GlobeNewswire Inc | Nov 8, 2021 04:05PM EST

November 08, 2021

- Sales in the Third Quarter of 2021 Increased 69% Year-Over-Year to a Record $109.0 Million -

- Upwardly Revised Financial Outlook Expects 2021 Sales and Adjusted EBITDA to Grow Approximately 62% and 155% Year-over-Year to $362.5 Million and $57 Million, Respectively -

- Successfully Completed Public Offering of 2.75 Million Shares Plus 0.4 Million Overallotment Option For Gross Proceeds of $85.4 Million -

SALT LAKE CITY, Nov. 08, 2021 (GLOBE NEWSWIRE) -- Clarus Corporation (NASDAQ: CLAR) (Clarus and/or the Company), a global company focused on the outdoor and consumer enthusiast markets, reported financial results for the third quarter ended September 30, 2021.

Third Quarter 2021 Financial Highlights vs. Same YearAgoQuarter

-- Sales increased 69% to a record $109.0 million. -- Gross margin improved 240 basis points to 36.0%; adjusted gross margin up 520 basis points to 38.8%. -- Net income increased to $4.5 million, or $0.13 per diluted share, compared to net income of $1.2 million, or $0.04 per diluted share. -- Adjusted net income before noncash items increased 97% to $18.1 million, or $0.50 per diluted share, compared to $9.2 million, or $0.30 per diluted share. -- Adjusted EBITDA more than doubled to a record $19.2 million, an Adjusted EBITDA margin of 17.7%, compared to $9.1 million, an Adjusted EBITDA margin of 14.1%.

Public Offering

On October 29, 2021, the Company closed its public offering of 2.75 million shares of the Companys common stock at a price to the public of $27.00 per share, providing gross proceeds of $74.3 million. In addition, on November 2, 2021, the Company closed the option exercise by the underwriters in the offering to purchase an additional 412,500 shares of the Company common stock on the same terms and conditions. With the addition of the full exercise of the underwriters option to purchase additional shares, the total number of shares sold by Clarus in the offering increased to 3,162,500 shares, and the gross proceeds before underwriting fees and estimated offering expenses were approximately $85.4 million.

The Company intends to use a portion of the net proceeds of the offering for the repayment in full of approximately $65.0 million in aggregate principal amount under its revolving loan facility. This will provide remaining pro forma net debt leverage of less than 2.0x. The remaining portion of the net proceeds from the offering for general corporate purposes, including capital expenditures and potential acquisitions.

ManagementCommentary

As previously announced in our third quarter preliminary results, weve seen continued strong growth among our portfolio of well-diversified Super Fan brands, said Clarus President John Walbrecht. For the second consecutive quarter, we reported record sales and Adjusted EBITDA with significant gross margin expansion. These results reflect the continued execution of our Innovate and Accelerate strategy, underpinned by our focus on strong supplier partnerships and operational excellence.

Our Black Diamond, Sierra, and Rhino-Rack segments all continue to benefit from the increase in the number of new and existing consumers spending more time outdoors a trend weve termed outdoorism. It is in the outdoors where our brands are uniquely positioned to deliver an enhanced consumer experience. Bookings remain strong and our team has done a tremendous job fulfilling orders and staying aligned with our retail and vendor partners despite the supply chain headwinds we have mitigated. This, along with our ease of doing business mentality, we continue to reap market share gains across all of our leading categories.

Third Quarter 2021 FinancialResults

Sales in the third quarter increased 69% to a record $109.0 million compared to $64.5 million in the same yearago quarter. The increase includes revenue contribution of approximately $13.2 million from Barnes, an acquisition Clarus completed on October 2, 2020, and $19.6 million from Rhino-Rack, an acquisition completed on July 1, 2021. Third quarter sales increased 18% on a pro forma basis compared to the same year-ago quarter.

Black Diamond sales were up 20% and Sierra sales were up 100%, or 13% excluding Barnes. The increase across both segments is attributed to continued strong consumer demand. On a constant currency basis, total sales increased 67% compared to the same year-ago quarter.

Gross margin in the third quarter improved 240 basis points to 36.0% compared to 33.6% in the yearago quarter due mostly to improvements in channel and product mix. Excluding a fair value inventory step-up associated with the Rhino-Rack acquisition, adjusted gross margin in the third quarter increased 520 basis points to 38.8%.

