Boosted by strength at Black Diamond and its ammunition businesses, Clarus Corp. delivered another record quarter to close out its record-setting year of sales and earnings despite supply chain challenges. 

John Walbrecht, President and CEO, said, “We continue to be nimble and decisive at the brand level, which is critical in achieving this level of performance.”

In the quarter ended December 31, sales jumped 55.7 percent to $118.2 million ahead of Wall Street’s consensus estimate of $106.1 million and company guidance of $104.9 million. The increase includes $23.8 million from Rhino-Rack, an Australia-based roof rack and accessories brand acquired on July 1, 2021, and $1.7 million from MaxTrax, Australian-based vehicle recovery and extraction tracks developer. On a proforma basis, sales increased 16 percent year-over-year.

Black Diamond’s Apparel Sales Climb 22 Percent
Sales in its Outdoor segment, which includes Black Diamond, PIEPS and ClimbOn, of $65.1 million, grew 17 percent. Hardgoods at Black Diamond were up 16 percent in the quarter, and apparel was up 22 percent, its fastest-growing category, with “90 percent of apparel meeting, or exceeding sustainability goals in the outdoor industry,” said the company.

In its Precision Sport segment, which includes Sierra and Barnes, sales of $27.6 million rose 37 percent. Sierra contributed sales of $15.8 million, up 17 percent year-over-year, driven by demand for domestic ammo, up 206 percent compared to the year-ago quarter. Ammo accounts for over 30 percent of Sierra’s sales. Clarus’ original goal was for ammunition to account for 10 percent of the brand’s sales.

Barnes’ sales increased 79 percent to $11.7 million, led by an increase across all channels, including black box, ammo and OEM. Barnes has reported five straight quarters of revenue growth while expanding gross margins and improving EBITDA since being acquired on October 2, 2020. Barnes continues to focus on increasing production through investing in equipment and processes to fill demand in the market. During the quarter, Barnes’ headquarters in Mona, UT, was acquired for $9.5 million to support capacity needs and distribution.

Sales in the Adventure segment, to include Rhino-Rack and MaxTrax, were $25.5 million in the fourth quarter. Rhino-Rack contributed $23.8 million in sales. In North America, Rhino-Rack’s sales grew 25 percent proforma.

Adjusted Gross Margins Expand 120 Basis Points
Gross margins in the quarter improved 60 basis points to 36.1 percent 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 expanded 120 basis points to 37.2 percent.

SG&A expenses rose to $32.6 million from $20.9 million primarily due to the addition of Rhino-Rack and MaxTrax. As a percent of sales, SG&A expenses were flat at 27.6 percent against 27.5 percent a year ago.

Adjusted EBITDA in the quarter nearly doubled to $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. Adjusted EBITDA came in ahead of Wall Street’s consensus target of $16.0 million.

Net income in the quarter reached $14.0 million, or 36 cents per share, from $7.1 million, or 22 cents, in the prior-year quarter. Adjusted net income, excluding non‐cash items and transaction costs, increased 55.4 percent to $17.4 million, or 45 cents, from $11.2 million, or 34 cents, in the same year‐ago quarter.

For the full year, sales increased 67.7 percent to $375.8 million. Sales topped Clarus’ guidance of $362.5 million provided on November 8 with third-quarter results.

The full-year included revenue contribution of $33.4 million from Barnes, acquired October 2020, $43.5 million from Rhino-Rack and $1.7 million from MaxTrax. Pro-forma sales increased 36 percent versus 2020.

From a segment perspective, Outdoor sales of $220.8 million were up 29 percent, and Precision Sport sales of $109.8 million gained 108 percent. Adventure sales were $45.2 million in 2021.

Net income in 2021 increased 375 percent to $26.1 million, or 73 cents per share, while adjusted net income gained 140 percent to $52.5 million, or $1.47. Adjusted EBITDA in 2021 vaulted 175 percent to $61.5 million, topping company guidance of $57 million.

“Super Fan” Strategy Pays Dividends
On the call, Walbrecht cited the benefits of Clarus’ strategy formulated in 2016 to acquire “Super Fan” brands and execute an “Innovate and Accelerate” strategy to increase growth. Highlights include

  • Black Diamond developing more than 100 new products per season from 2017 through 2021;
  • its relaunch of apparel focused on technology; and
  • its accelerated marketing push led by digital.

“In 2021, Black Diamond had an impressive total of over 5 billion impressions across all product categories. In particular, apparel grew at a higher rate, recording a 58 percent year-over-year increase in earned consumer impressions,” said Walbrecht. “Today, BD is the premium badass image brand of the outdoor industry and the Super Fan brand for climbing, backcountry skiing, trail running, and hiking. We are the reference brand for equipment, driving industry-leading growth, resulting in market share gains across all categories, channels and geographies.”

Sierra’s big coup was launching ammunition and expanding it to 30 percent of sales. Walbrecht said, “In 2021, we launched all-new packaging for bullets and ammunition, creating a disruptive statement unique to the market. Our customers have responded, and we have doubled sales while significantly increasing our EBITDA margins.”

Barnes expanded from about $20 million in revenue, when acquired in October 2020, to a $45 million business. The brand benefited from accelerated efforts to target the OEM and wholesale distribution markets, including expanding distribution to top retailers. Walbrecht said, “Over the past 12 months, we successfully relaunched Barnes as the reference brand for big game hunting, reconnected with their very strong tribal community and doubled sales while expanding EBITDA margins. We have the inspirational goal of doubling sales again in the next three years.”

Rhino-Rack’s sales growth initiative for 2022 includes targeting the OEM, automotive aftermarket, and outdoor retailers. Said Walbrecht, “In fact, we have already had appointments with the top North American outdoor retailers for a 2022 launch later this year. We will be accelerating our marketing, launching a North American-specific website, new Overlanding trade booths, new trade and consumer catalogs, and launching an aggressive make space for adventure ad campaign. We will be accelerating our participation in events and gear reviews through our black tops to brown roads public relations campaign.”

MaxTrax also has a “substantial opportunity” to expand in North America. Said Walbrecht, “In fact, we launched our first go-to-market offering at SHOT Show, and the retailer’s feedback was very strong.”

Inventory levels were $129.4 million, up 9 percent from the end of the third quarter and ahead 89.2 percent year over year. The amount includes $27 million of incremental Rhino-Rack and MaxTrax inventory and incremental inventory investments of roughly $34 million across brands to mitigate supply chain constraints. CFO Mike Yates said, “We believe that our 2021 results through this strategy have been working.”

2022 Outlook
For the current year, sales are expected to expand approximately 25 percent to $470.0 million, ahead of Wall Street’s consensus estimate of $450.8 million. By segment, Outdoor sales are expected to increase high-single-digits to approximately $237.5 million, Precision Sport sales to increase low-single-digits to roughly $112.5 million and Adventure sales to contribute approximately $120 million.

Adjusted EBITDA in 2022 is expected to reach $78.0 million ahead of Wall Street’s consensus estimate of $71.5 million and up 26.8 percent from $61.5 million in 2021.

Photo courtesy Black Diamond