Clarus Corp
For the period ended Sep 30, 2024. Filed Nov 7, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 7, 2024
CLAR$5.02+18.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-01.
0001558370-24-010612
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-07.
0001558370-24-014902
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 101 previous paragraphs and 102 current paragraphs.
51 unchanged; 43 reworded; 7 added; 5 removed; 2 previous and 1 current paragraphs rearranged.
Tables are not compared: 4 previous and 4 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (7)
Current report
No impairments were recorded for goodwill or intangible assets during the nine months ended September 30, 2024. However, factors such as a sustained decline in revenues and cash flows, or other adverse changes in macroeconomic conditions, including our current and future share price, could result in an impairment charge to our Adventure reporting unit in a future reporting period. The Company performs its annual impairment assessment during the fourth quarter of 2024.
Current report
At this time, we consider it more likely than not that we will have sufficient taxable income in future periods that will allow us to realize our deferred tax assets. However, unless we can generate sufficient taxable income from our future operations, a valuation allowance to reduce our U.S. deferred tax assets may be required, which would materially increase our income tax expense in the period the allowance is recognized and have a material adverse effect on our results of operations and consolidated financial position.
Current report
Selling, general, and administrative expenses decreased $524, or 1.8%, to $27,880 during the three months ended September 30, 2024, compared to selling, general and administrative expenses of $28,404 during the three months ended September 30, 2023. Selling, general and administrative expenses at the Outdoor segment decreased by $1,688 primarily as a result of lower retail expenses due to store closures and other expense reduction initiatives to manage costs. Selling, general and administrative expenses at the Adventure segment increased by $1,212 primarily as a result of investments in global marketing and e-commerce initiatives to accelerate growth.
Current report
Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023
Current report
Selling, general, and administrative expenses decreased $464, or 0.5%, to $84,176 during the nine months ended September 30, 2024, compared to selling, general and administrative expenses of $84,640 during the nine months ended September 30, 2023. Selling, general and administrative expenses at the Outdoor segment decreased by $4,850 primarily as a result of lower retail expenses due to store closures and other expense reduction initiatives to manage costs. Selling, general and administrative expenses at the Adventure segment increased by $3,753 primarily as a result of investments in global marketing, e-commerce initiatives, and organizational leadership to accelerate growth.
Current report
Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023
Current report
As of September 30, 2024, we had approximately $18,000 in U.S. net deferred tax assets. These deferred tax assets are expected to reverse into NOL carryforwards that can be used to offset taxable income and reduce income taxes payable in future periods. At this time, we consider it more likely than not that we will have sufficient taxable income in future periods that will allow us to realize these deferred tax assets. However, unless we can generate sufficient taxable income from our future operations, a valuation allowance to reduce our U.S. deferred tax assets may be required, which would materially increase our income tax expense in the period the allowance is recognized and have a material adverse effect on our results of operations and consolidated financial position.
Removed paragraphs (5)
Previous report
Selling, general, and administrative expenses increased $1,199, or 4.5%, to $28,081 during the three months ended June 30, 2024, compared to selling, general and administrative expenses of $26,882 during the three months ended June 30, 2023. The increase was primarily due to an increase in higher investment in marketing initiatives in the Adventure segment, as well as higher employee-related expenses across the Company. These increases were partially offset by expense reduction initiatives in the Outdoor segment to manage costs as well as lower intangible amortization.
Previous report
Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023
Previous report
Selling, general, and administrative expenses increased $60, or 0.1%, to $56,296 during the six months ended June 30, 2024, compared to selling, general and administrative expenses of $56,236 during the six months ended June 30, 2023.
Previous report
Contingent Consideration Benefit
Previous report
Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023
Reworded paragraphs (43)
Previous wording
Each of our brands represents a unique customer value proposition. Supported by six decades of proven innovation, Black Diamond is an established global leader in high-performance, activity-based climbing, skiing, and technical mountain sports equipment. The brand is synonymous with premium performance, safety and reliability. Founded in 1992, our Rhino-Rack brand is a globally-recognized designer and distributor of highly-engineered automotive roof racks and accessories to enhance the outdoor enthusiast’s overlanding experience. Founded in 2005, our MAXTRAX brand offers high-quality overlanding and off-road vehicle recovery and extraction tracks for the overland and off-road market. Similarly, TRED, founded in 2012, is a trusted brand for key retailers and distributors in the overlanding and off-road vehicle recovery market.
