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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended: September 30, 2022

or

¨ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from _________ to _________

Commission File Number: 001-34767

CLARUS CORPORATION

(Exact name of registrant as specified in its charter)

Delaware

58-1972600

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification Number)

2084 East 3900 South

Salt Lake City, Utah

84124

(Address of principal executive offices)

(Zip code)

(801) 278-5552

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange on which registered

Common Stock, par value $.0001 per share

CLAR

NASDAQ Global Select Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes  x No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes  x No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

¨

Non-accelerated filer

¨

Accelerated filer

x

Smaller reporting company

¨

Emerging growth company

¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

As of November 2, 2022, there were 37,036,468 shares of common stock, par value $0.0001, outstanding.


 

INDEX

CLARUS CORPORATION

PART I

FINANCIAL INFORMATION

Page

Item 1.

Financial Statements (Unaudited)

Condensed Consolidated Balance Sheets – September 30, 2022 and December 31, 2021

3

Condensed Consolidated Statements of Comprehensive Loss – Three months ended September 30, 2022 and 2021

4

Condensed Consolidated Statements of Comprehensive (Loss) Income – Nine months ended September 30, 2022 and 2021

5

Condensed Consolidated Statements of Cash Flows – Nine months ended September 30, 2022 and 2021

6

Condensed Consolidated Statements of Stockholders’ Equity – Three and nine months ended September 30, 2022 and 2021

7

Notes to Condensed Consolidated Financial Statements

9

Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

27

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

37

Item 4.

Controls and Procedures

37

PART II

OTHER INFORMATION

Item 1.

Legal Proceedings

39

Item 1A.

Risk Factors

39

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

40

Item 6.

Exhibits

41

Signature Page

42

 

 

 

2


 

 

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

  

CLARUS CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands, except per share amounts)

September 30, 2022

December 31, 2021

Assets

Current assets

Cash

$

10,365

$

19,465

Accounts receivable, less allowance for

credit losses of $1,200 and $811

76,468

66,180

Inventories

155,206

129,354

Prepaid and other current assets

14,586

11,831

Income tax receivable

860

116

Total current assets

257,485

226,946

Property and equipment, net

42,140

42,826

Other intangible assets, net

56,789

73,683

Indefinite-lived intangible assets

119,201

128,271

Goodwill

112,247

118,090

Deferred income taxes

22,304

22,433

Other long-term assets

17,775

19,578

Total assets

$

627,941

$

631,827

Liabilities and Stockholders' Equity

Current liabilities

Accounts payable

$

23,640

$

31,488

Accrued liabilities

26,271

27,473

Income tax payable

1,109

4,437

Current portion of long-term debt

10,306

9,585

Total current liabilities

61,326

72,983

Long-term debt, net

156,852

131,948

Deferred income taxes

30,704

35,280

Other long-term liabilities

15,970

21,448

Total liabilities

264,852

261,659

Stockholders' Equity

Preferred stock, $0.0001 par value per share; 5,000

shares authorized; none issued

-

-

Common stock, $0.0001 par value per share; 100,000 shares authorized;

41,625 and 41,105 issued and 37,036 and 37,094 outstanding, respectively

4

4

Additional paid in capital

677,120

662,996

Accumulated deficit

(254,313)

(263,342)

Treasury stock, at cost

(32,707)

(24,440)

Accumulated other comprehensive loss

(27,015)

(5,050)

Total stockholders' equity

363,089

370,168

Total liabilities and stockholders' equity

$

627,941

$

631,827

See accompanying notes to condensed consolidated financial statements.

