 2024.

Gross profit decreased $726, or 3.6%, to $19,680 during the three months ended June 30, 2025, compared to gross profit of $20,406 during the three months ended June 30, 2024.

Gross margin was 35.6% during the three months ended June 30, 2025, compared to a gross margin of 36.1% during the three months ended June 30, 2024.

Gross margin during the three months ended June 30, 2025, decreased compared to the prior year as a result of lower volumes and an unfavorable product mix at the Adventure segment.

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

This combined with lower wholesale volume at Rhino-Rack in Australia drove the decline in gross margin compared to the three months ended June 30, 2024.

These decreases were partially offset by higher volumes and a favorable product mix at the Outdoor segment during the three months ended June 30, 2025 compared to prior year.

Selling, General and Administrative

Selling, general, and administrative expenses decreased $1,171, or 4.2%, to $26,910 during the three months ended June 30, 2025, compared to selling, general and administrative expenses of $28,081 during the three months ended June 30, 2024.

Selling, general and administrative expenses at the Outdoor segment decreased by $70 primarily as a result of lower employee-related costs and other expense reduction initiatives to manage costs.

Selling, general and administrative expenses at the Adventure segment decreased by $617 primarily as a result of lower marketing, amortization, and employee-related costs, combined with other expense reduction initiatives.

Additionally, Corporate costs decreased $484 due to lower outside service and employee-related costs.

CLARUS CORPORATION

MANAGEMENT DISCUSSION AND ANALYSIS

(in thousands, except per share amounts)

Restructuring Charges

Restructuring charges were $161 during the three months ended June 30, 2025, compared to restructuring charges of $161 during the three months ended June 30, 2024.

The restructuring charges incurred during the three months ended June 30, 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.

Transaction Costs

Transaction costs increased to $108 during the three months ended June 30, 2025, compared to transaction costs of $27 during the three months ended June 30, 2024, which consisted of expenses related to the Company’s various acquisition and disposal efforts.

Contingent Consideration Benefit

Contingent consideration benefit decreased to $0 during the three months ended June 30, 2025, compared to a contingent consideration benefit of $125 during the three months ended June 30, 2024, which consisted of changes in the estimated fair value of contingent consideration liabilities associated with our acquisition of TRED in 2023.

Legal Costs and Regulatory Matter Expenses

Legal costs and regulatory matter expenses increased to $1,837 during the three months ended June 30, 2025, compared to legal costs and regulatory matter expenses of $399 during the three months ended June 30, 2024, which consisted of expenses related to the Company’s specific legal matters.

See Note 17 to our condensed consolidated financial statements for financial information regarding specific legal matters.

Impairment of Indefinite-Lived Intangible Assets

Impairment of indefinite-lived intangible assets increased to $1,565 during the three months ended June 30, 2025, compared to impairment of indefinite-lived intangible assets of $0 during the three months ended June 30, 2024.

Based on the results of the Company’s impairment analysis completed as of June 30, 2025, the Company determined that certain indefinite-lived intangible assets, specifically the PIEPS trademark, were impaired and recognized charges of $1,565 during the three months ended June 30, 2025.

Interest Income, net

Interest income, net decreased to $153 during the three months ended June 30, 2025, compared to interest income, net of $455 during the three months ended June 30, 2024.

The decrease in interest income recognized during the three months ended June 30, 2025, was due to lower interest rates on lower cash balances, compared to the prior period.

Other, net, changed by $1,069, or 258.2%, to $1,483 during the three months ended June 30, 2025, compared to other, net of $414 during the three months ended June 30, 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 June 30, 2025.

CLARUS CORPORATION

MANAGEMENT DISCUSSION AND ANALYSIS

(in thousands, except per share amounts)

Income tax benefit decreased by $944, or 53.2%, to $831 during the three months ended June 30, 2025, compared to $1,775 during the same period in 2024.

Our effective income tax rate was a benefit of 9.0% for the three months ended June 30, 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 June 30, 2024, our effective income tax rate was a benefit of 24.4% and differed compared to the statutory tax rates primarily due to the impact of stock compensation and research and experimentation expenditures and credits.

CLARUS CORPORATION

MANAGEMENT DISCUSSION AND ANALYSIS

(in thousands, except per share amounts)

Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024

The following presents a discussion of operations for the six months ended June 30, 2025, compared with the six months ended June 30, 2024.