Current wording
Each of our brands represents a unique customer value proposition. Supported by six decades of proven innovation, Black Diamond is an established global leader in high-performance, activity-based climbing, skiing, and technical mountain sports equipment. The brand is synonymous with premium performance, safety and reliability. Founded in 1992, our Rhino-Rack brand is a globally-recognized designer and distributor of highly-engineered automotive roof racks and accessories to enhance the outdoor enthusiast’s experience. Founded in 2005, our MAXTRAX brand offers high-quality overlanding and off-road vehicle recovery and extraction tracks for the overland and off-road market. Similarly, TRED, founded in 2012, is a trusted brand for key retailers and distributors in the overlanding and off-road vehicle recovery market.
Previous wording
Clarus, incorporated in Delaware in 1991, acquired Black Diamond Equipment, Ltd. (“Black Diamond Equipment”) in May 2010 and changed its name to Black Diamond, Inc. in January 2011. In October 2012, we acquired PIEPS Holding GmbH and its subsidiaries (collectively, “PIEPS”). On August 14, 2017, the Company changed its name from Black Diamond, Inc. to Clarus Corporation and its stock ticker symbol from “BDE” to “CLAR” on the NASDAQ stock exchange.
Current wording
Clarus, incorporated in Delaware in 1991, acquired Black Diamond Equipment, Ltd. in May 2010 and changed its name to Black Diamond, Inc. in January 2011. In October 2012, we acquired PIEPS Holding GmbH and its subsidiaries. On August 14, 2017, the Company changed its name from Black Diamond, Inc. to Clarus Corporation and its stock ticker symbol from “BDE” to “CLAR” on the NASDAQ stock exchange.
Previous wording
On February 29, 2024, the Company completed the sale of all of the equity associated with the Company’s Precision Sport segment, comprised of the Company’s subsidiaries Sierra and Barnes, pursuant to a Purchase and Sale Agreement dated as of December 29, 2023 (the “Precision Sport Purchase Agreement”). Under the terms of the Precision Sport Purchase Agreement, the Company received approximately $175,674 in cash subject to customary working capital adjustments, in exchange for all of the equity associated with the Company’s Precision Sport segment. The activities of the Precision Sport segment have been segregated and reported as discontinued operations for all periods presented. See Note 3 to our condensed consolidated financial statements for financial information regarding discontinued operations.
Current wording
On February 29, 2024, the Company completed the sale of all of the equity associated with the Company’s Precision Sport segment, comprised of the Company’s subsidiaries Sierra and Barnes, pursuant to a Purchase and Sale Agreement dated as of December 29, 2023 (the “Precision Sport Purchase Agreement”). Under the terms of the Precision Sport Purchase Agreement, the Company received approximately $175,674 in cash in exchange for all of the equity associated with the Company’s Precision Sport segment. The activities of the Precision Sport segment have been segregated and reported as discontinued operations for all periods presented. See Note 3 to our condensed consolidated financial statements for financial information regarding discontinued operations.
Previous wording
Starting in 2023, the Company began incurring expenses to facilitate long-term sustainable growth through cost reduction actions, consisting of employee reductions, facility rationalization and contract termination costs. During the three months ended June 30, 2024 and 2023, the Company incurred $161 and $736, respectively, and during the six months ended June 30, 2024 and 2023, the Company incurred $531 and $736, respectively, of restructuring charges related to these actions. The Company has incurred $3,754 of cumulative restructuring charges since the commencement of restructuring actions in 2023. The Company accrues for restructuring costs when they are probable and reasonably estimable. These costs include severance costs, exit costs, and other restructuring costs and are included in Restructuring charges in the condensed consolidated statements of comprehensive income (loss). Severance costs primarily consist of severance benefits through payroll continuation, conditional separation costs and employer tax liabilities, while exit costs primarily consist of lease exit and contract termination costs. Other costs consist primarily of costs related to the discontinuance of certain product lines and are distinguishable and directly attributable to the Company’s restructuring initiative and not a result of external market factors associated with the ongoing business. We estimate that we will continue to incur restructuring costs related to employee-related costs and facility exit costs during the year 2024; however, the Company cannot estimate the total amount expected to be incurred as cost reduction actions continue to be evaluated. The Company anticipates completing these restructuring activities in 2025.
