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CST: 23/10/2019 21:41:28   

Clarus Reports Second Quarter 2019 Results

79 Days ago

SALT LAKE CITY, Aug. 05, 2019 (GLOBE NEWSWIRE) -- Clarus Corporation (NASDAQ: CLAR) (“Clarus” and/or the “Company”), a company focused on the outdoor and consumer industries, seeking opportunities to acquire and grow businesses that can generate attractive shareholder returns, reported financial results for the second quarter ended June 30, 2019, and reiterated its financial outlook for 2019.

Second Quarter 2019 Financial Summary vs. Same Year-Ago Quarter

  • Sales increased 2% to $47.0 million.
  • Gross margin was 34.0% compared to 34.6%.
  • Net loss was $(0.7) million or $(0.02) per basic and diluted share, compared to $(0.8) million or $(0.03) per basic and diluted share.
  • Adjusted net income before non-cash items was $1.5 million or $0.05 per diluted share, compared to $2.6 million or $0.09 per diluted share.
  • Adjusted EBITDA was $1.6 million compared to $2.8 million.

Management Commentary

“Our results in the second quarter capped an excellent first half season, with sales up 9% for the first six months of the year,” said John Walbrecht, president of Clarus. “We also continued to drive operational improvements and profitability gains across the business, with adjusted EBITDA margin in the first six months of 2019 increasing 100 basis points to 8.2%.

“The momentum at Black Diamond® continued to produce strong results, as brand sales were up 8% in the second quarter and 13% for the first six months of the year driven by gains across all categories and channels. This momentum was despite the protracted winter throughout the majority of our core markets, which impacted spring product sell-through and at-once orders.

“Also, and as expected, sales at Sierra® were affected by the headwinds facing the overall bullet and ammunition market. Irrespective of market dynamics, we are continuing to deploy our ‘innovate and accelerate’ strategy and expect to drive further market share gains through overall brand strength and awareness, as well as Sierra’s compelling product offering.

“We expect the second half of 2019 to be fueled by continued product innovation across Black Diamond with over 150 new products slated to release this fall across footwear, apparel, snow safety, gloves and skis. The initial reaction to our offering has been highly positive and will be supported by a comprehensive marketing campaign aimed at bringing new consumers into the brand, while still resonating with our core consumer. Looking ahead, the improvements we have and expect to continue to make at Black Diamond, as well as the fundamental brand strength at Sierra, are our key focus areas for growth and driving long-term shareholder value creation.”

Second Quarter 2019 Financial Results

Sales in the second quarter increased 2% to $47.0 million compared to $45.9 million in the same year-ago quarter. The increase was driven by 8% growth in Black Diamond, partially offset by a 16% decline in Sierra. The year-over-year decline was expected due to headwinds in the bullet and ammunition industry. On a constant currency basis, total sales were up 3%.

Gross margin in the second quarter was 34.0% compared to 34.6% in the year-ago quarter. The slight decline was primarily due to channel and product mix and foreign exchange headwinds from the strengthening U.S. dollar. This was partially offset by the continued benefits of the Company’s productivity programs focused on value enhancing activities within its supply chains and operations.

Selling, general and administrative expenses in the second quarter were $17.2 million compared to $15.8 million in the year-ago quarter. As a percentage of sales, selling, general and administrative expenses was 36.6% compared to 34.4%. The increase was attributable to the Company’s continued investment in the brand related activities of marketing and direct-to-consumer of $0.5 million, a shift in timing of summer tradeshows from traditionally the third quarter to the second quarter of $0.5 million and costs incurred with the move of the Company’s warehouse in Europe of $0.4 million.

Net loss in the second quarter was $(0.7) million or $(0.02) per basic and diluted share, compared to a net loss of $(0.8) million or $(0.03) per basic and diluted share in the year-ago quarter. Net loss in the second quarter of 2019 included $2.2 million of non-cash charges, compared to $3.2 million of non-cash charges and $0.2 million in transaction and restructuring costs in the same year-ago quarter.

Adjusted net income, which excludes the non-cash items, as well as transaction and restructuring costs, in the second quarter was $1.5 million or $0.05 per diluted share, compared to $2.6 million or $0.09 per diluted share in the same year-ago quarter.

Adjusted EBITDA in the second quarter was $1.6 million compared to $2.8 million in the same year-ago quarter. As a percentage of sales, adjusted EBITDA was 3.4% compared to 6.2% in the same year-ago quarter.