Selling, general and administrative expenses in the third quarter were $31.3 million compared to $18.7 million in the same yearago quarter, primarily due to the significant increase in sales and the inclusion of Rhino-Rack, which contributed $7.7 million, and Barnes, which contributed $1.7 million. The remaining increase was attributable to the Companys investments in the brand related activities of sales, direct-to-consumer, marketing, and warehousing and logistics, focused on supporting its strategic initiatives around expanding distribution, elevating brand awareness and being easier to do business with. The increase was partially offset by a decrease of stock compensation of $1.1 million during the three months ended September 30, 2021 compared to the prior year.

Net income in the third quarter improved to $4.5 million, or $0.13 per diluted share, compared to net income of $1.2 million or $0.04 per diluted share, in the same yearago quarter.

Adjusted net income in the third quarter, which excludes noncash items and transaction costs, increased 97% to $18.1 million, or $0.50 per diluted share, compared to an adjusted net income of $9.2 million, or $0.30 per diluted share, in the same yearago quarter.

Adjusted EBITDA in the third quarter increased to a record $19.2 million, or an Adjusted EBITDA margin of 17.7%, compared to $9.1 million, or an Adjusted EBITDA margin of 14.1%, in the same yearago quarter.

Net cash provided by operating activities for the three months ended September 30, 2021 was $(17.5) million compared to $6.6 million in the prior year. Capital expenditures in the third quarter were $2.4 million compared to $1.6 million in the same year-ago quarter. Free cash flow, defined as net cash provided by operating activities less capital expenditures, for the quarter ended September 30, 2021 was $(19.8) million compared to $5.0 million in the same yearago period. The decline reflects proactive inventory increases to mitigate supply chain constraints and transaction expenses related to Rhino-Rack.

Liquidity at September 30, 2021 vs. December 31, 2020

-- Cash and cash equivalents totaled $10.2 million compared to $17.8 million. -- Total debt of $190.0 million compared to $34.6 million. -- Remaining access to $34.6 million on the Companys revolving line of credit. -- Net debt leverage ratio 2.7x compared to 0.6x at the end of 2020.

Increased 2021 Outlook

As revised in the Companys preliminary third quarter 2021 results, Clarus anticipates fiscal year 2021 sales to grow approximately 62% to $362.5 million ($350 million prior) compared to 2020. By brand, the Company expects sales for Black Diamond to increase 27% to $217.5 million ($215 million prior) and Sierra and Barnes combined to increase 99% to $105 million ($95 million prior) compared to 2020. The Company continues to expect sales for Rhino-Rack to be $40 million for the second half of 2021.

The Company expects adjusted EBITDA in 2021 to increase approximately 155% to $57 million ($52 million prior) compared to 2020. Included in this assumption is the continued expectation for Rhino-Rack to contribute approximately $6 million in adjusted EBITDA for the second half of 2021. Capital expenditures are expected to be approximately $8.5 million in 2021.

Net Operating Loss(NOL)

The Company estimates that it has available NOL carryforwards for U.S. federal income tax purposes of approximately $120 million. The Companys common stock is subject to a rights agreement dated February 7, 2008 that is intended to limit the number of 5% or more owners and therefore reduce the risk of a possible change of ownership under Section 382 of the Internal Revenue Code of 1986, as amended. Any such change of ownership under these rules would limit or eliminate the ability of the Company to use its existing NOLs for federal income tax purposes. However, there is no guaranty that the rights agreement will achieve the objective of preserving the value of the NOLs.

ConferenceCall

The Company will hold a conference call today at 5:00 p.m. Eastern time to discuss its third quarter 2021 results.

Date: Monday, November 8, 2021Time: 5:00 p.m. Eastern time (3:00 p.m. Mountain time) Toll-free dial-in number: 1-877-511-3707International dial-in number: 1-786-815-8672Conference ID: 3876067

Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Gateway Investor Relations at 1-949-574-3860.

The conference call will be broadcast live and available for replay here and on the Companys website at www.claruscorp.com.

A replay of the conference call will be available after 8:00 p.m. Eastern time on the same day through November 22, 2021.