Current wording
Starting in 2023, the Company began incurring expenses to facilitate long-term sustainable growth through cost reduction actions, consisting of employee reductions, facility rationalization and contract termination costs. During the three months ended September 30, 2024 and 2023, the Company incurred $478 and $1,076, respectively, and during the nine months ended September 30, 2024 and 2023, the Company incurred $1,009 and $1,812, respectively, of restructuring charges related to these actions. The Company has incurred $4,232 of cumulative restructuring charges since the commencement of restructuring actions in 2023. The Company accrues for restructuring costs when they are probable and reasonably estimable. These costs include severance costs, exit costs, and other restructuring costs and are included in restructuring charges in the condensed consolidated statements of comprehensive income (loss). Severance costs primarily consist of severance benefits through payroll continuation, conditional separation costs and employer tax liabilities, while exit costs primarily consist of lease exit and contract termination costs. Other costs consist primarily of costs related to the discontinuance of certain product lines and are distinguishable and directly attributable to the Company’s restructuring initiative and not a result of external market factors associated with the ongoing business. We estimate that we will continue to incur restructuring costs related to employee-related costs and facility exit costs during the year 2024; however, the Company cannot estimate the total amount expected to be incurred as cost reduction actions continue to be evaluated. The Company anticipates completing these restructuring activities in 2025.
Previous wording
Total sales decreased $2,420, or 1.9%, to $125,795 during the six months ended June 30, 2024, compared to total sales of $128,215 during the six months ended June 30, 2023. The decrease in sales was primarily attributable to a decrease in sales at the Outdoor segment of $3,880, partially offset by an increase in sales at the Adventure segment of $2,427.
Current wording
Total sales decreased $14,187, or 17.4%, to $67,115 during the three months ended September 30, 2024, compared to total sales of $81,302 during the three months ended September 30, 2023. The decrease in sales was attributable to a decrease in sales at the Outdoor and Adventure segments of $11,789 and $2,398, respectively.
Previous wording
Sales in the Adventure segment were reduced by $230 due to foreign exchange impact from the strengthening of the U.S. dollar against the Australian dollar during the three months ended June 30, 2024, compared to the prior period. Sales in the Outdoor segment were reduced by $28 due to foreign exchange impact from the strengthening of the U.S. dollar primarily against the euro during the three months ended June 30, 2024, compared to the prior period.
Current wording
Sales in the Adventure segment increased by $281 due to foreign exchange impact from the weakening of the U.S. dollar against the Australian dollar during the three months ended September 30, 2024, compared to the prior period. Sales in the Outdoor segment were reduced by $13 due to foreign exchange impact from the strengthening of the U.S. dollar primarily against the euro during the three months ended September 30, 2024, compared to the prior period.
Previous wording
Sales in the Outdoor segment decreased due to weakness in our European, independent global distributors (“IGD”), and North American direct to consumer markets. This weakness was partially offset by growth in the North American wholesale channel at the Outdoor segment. Sales in the Adventure segment increased due to higher demand from OEM customers and a $2,236 increase from the TRED Outdoors acquisition.
Current wording
Sales in the Outdoor segment decreased due to weakness in our North American wholesale and direct to consumer (“DTC”) channels, independent global distributor (“IGD”) customers, and softness in our European markets, combined with the effects from our product simplification and SKU rationalization strategy. Sales in the Adventure segment decreased due to lower demand from original equipment manufacturer (“OEM”) customers and challenging wholesale in the Australia and US markets, partially offset by a $1,237 increase from the TRED Outdoors acquisition.
Previous wording
Domestic sales decreased $2,991, or 11.5%, to $22,934 during the three months ended June 30, 2024, compared to domestic sales of $25,925 during the three months ended June 30, 2023. The decrease in sales was attributable to decreases at the Outdoor and Adventure segments of $2,984, and $7 respectively.
Current wording
Domestic sales decreased $6,058, or 19.9%, to $24,365 during the three months ended September 30, 2024, compared to domestic sales of $30,423 during the three months ended September 30, 2023. The decrease in sales was attributable to decreases at the Outdoor and Adventure segments of $5,253 and $805, respectively.
Previous wording
International sales increased $1,538, or 4.8%, to $33,550 during the three months ended June 30, 2024, compared to international sales of $32,012 during the three months ended June 30, 2023. The increase in sales was primarily attributable to an increase in sales at the Adventure segment of $2,434, partially offset by a decrease in sales at the Outdoor segment of $896.
Current wording
International sales decreased $8,129, or 16.0%, to $42,750 during the three months ended September 30, 2024, compared to international sales of $50,879 during the three months ended September 30, 2023. The decrease in sales was attributable to decreases at the Outdoor and Adventure segments of $6,536 and $1,593, respectively.
Previous wording
Cost of goods sold increased $718, or 2.0%, to $36,078 during the three months ended June 30, 2024, compared to cost of goods sold of $35,360 during the three months ended June 30, 2023.
Current wording
Cost of goods sold decreased $10,400, or 19.3%, to $43,618 during the three months ended September 30, 2024, compared to cost of goods sold of $54,018 during the three months ended September 30, 2023.