Net cash provided by operating activities for the six months ended June 30, 2019 was $9.7 million compared to $7.9 million in the same year-ago period. Capital expenditures for the six months ended June 30, 2019 were $2.0 million compared to $1.5 million in the same year-ago period. Free cash flow, defined as net cash provided by operating activities less capital expenditures, for the six months ended June 30, 2019 was $7.7 million compared to $6.4 million in the same year-ago period.

At June 30, 2019, cash and cash equivalents totaled $2.0 million compared to $2.5 million at December 31, 2018. The Company’s debt balance at June 30, 2019, was $16.7 million compared to $22.1 million at December 31, 2018.

2019 Outlook

Clarus still anticipates fiscal year 2019 sales to grow approximately 8% to $230 million compared to 2018. By brand, the Company now expects sales for Black Diamond to increase low-double digits and sales for Sierra to decrease high-single digits.

The Company continues to expect adjusted EBITDA to increase approximately 20% to $25 million compared to 2018.

Additionally, in fiscal year 2019 the Company still expects capital expenditures to be approximately $4.5 million and free cash flow to be approximately $10 million.

Net Operating Loss (NOL)

The Company estimates that it has available NOL carryforwards for U.S. federal income tax purposes of approximately $141 million. The Company’s 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.

Conference Call

The Company will hold a conference call today at 5:00 p.m. Eastern time to discuss its second quarter 2019 results.

Date: Monday, August 5, 2019
Time: 5:00 p.m. Eastern time (3:00 p.m. Mountain time)
Toll-free dial-in number: 1-877-511-3707
International dial-in number: 1-786-815-8672
Conference ID: 5970885

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 via the investor relations section of the Company’s 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 August 19, 2019.

Toll-free replay number: 1-855-859-2056
International replay number: 1-404-537-3406
Replay ID: 5970885

About Clarus Corporation

Clarus Corporation is focused on the outdoor and consumer industries, seeking opportunities to acquire and grow businesses that can generate attractive shareholder returns. The Company has substantial net operating tax loss carryforwards which it is seeking to redeploy to maximize shareholder value. Clarus’ primary business is as a leading developer, manufacturer and distributor of outdoor equipment and lifestyle products focused on the climb, ski, mountain, and sport markets. The Company’s products are principally sold under the Black Diamond®, Sierra®, PIEPS®, and SKINourishment® brand names through specialty and online retailers, distributors and original equipment manufacturers throughout the U.S. and internationally. For additional information, please visit www.claruscorp.com or the brand websites at www.blackdiamondequipment.com, www.sierrabullets.com or www.pieps.com.

Use of Non-GAAP Measures

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 (loss) before non-cash items and related income (loss) per diluted share, and adjusted net income (loss) before non-cash items and related income (loss) 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 (loss) before non-cash items and related income (loss) per diluted share, and adjusted net income (loss) before non-cash items and related income (loss) 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.

Forward-Looking 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 by our Sierra segment, and the possession and use of firearms and ammunition by our customers; the Company’s exposure to product liability or product warranty claims and other loss contingencies; stability of the Company's manufacturing facilities and suppliers; the Company's ability to protect patents, trademarks and other intellectual property rights; any breaches of, or interruptions in, our information systems; fluctuations in the price, availability and quality of raw materials and contracted products as well as foreign currency fluctuations; our ability to utilize our net operating loss carryforwards; changes in tax laws and liabilities, tariffs, legal, regulatory, political and economic risks; and the Company’s ability to declare a dividend. 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.

Company Contact:

John C. Walbrecht
President
Tel 1-801-993-1344
john.walbrecht@claruscorp.com
or
Aaron J. Kuehne
Chief Administrative Officer and
Chief Financial Officer
Tel 1-801-993-1364
aaron.kuehne@claruscorp.com

Investor Relations Contact:

Gateway Investor Relations
Cody Slach
Tel 1-949-574-3860
CLAR@gatewayir.com

             
CLARUS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except per share amounts)
         
    June 30, 2019   December 31, 2018
Assets            
Current assets            
Cash   $ 1,969     $ 2,486  
Accounts receivable, less allowance for doubtful            
accounts of $620 and $392, respectively     32,545       35,943  
Inventories     73,024       64,933  
Prepaid and other current assets     4,475       5,115  
Income tax receivable     400       24  
Total current assets     112,413       108,501  
             
Property and equipment, net     23,007       23,401  
Other intangible assets, net     17,623       19,416  
Indefinite lived intangible assets     41,674       41,694  
Goodwill     18,090       18,090  
Other long-term assets     3,897       2,026  
Total assets   $ 216,704     $ 213,128  
             
