Clarus Corporation reported sales jumped 50 percent in the first quarter, which ended March 31, largely due to the acquisitions of Rhino-Rack and MaxTrax. Sales on a proforma basis grew 6 percent. Sales of the Outdoor segment, led by Black Diamond, were impacted by logistics challenges.

First Quarter 2022 Financial Summary v. Same Year‐Ago Quarter

  • Record sales of $113.3 million increased 50 percent and 6 percent on a proforma basis;
  • Gross margin improved 320 basis points to 39.1 percent. Adjusted gross margin increased 290 basis points to 39.3 percent;
  • Net income was $5.3 million, or $0.13 per diluted share, compared to net income of $5.7 million, or $0.17 per diluted share;
  • Adjusted net income before non‐cash items increased 44 percent to $14.8 million, or $0.37 per diluted share, compared to $10.2 million, or $0.31 per diluted share; and
  • Adjusted EBITDA increased significantly to a record $19.7 million with an adjusted EBITDA margin of 17.4 percent, compared to $10.6 million with an adjusted EBITDA margin of 14.1 percent.

Management Commentary
“The momentum from our record-setting year in 2021 certainly continued into the first quarter of 2022,” said Clarus President John Walbrecht. “Our Precision Sport segment continues to execute at a high level growing sales by 41 percent and in our Adventure segment, we are pleased to report early success in our ‘Innovate and Accelerate’ strategy. Rhino-Rack’s net sales in North America during the first quarter increased 42 percent, an early proof point of the substantial white space that we believe exists for our Adventure brands in this market. While we continue to experience a strong order book for Black Diamond, supply chain and logistic challenges impacted our ability to convert all Outdoor segment demand into revenue.

“Looking to the remainder of the year, we believe our portfolio of ‘Super Fan’ brands has us well-positioned to continue our market momentum. Our brands have demonstrated strong resistance to recent economic headwinds, highlighting the durability of our entire portfolio of activity-based brands. We estimate some of the logistics challenges we experienced in the first quarter will subside in the back half of the year. This combination is expected to position us for another record-setting year in 2022.”

First Quarter 2022 Financial Results
Sales in the first quarter increased 50 percent to $113.3 million compared to $75.3 million in the same year‐ago quarter. The increase includes a revenue contribution of approximately $24.5 million from Rhino-Rack, an acquisition completed on July 1, 2021, and $4.2 million from MaxTrax, an acquisition completed on December 1, 2021. First-quarter sales increased 6 percent on a proforma basis compared to the year-ago quarter.

Sales in the Outdoor segment were $51.5 million compared to $51.8 million in the same year-ago quarter, while Precision Sport sales increased 41 percent to $33.1 million. Sales in the Adventure segment were $28.7 million in the first quarter of 2022. Despite strong customer demand, Outdoor segment sales were impacted by logistics challenges that affected the company’s ability to deliver products on time and in full. Sales in the Precision Sport and Adventure segments reflect continued strong customer demand and outperformance in navigating the challenging supply chain environment.

Gross margin in the first quarter improved 320 basis points to 39.1 percent compared to 35.9 percent in the year‐ago quarter due to improvements in channel and product mix, as well as operational efficiencies achieved due to the company’s larger scale. Excluding a $0.3 million fair value inventory step-up associated with the MaxTrax acquisition, the adjusted gross margin in the first quarter increased 290 basis points to 39.3 percent.

Selling, general and administrative expenses in the first quarter were $34.2 million compared to $20.9 million in the same year‐ago quarter due primarily to the inclusion of Rhino-Rack and MaxTRax, which contributed $9.4 million in expenses. Non-cash stock-based compensation for performance awards was $3.4 million, a $1.8 million increase compared to the first quarter of 2021. The remainder of the increase was driven by investments in the Company’s go-to-market and fulfillment activities in support of its increased sales.

Net income in the first quarter was $5.3 million, or $0.13 per diluted share, compared to net income of $5.7 million, or $0.17 per diluted share, in the prior-year quarter.

Adjusted net income in the first quarter, which excludes non‐cash items and transaction costs, increased 44 percent to $14.8 million, or $0.37 per diluted share, compared to an adjusted net income of $10.2 million, or $0.31 per diluted share, in the same year‐ago quarter.

Adjusted EBITDA in the first quarter increased 85 percent to a record $19.7 million, or an adjusted EBITDA margin of 17.4 percent, compared to $10.6 million, or an adjusted EBITDA margin of 14.1 percent, in the same year‐ago quarter.

Net cash used in operating activities for the three months ended March 31, 2022 was $(10.8) million compared to $(2.5) million in the prior-year quarter. Capital expenditures in the first quarter of 2022 were $1.9 million compared to $1.3 million in the prior-year quarter. Free cash flow, defined as net cash provided by operating activities less capital expenditures, for the first quarter of 2022 was $(12.7) million compared to $(3.9) million in the same year‐ago quarter. The decrease is primarily due to investments in inventory to mitigate supply chain constraints.

Liquidity at March 31, 2022 v. December 31, 2021

  • Cash and cash equivalents totaled $16.5 million compared to $19.5 million;
  • Total debt of $151.9 million compared to $141.5 million; and
  • Net debt leverage ratio 1.9x compared to 2.0x at the end of 2021.

Amended and Restated Credit Agreement
On April 18, 2022, the company entered into an amended and restated credit agreement with its banking partners, the agreement provides for borrowings of up to $300 million under a secured revolving credit facility and borrowings of $125 million under a secured term loan facility. At closing the $125 million was fully drawn and $29 million was outstanding under the revolving credit facility. The amended and restated credit agreement has customary commitment fees and covenants and matures on April 18, 2027.

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 in high-single-digits to approximately $237.5 million, the Precision Sport segment to increase in 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 still expected to be approximately $9.0 million and free cash flow is still expected to range between $50.0 million to $60.0 million.

The company’s products are principally sold globally under the Black Diamond, Rhino-Rack, MaxTrax, Sierra and Barnes brand names.

Photo courtesy Clarus/MaxTrax