Previous wording
Gross profit decreased $2,171, or 9.6%, to $20,406 during the three months ended June 30, 2024, compared to gross profit of $22,577 during the three months ended June 30, 2023. Gross margin was 36.1% during the three months ended June 30, 2024, compared to a gross margin of 39.0% during the three months ended June 30, 2023. Gross margin during the three months ended June 30, 2024 decreased compared to the prior year due to an increase in polyfluoroalkyl substances (“PFAS”) related inventory reserve expenses, unfavorable product mix due to increased discontinued merchandise sales at the Outdoor segment, as well as higher inventory and sales return reserve expenses at the Adventure segment.
Current wording
Gross profit decreased $3,787, or 13.9%, to $23,497 during the three months ended September 30, 2024, compared to gross profit of $27,284 during the three months ended September 30, 2023. Gross margin was 35.0% during the three months ended September 30, 2024, compared to a gross margin of 33.6% during the three months ended September 30, 2023. Gross margin during the three months ended September 30, 2024 increased compared to the prior year as a result of favorable product mix at the Outdoor segment, as well as a favorable channel mix due to lower OEM sales and higher MAXTRAX revenue at the Adventure segment. These increases were partially offset by an increase in polyfluoroalkyl substances (“PFAS”) related inventory reserve expenses at the Outdoor segment, as well as sales return reserve and rebate expenses at the Adventure segment.
Previous wording
Restructuring charges decreased to $161 during the three months ended June 30, 2024, compared to restructuring charges of $736 during the three months ended June 30, 2023. The restructuring charges incurred during the three months ended June 30, 2024 relate to benefits provided to employees who were terminated due to the Company’s reduction-in-force as part of its continued realignment of resources within the organization of $158 and lease exit and contract termination costs of $3.
Current wording
Restructuring charges decreased to $478 during the three months ended September 30, 2024, compared to restructuring charges of $1,076 during the three months ended September 30, 2023. The restructuring charges incurred during the three months ended September 30, 2024 relate to benefits provided to employees who were terminated due to the Company’s reduction-in-force as part of its continued realignment of resources within the organization of $478.
Previous wording
Transaction costs increased to $27 during the three months ended June 30, 2024, compared to transaction costs of $22 during the three months ended June 30, 2023, which consisted of expenses related to the Company’s various acquisition efforts.
Current wording
Transaction costs decreased to $103 during the three months ended September 30, 2024, compared to transaction costs of $400 during the three months ended September 30, 2023, which consisted of expenses related to the Company’s various acquisition efforts.
Previous wording
Legal costs and regulatory matter expenses increased to $399 during the three months ended June 30, 2024, compared to legal costs and regulatory matter expenses of $355 during the three months ended June 30, 2023, which consisted of expenses related to the Company’s specific legal matters. See Note 16 to our condensed consolidated financial statements for financial information regarding specific legal matters.
Current wording
Legal costs and regulatory matter expenses decreased to $394 during the three months ended September 30, 2024, compared to legal costs and regulatory matter expenses of $579 during the three months ended September 30, 2023, which consisted of expenses related to the Company’s specific legal matters. See Note 16 to our condensed consolidated financial statements for financial information regarding specific legal matters.
Previous wording
Interest income, net increased to $455 during the three months ended June 30, 2024, compared to interest income, net of $8 during the three months ended June 30, 2023. The increase in interest income recognized during the three months ended June 30, 2024, was due to interest income on higher cash balances.
Current wording
Interest income, net increased to $373 during the three months ended September 30, 2024, compared to interest income, net of $19 during the three months ended September 30, 2023. The increase in interest income recognized during the three months ended September 30, 2024, was due to interest income on higher cash balances.
Previous wording
Other, net, changed by $188, or 83.2%, to $414 during the three months ended June 30, 2024, compared to other, net of $226 during the three months ended June 30, 2023. The change in other, net, was primarily attributable to an increase in remeasurement gains recognized on the Company’s foreign denominated accounts receivable and accounts payable. The change was partially offset by a reduction in gains in mark-to-market adjustments on non-hedged foreign currency contracts during the three months ended June 30, 2024.
Current wording
Other, net, changed by $1,609, or 361.6%, to $1,164 during the three months ended September 30, 2024, compared to other, net of ($445) during the three months ended September 30, 2023. The change in other, net, was primarily attributable to an increase in remeasurement gains recognized on the Company’s foreign denominated accounts receivable and accounts payable. The change was partially offset by losses in mark-to-market adjustments on non-hedged foreign currency contracts during the three months ended September 30, 2024.