Liabilities and Stockholders' Equity            
Current liabilities            
Accounts payable and accrued liabilities   $ 28,373     $ 21,489  
Income tax payable     -       210  
Current portion of long-term debt     -       41  
Total current liabilities     28,373       21,740  
             
Long-term debt     16,650       22,105  
Deferred income taxes     2,729       2,919  
Other long-term liabilities     1,012       159  
Total liabilities     48,764       46,923  
             
Stockholders' Equity            
Preferred stock, $.0001 par value; 5,000            
shares authorized; none issued     -       -  
Common stock, $.0001 par value; 100,000 shares authorized;            
33,595 and 33,244 issued and 29,983 and 29,748 outstanding, respectively 3       3  
Additional paid in capital     490,776       488,404  
Accumulated deficit     (302,978 )     (304,577 )
Treasury stock, at cost     (19,607 )     (18,102 )
Accumulated other comprehensive (loss) income     (254 )     477  
Total stockholders' equity     167,940       166,205  
Total liabilities and stockholders' equity   $ 216,704     $ 213,128  
             

 

             
CLARUS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share amounts)
             
      Three Months Ended  
    June 30, 2019   June 30, 2018
             
Sales            
Domestic sales   $ 28,422     $ 27,845  
International sales     18,572       18,036  
Total sales     46,994       45,881  
             
Cost of goods sold     31,002       30,021  
Gross profit     15,992       15,860  
             
Operating expenses            
Selling, general and administrative     17,192       15,791  
Restructuring charge     -       24  
Transaction costs     41       168  
             
Total operating expenses     17,233       15,983  
             
Operating loss     (1,241 )     (123 )
             
Other (expense) income            
Interest expense     (315 )     (463 )
Other, net     183       (192 )
             
Total other expense, net     (132 )     (655 )
             
Loss before income tax     (1,373 )     (778 )
Income tax benefit     (679 )     (1 )
Net loss   $ (694 )   $ (777 )
             
Net loss per share:            
Basic   $ (0.02 )   $ (0.03 )
Diluted     (0.02 )     (0.03 )
             
Weighted average shares outstanding:            
Basic     29,898       30,041  
Diluted     29,898       30,041  
             

 

             
CLARUS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share amounts)
             
      Six Months Ended  
    June 30, 2019   June 30, 2018
             
Sales            
Domestic sales   $   59,011     $   53,499  
International sales       49,201         45,649  
Total sales       108,212         99,148  
             
Cost of goods sold       70,164         65,461  
Gross profit       38,048         33,687  
             
Operating expenses            
Selling, general and administrative       34,772         32,919  
Restructuring charge       13         64  
Transaction costs       87         333  
             
Total operating expenses       34,872         33,316  
             
Operating income       3,176         371  
             
Other (expense) income            
Interest expense       (625 )       (717 )
Other, net       160         (71 )
             
Total other expense, net       (465 )       (788 )
             
Income (loss) before income tax       2,711         (417 )
Income tax benefit       (382 )       (43 )
Net income (loss)   $   3,093     $   (374 )
             
Net income (loss) per share:            
Basic   $   0.10     $   (0.01 )
Diluted       0.10         (0.01 )
             
Weighted average shares outstanding:            
Basic     29,824       30,041  
Diluted     30,961       30,041  
             

 

                 
CLARUS CORPORATION
RECONCILIATION FROM GROSS PROFIT TO ADJUSTED GROSS PROFIT
AND ADJUSTED GROSS MARGIN
                 
THREE MONTHS ENDED
       
    June 30, 2019       June 30, 2018
                 
          Gross profit as reported   $ 15,860  
          Plus impact of inventory fair value adjustment     -  
Gross profit as reported   $ 15,992     Adjusted gross profit   $ 15,860  
                 
          Gross margin as reported     34.6 %
                 
Gross margin as reported     34.0 %   Adjusted gross margin     34.6 %
                 
SIX MONTHS ENDED
                 
    June 30, 2019       June 30, 2018
                 
          Gross profit as reported   $ 33,687  
          Plus impact of inventory fair value adjustment     1,049  
Gross profit as reported   $ 38,048     Adjusted gross profit   $ 34,736  
                 
          Gross margin as reported     34.0 %
                 
Gross margin as reported     35.2 %   Adjusted gross margin     35.0 %
                 

 

