Clarus(CLAR) - 2025 Q2 - Quarterly Results

Q2 2025 Financial Highlights and Management Commentary This section provides an overview of Clarus's Q2 2025 financial performance and management's strategic insights amidst market challenges Second Quarter 2025 Financial Summary In the second quarter of 2025, Clarus reported a slight year-over-year sales decline to $55.2 million. The company's net loss widened to $8.4 million from $5.5 million, while the adjusted net loss remained flat at $(0.03) per diluted share. Adjusted EBITDA showed a slightly larger loss of $(2.1) million compared to the prior year Financial Metric Comparison | Financial Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Sales | $55.2 million | $56.5 million | -2.3% | | Gross Margin | 35.6% | 36.1% | -50 bps | | Adjusted Gross Margin | 36.5% | 37.4% | -90 bps | | Net Loss | $(8.4) million | $(5.5) million | Increased Loss | | Net Loss per Diluted Share | $(0.22) | $(0.14) | Increased Loss | | Adjusted Net Loss | $(1.1) million | $(1.2) million | Improved | | Adjusted Net Loss per Diluted Share | $(0.03) | $(0.03) | Flat | | Adjusted EBITDA | $(2.1) million | $(1.9) million | Increased Loss | Management Commentary Management emphasized its focus on operational execution and disciplined investment amid ongoing headwinds in the global outdoor market. Key strategic actions include simplifying the Black Diamond business, highlighted by the recent divestiture of the PIEPS brand, and prioritizing high-return initiatives for the Adventure segment. While anticipating a challenging consumer demand outlook for the remainder of the year, the company believes its structural improvements will yield benefits as market conditions normalize - Completed the divestiture of the PIEPS snow safety brand for approximately $9.1 million, reflecting a strategy to simplify the Black Diamond business and rationalize product categories[3] - Positioned the Black Diamond brand for a return to growth through a simplified product portfolio, sharper marketing, key hires, and a rationalized inventory position[3] - The Adventure segment continues to be affected by market softness and over-reliance on legacy customers; the focus is on improving speed to market and expanding vehicle fitment[3] - Management believes the combined value of its Outdoor and Adventure segments exceeds the current market valuation and is committed to maximizing long-term shareholder value[3] Q2 2025 Financial Performance Analysis This section provides a detailed analysis of Clarus's sales performance, profitability, and adjusted financial metrics for the second quarter of 2025 Sales Performance Total sales for Q2 2025 decreased by 2.3% to $55.2 million. The Outdoor segment's sales grew 1% to $36.7 million, driven by a timing shift in IGD revenues. Conversely, the Adventure segment's sales declined 8% to $18.6 million, impacted by reduced demand from global OEM customers and a challenging wholesale market in Australia, which was partially offset by the RockyMounts acquisition Segment Sales Performance | Segment | Q2 2025 Sales | Q2 2024 Sales | YoY Change | | :--- | :--- | :--- | :--- | | Outdoor | $36.7 million | $36.2 million | +1% | | Adventure | $18.6 million | $20.3 million | -8% | | Total Sales | $55.2 million | $56.5 million | -2.3% | - The increase in Outdoor sales was attributed to a shift in the timing of IGD revenues into the second quarter[6] - The decrease in Adventure sales was due to lower demand from global OEM customers and a weak wholesale market for Rhino-Rack in Australia[6] Profitability Analysis Gross margin for Q2 2025 decreased to 35.6% from 36.1% year-over-year, primarily due to lower volumes and an unfavorable product mix from promotional sales in the Adventure segment. Selling, general and administrative (SG&A) expenses were reduced to $26.9 million from $28.1 million due to cost management initiatives. The company's net loss increased to $8.4 million from $5.5 million in the prior-year quarter - Gross margin decreased to 35.6% from 36.1% YoY, driven by lower volumes and unfavorable product mix at the Adventure segment[7] - SG&A expenses decreased by $1.2 million YoY to $26.9 million, primarily due to lower employee-related and marketing costs[8] - Net loss was $8.4 million, or $(0.22) per diluted share, compared to a net loss of $5.5 million, or $(0.14) per diluted share, in Q2 2024[9] Adjusted Performance Metrics On an adjusted basis, the company's performance was relatively stable year-over-year. Adjusted net loss was $1.1 