Previous wording
Income tax benefit changed by $913, or 105.9%, to $1,775 during the three months ended June 30, 2024, compared to $862 during the same period in 2023. Our effective income tax rate was a benefit of 24.4% for the three months ended June 30, 2024, and differed compared to the statutory tax rates primarily due to the impact of stock compensation and research and experimentation expenditures and credits. For the three months ended June 30, 2023, our effective income tax rate was a benefit of 16.6% and differed compared to the statutory tax rates due to the impact of stock compensation, research and experimentation expenditures and credits, and discrete stock option windfall benefits.
Current wording
Income tax benefit decreased by $731, or 52.4%, to $664 during the three months ended September 30, 2024, compared to $1,395 during the same period in 2023. Our effective income tax rate was a benefit of 17.4% for the three months ended September 30, 2024, and differed compared to the statutory tax rates primarily due to the impact of stock compensation and research and experimentation expenditures and credits. For the three months ended September 30, 2023, our effective income tax rate was a benefit of 38.7% and differed compared to the statutory tax rates primarily due to the impact of stock compensation, research and experimentation expenditures and credits, and discrete stock option windfall benefits.
Previous wording
Net income from discontinued operations was $0 during the three months ended June 30, 2024, compared to net income from discontinued operations of $2,231 during the three months ended June 30, 2023. The change in net income from discontinued operations is due to the sale of the Precision Sport segment occurring during the three months ended March 31, 2024. There was no activity in discontinued operations during the three months ended June 30, 2024.
Current wording
Net income from discontinued operations was $0 during the three months ended September 30, 2024, compared to net income from discontinued operations of $942 during the three months ended September 30, 2023. The change in net income from discontinued operations is due to the sale of the Precision Sport segment occurring during the three months ended March 31, 2024. There was no activity in discontinued operations during the three months ended September 30, 2024.
Previous wording
The following presents a discussion of operations for the six months ended June 30, 2024, compared with the six months ended June 30, 2023.
Current wording
The following presents a discussion of operations for the nine months ended September 30, 2024, compared with the nine months ended September 30, 2023.
Previous wording
Total sales decreased $1,453, or 2.5%, to $56,484 during the three months ended June 30, 2024, compared to total sales of $57,937 during the three months ended June 30, 2023. The decrease in sales was primarily attributable to a decrease in sales at the Outdoor segment of $3,880, partially offset by an increase in sales at the Adventure segment of $2,427.
Current wording
Total sales decreased $16,607, or 7.9%, to $192,910 during the nine months ended September 30, 2024, compared to total sales of $209,517 during the nine months ended September 30, 2023. The decrease in sales was attributable to a decrease in sales at the Outdoor segment of $21,422, partially offset by an increase in sales at the Adventure segment of $4,815.
Previous wording
Sales in the Adventure segment were reduced by $891 due to foreign exchange impact from the strengthening of the U.S. dollar against the Australian dollar during the six months ended June 30, 2024, compared to the prior period. Sales in the
Current wording
Sales in the Adventure segment were reduced by $611 due to foreign exchange impact from the strengthening of the U.S. dollar against the Australian dollar during the nine months ended September 30, 2024, compared to the prior period. Sales in the Outdoor segment increased by $256 due to foreign exchange impact from the weakening of the U.S. dollar primarily against the euro during the nine months ended September 30, 2024, compared to the prior period.
Previous wording
Sales in the Outdoor segment decreased due to weakness in our North American direct to consumer markets and softness in our European markets. Sales in the Adventure segment increased due to higher demand from original equipment manufacturer (“OEM”) customers and a $977 increase from the TRED Outdoors acquisition.
Current wording
Sales in the Outdoor segment decreased due to weakness in our European, IGD, and North American markets, combined with the effects from our product simplification and SKU rationalization strategy. Sales in the Adventure segment increased due to higher demand from OEM customers, improved domestic MAXTRAX sales, and a $3,473 increase from the TRED Outdoors acquisition.
Previous wording
Domestic sales increased $1,096, or 2.2%, to $51,218 during the six months ended June 30, 2024, compared to domestic sales of $50,122 during the six months ended June 30, 2023. The increase in sales was primarily attributable to an increase in sales at the Adventure segment of $2,016, partially offset by a decrease in sales at the Outdoor segment of $920.
Current wording
Domestic sales decreased $4,962, or 6.2%, to $75,583 during the nine months ended September 30, 2024, compared to domestic sales of $80,545 during the nine months ended September 30, 2023. The decrease in sales was attributable to a decrease in sales at the Outdoor segment of $6,173, partially offset by an increase in sales at the Adventure segment of $1,211.
