Core Insights - Clarus (NASDAQ:CLAR) exceeded Wall Street's revenue expectations in Q3 CY2025, reporting sales of $69.35 million, a 3.3% year-on-year increase, and a non-GAAP profit of $0.05 per share, aligning with analyst estimates [1][6] Financial Performance - Revenue reached $69.35 million, surpassing analyst estimates of $66.51 million by 4.3% [6] - Adjusted EPS was $0.05, in line with analyst expectations of $0.06 [6] - Adjusted EBITDA stood at $2.80 million, with a 4% margin, relatively in line with estimates [6] - Operating margin improved to -4.4%, up from -8% in the same quarter last year [6] - Market capitalization is reported at $124.8 million [6] Business Highlights - Strong demand for outdoor products in North American wholesale contributed to revenue growth, with wholesale sales increasing by 15.6% [3][7] - The revamped Black Diamond apparel line achieved 29% year-over-year sales growth, now comprising 23% of the product mix, up nearly five percentage points from the previous year [7] - Direct-to-consumer (D2C) sales declined by double digits in North America and Europe, influenced by a pullback in pro sales and market resistance to price increases [7] Management Insights - Management attributed the quarter's performance to a healthier revenue mix, focused cost control, and improvements in product and channel strategy, despite challenges from tariffs and foreign exchange losses [5] - Expense reduction initiatives led to a decrease in selling, general, and administrative (SG&A) expenses, removing over $1 million in fixed costs annually [7] - Leadership remains cautious due to macroeconomic headwinds, ongoing tariff impacts, and uncertainty in consumer sentiment [4]

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Financial Data and Key Metrics Changes - Clarus generated net sales of $69.3 million, a 3% increase over the same period last year, with adjusted EBITDA increasing by 15% [4][5] - Consolidated gross margin rate was 35.1%, compared to 35% in the prior year quarter, reflecting higher sales volumes and a favorable product mix [26][27] - Adjusted EBITDA for the third quarter was $2.8 million, with an adjusted EBITDA margin of 4.0% [29] Business Line Data and Key Metrics Changes - The outdoor segment revenue was flat, but Black Diamond apparel saw a sales growth of 29% [36] - Adventure segment delivered 15.9% year-over-year growth, with organic growth of 7.4% excluding the Rocky Mounts acquisition [19] - Apparel represented 23% of the mix in Q3, up 490 basis points from a year ago, with total apparel sales ahead by 29% [15] Market Data and Key Metrics Changes - North America wholesale, the largest channel, was up 15.6% from the prior year period, while North America digital D2C was down 16.5% [12] - Europe wholesale revenue was up 2.9% in dollars but down 3% on a constant currency basis [13][14] - International distributor channel was down 28.9%, reflecting a timing shift in deliveries [14] Company Strategy and Development Direction - The company is focused on enhancing margins and setting the stage for sustainable growth despite macroeconomic challenges [8] - A renewed focus on product innovation is emphasized, with a three-year innovation roadmap to disrupt multiple product categories [25] - The company is taking proactive steps to address pricing issues in various markets, including planned price increases in the US and a pricing reset in Australia [8][20] Management's Comments on Operating Environment and Future Outlook - Management expressed caution regarding the fourth quarter due to low consumer sentiment and increased promotional activity [18] - The ongoing uncertainty related to tariffs and macroeconomic conditions makes it difficult to confidently forecast the business [31] - Despite challenges, management believes the actions taken will position the company for long-term success [35] Other Important Information - SG&A expenses were down 6% year-over-year, primarily due to lower employee-related costs and other expense reduction initiatives [29] - The company has zero third-party bank debt and is committed to prudent capital allocation [35] Q&A Session Summary Question: What was the offset to the Black Diamond strength in outdoor segment sales? - The decline in the North American D2C business, which was down 16.5%, offset the strength in wholesale [36] Question: How are retail partners ordering for spring 2026 in the outdoor segment? - The order book is up, reflecting some caution from retail partners, but there is positive momentum in the wholesale channel [38] Question: What are the expectations for the holiday season this year? - The environment is expected to be more promotional, and retailers are cautious about inventory [39]

Q3 EARNINGS PRESENTATION NOVEMBER 6, 2025 DISCLAIMER 6 February 2023 Forward -Looking Statements Please note that in this presentation 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 ...