                         
CLARUS CORPORATION
RECONCILIATION FROM NET LOSS 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 Diluted             Per Diluted  
    June 30, 2019   Share   June 30, 2018   Share
                         
                         
Net loss   $ (694 )   $ (0.02 )   $ (777 )   $ (0.03 )
                         
Amortization of intangibles     888       0.03       968       0.03  
Depreciation     1,139       0.04       1,135       0.04  
Amortization of debt issuance costs     68       0.00       290       0.01  
Stock-based compensation     783       0.03       656       0.02  
Loss from removal of accumulated translation adjustment     -       -       172       0.01  
Income tax benefit     (679 )     (0.02 )     (1 )     (0.00 )
Cash paid for income taxes     (28 )     (0.00 )     (9 )     (0.00 )
                         
Net income before non-cash items   $ 1,477     $ 0.05     $ 2,434     $ 0.08  
                         
Restructuring charge     -       -       24       0.00  
Transaction costs     41       0.00       168       0.01  
State cash taxes on adjustments     (1 )     (0.00 )     (6 )     (0.00 )
AMT cash taxes on adjustments     (1 )     (0.00 )     (4 )     (0.00 )
                         
Adjusted net income before non-cash items   $ 1,516     $ 0.05     $ 2,616     $ 0.09  
                         

 

                         
CLARUS CORPORATION
RECONCILIATION FROM NET INCOME (LOSS) 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)
                         
                         
      Six Months Ended  
            Per Diluted             Per Diluted  
    June 30, 2019   Share   June 30, 2018   Share
                         
                         
Net income (loss)   $ 3,093     $ 0.10     $ (374 )   $ (0.01 )
                         
Amortization of intangibles     1,777       0.06       1,937       0.06  
Depreciation     2,242       0.07       2,208       0.07  
Amortization of debt issuance costs     132       0.00       307       0.01  
Stock-based compensation     1,568       0.05       1,155       0.04  
Loss from removal of accumulated translation adjustment     -       -       41       0.00  
Inventory fair value of purchase accounting     -       -       1,049       0.03  
Income tax benefit     (382 )     (0.01 )     (43 )     (0.00 )
Cash paid for income taxes     (103 )     (0.00 )     (246 )     (0.01 )
                         
Net income before non-cash items   $ 8,327     $ 0.27     $ 6,034     $ 0.20  
                         
Restructuring charge     13       0.00       64       0.00  
Transaction costs     87       0.00       333       0.01  
State cash taxes on adjustments     (3 )     (0.00 )     (11 )     (0.00 )
AMT cash taxes on adjustments     (2 )     (0.00 )     (8 )     (0.00 )
                         
Adjusted net income before non-cash items   $ 8,422     $ 0.27     $ 6,412     $ 0.21  
                         

 

CLARUS CORPORATION
RECONCILIATION FROM NET LOSS TO EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION, AND
 AMORTIZATION (EBITDA), AND ADJUSTED EBITDA 
(In thousands)
               
      Three Months Ended  
    June 30, 2019   June 30, 2018
             
             
Net loss   $   (694 )   $   (777 )
             
Income tax benefit       (679 )       (1 )
Other, net       (183 )       192  
Interest expense, net       315         463  
             
Operating loss       (1,241 )       (123 )
             
Depreciation        1,139         1,135  
Amortization of intangibles       888         968  
             
EBITDA   $   786     $   1,980  
             
Restructuring charge       -          24  
Transaction costs       41         168  
Stock-based compensation       783         656  
             
Adjusted EBITDA   $   1,610     $   2,828  
             

 

             
CLARUS CORPORATION
RECONCILIATION FROM NET INCOME (LOSS) TO EARNINGS BEFORE INTEREST, TAXES,
DEPRECIATION, AND AMORTIZATION (EBITDA), AND ADJUSTED EBITDA 
(In thousands) 
   
             
      Six Months Ended  
    June 30, 2019   June 30, 2018
             
             
Net income (loss)   $ 3,093     $ (374 )
             
Income tax benefit     (382 )     (43 )
Other, net     (160 )     71  
Interest expense, net     625       717  
             
Operating income     3,176       371  
             
Depreciation     2,242       2,208  
Amortization of intangibles     1,777       1,937  
             
EBITDA   $ 7,195     $ 4,516  
             
Restructuring charge     13       64  
Transaction costs     87       333  
Inventory fair value of purchase accounting     -       1,049  
Stock-based compensation     1,568       1,155  
             
Adjusted EBITDA   $ 8,863     $ 7,117  
             

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