Toll-free replay number: 1-855-859-2056International replay number: 1-404-537-3406Replay ID: 3876067

About Clarus Corporation

Headquartered in Salt Lake City, Utah, Clarus Corporation is a global leading designer, developer, manufacturer and distributor of best-in-class outdoor equipment and lifestyle products focused on the outdoor and consumer enthusiast markets. Our mission is to identify, acquire and grow outdoor super fan brands through our unique innovate and accelerate strategy. We define a super fan brand as a brand that creates the worlds pre-eminent, performance-defining product that the best-in-class user cannot live without. Each of our brands has a long history of continuous product innovation for core and everyday users alike. The Companys products are principally sold globally under the Black Diamond, Rhino-Rack, Sierra, and Barnes brand names through outdoor specialty and online retailers, our own websites, distributors and original equipment manufacturers. Our portfolio of iconic brands is well-positioned for sustainable, long-term growth underpinned by powerful industry trends across the outdoor and adventure sport end markets. For additional information, please visit www.claruscorp.com or the brand websites at www.blackdiamondequipment.com, www.rhinorack.com, www.sierrabullets.com, www.barnesbullets.com, www.pieps.com, or www.goclimbon.com.

Use of NonGAAPMeasures

The Company reports its financial results in accordance with U.S. generally accepted accounting principles (GAAP). This press release contains the non-GAAP measures: (i) adjusted gross margin and adjusted gross profit, (ii) net income before non-cash items and related income per diluted share, and adjusted net income before non-cash items and related income per diluted share, (iii) earnings before interest, taxes, other income or expense, depreciation and amortization (EBITDA), and adjusted EBITDA, and (iv) free cash flow. The Company believes that the presentation of certain non-GAAP measures, i.e.: (i) adjusted gross margin and adjusted gross profit, (ii) net income before non-cash items and related income per diluted share, and adjusted net income before non-cash items and related income per diluted share, (iii) EBITDA and adjusted EBITDA, and (iv) free cash flow, provide useful information for the understanding of its ongoing operations and enables investors to focus on period- over-period operating performance, and thereby enhances the user's overall understanding of the Company's current financial performance relative to past performance and provides, along with the nearest GAAP measures, a baseline for modeling future earnings expectations. Non-GAAP measures are reconciled to comparable GAAP financial measures within this press release. The Company cautions that non-GAAP measures should be considered in addition to, but not as a substitute for, the Company's reported GAAP results. Additionally, the Company notes that there can be no assurance that the above referenced non-GAAP financial measures are comparable to similarly titled financial measures used by other publicly traded companies.

ForwardLooking Statements

Please note that in this press release we may use words such as appears, anticipates, believes, plans, expects, intends, future, and similar expressions which constitute forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are made based on our expectations and beliefs concerning future events impacting the Company and therefore involve a number of risks and uncertainties. We caution that forward-looking statements are not guarantees and that actual results could differ materially from those expressed or implied in the forward-looking statements. 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 release 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; disruption and volatility in the global currency, capital, and credit markets; the financial strength of the Company's customers; the Company's ability to implement its business strategy; the ability of the Company to execute and integrate acquisitions; changes in governmental regulation, legislation or public opinion relating to the manufacture and sale of bullets and ammunition, and the possession and use of firearms and ammunition by our customers; the Companys exposure to product liability or product warranty claims and other loss contingencies; disruptions and other impacts to the Companys business, as a result of the COVID-19 global pandemic and government actions and restrictive measures implemented in response; stability of the Companys 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; the impact that global climate change trends may have on the Company and its suppliers and customers; the Company's ability to protect patents, trademarks and other intellectual property rights; any breaches of, or interruptions in, our information systems; the ability of our information technology systems or information security systems to operate effectively, including as a result of security breaches, viruses, hackers, malware, natural disasters, vendor business interruptions or other causes; our ability to properly maintain, protect, repair or upgrade our information technology systems or information security systems, or problems with our transitioning to upgraded or replacement systems; the impact of adverse publicity about the Company and/or its brands, including without limitation, through social media or in connection with brand damaging events and/or public perception; fluctuations in the price, availability and quality of raw materials and contracted products as well as foreign currency fluctuations; ongoing disruptions and delays in the shipping and transportation of our products due to port congestion, container ship availability and/or other logistical challenges; our ability to utilize our net operating loss carryforwards; changes in tax laws and liabilities, tariffs, legal, regulatory, political and economic risks; the Companys ability to maintain a quarterly dividend; and any material differences in the actual financial results of the Rhino-Rack acquisition as compared with expectations, including the impact of the acquisition on the Companys 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 press release are based upon information available to the Company as of the date of this press release, and speak only as of the date hereof. We assume no obligation to update any forward-looking statements to reflect events or circumstances after the date of this press release.

