Black Diamond Owner Clarus Reports Strong Q4 & Full Year 2020 Results

Clarus Corporation (NASDAQ: CLAR) (“Clarus” and/or the “Company”), parent of Black Diamond, has reported financial results for the fourth quarter and full year ended December 31, 2020.

Fourth Quarter 2020 Financial Summary vs. Same Year‐Ago Quarter

• Sales increased 24% to $75.9 million.
• Gross margin was unchanged at 35.5%; adjusted gross margin up 50 basis points to 36.0%.
• Net income was $7.1 million, or $0.22 per diluted share, compared to $12.4 million, or $0.40 per diluted share. The fourth quarter of 2019 included a $10.4 million net benefit associated with the partial release of the Company’s valuation allowance on its deferred tax assets.
• Adjusted net income before non‐cash items increased 64% to $11.2 million, or $0.34 per diluted share, compared to $6.8 million, or $0.22 per diluted share.
• Adjusted EBITDA increased 56% to $11.0 million.
• Free cash flow (net cash provided by operating activities less capital expenditures) increased significantly to $6.5 million compared to $2.6 million.
• At December 31, 2020, cash and cash equivalents totaled $17.8 million compared to $1.7 million at December 31, 2019, and debt was $34.6 million compared to $22.7 million at December 31, 2019.

2020 Financial Summary vs. 2019

• Sales were $224.0 million compared to $229.4 million.
• Gross margin was 34.7% compared to 35.0%; adjusted gross margin of 34.9%.
• Net income was $5.5 million, or $0.18 per diluted share, compared to $19.0 million, or $0.61 per diluted share. 2019 included the aforementioned $10.4 million net tax benefit.
• Adjusted net income before non‐cash items increased 3% to $21.9 million, or $0.70 per diluted share, compared to $21.3 million, or $0.69 per diluted share.
• Adjusted EBITDA was $22.4 million compared to $22.7 million.
• Free cash flow increased significantly to $24.0 million compared to $5.4 million.

Management Commentary

Full Year 2020 Financial Results

Sales in 2020 were $224.0 million compared to $229.4 million in 2019. The decrease was driven by a 14% decline in Black Diamond sales due to the impacts of the COVID-19-related retail demand freeze in the first half of the year, partially offset by a 57% increase in Sierra sales due to strong demand tailwinds throughout the year. On a constant currency basis, total sales were down 3%.

Gross margin in 2020 was 34.7% compared to 35.0% in 2019. The decrease was primarily due to the unfavorable impacts on the Company’s supply chain and logistics due to the COVID-19 pandemic, partially offset by improved product and channel mix. Excluding a fair value inventory step-up associated with the Barnes acquisition, adjusted gross margin in 2020 was 34.9%.

Selling, general and administrative expenses in 2020 were $71.4 million compared to $68.7 million in 2019. The increase was primarily due to higher levels of stock-based compensation in line with the Company’s stock price appreciation along with the inclusion of Barnes, which contributed $1.7 million, partially offset by the cost-saving initiatives implemented during the first half of the year in response to the COVID-19 pandemic.

Net income in 2020 was $5.5 million, or $0.18 per diluted share, compared to $19.0 million, or $0.61 per diluted share, in 2019. Net income in 2020 included $14.0 million of non-cash charges and $2.4 million of transaction costs, compared to net income in 2019 that included $2.1 million of non‐cash charges and $0.2 million in transaction and restructuring costs.

Adjusted net income in 2020, which excludes the non‐cash items and transaction costs, increased 3% to $21.9 million, or $0.70 per diluted share, compared to $21.3 million, or $0.69 per diluted share, in 2019.

Adjusted EBITDA in 2020 was $22.4 million compared to $22.7 million in 2019.

Net cash provided by operating activities for the year ended December 31, 2020 increased significantly to $29.4 million compared to $9.5 million in the prior year. Capital expenditures for 2020 were $5.4 million compared to $4.1 million in the same year‐ago period. Free cash flow, defined as net cash provided by operating activities less capital expenditures, for the year ended December 31, 2020 increased significantly to $24.0 million compared to $5.4 million in the same year‐ago period.

2021 Outlook

Clarus anticipates fiscal year 2021 sales to grow approximately 25% to $280 million compared to 2020. By brand, the Company expects sales for Black Diamond to increase 17% to $200 million and Sierra and Barnes combined to increase 52% to $80 million compared to 2020.

The Company expects adjusted EBITDA in 2021 to increase approximately 56% to $35 million compared to 2020 with capital expenditures of approximately $7.5 million and free cash flow of approximately $15 million