Previous wording
International sales decreased $3,516, or 4.5%, to $74,577 during the six months ended June 30, 2024, compared to international sales of $78,093 during the six months ended June 30, 2023. The decrease in sales was primarily attributable to a decrease in sales at the Outdoor segment of $8,713, partially offset by an increase in sales at the Adventure segment of $5,197.
Current wording
International sales decreased $11,645, or 9.0%, to $117,327 during the nine months ended September 30, 2024, compared to international sales of $128,972 during the nine months ended September 30, 2023. The decrease in sales was attributable to a decrease in sales at the Outdoor segment of $15,249, partially offset by an increase in sales at the Adventure segment of $3,604.
Previous wording
Cost of goods sold increased $408, or 0.5%, to $80,538 during the six months ended June 30, 2024, compared to cost of goods sold of $80,130 during the six months ended June 30, 2023.
Current wording
Cost of goods sold decreased $9,992, or 7.4%, to $124,156 during the nine months ended September 30, 2024, compared to cost of goods sold of $134,148 during the nine months ended September 30, 2023.
Previous wording
Gross profit decreased $2,828, or 5.9%, to $45,257 during the six months ended June 30, 2024, compared to gross profit of $48,085 during the six months ended June 30, 2023. Gross margin was 36.0% during the six months ended June 30, 2024, compared to a gross margin of 37.5% during the six months ended June 30, 2023. Gross margin during the six months ended June 30, 2024, decreased compared to the prior year due to unfavorable product mix, lower volume, and an increase in PFAS related inventory reserve expenses at the Outdoor segment, as well as an increase in sales return reserve expenses at the Adventure segment.
Current wording
Gross profit decreased $6,615, or 8.8%, to $68,754 during the nine months ended September 30, 2024, compared to gross profit of $75,369 during the nine months ended September 30, 2023. Gross margin was 35.6% during the nine months ended September 30, 2024, compared to a gross margin of 36.0% during the nine months ended September 30, 2023. Gross margin during the nine months ended September 30, 2024, decreased compared to the prior year due to unfavorable PFAS-related inventory reserve expenses at the Outdoor segment, as well as an increase in sales return reserve and rebate expenses at the Adventure segment.
Previous wording
Restructuring charges decreased to $531 during the six months ended June 30, 2024, compared to restructuring charges of $736 during the six months ended June 30, 2023. The restructuring charges incurred during the six months ended June 30, 2024 relate to benefits provided to employees who were terminated due to the Company’s reduction-in-force as part of its continued realignment of resources within the organization of $515 and lease exit and contract termination costs of $16.
Current wording
Restructuring charges decreased to $1,009 during the nine months ended September 30, 2024, compared to restructuring charges of $1,812 during the nine months ended September 30, 2023. The restructuring charges incurred during the nine months ended September 30, 2024 relate to benefits provided to employees who were terminated due to the Company’s reduction-in-force as part of its continued realignment of resources within the organization of $993 and lease exit and contract termination costs of $16.
Previous wording
Transaction costs increased to $65 during the six months ended June 30, 2024, compared to transaction costs of $59 during the six months ended June 30, 2023, which consisted of expenses related to the Company’s various acquisition efforts.
Current wording
Transaction costs decreased to $168 during the nine months ended September 30, 2024, compared to transaction costs of $459 during the nine months ended September 30, 2023, which consisted of expenses related to the Company’s various acquisition efforts.
Previous wording
Contingent consideration benefit decreased to $125 during the six months ended June 30, 2024, compared to a contingent consideration benefit of $1,565 during the six months ended June 30, 2023, which consisted of changes in the estimated fair value of contingent consideration liabilities associated with our acquisitions of MAXTRAX in 2021 and TRED in 2023.
Current wording
Contingent consideration benefit decreased to $125 during the nine months ended September 30, 2024, compared to a contingent consideration benefit of $1,565 during the nine months ended September 30, 2023, which consisted of changes in the estimated fair value of contingent consideration liabilities associated with our acquisitions of MAXTRAX in 2021 and TRED in 2023.
Previous wording
Legal costs and regulatory matter expenses increased to $3,401 during the six months ended June 30, 2024, compared to legal costs and regulatory matter expenses of $483 during the six months ended June 30, 2023. The increase in legal costs and regulatory matter expenses recognized during the six months ended June 30, 2024 reflects the Company’s accrued liability for the outstanding regulatory matter with the United States Consumer Product Safety Commission and increased expenses related to the Company’s specific legal matters. See Note 16 to our condensed consolidated financial statements for financial information regarding specific legal matters.