CompanyContacts:

John C. Walbrecht PresidentTel 18019931344john.walbrecht@claruscorp.com orAaron J. KuehneExecutive Vice President and Chief Financial OfficerTel 18019931364aaron.kuehne@claruscorp.com

Investor RelationsContact:

Gateway Investor RelationsCody SlachTel 19495743860CLAR@gatewayir.com

CLARUS CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (In thousands, except per share amounts) September 30, December 31, 2021 2020Assets Current assets Cash $ 10,170 $ 17,789 Accounts receivable, less allowance for credit losses anddoubtful accounts of $709 and $1,433, 68,045 50,475 respectivelyInventories 118,706 68,356 Prepaid and other current assets 13,478 5,385 Income tax receivable 285 117 Total current assets 210,684 142,122 Property and equipment, net 32,444 26,956 Other intangible assets, net 62,672 19,416 Indefinite-lived intangible assets 116,997 47,523 Goodwill 108,174 26,715 Deferred income taxes 17,156 11,113 Other long-term assets 23,616 6,846 Total assets $ 571,743 $ 280,691 Liabilities and Stockholders' Equity Current liabilities Accounts payable and accrued liabilities $ 54,389 $ 34,665 Income tax payable 4,250 956 Current portion of long-term debt 8,990 4,000 Total current liabilities 67,629 39,621 Long-term debt 181,042 30,621 Deferred income taxes 35,025 1,227 Other long-term liabilities 19,450 4,628 Total liabilities 303,146 76,097 Stockholders' Equity Preferred stock, $0.0001 par value per share; 5,000shares authorized; none issued - - Common stock, $0.0001 par value per share; 100,000 shares authorized;37,811 and 35,198 issued and 33,800 and 4 4 31,228 outstanding, respectivelyAdditional paid in capital 577,378 513,979 Accumulated deficit (276,463 ) (286,100 ) Treasury stock, at cost (24,440 ) (23,789 ) Accumulated other comprehensive (loss) (7,882 ) 500 incomeTotal stockholders' equity 268,597 204,594 Total liabilities and stockholders' equity $ 571,743 $ 280,691

CLARUS CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (In thousands, except per share amounts) Three Months Ended September 30, September 30, 2021 2020 Sales Domestic sales $ 61,259 $ 34,686 International sales 47,712 29,805 Total sales 108,971 64,491 Cost of goods sold 69,792 42,822 Gross profit 39,179 21,669 Operating expenses Selling, general and 31,314 18,674 administrativeTransaction costs 8,147 1,440 Total operating expenses 39,461 20,114 Operating (loss) income (282 ) 1,555 Other (expense) income Interest expense, net (1,476 ) (232 ) Other, net 338 449 Total other (expense) income, net (1,138 ) 217 (Loss) income before income tax (1,420 ) 1,772 Income tax (benefit) expense (5,950 ) 589 Net income $ 4,530 $ 1,183 Net income per share: Basic $ 0.13 $ 0.04 Diluted 0.13 0.04 Weighted average shares outstanding:Basic 33,800 29,983 Diluted 36,164 30,986

CLARUS CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) (Unaudited) (In thousands, except per share amounts) Nine Months Ended September 30, 2021 September 30, 2020 Sales Domestic sales $ 160,708 $ 83,493 International sales 96,903 64,567 Total sales 257,611 148,060 Cost of goods sold 163,361 97,243 Gross profit 94,250 50,817 Operating expenses Selling, general and administrative 72,903 50,537 Transaction costs 9,272 1,870 Total operating expenses 82,175 52,407 Operating income (loss) 12,075 (1,590 ) Other expense Interest expense, net (1,926 ) (800 ) Other, net (4,263 ) 324 Total other expense, net (6,189 ) (476 ) Income (loss) before income tax 5,886 (2,066 ) Income tax benefit (6,161 ) (542 ) Net income (loss) $ 12,047 $ (1,524 ) Net income (loss) per share: Basic $ 0.37 $ (0.05 ) Diluted 0.35 (0.05 ) Weighted average shares outstanding: Basic 32,159 29,854 Diluted 34,044 29,854

CLARUS CORPORATION RECONCILIATION FROM GROSS PROFIT TO ADJUSTED GROSS PROFIT AND ADJUSTED GROSS MARGIN THREE MONTHS ENDED September September 30, 2021 30, 2020 Gross profit as reported $ 39,179 Plus impact of inventory 3,099 fair value adjustmentAdjusted gross profit $ 42,278 Gross profit $ 21,669 as reported Gross margin as reported 36.0 % Adjusted gross margin 38.8 % Gross margin 33.6 % as reported NINE MONTHS ENDED September September 30, 2021 30, 2020 Gross profit as reported $ 94,250 Plus impact of inventory 3,460 fair value adjustmentAdjusted gross profit $ 97,710 Gross profit $ 50,817 as reported Gross margin as reported 36.6 % Adjusted gross margin 37.9 % Gross margin 34.3 % as reported

