Clarus(CLAR) - 2021 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS Presents Clarus Corporation's unaudited condensed consolidated financial statements and detailed notes for Q3 2021 and FY 2020 Condensed Consolidated Balance Sheets Balance sheets show significant asset and liability increases from December 2020 to September 2021, primarily due to acquisitions Condensed Consolidated Balance Sheets (in thousands) | Metric | September 30, 2021 | December 31, 2020 | | :--------------------------------------- | :------------------- | :------------------ | | Total Assets | $571,743 | $280,691 | | Total Liabilities | $303,146 | $76,097 | | Total Stockholders' Equity | $268,597 | $204,594 | - Total assets increased by over 100% from December 31, 2020, to September 30, 2021, largely due to the acquisition of Rhino-Rack[7][32][33] Condensed Consolidated Statements of Comprehensive (Loss) Income (Three Months) Q3 2021 sales and gross profit grew substantially, but an operating and comprehensive loss resulted from higher transaction costs and foreign currency adjustments Three Months Ended September 30 (in thousands, except per share amounts) | Metric | September 30, 2021 | September 30, 2020 | | :--------------------------------------- | :------------------- | :------------------- | | Total Sales | $108,971 | $64,491 | | Gross Profit | $39,179 | $21,669 | | Operating (Loss) Income | $(282) | $1,555 | | Net Income | $4,530 | $1,183 | | Comprehensive (Loss) Income | $(4,135) | $1,390 | | Net Income Per Share (Basic) | $0.13 | $0.04 | - Total sales increased by 69.0% year-over-year for the three months ended September 30, 2021, driven by new and existing product sales and recent acquisitions (Barnes and Rhino-Rack)[10][145] - Gross profit increased by 80.8%, and gross margin improved to 36.0% from 33.6%, benefiting from a favorable product mix and foreign currency impacts, despite a 2.8% decrease due to Rhino-Rack inventory fair value adjustments[10][151] - Operating expenses significantly increased, leading to an operating loss, primarily due to a surge in transaction costs related to acquisitions ($8,147 thousand in 2021 vs. $1,440 thousand in 2020)[10][153] Condensed Consolidated Statements of Comprehensive Income (Loss) (Nine Months) Nine months ended September 30, 2021, saw substantial sales and gross profit growth, turning prior year's losses into income, driven by strong demand and acquisitions Nine Months Ended September 30 (in thousands, except per share amounts) | Metric | September 30, 2021 | September 30, 2020 | | :--------------------------------------- | :------------------- | :------------------- |\n| Total Sales | $257,611 | $148,060 | | Gross Profit | $94,250 | $50,817 | | Operating Income (Loss) | $12,075 | $(1,590) | | Net Income (Loss) | $12,047 | $(1,524) | | Comprehensive Income (Loss) | $3,665 | $(1,087) | | Net Income (Loss) Per Share (Basic) | $0.37 | $(0.05) | - Total sales increased by 74.0% year-over-year for the nine months ended September 30, 2021, driven by increased sales of climb, mountain, ski, and sport products, and the inclusion of Barnes and Rhino-Rack[14][161] - Gross profit increased by 85.5%, and gross margin improved to 36.6% from 34.3%, benefiting from a favorable product mix and foreign currency impacts, partially offset by inventory fair value adjustments from acquisitions[14][167] - Operating income turned positive ($12,075 thousand) from a loss in the prior year, despite increased selling, general, and administrative expenses and transaction costs[14][168][169] Condensed Consolidated Statements of Cash Flows Cash flows for the nine months ended September 30, 2021, shifted to usage from operations, increased usage in investing for acquisitions, and significant provision from financing activities Nine Months Ended September 30 (in thousands) | Cash Flow Activity | September 30, 2021 | September 30, 2020 | | :--------------------------------------- | :------------------- | :------------------- | | Net cash (used in) provided by operating activities | $(17,101) | $21,048 | | Net cash used in investing activities | $(141,181) | $(33,779) | | Net cash provided by financing activities | $151,041 | $27,956 | | Change in cash | $(7,619) | $15,324 | | Cash, end of period | $10,170 | $17,027 | - Net cash used in operating activities was $17,101 thousand in 2021, a significant change from $21,048 thousand provided in 2020, mainly due to a $52,207 thousand increase in net operating assets[16][183] - Net cash used in investing activities increased substantially to $141,181 