Sales Performance - Total sales for Q3 2025 reached $69,347,000, a 3.3% increase from $67,115,000 in Q3 2024[14] - Domestic sales increased to $28,261,000, up 16.5% from $24,365,000 year-over-year[14] - International sales decreased to $41,086,000, down 3.9% from $42,750,000 year-over-year[14] - Total sales for the nine months ended September 30, 2025, were $185,027, a decrease of 4% compared to $192,910 for the same period in 2024[116] - Domestic sales for the Outdoor segment were $63,455, while Adventure segment domestic sales were $14,339, contributing to total domestic sales of $77,794[116] - International sales reached $107,233, with $66,217 from the Outdoor segment and $41,016 from the Adventure segment[116] Profit and Loss - Gross profit for Q3 2025 was $24,366,000, compared to $23,497,000 in Q3 2024, reflecting a 3.7% increase[14] - Net loss for the nine months ended September 30, 2025, was $15,295,000, compared to a net income of $13,234,000 in 2024[16] - Comprehensive loss for the nine months ended September 30, 2025, was $8,934,000, compared to comprehensive income of $14,588,000 in 2024[16] - Gross profit decreased by $3,914, or 5.7%, to $64,840, with a gross margin of 35.0% for the nine months ended September 30, 2025, compared to 35.6% in the prior year[170] Cash and Assets - Cash and cash equivalents at the end of Q3 2025 were $29,508,000, down from $45,359,000 at the end of 2024[12] - Total assets decreased to $283,070,000 as of September 30, 2025, from $294,094,000 at the end of 2024[12] - Stockholders' equity decreased to $225,805,000 from $233,093,000 over the same period[12] - The company reported a depreciation expense of $894 for the three months ended September 30, 2025, compared to $980 for the same period in 2024[45] Expenses and Liabilities - Operating loss for the nine months ended September 30, 2025, was $20,689,000, slightly higher than the loss of $20,269,000 for the same period in 2024[16] - Selling, general, and administrative expenses decreased by $1,725, or 6.2%, to $26,155, primarily due to lower employee-related costs and expenses from the sale of PIEPS[152] - Legal expenses incurred during the three months ended September 30, 2025, amounted to $322,000, up from $194,000 in the same period of 2024, indicating a year-over-year increase of approximately 66%[99] - Restructuring charges were $155 during the three months ended September 30, 2025, down from $478 in the same period of 2024[154] Acquisitions and Sales - The acquisition of RockyMounts was completed on December 5, 2024, for a total purchase consideration of up to $8,000, which includes $4,000 in cash at closing and additional contingent consideration of up to $2,000 based on future net sales thresholds[32][34] - The company completed the acquisition of TRED Outdoors Pty Ltd on October 9, 2023, enhancing its market presence in the outdoor equipment sector[130] - The company received net proceeds of approximately $37,871 from the sale of its Precision Sport segment, which has been reported as discontinued operations[132] Legal and Regulatory Matters - The Company recorded a liability of $2,500,000 related to potential penalties from the CPSC, reflecting the low end of the estimated exposure range[98] - The U.S. Consumer Product Safety Commission approved a voluntary product recall for certain avalanche beacon transceivers to improve safety[209] - The Company is currently unable to predict the duration or outcome of ongoing investigations, which may materially affect its liquidity and financial condition[99] Stock and Compensation - Stock-based compensation expense for the quarter ended September 30, 2025, was $1,544[22] - The company issued stock option awards for an aggregate of 630 shares during the nine months ended September 30, 2025, with varying vesting schedules[78] - As of September 30, 2025, there were 1,053 unvested stock options with an unrecognized compensation cost of $1,180, and 1,050 unvested restricted stock unit awards with an unrecognized compensation cost of $1,639[82] Tax and Deferred Assets - The estimated effective tax rate benefit for the three months ended September 30, 2025, was 58.1%, significantly higher than the U.S. federal statutory tax rate of 21%[106] - The Company has recorded a gross deferred tax asset of $35,658,000 as of December 31, 2024, with a valuation allowance of $23,344,000, resulting in a net deferred tax asset of $12,314,000[108]