CLARUS CORPORATION RECONCILIATION FROM NET INCOME TO NET INCOME BEFORE NON-CASH ITEMS, ADJUSTED NET INCOME BEFORE NON-CASH ITEMS AND RELATED EARNINGS PER DILUTED SHARE (In thousands, except per share amounts) Three Months Ended Per Per Diluted Diluted September Share September Share 30, 2021 30, 2020 Net income $ 4,530 $ 0.13 $ 1,183 $ 0.04 Amortization of 3,577 0.10 753 0.02 intangiblesDepreciation 1,631 0.05 1,140 0.04 Amortization ofdebt issuance 173 0.00 76 0.00 costsStock-based 3,064 0.08 4,204 0.14 compensationInventory fairvalue of 3,099 0.09 - - purchaseaccountingIncome tax(benefit) (5,950 ) (0.16 ) 589 0.02 expenseCash paid for - - (152 ) (0.00 ) income taxes Net incomebefore non-cash $ 10,124 $ 0.28 $ 7,793 $ 0.25 items Transaction 8,147 0.23 1,440 0.05 costsState cashtaxes on (202 ) (0.01 ) (45 ) (0.00 ) adjustments Adjusted netincome before $ 18,069 $ 0.50 $ 9,188 $ 0.30 non-cash items

CLARUS CORPORATION RECONCILIATION FROM NET INCOME (LOSS) TO NET INCOME BEFORE NON-CASH ITEMS, ADJUSTEDNET INCOME BEFORE NON-CASH ITEMS AND RELATED EARNINGS PER DILUTED SHARE (In thousands, except per share amounts) Nine Months Ended Per Diluted Per Diluted September Share September Share 30, 2021 30, 2020 Net income (loss) $ 12,047 $ 0.35 $ (1,524 ) $ (0.05 ) Amortization of 5,971 0.18 2,290 0.08 intangiblesDepreciation 4,336 0.13 3,405 0.11 Amortization ofdebt issuance 335 0.01 230 0.01 costsStock-based 6,414 0.19 5,433 0.18 compensationInventory fairvalue of purchase 3,460 0.10 - - accountingIncome tax (6,161 ) (0.18 ) (542 ) (0.02 ) benefitCash paid for (353 ) (0.01 ) (418 ) (0.01 ) income taxes Net income before $ 26,049 $ 0.77 $ 8,874 $ 0.30 non-cash items Transaction costs 9,272 0.27 1,870 0.06 State cash taxes (230 ) (0.01 ) (58 ) (0.00 ) on adjustments Adjusted netincome before $ 35,091 $ 1.03 $ 10,686 $ 0.36 non-cash items

CLARUS CORPORATION RECONCILIATION FROM NET INCOME TO EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION, AND AMORTIZATION (EBITDA), AND ADJUSTED EBITDA (In thousands) Three Months Ended September 30, September 30, 2021 2020 Net income $ 4,530 $ 1,183 Income tax (benefit) expense (5,950 ) - - 589 Other, net (338 ) - - (449 ) Interest expense, net 1,476 - - 232 Operating (loss) income (282 ) 1,555 Depreciation 1,631 1,140 Amortization of intangibles 3,577 753 EBITDA 4,926 3,448 Transaction costs 8,147 1,440 Inventory fair value of purchase accounting 3,099 - Stock-based compensation 3,064 4,204 Adjusted EBITDA $ 19,236 $ 9,092

CLARUS CORPORATION RECONCILIATION FROM NET INCOME (LOSS) TO EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION, AND AMORTIZATION (EBITDA), AND ADJUSTED EBITDA (In thousands) Nine Months Ended September 30, September 30, 2021 2020 Net income (loss) $ 12,047 $ (1,524 ) Income tax benefit (6,161 ) (542 ) Other, net 4,263 (324 ) Interest expense, net 1,926 800 Operating income (loss) 12,075 (1,590 ) Depreciation 4,336 3,405 Amortization of intangibles 5,971 2,290 EBITDA 22,382 4,105 Transaction costs 9,272 1,870 Inventory fair value of purchase accounting 3,460 - Stock-based compensation 6,414 5,433 Adjusted EBITDA $ 41,528 $ 11,408