thousand, primarily driven by the acquisition of Rhino-Rack[16][185] - Net cash provided by financing activities increased to $151,041 thousand, largely from proceeds from revolving credit facilities and term notes, and a stock issuance for business acquisition[16][186] Condensed Consolidated Statements of Stockholders' Equity Stockholders' equity significantly increased from December 2020 to September 2021, primarily due to net income and stock issuances for acquisitions, partially offset by dividends and foreign currency losses Total Stockholders' Equity (in thousands) | Date | Total Stockholders' Equity | | :------------------- | :------------------------- | | September 30, 2021 | $268,597 | | December 31, 2020 | $204,594 | | September 30, 2020 | $195,287 | | December 31, 2019 | $181,192 | - The increase in stockholders' equity was significantly influenced by the issuance of shares for the Rhino-Rack acquisition ($55,333 thousand) and net income[21][33] - Accumulated other comprehensive loss increased significantly due to foreign currency translation adjustments[21][65] Notes to Condensed Consolidated Financial Statements This section provides detailed disclosures on the company's financial statements, covering significant accounting policies, recent acquisitions, inventory and property details, goodwill and intangible assets, long-term debt, derivative instruments, stockholders' equity, earnings per share, stock-based compensation, commitments, income taxes, segment information, related party transactions, and subsequent events NOTE 1. Nature of Operations and Summary of Significant Accounting Policies Clarus Corporation designs and distributes outdoor equipment and lifestyle products under brands like Black Diamond and Rhino-Rack, with interim financials prepared under GAAP using management estimates - Clarus Corporation's mission is to identify, acquire, and grow outdoor 'super fan' brands through an 'innovate and accelerate' strategy[27] - The company's product portfolio includes high-performance apparel, climbing and snow safety equipment (Black Diamond, PIEPS, SKINourishment), high-performance bullets and ammunition (Sierra, Barnes), and automotive roof racks and accessories (Rhino-Rack)[28] - Significant estimates in financial statements relate to fair value of acquired assets, inventory, credit losses, and deferred tax assets[29] - The company is evaluating ASU 2020-04 regarding reference rate reform (LIBOR transition) but has not yet adopted it[31] NOTE 2. Acquisitions Clarus acquired Rhino-Rack for approximately $202,038 thousand in July 2021, expecting enhanced revenue and profitability, with pro forma results showing significant sales and net income increases from this and the Barnes acquisition - Rhino-Rack acquisition completed on July 1, 2021, for approximately $202,038 thousand, paid with $143,140 thousand cash, $55,333 thousand in common stock, and $3,565 thousand in contingent consideration[32][33][39] - Acquisition-related costs for Rhino-Rack were $7,866 thousand for the three months and $8,643 thousand for the nine months ended September 30, 2021[34] - Goodwill of $85,127 thousand was recorded for Rhino-Rack, and $8,625 thousand for Barnes, primarily representing expected synergies[38][39] Unaudited Pro Forma Results (in thousands, except per share amounts) | Metric | Three Months Ended Sep 30, 2021 (Pro Forma) | Three Months Ended Sep 30, 2020 (Pro Forma) | Nine Months Ended Sep 30, 2021 (Pro Forma) | Nine Months Ended Sep 30, 2020 (Pro Forma) | | :------------------------- | :------------------------------------------ | :------------------------------------------ | :----------------------------------------- | :----------------------------------------- | | Sales | $108,971 | $93,259 | $308,142 | $213,076 | | Net Income | $15,739 | $3,938 | $25,258 | $832 | | Net Income Per Share - Basic | $0.47 | $0.13 | $0.79 | $0.03 | NOTE 3. Inventories Inventories significantly increased from December 2020 to September 2021, primarily in finished goods and raw materials, reflecting increased operational scale and anticipated demand Inventories (in thousands) | Category | September 30, 2021 | December 31, 2020 | | :----------------------- | :------------------- | :------------------ | | Finished goods | $78,601 | $50,132 | | Work-in-process | $9,168 | $6,429 | | Raw materials and supplies | $30,937 | $11,795 | | Total Inventories | $118,706 | $68,356 | - Total inventories increased by $50,350 thousand, or 73.7%, from December 31, 2020, to September 30, 2021[46] NOTE 4. Property and Equipment, Net