Financial Performance - Third quarter sales increased by 3% to $69.3 million compared to $67.1 million in the same year-ago quarter[4] - Adjusted EBITDA for the third quarter was $2.8 million, representing an adjusted EBITDA margin of 4.0%, up from $2.4 million and 3.6% in the prior year[12] - Net loss narrowed to $1.6 million, or $(0.04) per diluted share, compared to a net loss of $3.2 million, or $(0.08) per diluted share in the year-ago quarter[10] - Gross margin improved slightly to 35.1% from 35.0% year-over-year, despite challenges in product mix and tariff impacts[8] - Selling, general and administrative expenses decreased to $26.2 million from $27.9 million, primarily due to lower employee-related expenses[9] - Domestic sales for Q3 2025 increased to $28,261 million, up from $24,365 million in Q3 2024, representing a growth of 7.8%[23] - Total sales for the nine months ended September 30, 2025, were $185,027 million, a decrease of 4.1% compared to $192,910 million for the same period in 2024[25] - Gross profit for Q3 2025 was reported at $24,366 million, an increase from $23,497 million in Q3 2024, reflecting a growth of 3.7%[23] - The adjusted gross margin for Q3 2025 was 35.1%, compared to 37.8% in Q3 2024, indicating a decline in profitability[27] - Operating loss for the nine months ended September 30, 2025, was $20,689 million, slightly higher than the loss of $20,269 million in the same period of 2024[25] - Net loss for Q3 2025 was $1,617 million, an improvement from a net loss of $3,157 million in Q3 2024, showing a reduction of 48.9%[23] - The company reported a basic net loss per share of $0.04 for Q3 2025, compared to a loss of $0.08 per share in Q3 2024[23] - Total operating expenses for Q3 2025 were $27,392 million, down from $28,855 million in Q3 2024, a decrease of 5.1%[23] - International sales for Q3 2025 were $41,086 million, a decrease of 3.9% from $42,750 million in Q3 2024[23] - Total sales for the nine months ended September 30, 2025, were $185,027, a decrease from $192,910 in the same period of 2024, representing a decline of 4.6%[33] - Gross profit for the nine months ended September 30, 2025, was $64,840, compared to $68,754 in 2024, reflecting a decrease of 5.6%[33] - Adjusted income from continuing operations for the nine months ended September 30, 2025, was $61, resulting in an adjusted EPS of $0.00, while the adjusted income for 2024 was $549 with an adjusted EPS of $0.01[33][35] Segment Performance - Adventure segment sales rose by 16% to $20.7 million, while Outdoor segment sales decreased by 1% to $48.7 million[5] - North America wholesale sales in the Outdoor segment increased by $3.1 million, or 16%[6] - The outdoor segment generated sales of $48,688 for the three months ended September 30, 2025, while the adventure segment generated $20,659, contributing to total sales of $69,347[36] - Sales for the Outdoor segment reached $129,672, and the Adventure segment generated $55,355, totaling $185,027 for the nine months ended September 30, 2025[38] - Operating loss for the Outdoor segment was $899, and for the Adventure segment was $6,978, totaling $12,812 for the nine months ended September 30, 2025[38] - Adjusted EBITDA for the Outdoor segment was $6,248, while the Adventure segment reported $449, resulting in a total of $(6,755) for the nine months ended September 30, 2025[38] - EBITDA margin for the Outdoor segment was 1.1%, while the Adventure segment reported (0.1)%, leading to an overall margin of (6.2)% for the nine months ended September 30, 2025[38] - Adjusted EBITDA margin for the Outdoor segment was 4.8%, and for the Adventure segment it was 0.8%, resulting in an overall margin of (0.0)% for the nine months ended September 30, 2025[38] Cash Flow and Debt - Cash and cash equivalents decreased to $29.5 million from $45.4 million[17] - Total debt increased slightly to $2.0 million from $1.9 million[17] Strategic Focus - The company is focused on aligning its cost structure and strategic roadmap with market realities to unlock growth opportunities in the Americas and Europe[3] Tax and Other Expenses - The company recorded an income tax benefit of $2,244 million for Q3 2025, compared to a benefit of $664 million in Q3 2024, indicating a significant increase in tax benefits[23] - The tax benefit for the nine months ended September 30, 2025, was $(3,877), resulting in a tax rate of 20.2%, compared to a tax rate of 17.9% in 2024[33][34] - The company reported a loss from continuing operations of $(15,295) for the nine months ended September 30, 2025, compared to a loss of $(15,112) in 2024[33][34] - Legal costs and regulatory matter expenses amounted to $2,050, contributing to a total of $3,463 for the nine months ended September 30, 2025[38] - Inventory fair value adjustments accounted for $120 in the Outdoor segment for the nine months ended September 30, 2025[38] - Impairment of indefinite-lived intangible assets was $1,565 for the nine months ended September 30, 2025[38] - Restructuring charges totaled $489 for the nine months ended September 30, 2025[38] - The company incurred restructuring charges of $1,009 for the nine months ended September 30, 2024, which were not present in the 2025 results[34][36] - Depreciation expenses for the Outdoor segment were $1,590, and for the Adventure segment were $1,064, totaling $2,654 for the nine months ended September 30, 2025[38]

