Clarus reported adjusted net income grew 55 percent as sales rose 56 percent. Sales grew 68 percent in 2021 and are expected to climb 25 percent in 2022. Sales in the fourth quarter grew 17 percent in the Outdoor segment (Black Diamond) and 37 percent in the Precision Sport segment (Sierra, Barnes).

Fourth Quarter 2021 Financial Summary vs. Same Year‐Ago Quarter

  • Record sales of $118.2 million, an increase of 56 percent;
  • Gross margin improved 60 basis points to 36.1 percent. Adjusted gross margin increased 120 basis points to 37.2 percent;
  • Net income was $14.0 million, or $0.36 per diluted share, compared to net income of $7.1 million, or $0.22 per diluted share;
  • Adjusted net income before non‐cash items increased 55 percent to $17.4 million, or $0.45 per diluted share, compared to $11.2 million, or $0.34 per diluted share.
  • Adjusted EBITDA increased to a record $20.0 million with an adjusted EBITDA margin of 16.9 percent, compared to $11.0 million with an adjusted EBITDA margin of 14.5 percent.

2021 Financial Summary vs. 2020

  • Record sales of $375.8 million increased by 68 percent.
  • Gross margin improved 170 basis points to 36.4 percent. Adjusted gross margin increased by 280 basis points to 37.7 percent.
  • Net income increased to $26.1 million, or $0.73 per diluted share, compared to net income of $5.5 million, or $0.18 per diluted share.
  • Adjusted net income, before non‐cash items, increased 140 percent to $52.5 million, or $1.47 per diluted share, compared to $21.9 million, or $0.70 per diluted share.
  • Adjusted EBITDA increased to $61.5 million with an adjusted EBITDA margin of 16.4 percent, compared to $22.4 million with an adjusted EBITDA margin of 10.0 percent.

MaxTrax Acquisition
On December 1, 2021, Clarus acquired the Australian-based MaxTrax business, a manufacturer of Overlanding and off-road vehicle recovery and extraction tracks, for a combination of cash, stock and future consideration. MaxTrax continues to operate independently as a wholly-owned subsidiary of Clarus and a part of its Adventure reporting segment, which also includes Rhino-Rack, acquired on July 1, 2021.

Management Commentary
“Our record-setting fourth-quarter performance is yet another indication that our ‘Innovate and Accelerate’ strategy is delivering the intended results across our ‘Super Fan’ brand portfolio,” said Clarus President John Walbrecht. “For the third consecutive quarter, we reported record sales and adjusted EBITDA. We also continue to increase our gross margin profile despite headwinds across the global supply chain, highlighting the strength of our brands, the execution of operational excellence initiatives, and strong supplier partnerships.

“All of our brands continued to gain market share during the quarter. Within the Outdoor segment, nearly all product categories saw double-digit growth, largely driven by strong consumer demand for high-quality outdoor products and the expansion of our retail partnerships. The Precision Sport segment displayed strong performance, attributable to growth in outdoor precision sports and our unique ability to take more control of our supply chain. With the fourth quarter acquisition of MaxTrax we have created the Adventure segment, which is comprised of our Rhino-Rack and MaxTrax brands. We are expanding our sales and marketing teams within the Adventure segment to support our North American market penetration efforts while continuing to complement Australia’s existing market share. Bookings for all three segments remain strong, and our team has done a fantastic job fulfilling orders despite the challenging market backdrop.

“2021 capped a five-year journey where we outlined our Super Fan brand approach and delivered record-setting results through our Innovate and Accelerate strategy. We’ve grown from a roughly $150 million in sales business that was losing $3 million in adjusted EBITDA in 2016 to record-setting results in 2021 of $375.8 million in sales and $61.5 million in adjusted EBITDA. The transformational change that we have enacted over the last five years is what guides our vision for the future.

“As we look to 2022, we expect to leverage this foundation to capitalize on the strong demand trends underpinning our brands while using our Innovate and Accelerate strategy to accelerate both sales and profitability.”

Clarus Executive Chairman Warren Kanders added: “The team has done an outstanding job driving our Innovate and Accelerate strategy over the past five years, delivering record sales and profitability. This has enabled us to deploy over $350 million of capital on acquisitions, starting with Sierra Bullets in 2017. Since this time, we have also realized over $109 million of tax benefits associated with our NOL carryforwards. In 2010, Clarus had $225 million of NOLs set to expire at the end of 2022, but we now expect to realize the remaining $39.5 million that existed from 2010 to 2022 before expiration. This is quite the testament to our organization’s accomplishments in making accretive acquisitions while driving significant cash tax savings and value creation for our shareholders.”