million, or $(0.03) per share, compared to an adjusted net loss of $1.2 million in the prior year. Adjusted EBITDA was a loss of $(2.1) million, with the adjusted EBITDA margin declining slightly to (3.8)% from (3.4)% in Q2 2024 Adjusted Financial Metrics | Adjusted Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Adjusted Net Loss | $(1.1) million | $(1.2) million | | Adjusted Net Loss per Share | $(0.03) | $(0.03) | | Adjusted EBITDA | $(2.1) million | $(1.9) million | | Adjusted EBITDA Margin | (3.8)% | (3.4)% | Liquidity and Strategic Transactions This section details Clarus's cash flow, liquidity position, and the strategic divestiture of the PIEPS brand Cash Flow and Capital Expenditures For the three months ended June 30, 2025, the company used $(9.4) million in cash from operating activities, a reversal from the $0.8 million generated in the same period last year. Capital expenditures rose to $1.9 million, leading to a total free cash flow outflow of $11.3 million for the quarter Cash Flow Summary (Q2) | Cash Flow Metric (Q2) | 2025 | 2024 | | :--- | :--- | :--- | | Net Cash (Used in) Generated by Operating Activities | $(9.4) million | $0.8 million | | Capital Expenditures | $1.9 million | $1.6 million | | Free Cash Flow | $(11.3) million | N/A | Liquidity Position The company's liquidity position weakened compared to the end of 2024. Cash and cash equivalents decreased to $28.5 million as of June 30, 2025, from $45.4 million at December 31, 2024. Total debt remained unchanged at $1.9 million Liquidity Snapshot | Liquidity Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $28.5 million | $45.4 million | | Total debt | $1.9 million | $1.9 million | Completed Sale of PIEPS Subsequent to the quarter's end, on July 11, 2025, Clarus finalized the sale of its PIEPS snow safety brand. The divestiture, which included avalanche transceivers and JetForce airbag systems, was made to a private investment firm for a total price of €7.8 million (approximately $9.1 million) - The sale of the PIEPS brand was completed on July 11, 2025[13] - The total sale price was €7.8 million, or approximately $9.1 million, including cash and debt[13] Condensed Consolidated Financial Statements This section presents the condensed consolidated balance sheets and statements of loss for Clarus Corporation Condensed Consolidated Balance Sheets As of June 30, 2025, Clarus reported total assets of $286.5 million, down from $294.1 million at year-end 2024. The decrease was primarily driven by a reduction in cash. Total liabilities remained stable at $61.4 million, while total stockholders' equity decreased to $225.1 million from $233.1 million Balance Sheet Summary (in thousands) | Balance Sheet Item (in thousands) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Current Assets | $175,927 | $177,780 | | Cash | $28,474 | $45,359 | | Inventories | $91,527 | $82,278 | | Total Assets | $286,510 | $294,094 | | Total Current Liabilities | $38,626 | $36,037 | | Total Liabilities | $61,390 | $61,001 | | Total Stockholders' Equity | $225,120 | $233,093 | Condensed Consolidated Statements of Loss (Quarterly) For the three months ended June 30, 2025, the company recorded a net loss of $(8.4) million on total sales of $55.2 million. This compares to a net loss of $(5.5) million on sales of $56.5 million in the prior-year quarter. The operating loss widened to $(10.9) million from $(8.1) million, driven by higher operating expenses including impairment and legal costs Income Statement Summary (Q2, in thousands) | Income Statement Item (Q2, in thousands) | 2025 | 2024 | | :--- | :--- | :--- | | Total Sales | $55,247 | $56,484 | | Gross Profit | $19,680 | $20,406 | | Operating Loss | $(10,901) | $(8,137) | | Net Loss | $(8,434) | $(5,493) | | Diluted Loss Per Share | $(0.22) | $(0.14) | Condensed Consolidated Statements of (Loss) Income (YTD) For the six months ended June 30, 2025, Clarus reported a loss from continuing operations of $(13.7) million on sales of $115.7 million. This represents an increased loss from the $(12.0) million reported in the first half of 2024. The prior year's six-month period included a significant gain from discontinued operations, resulting in a net income of $16.4 million in H1 2024 Income Statement Summary (YTD, in thousands) | Income Statement Item (YTD, in thousands) | 2025 | 2024 | | :--- | :--- | :--- | | Total Sales | $115,680 | $125,795 | | Gross Profit | $40,474 | $45,257 | | Operating Loss | $(17,663) | $(14,911) | | Loss from Continuing Operations | $(13,678) | $(11,955) | | Net (Loss) Income | $(13,678) | $16,391 | Reconciliation of GAAP to Non-GAAP Financial Measures This section provides a detailed reconciliation of Clarus's GAAP financial measures to their corresponding non-GAAP adjusted metrics Reconciliation of Gross Profit to Adjusted Gross Profit After adjusting for inventory reserves, the company's adjusted gross margin for Q2 2025 was 36.5%, a decrease from 37.4% in Q2 2024. For the six-month period, the adjusted gross margin was 35.5%, down from 37.1% in the prior year. The adjustments in 2025 were for other inventory reserves, while 2024 also included adjustments for PFAS-related reserves Gross Margin Reconciliation (Q2) | Gross Margin Reconciliation (Q2) | 2025 | 2024 | | :--- | :--- | :--- | | Gross Margin (GAAP) | 35.6% | 36.1% | | Adjusted Gross Margin (Non-GAAP) | 36.5% | 37.4% | Gross Margin Reconciliation (YTD) | Gross Margin Reconciliation (YTD) | 2025 | 2024 | | :--- | :--- | :--- | | Gross Margin (GAAP) | 35.0% | 36.0% | | Adjusted Gross Margin (Non-GAAP) | 35.5% | 37.1% | Reconciliation of Net Loss to Adjusted Net Loss This section details the adjustments made to the GAAP net loss to arrive at the non-GAAP adjusted net loss. Major adjustments for Q2 2025 include amortization of intangibles, impairment charges, legal costs, and stock-based compensation. The resulting adjusted net loss per share was flat year-over-year for both the quarterly and year-to-date periods Quarterly Reconciliation of Net Loss For Q2 2025, the reported net loss of $(8.4) million was adjusted to a non-GAAP net loss of $(1.1) million, or $(0.03) per share. This is consistent with the adjusted net loss of $(1.2) million, or $(0.03) per share, in Q2 2024. Key adjustments included amortization ($2.0M), impairment ($1.6M), and legal costs ($1.6M) Net Loss Reconciliation (Q2) | Net Loss Reconciliation (Q2) | 2025 | 2024 | | :--- | :--- | :--- | | Net Loss (GAAP) | $(8.4) million | $(5.5) million | | Adjusted Net Loss (Non-GAAP) | $(1.1) million | $(1.2) million | | Diluted EPS (GAAP) | $(0.22) | $(0.14) | | Adjusted Diluted EPS (Non-GAAP) | $(0.03) | $(0.03) | Year-to-Date Reconciliation of Net Loss For the six months ended June 30, 2025, the reported loss from continuing operations of $(13.7) million was adjusted to a non-GAAP loss of $(1.7) million, or $(0.04) per share. This is slightly higher than the adjusted loss of $(1.3) million, or $(0.04) per share, in the same period of 2024 Loss from Continuing Operations Reconciliation (YTD) | Loss from Cont. Ops Reconciliation (YTD) | 2025 | 2024 | | :--- | :--- | :--- | | Loss from Cont. Ops (GAAP) | $(13.7) million | $(12.0) million | | Adjusted Loss from Cont. Ops (Non-GAAP) | $(1.7) million | $(1.3) million | | Diluted EPS (GAAP) | $(0.36) | $(0.31) | | Adjusted Diluted EPS (Non-GAAP) | $(0.04) | $(0.04) | Reconciliation of Operating Loss to Adjusted EBITDA The company provides a reconciliation from operating loss to adjusted EBITDA, broken down by its Outdoor and Adventure segments. For Q2 2025, the total adjusted EBITDA was a loss of $(2.1) million, and for the first six months of 2025, the loss was $(2.9) million. The Adventure segment showed positive adjusted EBITDA in Q2, while the Outdoor segment posted a small loss Quarterly Reconciliation of Adjusted EBITDA In Q2 2025, total adjusted EBITDA was a loss of $(2.1) million, slightly larger than the $(1.9) million loss in Q2 2024. The Outdoor segment reported an adjusted EBITDA loss of $(0.2) million, while the Adventure segment generated a positive adjusted EBITDA of $0.3 million. Corporate costs contributed $(2.2) million to the adjusted EBITDA loss Adjusted EBITDA by Segment (Q2 2025, in thousands) | Adjusted EBITDA by Segment (Q2 2025, in thousands) | Outdoor | Adventure | Corporate | Total | | :--- | :--- | :--- | :--- | :--- | | Adjusted EBITDA | $(214) | $311 | $(2,193) | $(2,096) | Year-to-Date Reconciliation of Adjusted EBITDA For the six months ended June 30, 2025, total adjusted EBITDA was a loss of $(2.9) million, a significant decline from a positive $0.1 million in the prior-year period. The Outdoor segment contributed $1.5 million in adjusted EBITDA, and the Adventure segment added $0.1 million, which was more than offset by $(4.5) million in corporate costs Adjusted EBITDA by Segment (YTD 2025, in thousands) | Adjusted EBITDA by Segment (YTD 2025, in thousands) | Outdoor | Adventure | Corporate | Total | | :--- | :--- | :--- | :--- | :--- | | Adjusted EBITDA | $1,518 | $100 | $(4,475) | $(2,857) |