Net property and equipment increased due to ongoing capital investments, with depreciation expense rising consistent with an expanded asset base Property and Equipment, Net (in thousands) | Category | September 30, 2021 | December 31, 2020 | | :--------------------------------------- | :------------------- | :------------------ | | Land | $3,160 | $3,160 | | Building and improvements | $7,650 | $7,324 | | Furniture and fixtures | $6,183 | $5,715 | | Computer hardware and software | $7,266 | $5,707 | | Machinery and equipment | $31,603 | $26,848 | | Construction in progress | $5,495 | $3,042 | | Less accumulated depreciation | $(28,913) | $(24,840) | | Total Property and Equipment, Net | $32,444 | $26,956 | - Depreciation expense for the three months ended September 30, 2021, was $1,631 thousand, up from $1,140 thousand in 2020. For the nine months, it was $4,336 thousand, up from $3,405 thousand[46] NOTE 5. Goodwill and Intangible Assets Goodwill and indefinite-lived intangible assets significantly increased due to the Rhino-Rack acquisition, while other amortizable intangibles like customer relationships and product technologies also grew Goodwill by Segment (in thousands) | Segment | Balance at Dec 31, 2020 | Increase due to Rhino-Rack Acquisition | Impact of Foreign Currency Exchange Rates | Balance at Sep 30, 2021 | | :---------------- | :---------------------- | :------------------------------------- | :---------------------------------------- | :---------------------- | | Black Diamond | $0 | $0 | $0 | $0 | | Sierra | $26,715 | $0 | $0 | $26,715 | | Rhino-Rack | $0 | $85,127 | $(3,668) | $81,459 | | Total | $26,715 | $85,127 | $(3,668) | $108,174 | Indefinite-Lived Intangible Assets (in thousands) | Metric | Amount | | :--------------------------------------- | :------- | | Balance at December 31, 2020 | $47,523 | | Increase due to acquisition of Rhino-Rack | $72,800 | | Impact of foreign currency exchange rates | $(3,326) | | Balance at September 30, 2021 | $116,997 | Other Intangible Assets, Net (in thousands) | Category | September 30, 2021 Net | December 31, 2020 Net | | :----------------------- | :--------------------- | :-------------------- | | Customer relationships | $45,669 | $15,147 | | Product technologies | $16,393 | $3,549 | | Tradename / trademark | $610 | $720 | | Core technologies | $0 | $0 | | Total | $62,672 | $19,416 | - Amortization expense for other intangible assets increased significantly to $3,577 thousand for the three months and $5,971 thousand for the nine months ended September 30, 2021, compared to $753 thousand and $2,290 thousand in the prior year periods, respectively[49] NOTE 6. Long-Term Debt Long-term debt increased substantially due to an expanded term loan and revolving credit facility borrowings, largely financing the Rhino-Rack acquisition, with the company remaining in compliance with debt covenants Long-Term Debt (in thousands) | Category | September 30, 2021 | December 31, 2020 | | :--------------------------------------- | :------------------- | :------------------ | | Revolving credit facility | $65,412 | $15,579 | | Other debt | $1,525 | $1,042 | | Term note | $123,437 | $18,000 | | Debt issuance costs | $(342) | $0 | | Less current portion | $(8,990) | $(4,000) | | Total Long-Term Debt | $181,042 | $30,621 | - Amendment No. 3 to the Credit Agreement increased the term loan facility to $125,000 thousand and the revolving loan facility to $100,000 thousand, with the term loan fully borrowed on July 1, 2021[53][57] - The maximum consolidated total leverage ratio permitted under the Credit Agreement was increased to 4.25:1.00, and the company was in compliance as of September 30, 2021[54][55] NOTE 7. Derivative Financial Instruments The company uses currency forward and option contracts to mitigate foreign exchange risk for international sales, with non-hedged contracts related to the Rhino-Rack acquisition resulting in recognized losses - The company's primary objective for exchange rate risk management is to mitigate uncertainty of anticipated cash flows from foreign currency sales using currency forward and option contracts[59] - Non-designated currency forward contracts related to the Rhino-Rack acquisition resulted in a loss of $(4,281) thousand for the nine months ended September 30, 2021, recognized in other, net expense[60] Designated Hedging Instruments Notional Amounts (in thousands) | Currency | September 30, 2021 Notional Amount | December 31, 2020 Notional Amount | | :--------------------------------------- | :--------------------------------- | :-------------------------------- | | Canadian