Current wording
Legal costs and regulatory matter expenses increased to $3,795 during the nine months ended September 30, 2024, compared to legal costs and regulatory matter expenses of $1,062 during the nine months ended September 30, 2023. The increase in legal costs and regulatory matter expenses recognized during the nine months ended September 30, 2024 reflects the Company’s accrued liability for the outstanding regulatory matter with the United States Consumer Product Safety Commission and increased expenses related to the Company’s specific legal matters. See Note 16 to our condensed consolidated financial statements for financial information regarding specific legal matters.
Previous wording
Interest income, net increased to $825 during the six months ended June 30, 2024, compared to interest income, net of $13 during the six months ended June 30, 2023. The increase in interest income recognized during the six months ended June 30, 2024, was due to interest income on higher cash balances.
Current wording
Interest income, net increased to $1,198 during the nine months ended September 30, 2024, compared to interest income, net of $32 during the nine months ended September 30, 2023. The increase in interest income recognized during the nine months ended September 30, 2024, was due to interest income on higher cash balances.
Previous wording
Other, net, changed by $797, or 263.9%, to ($495) during the six months ended June 30, 2024, compared to other, net of $302 during the six months ended June 30, 2023. The change in other, net, was primarily attributable to an increase in remeasurement losses recognized on the Company’s foreign denominated accounts receivable and accounts payable. The change was partially offset by gains in mark-to-market adjustments on non-hedged foreign currency contracts during the six months ended June 30, 2024.
Current wording
Other, net, changed by $812, or 567.8%, to $669 during the nine months ended September 30, 2024, compared to other, net of ($143) during the nine months ended September 30, 2023. The change in other, net, was primarily attributable to a decrease in remeasurement losses recognized on the Company’s foreign denominated accounts receivable and accounts payable. The change was partially offset by a reduction in gains in mark-to-market adjustments on non-hedged foreign currency contracts during the nine months ended September 30, 2024.
Previous wording
Income tax benefit changed by $1,430, or 119.6%, to $2,626 during the six months ended June 30, 2024, compared to a benefit of $1,196 during the same period in 2023. Our effective income tax rate was a benefit of 18.0% for the six months ended June 30, 2024, and differed compared to the statutory tax rates primarily due to the impact of stock compensation and research and experimentation expenditures and credits. For the six months ended June 30, 2023, our effective income tax rate was a benefit of 15.8% and differed compared to the statutory tax rates due to the impact of stock compensation, research and experimentation expenditures and credits, and discrete stock option windfall benefits.
Current wording
Income tax benefit increased by $699, or 27.0%, to $3,290 during the nine months ended September 30, 2024, compared to $2,591 during the same period in 2023. Our effective income tax rate was a benefit of 17.9% for the nine months ended September 30, 2024, and differed compared to the statutory tax rates primarily due to the impact of stock compensation and research and experimentation expenditures and credits. For the nine months ended September 30, 2023, our effective income tax rate was a benefit of 23.2% and differed compared to the statutory tax rates due to the impact of stock compensation, research and experimentation expenditures and credits, and discrete stock option windfall benefits.
Previous wording
Net income from discontinued operations changed by $22,486, to $28,346 during the six months ended June 30, 2024, compared to net income from discontinued operations of $5,860 during the six months ended June 30, 2023. The change in net income from discontinued operations was primarily attributable to the pre-tax gain on the sale of the Precision Sport segment of $40,585. There was no activity in discontinued operations during the three months ended June 30, 2024.
Current wording
Net income from discontinued operations changed by $21,544, to $28,346 during the nine months ended September 30, 2024, compared to net income from discontinued operations of $6,802 during the nine months ended September 30, 2023. The change in net income from discontinued operations was primarily attributable to the pre-tax gain on the sale of the
Previous wording
Our primary ongoing funding requirements are for working capital, expansion of our operations (both organically and through acquisitions) and general corporate needs, as well as investing in the various brands. We plan to fund these activities through a combination of our future operating cash flows and cash on hand. Upon the closing of the sale of the Precision Sport segment, the Company terminated and settled all outstanding borrowings on our revolving credit facility and term debt under the Restated Credit Agreement. We believe that our liquidity requirements and contractual obligations for at least the next 12 months will be adequately covered by cash provided by operations and cash on hand. Additionally, long-term contractual obligations are also currently expected to be funded from cash from operations and cash on hand.