 


 

3


 

  

CLARUS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Unaudited)

(In thousands, except per share amounts)

Three Months Ended

September 30, 2022

September 30, 2021

Sales

Domestic sales

$

55,540

$

61,259

International sales

60,175

47,712

Total sales

115,715

108,971

Cost of goods sold

76,291

69,792

Gross profit

39,424

39,179

Operating expenses

Selling, general and administrative

32,340

31,314

Transaction costs

858

8,147

Contingent consideration expense

104

-

Total operating expenses

33,302

39,461

Operating income (loss)

6,122

(282)

Other expense

Interest expense, net

(2,216)

(1,476)

Other, net

(1,238)

338

Total other expense, net

(3,454)

(1,138)

Income (loss) before income tax

2,668

(1,420)

Income tax benefit

(83)

(5,950)

Net income

2,751

4,530

Other comprehensive loss, net of tax:

Foreign currency translation adjustment

(11,386)

(8,933)

Unrealized gain on hedging activities

268

268

Other comprehensive loss

(11,118)

(8,665)

Comprehensive loss

$

(8,367)

$

(4,135)

Net income per share:

Basic

$

0.07

$

0.13

Diluted

0.07

0.13

Weighted average shares outstanding:

Basic

37,369

33,800

Diluted

39,580

36,164

See accompanying notes to condensed consolidated financial statements.

 


 

4


 

  

CLARUS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(Unaudited)

(In thousands, except per share amounts)

Nine Months Ended

September 30, 2022

September 30, 2021

Sales

Domestic sales

$

181,920

$

160,708

International sales

162,004

96,903

Total sales

343,924

257,611

Cost of goods sold

216,566

163,361

Gross profit

127,358

94,250

Operating expenses

Selling, general and administrative

101,959

72,903

Transaction costs

2,880

9,272

Contingent consideration expense

493

-

Total operating expenses

105,332

82,175

Operating income

22,026

12,075

Other expense

Interest expense, net

(5,060)

(1,926)

Other, net

(2,648)

(4,263)

Total other expense, net

(7,708)

(6,189)

Income before income tax

14,318

5,886

Income tax expense (benefit)

2,494

(6,161)

Net income

11,824

12,047

Other comprehensive (loss) income, net of tax:

Foreign currency translation adjustment

(22,941)

(9,654)

Unrealized gain on hedging activities

976

1,272

Other comprehensive loss

(21,965)

(8,382)

Comprehensive (loss) income

$

(10,141)

$

3,665

Net income per share:

Basic

$

0.32

$

0.37

Diluted

0.30

0.35

Weighted average shares outstanding:

Basic

37,256

32,159

Diluted

39,694

34,044

See accompanying notes to condensed consolidated financial statements.

 

 

5


 

 

CLARUS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

Nine Months Ended

September 30, 2022

September 30, 2021

Cash Flows From Operating Activities:

Net income

$

11,824

$

12,047

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

Depreciation of property and equipment

5,800

4,336

Amortization of other intangible assets

11,740

5,971

Amortization of debt issuance costs

593

335

Gain on disposition of property and equipment

(41)

(2)

Noncash lease expense

2,412

1,507

Contingent consideration expense

468

-

Stock-based compensation

9,142

6,414

Deferred income taxes

(410)

(7,006)

Changes in operating assets and liabilities, net of acquisitions:

Accounts receivable

(24,941)

(13,079)

Inventories

(30,243)

(25,181)

Prepaid and other assets

(2,126)

(5,912)

Accounts payable

4,662

1,358

Accrued liabilities

(2,756)

2,200

Income taxes

(3,870)

(89)

Net cash used in operating activities

(17,746)

(17,101)

Cash Flows From Investing Activities:

Purchase of businesses, net of cash received

-

(135,627)

Proceeds from disposition of property and equipment

438

25

Purchases of property and equipment

(6,216)

(5,579)

Net cash used in investing activities

(5,778)

(141,181)

Cash Flows From Financing Activities:

Proceeds from revolving credit facilities

98,991

87,703

Repayments on revolving credit facilities

(72,804)

(37,871)

Repayments on term loans

(125,191)

(5,814)

Proceeds from issuance of term loans

125,000

109,154

Payment of debt issuance costs

(1,385)

(