Dollars | $9,224 | $14,587 | | Euros | €16,512 | €24,481 | NOTE 8. Accumulated Other Comprehensive Income (Loss) Accumulated other comprehensive income (loss) shifted to a significant loss, primarily driven by negative foreign currency translation adjustments, partially offset by unrealized gains on cash flow hedges Changes in AOCI (Net of Tax, in thousands) | Metric | Balance as of Dec 31, 2020 | Net Current Period Other Comprehensive (Loss) Income (Nine Months) | Balance as of Sep 30, 2021 | | :--------------------------------------- | :------------------------- | :----------------------------------------------------------------- | :------------------------- | | Foreign Currency Translation Adjustments | $1,480 | $(9,654) | $(8,174) | | Unrealized Gains on Cash Flow Hedges | $(980) | $1,272 | $292 | | Total AOCI | $500 | $(8,382) | $(7,882) | - Foreign currency translation adjustments were a significant negative contributor to AOCI, with a $(9,654) thousand loss for the nine months ended September 30, 2021[65] NOTE 9. Fair Value Measurements The company measures financial assets and liabilities at fair value, including designated forward exchange contracts and the Level 3 contingent consideration liability for the Rhino-Rack acquisition, with changes recognized in operating income (loss) Fair Value of Financial Instruments (September 30, 2021, in thousands) | Category | Level 1 | Level 2 | Level 3 | Total | | :--------------------------------------- | :------ | :------ | :------ | :------ | | Assets: | | | | | | Designated forward exchange contracts | $0 | $721 | $0 | $721 | | Liabilities: | | | | | | Designated forward exchange contracts | $0 | $82 | $0 | $82 | | Contingent consideration liability | $0 | $0 | $3,410 | $3,410 | - The contingent consideration liability for the Rhino-Rack acquisition was estimated at $3,565 thousand as of July 1, 2021, and $3,410 thousand as of September 30, 2021, using Level 3 inputs (unobservable inputs like a 4.8% discount rate)[75] NOTE 10. Stockholders' Equity The company reinstated its $0.025 per share quarterly cash dividend after a temporary stock dividend during COVID-19, with future declarations remaining at Board discretion - Clarus initiated a quarterly cash dividend program of $0.025 per share in August 2018[77] - The quarterly cash dividend was temporarily replaced with a stock dividend in May 2020 due to the COVID-19 pandemic, but was reinstated in October 2020[77] - On October 29, 2021, the Board approved the payment of a $0.025 quarterly cash dividend on November 19, 2021[77] NOTE 11. Earnings (Loss) Per Share Basic and diluted EPS calculations reflect weighted average common shares outstanding, including dilutive stock awards, while anti-dilutive equity awards were excluded from diluted EPS Net Income (Loss) Per Share | Metric | Three Months Ended Sep 30, 2021 | Three Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :--------------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Basic EPS | $0.13 | $0.04 | $0.37 | $(0.05) | | Diluted EPS | $0.13 | $0.04 | $0.35 | $(0.05) | | Weighted Average Shares Outstanding - Basic | 33,800 | 29,983 | 32,159 | 29,854 | | Weighted Average Shares Outstanding - Diluted | 36,164 | 30,986 | 34,044 | 29,854 | - Equity awards of 1,000 and 927 for the three months, and 1,011 and 4,384 for the nine months ended September 30, 2021 and 2020, respectively, were excluded from diluted EPS calculations as they were anti-dilutive[80] NOTE 12. Stock-Based Compensation Plan The company grants stock options and restricted stock awards under its 2015 Plan, with 2021 options valued at $5.88 - $9.23 per share and a $7,230 thousand restricted stock award granted to the Executive Chairman - During the nine months ended September 30, 2021, 500 stock options were issued under the 2015 Plan, with a grant date fair value of $3,239 thousand[82][85] - A restricted stock award of 500 shares was granted to the Executive Chairman on May 28, 2021, vesting if the stock price reaches $35.00 by May 28, 2024. Its fair value was estimated at $7,230 thousand using a Monte-Carlo pricing model[86] - Total non-cash stock compensation expense for the nine months ended September 30, 2021, was $6,414 thousand, up from $5,433 thousand in the prior year[87] NOTE 13. Commitments and Contingencies The company faces various legal disputes and product liability risks, with no current proceedings expected to materially affect financial condition, though losses exceeding accrued amounts are possible but not estimable - As a consumer goods manufacturer, the company faces product liability and related lawsuits, including claims for substantial damages and product recalls[89] - Management does not believe current legal disputes will have a material adverse effect on consolidated financial condition, results of operations, or cash flows[90] - There is a reasonable possibility of loss from contingencies exceeding accrued amounts, but the actual amounts cannot be reasonably estimated at this time[90] NOTE 14. Income Taxes The company's effective tax rate for Q3 and nine months ended September 30, 2021, was a significant benefit due to the release of a valuation allowance on deferred tax assets, primarily related to NOLs - The estimated effective tax rates were a benefit of $(419.0)% for the three months and $(104.7)% for the nine months ended September 30, 2021, primarily due to a release of valuation allowance on NOLs[93] - An additional valuation allowance of $6,003 thousand was released during the three months ended September 30, 2021, increasing the income tax benefit, due to a change in accounting method that increased taxable income and NOL utilization[94] - As of December 31, 2020, the company had U.S. federal NOLs of $120,309 thousand, expected to substantially offset future U.S. federal income taxes[96] NOTE 15. Segment Information Clarus operates three segments: Black Diamond, Sierra, and Rhino-Rack, with the 2021-acquired Rhino-Rack significantly contributing to total assets and sales despite an initial operating loss - The three operating segments are Black Diamond, Sierra, and Rhino-Rack, each focusing on distinct outdoor and consumer enthusiast markets[99][101][102] Sales to External Customers by Segment (in thousands) | Segment | Three Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2021 | | :---------------- | :------------------------------ | :----------------------------- | | Black Diamond | $59,029 | $155,717 | | Sierra | $30,317 | $82,269 | | Rhino-Rack | $19,625 | $19,625 | | Total Sales | $108,971 | $257,611 | Segment Operating Income (in thousands) | Segment | Three Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2021 | | :---------------- | :------------------------------ | :----------------------------- | | Black Diamond | $5,939 | $10,041 | | Sierra | $10,441 | $26,420 | | Rhino-Rack | $(3,014) | $(3,014) | | Total Segment Operating Income | $13,366 | $33,447 | Total Assets by Segment (in thousands) | Segment | September 30, 2021 | December 31, 2020 | | :---------------- | :------------------- | :------------------ | | Black Diamond | $157,163 | $141,746 | | Sierra | $136,509 | $113,430 | | Rhino-Rack | $254,585 | $0 | | Corporate | $23,486 | $25,515 | | Total Assets | $571,743 | $280,691 | NOTE 16. Related Party Transactions The company engaged in transactions with Kanders & Company, Inc., related to its Executive Chairman, for significant support in acquisitions and offerings, resulting in fees paid - Clarus paid Kanders & Company, Inc. $1,750 thousand for support in the Rhino-Rack acquisition and $250 thousand for support in Amendment No. 3 to the Credit Agreement, both paid during Q3 2021[109][110] - Kanders & Company, Inc. is related to the company's Executive Chairman, Mr. Warren B. Kanders[109] NOTE 17. Subsequent Events Subsequent to the reporting period, Clarus completed a public stock offering, raising approximately $80,264 thousand in net proceeds for revolving loan repayment and general corporate purposes, including potential acquisitions - On October 26, 2021, the company entered into an underwriting agreement for a public offering of 2,750 shares of common stock at $27.00 per share, with an option for underwriters to purchase an additional 413 shares, which was fully exercised[114] - The net proceeds from the offering, approximately $80,264 thousand, will be used to repay $65,000 thousand of the revolving loan facility and for general corporate purposes, including capital expenditures and potential acquisitions[115] - A fee of $500 thousand was recorded as owed to Kanders & Company for support in negotiating the offering[116] ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Management discusses financial performance, condition, and liquidity, highlighting sales and gross profit growth from acquisitions, COVID-19 impacts, critical accounting policies, and recent financing activities Forward-Looking Statements This section cautions that forward-looking statements involve risks and uncertainties, including consumer demand, economic conditions, acquisitions, regulatory