Current wording
Our primary ongoing funding requirements are for working capital, expansion of our operations (both organically and through acquisitions) and general corporate needs, as well as investing in the various brands. We plan to fund these activities through a combination of our future operating cash flows and cash on hand. Upon the closing of the sale of the Precision Sport segment, the Company terminated and settled all outstanding borrowings on our revolving credit facility and term debt under the Credit Agreement with JPMorgan Chase Bank, N.A., as administrative agent and the lenders party thereto (the “Restated Credit Agreement”). We believe that our liquidity requirements and contractual obligations for at least the next 12 months will be adequately covered by cash provided by operations and cash on hand. Additionally, long-term contractual obligations are currently expected to be funded from cash from operations and cash on hand.
Previous wording
At June 30, 2024, we had total cash of $46,221, compared to total cash of $11,324 at December 31, 2023. At June 30, 2024, the Company had $5,660 of the $46,221 in cash held by foreign entities, of which $4,527 is considered permanently reinvested.
Current wording
At September 30, 2024, we had total cash of $36,399, compared to total cash of $11,324 at December 31, 2023. At September 30, 2024, the Company had $5,109 of the $36,399 in cash held by foreign entities, of which $3,819 is considered permanently reinvested.
Previous wording
The following presents a discussion of cash flows for the condensed consolidated six months ended June 30, 2024 compared with the condensed consolidated six months ended June 30, 2023.
Current wording
The following presents a discussion of cash flows for the condensed consolidated nine months ended September 30, 2024 compared with the condensed consolidated nine months ended September 30, 2023.
Previous wording
Net cash used in operating activities was $15,527 during the six months ended June 30, 2024, compared to net cash provided by operating activities of $17,286 during the six months ended June 30, 2023. The change in net cash (used in) provided by operating activities during 2024 is primarily due to the gain on sale of $40,585 related to the disposition of the Precision Sport segment and an increase in cash outflows related to working capital of $13,855. These were partially offset by an increase in net income and a decrease in contingent consideration benefit during the six months ended June 30, 2024, compared to the same period in 2023.
Current wording
Net cash used in operating activities was $23,870 during the nine months ended September 30, 2024, compared to net cash provided by operating activities of $17,428 during the nine months ended September 30, 2023. The change in net cash (used in) provided by operating activities during 2024 is primarily due to the gain on sale of $40,585 related to the disposition of the Precision Sport segment and an increase in cash outflows related to working capital of $18,859. These were partially offset by an increase in net income and deferred income taxes, as well as a decrease in contingent consideration benefit during the nine months ended September 30, 2024, compared to the same period in 2023.
Previous wording
Free cash flow, defined as net cash (used in) provided by operating activities less capital expenditures, of ($19,002) was used during the six months ended June 30, 2024 compared to $14,034 generated during the same period in 2023. The Company believes that the non-GAAP measure, free cash flow, provides an understanding of the capital required by the Company to expand its asset base. A reconciliation of free cash flows to the nearest comparable GAAP financial measure is set forth below:
Current wording
Free cash flow, defined as net cash (used in) provided by operating activities less capital expenditures, of ($28,395) was used during the nine months ended September 30, 2024 compared to $12,933 generated during the same period in 2023. The Company believes that the non-GAAP measure, free cash flow, provides an understanding of the capital required by the Company to expand its asset base. A reconciliation of free cash flows to the nearest comparable GAAP financial measure is set forth below:
Previous wording
Net cash provided by investing activities was $172,162 during the six months ended June 30, 2024, compared to net cash used in investing activities of $3,083 during the six months ended June 30, 2023. The increase in cash provided during the six months ended June 30, 2024 is primarily due to the cash received related to the disposition of the Precision Sport segment, compared to the same period in 2023.
Current wording
Net cash provided by investing activities was $171,144 during the nine months ended September 30, 2024, compared to net cash used in investing activities of $4,549 during the nine months ended September 30, 2023. The increase in cash provided during the nine months ended September 30, 2024 is primarily due to the cash received related to the disposition of the Precision Sport segment, compared to the same period in 2023.
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Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
Precision Sport segment of $40,585. There was no activity in discontinued operations during the three months ended September 30, 2024.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
Contingent consideration benefit increased to $125 during the three months ended June 30, 2024, compared to a contingent consideration benefit of $0 during the three months ended June 30, 2023, which consisted of changes in the estimated fair value of contingent consideration liabilities associated with our acquisition of TRED in 2023.
Previous report — wording carried elsewhere
Outdoor segment increased by $268 due to foreign exchange impact from the weakening of the U.S. dollar primarily against the euro during the six months ended June 30, 2024, compared to the prior period.