Core Insights - Clarus Corporation reported a year-over-year revenue increase of 3.3% in Q3 2025, with total sales reaching $69.3 million compared to $67.1 million in the same quarter of the previous year [4][10] - The Adventure segment experienced a significant sales growth of 16%, while the Outdoor segment saw a slight decline of 1% [4][10] - The company is focused on sustainable growth and profitability amidst macroeconomic challenges, including tariff policies and changing consumer behavior [3] Financial Performance - Total sales for Q3 2025 were $69.3 million, up from $67.1 million in Q3 2024 [4][10] - Outdoor segment sales decreased by 1% to $48.7 million, while Adventure segment sales increased by 16% to $20.7 million [4][10] - Gross margin improved slightly to 35.1% from 35.0% year-over-year, although adjusted gross margin decreased to 35.1% from 37.8% [10][7] Cost Management - Selling, general, and administrative expenses decreased to $26.2 million from $27.9 million in the same quarter last year, primarily due to lower employee-related expenses and cost reduction initiatives [8][10] - The net loss for Q3 2025 was $1.6 million, or $(0.04) per diluted share, an improvement from a net loss of $3.2 million, or $(0.08) per diluted share, in Q3 2024 [9][10] Strategic Initiatives - The company is prioritizing its best customers and most profitable products, particularly in the Outdoor segment, and is simplifying its organizational structure in the Adventure segment [3] - Clarus aims to unlock intrinsic value in its Outdoor and Adventure segments, believing there are significant growth opportunities in the Americas and Europe [3] Cash Flow and Liquidity - Net cash used in operating activities for Q3 2025 was $5.7 million, an improvement from $8.3 million in the prior year [13] - Cash and cash equivalents totaled $29.5 million as of September 30, 2025, down from $45.4 million at the end of 2024 [18]

Core Insights - Laughing Water Capital reported a decline of approximately -1% in Q3 2025, resulting in year-to-date returns of approximately -2.7%, while the SP500TR and R2000 indices returned 12.4% and 8.1% respectively in the same quarter [1] - The investor letter highlighted Clarus Corporation (NASDAQ:CLAR) as a focus, noting its significant underperformance with a one-month return of -2.01% and a 52-week loss of 18.81% [2][3] Company Analysis - Clarus Corporation, known for its Black Diamond climbing gear and Rhino Rack roof racks, is perceived as undervalued in the market, with the Chairman incentivized to realize full value potentially through a sale [3] - As of October 29, 2025, Clarus Corporation's stock closed at $3.41 per share, with a market capitalization of $130.95 million [2] - Despite its potential, Clarus Corporation is not among the top 30 most popular stocks among hedge funds, with a decrease in hedge fund portfolios holding the stock from 13 to 11 [4]

Core Viewpoint - Clarus Corporation will hold a conference call on November 6, 2025, to discuss its financial results for Q3 2025, which ended on September 30, 2025. The results will be released after market hours on the same day [1]. Company Overview - Clarus Corporation is headquartered in Salt Lake City, Utah, and is a global leader in designing and developing equipment and lifestyle products for outdoor enthusiasts. The company aims to provide safe, simple, effective, and aesthetically pleasing products to enhance outdoor experiences [3]. - The company's products are sold globally under several brand names, including Black Diamond®, Rhino-Rack®, MAXTRAX®, TRED Outdoors®, and RockyMounts®, through various channels such as outdoor specialty retailers, online platforms, and original equipment manufacturers [3]. Conference Call Details - To participate in the conference call, interested parties can dial (888)-596-4144 or (646)-968-2525, and enter the access code 9696620 followed by the key. The call will be broadcast live and available for replay on the company's website [2].