changes, COVID-19 impacts, and supply chain disruptions - Forward-looking statements are based on expectations and beliefs concerning future events and involve risks and uncertainties[119] - Potential risks include consumer demand, economic conditions, global currency/capital market volatility, acquisition integration, regulatory changes, product liability, COVID-19 impacts, supply chain disruptions, and the ability to utilize net operating loss carryforwards[120] Overview Clarus Corporation is a global leader in outdoor equipment and lifestyle products, focused on acquiring and growing 'super fan' brands like Black Diamond and Rhino-Rack through innovation and acceleration - Clarus is headquartered in Salt Lake City, Utah, and is a global leader in designing, developing, manufacturing, and distributing outdoor equipment and lifestyle products[121] - The company's mission is to identify, acquire, and grow outdoor 'super fan' brands through its 'innovate and accelerate' strategy[121] - Key brands include Black Diamond, PIEPS, SKINourishment (climbing, ski, snow safety), Sierra, Barnes (bullets and ammunition), and Rhino-Rack (automotive roof racks)[122][125] Impact of COVID-19 COVID-19 negatively impacted Clarus's Black Diamond and Rhino-Rack segments through reduced demand and supply chain disruptions, with mitigation strategies in place but future impacts uncertain - COVID-19 caused a decline in retail demand for the Black Diamond segment from March 2020 through December 2020, and continued to a lesser extent in 2021[131] - A mandatory lockdown in Australia during Q3 2021 negatively impacted the Rhino-Rack segment's sales and profitability[131] - Mitigation actions include drawing on credit facilities, suspending share repurchases and cash dividends, postponing capital expenditures, and reducing operating costs[132] - The pandemic has significantly impacted the global supply chain, leading to increased raw material, storage, and shipping costs, and periodic delays in product delivery[133] Critical Accounting Policies and Use of Estimates Financial condition discussion relies on GAAP statements requiring estimates for derivatives, revenue, income taxes, and asset valuations, with no significant changes to critical accounting policies reported - Financial statements require management to make estimates and assumptions affecting reported asset/liability amounts and revenue/expense during the reporting period[138] - Significant estimates relate to derivatives, revenue recognition, income taxes, and valuation of long-lived assets, goodwill, and other intangible assets[138] - There have been no significant changes to critical accounting policies from the Annual Report on Form 10-K for the year ended December 31, 2020[139] Accounting Pronouncements Issued Not Yet Adopted This section refers to Note 1 for details on accounting pronouncements issued but not yet adopted by the company - Refer to Note 1 for information on accounting pronouncements not yet adopted[140] Results of Operations The company saw substantial sales and gross profit growth for Q3 and nine months ended September 30, 2021, driven by acquisitions and demand, though operating expenses, transaction costs, and interest expense also rose significantly Three Months Ended September 30, 2021 Compared to Three Months Ended September 30, 2020 Q3 2021 sales increased 69.0% to $108,971 thousand and gross profit rose 80.8% to $39,179 thousand, but operating expenses surged due to transaction costs, leading to an operating loss, offset by a significant income tax benefit Sales Consolidated sales increased 69.0% to $108,971 thousand, driven by product growth and Barnes and Rhino-Rack acquisitions, with domestic sales up 76.6% and international sales up 60.1% - Consolidated sales increased by $44,480 thousand (69.0%) to $108,971 thousand[145] - Increase attributed to new/existing climb, mountain, ski products ($8,665 thousand), Sierra sport products ($2,028 thousand), Barnes ($13,162 thousand), and Rhino-Rack ($19,625 thousand)[145] - Domestic sales increased by $26,573 thousand (76.6%) to $61,259 thousand[146] - International sales increased by $17,907 thousand (60.1%) to $47,712 thousand[147] Cost of Goods Sold Consolidated cost of goods sold increased 63.0% to $69,792 thousand, primarily due to an increase in units sold, aligning with significant sales growth - Consolidated cost of goods sold increased by $26,970 thousand (63.0%) to $69,792 thousand[150] - The increase was primarily attributable to an increase in the number of units sold[150](index=150&type=