Fourth Quarter 2021 Financial Results

  • Sales in the fourth quarter increased 56 percent to $118.2 million compared to $75.9 million in the same year‐ago quarter. The increase includes approximately $23.8 million from Rhino-Rack and $1.7 million from MaxTrax. Fourth-quarter sales increased 16 percent on a proforma basis compared to the same year-ago quarter.
  • Sales in the Outdoor segment of $65.1 million were up 17 percent, while Precision Sport sales of $27.6 million were up 37 percent. Sales in the Adventure segment were $25.5 million in the fourth quarter of 2021. The increase across each segment is attributed to continued strong demand, outperformance in navigating the challenging supply chain environment, and the benefit from the 2021 acquisitions.
  • Gross margin in the fourth quarter improved to 36.1 percent compared to 35.5 percent in the year‐ago quarter due to improvements in channel and product mix. Excluding a $1.3 million fair value inventory step-up associated with the Rhino-Rack and MaxTrax acquisitions, adjusted gross margin in the fourth quarter increased 120 basis points to 37.2 percent.
  • In the fourth quarter, selling, general and administrative expenses were $32.6 million compared to $20.9 million in the same year‐ago quarter due primarily to Rhino-Rack and MaxTrax, which contributed $7.6 million in expenses and an increase in stock-based compensation of $1.7 million. The remainder of the increase was driven by investments in the company’s go-to-market and fulfillment activities supporting its increased sales.
  • Net income in the fourth quarter was $14.0 million, or $0.36 per diluted share, compared to net income of $7.1 million, or $0.22 per diluted share, in the prior-year quarter.
  • Adjusted net income in the fourth quarter, which excludes non‐cash items and transaction costs, increased 55 percent to $17.4 million, or $0.45 per diluted share, compared to an adjusted net income of $11.2 million, or $0.34 per diluted share, in the same year‐ago quarter.
  • Adjusted EBITDA in the fourth quarter increased to a record $20.0 million, or an adjusted EBITDA margin of 16.9 percent, compared to $11.0 million, or an adjusted EBITDA margin of 14.5 percent, in the same year‐ago quarter.
  • Net cash, provided by operating activities for the three months ended December 31, 2021, increased to $16.8 million compared to $8.3 million in the prior year. Capital expenditures in the fourth quarter were $11.8 million, which included $9.5 million for the purchase of the Barnes facility, compared to $1.8 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 December 31, 2021, was $5.0 million compared to $6.5 million in the same year‐ago period. The decrease is due to the purchase of the Barnes facility and investments in inventory to mitigate supply chain constraints, partially offset by higher levels of profitability.

Liquidity At December 31, 2021 vs. December 31, 2020

  • Cash and cash equivalents totaled $19.5 million compared to $17.8 million.
  • Total debt of $141.5 million compared to $34.6 million.
  • Remaining access to $81.5 million on the company’s revolving line of credit.
  • Net debt leverage ratio 2.0x compared to 0.6x at the end of 2020.

Full Year 2021 Financial Results

  • Sales in 2021 increased 68 percent to $375.8 million compared to $224.0 million in 2020. The increase includes a revenue contribution of approximately $33.4 million from Barnes during the first nine months of 2021, $43.5 million from Rhino-Rack and roughly $1.7 million from MaxTrax. The full-year 2021 sales increased 36 percent on a proforma basis compared to 2020.
  • From a segment perspective, Outdoor sales of $220.8 million were up 29 percent. Precision Sport sales of $109.8 million were up 108 percent. Adventure sales were $45.2 million in 2021. The increase in sales across the segments is attributed to continued demand and the benefit from the 2020 and 2021 acquisitions.
  • Gross margin in 2021 improved 170 basis points to 36.4 percent compared to 34.7 percent in 2020, primarily due to improvements in channel and product mix. Excluding a $4.8 million fair value inventory step-up associated with the Rhino-Rack and MaxTrax acquisitions, the adjusted gross margin in 2021 increased 280 basis points to 37.7 percent.
  • Selling, general and administrative expenses in 2021 were $105.5 million compared to $71.4 million in 2020. The increase was primarily due to the inclusion of Rhino-Rack and MaxTrax, which contributed $15.3 million, and the full-year impact of the inclusion of Barnes, which contributed $5.0 million and an increase in stock-based compensation of $2.7 million. The remainder of the increase was driven by investments in the company’s go-to-market and fulfillment activities supporting its increased sales.
  • Net income in 2021 increased 375 percent to $26.1 million, or $0.73 per diluted share, compared to net income of $5.5 million, or $0.18 per diluted share, in the prior year.
  • Adjusted net income in 2021, which excludes non‐cash items and transaction costs, increased 140 percent to $52.5 million, or $1.47 per diluted share, compared to an adjusted net income of $21.9 million, or $0.70 per diluted share, in 2020.
  • Adjusted EBITDA in 2021 increased to a record $61.5 million, or an adjusted EBITDA margin of 16.4 percent, compared to $22.4 million, or an adjusted EBITDA margin of 10.0 percent, in 2020.
  • Net cash, provided by operating activities for the year ended December 31, 2021, was $(0.3) million compared to $29.4 million in 2020. Capital expenditures in 2021 were $17.4 million compared to $5.4 million in the prior year. Free cash flow, defined as net cash provided by operating activities less capital expenditures, for the year ended December 31, 2021 was $(17.7) million compared to $24.0 million in the same year‐ago period. This decrease is related to investments in inventory, the purchase of the Barnes facility, and cash transaction costs associated with the 2021 acquisitions.

In the year, sales of $375.8 million topped Clarus’ guidance of $362.5 million provided on November 8 with third-quarter results. Adjusted EBITDA in 2021 of $61.5 million topped guidance of $57 million.

2022 Outlook
Clarus anticipates the fiscal year 2022 sales to grow approximately 25 percent to $470.0 million compared to 2021. By segment, the company expects sales for Outdoor to increase high-single-digits to approximately $237.5 million, the Precision Sport segment to increase low-single-digits to approximately $112.5 million and the Adventure segment to contribute approximately $120 million.

The company expects adjusted EBITDA in 2022 to be approximately $78.0 million, or an adjusted EBITDA margin of 16.5 percent. In addition, capital expenditures are expected to be approximately $9.0 million, and free cash flow is expected to range between $50.0 to $60.0 million.

Net Operating Loss (NOL)
The company estimates that it has available NOL carryforwards for U.S. federal income tax purposes of approximately $60.7 million, including $39.5 million of NOL carryforwards that expires on December 31, 2022. The company’s common stock is subject to a rights agreement dated February 7, 2008, intended to limit the number of 5 percent 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 guarantee that the rights agreement will achieve the objective of preserving the value of the NOLs.

Photo courtesy Claus/Rhino-Rack