Six Months Ended

June 30, 2025

June 30, 2024

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

Impairment of indefinite-lived intangible assets

Total operating expenses

Operating loss

Other income (expense)

Interest income, net

Total other income (expense), net

Total other income, net

Loss before income tax

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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.

Total sales decreased $10,115, or 8.0%, to $115,680 during the six months ended June 30, 2025, compared to total sales of $125,795 during the six months ended June 30, 2024.

The decrease in sales was attributable to a decrease in sales at the Adventure and Outdoor segments of $7,890 and $2,225, respectively.

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Sales in the Outdoor segment were reduced by $795 due to foreign exchange impact from the strengthening of the U.S.

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

dollar primarily against the euro during the six months ended June 30, 2025, compared to the prior period.

Sales in the Adventure segment were reduced by $933 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.

dollar against the Australian dollar during the six months ended June 30, 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 six months ended June 30, 2025, partially offset by a $3,441 increase from the RockyMounts acquisition.

Sales in the Outdoor segment decreased due to our product simplification and SKU rationalization strategy across Black Diamond and decreases in our direct-to-consumer channels in both North America and Europe, partially offset by higher apparel revenue during the six months ended June 30, 2025.

Domestic sales decreased $1,685, or 3.3%, to $49,533 during the six months ended June 30, 2025, compared to domestic sales of $51,218 during the six months ended June 30, 2024.

The decrease in sales was attributable to a decrease in sales at the Outdoor segment of $3,199, partially offset by an increase in sales at the Adventure segment of $1,514.

International sales decreased $8,430, or 11.3%, to $66,147 during the six months ended June 30, 2025, compared to international sales of $74,577 during the six months ended June 30, 2024.

The decrease in sales was attributable to a decrease in sales at the Adventure segment of $9,404, partially offset by an increase in sales at the Outdoor segment of $974.

Cost of Goods Sold

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.

Cost of goods sold decreased $5,332, or 6.6%, to $75,206 during the six months ended June 30, 2025, compared to cost of goods sold of $80,538 during the six months ended June 30, 2024.

Gross profit decreased $4,783, or 10.6%, to $40,474 during the six months ended June 30, 2025, compared to gross profit of $45,257 during the six months ended June 30, 2024.

Gross margin was 35.0% during the six months ended June 30, 2025, compared to a gross margin of 36.0% during the six months ended June 30, 2024.

Gross margin during the six months ended June 30, 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, 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.

This combined with lower wholesale volume at both Rhino-Rack and MAXTRAX in Australia drove the decline in gross margin compared to the six months ended June 30, 2024.

Selling, General and Administrative

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.

Selling, general, and administrative expenses decreased $2,770, or 4.9%, to $53,526 during the six months ended June 30, 2025, compared to selling, general and administrative expenses of $56,296 during the six months ended June 30, 2024.

Selling, general and administrative expenses at the Outdoor segment decreased by $1,112 primarily as a result of lower digital marketing and employee-related costs, as well as lower retail expenses due to store closures and other expense reduction initiatives to manage costs.

Selling, general and administrative expenses at the Adventure segment decreased by $963 primarily as a result of lower marketing, amortization, and employee-related costs, combined with other expense reduction initiatives, partially offset by a write-off of internally developed software during the six months ended June 30, 2025.

Additionally, Corporate costs decreased $695 due to lower outside service and employee-related costs.

CLARUS CORPORATION

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Restructuring Charges

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.

Restructuring charges decreased to $334 during the six months ended June 30, 2025, compared to restructuring charges of $531 during the six months ended June 30, 2024.

The restructuring charges incurred during the six months ended June 30, 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 $304 and lease exit and contract termination costs of $30.

Transaction Costs

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.

Transaction costs increased to $250 during the six months ended June 30, 2025, compared to transaction costs of $65 during the six months ended June 30, 2024, which consisted of expenses related to the Company’s various acquisition and disposal efforts.

Contingent Consideration Benefit

Contingent consideration benefit decreased to $0 during the six months ended June 30, 2025, compared to a contingent consideration benefit of $125 during the six months ended June 30, 2024, which consisted of changes in the estimated fair value of contingent consideration liabilities associated with our acquisition of TRED in 2023.

Legal Costs and Regulatory Matter Expenses

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.

Legal costs and regulatory matter expenses decreased to $2,462 during the six months ended June 30, 2025, compared to legal costs and regulatory matter expenses of $3,401 during the six months ended June 30, 2024, which consisted of expenses related to the Company’s specific legal matters.

See Note 17 to our condensed consolidated financial statements for financial information regarding specific legal matters.

Impairment of Indefinite-Lived Intangible Assets

Impairment of indefinite-lived intangible assets increased to $1,565 during the six months ended June 30, 2025, compared to impairment of indefinite-lived intangible assets of $0 during the six months ended June 30, 2024.

Interest Income, net

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.

Interest income, net decreased to $410 during the six months ended June 30, 2025, compared to interest income, net of $825 during the six months ended June 30, 2024.

The decrease in interest income recognized during the six months ended June 30, 2025, was due to lower interest rates on lower cash balances, compared to the prior period.

Other, net, changed by $2,437, or 492.3%, to $1,942 during the six months ended June 30, 2025, compared to other, net of ($495) during the six months ended June 30, 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 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 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 March 31, 2025.

The change was partially offset by losses in mark-to-market adjustments on non-hedged foreign currency contracts during the six months ended June 30, 2025.

CLARUS CORPORATION

1 unchanged sentence

(in thousands, except per share amounts)

Income tax benefit decreased by $993, or 37.8%, to $1,633 during the six months ended June 30, 2025, compared to $2,626 during the same period in 2024.

Our effective income tax rate was a benefit of 10.7% for the six months ended June 30, 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 six months ended June 30, 2024, our effective income tax rate was a benefit of 18.0%, and differed compared to the statutory tax rates primarily due to the impact of stock compensation and research and experimentation expenditures and credits.

Discontinued Operations

Net income from discontinued operations was $0 during the six months ended June 30, 2025, compared to net income from discontinued operations of $28,346 during the six months ended June 30, 2024.

The change in net income from discontinued operations is due to the sale of the Precision Sport segment occurring during the six months ended June 30, 2024.

There was no activity in discontinued operations during the six months ended June 30, 2025.

Liquidity and Capital Resources

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

Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 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.

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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

At June 30, 2025, we had total cash of $28,474, compared to total cash of $45,359 at December 31, 2024.

At June 30, 2025, the Company had $4,931 of the $28,474 in cash held by foreign entities, of which $3,917 is considered permanently reinvested.

The following presents a discussion of cash flows for the condensed consolidated six months ended June 30, 2025 compared with the condensed consolidated six months ended June 30, 2024.

Six Months Ended

June 30, 2025

June 30, 2024

Net cash used in operating activities

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Cash, end of period

Net Cash From Operating Activities

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

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(in thousands, except per share amounts)

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.

Net Cash From Operating Activities

Net cash used in operating activities was $11,497 during the six months ended June 30, 2025, compared to net cash used in operating activities of $15,527 during the six months ended June 30, 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 six months ended June 30, 2024 related to the disposition of the Precision Sport segment.

This impact was partially offset by a decrease in net income and deferred income taxes, and an increase in cash outflows related to working capital during the six months ended June 30, 2025, compared to the same period in 2024.

Free cash flow, defined as net cash used in operating activities less capital expenditures, of $14,541 was used during the six months ended June 30, 2025 compared to $19,002 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:

Three Months Ended

March 31, 2025

March 31, 2024

Six Months Ended

June 30, 2025

June 30, 2024

Net cash used in operating activities

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Net Cash From Investing Activities

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 (used in) provided by investing activities was ($2,990) during the six months ended June 30, 2025, compared to net cash provided by investing activities of $172,162 during the six months ended June 30, 2024.

The change in cash (used in) provided by investing activities during the six months ended June 30, 2025 is primarily due to the cash received related to the disposition of the Precision Sport segment during the six months ended June 30, 2024.

Net Cash From Financing Activities

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 cash used in financing activities was $1,962 during the six months ended June 30, 2025, compared to net cash used in financing activities of $121,602 during the six months ended June 30, 2024.

The change in net cash used in financing activities during the six months ended June 30, 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 six months ended June 30, 2024.

Net Operating Loss

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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

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(in thousands, except per share amounts)

Credit Agreement

Off-Balance Sheet Arrangements

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis