Clarus Corp

Previous wording

Potential risks and uncertainties that could cause the actual results of operations or financial condition of the Company to differ materially from those expressed or implied by forward-looking statements in this Quarterly Report on Form 10-Q include, but are not limited to, the overall level of consumer demand on our products; general economic conditions and other factors affecting consumer confidence, preferences, and behavior, including, without limitation, the impact of inflation; disruption and volatility in the global currency, capital and credit markets; the financial strength of retail economies and the Company’s customers; the Company’s ability to implement its business strategy; the ability of the Company to execute and integrate acquisitions; the Company’s exposure to product liability or product warranty claims and other loss contingencies, including, without limitation, recalls and liability claims relating to our avalanche beacon transceivers; disruptions and other impacts to the Company’s business, as a result of an outbreak of disease or similar public health threat, such as the COVID 19 global pandemic, and government actions and restrictive measures implemented in response; stability of the Company’s manufacturing facilities and suppliers, as well as consumer demand for our products, in light of disease epidemics and health-related concerns such as the COVID 19 global pandemic; the impact that global climate change trends may have on the Company and its suppliers and customers, increased focus on sustainability issues as a result of global climate change; regulatory or market responses to global climate change; the Company’s ability to protect patents, trademarks and other intellectual property rights; any breaches of, or interruptions in, our information systems; the ability of our information technology systems or information security systems to operate effectively, including as a result of security breaches, viruses, hackers, malware, natural disasters, vendor business interruptions or other causes; our ability to properly maintain, protect, repair or upgrade our information technology systems or information security systems, or problems with our transitioning to upgraded or replacement systems; the impact of adverse publicity about the Company and/or its brands and products, including without limitation, through social media or in connection with brand damaging events and/or public perception; the potential impact of the Consumer Products Safety Commission’s investigation related to the Company’s reporting obligations under the Consumer Product Safety Act in connection with the Company’s recall of certain models of its avalanche transceivers on our business, results of operations, and financial condition; fluctuations in the price, availability and quality of raw materials and contracted products as well as foreign currency fluctuations; ongoing disruptions and delays in the shipping and transportation of our products due to…

Excerpt shortened here; the source contains the full paragraph.

Current wording

Potential risks and uncertainties that could cause the actual results of operations or financial condition of the Company to differ materially from those expressed or implied by forward-looking statements in this Quarterly Report on Form 10-Q include, but are not limited to, the overall level of consumer demand on our products; general economic conditions and other factors affecting consumer confidence, preferences, and behavior; the potential impact of the uncertain macroeconomic environment on our financial results, including, but not limited to, the effects of sustained global inflationary pressures and interest rates, potential economic slowdowns or recessions, trade restrictions and regulatory changes, and global supply chain disruptions; the effect of inflation on our business, including any future pricing actions taken in an effort to mitigate the effects of inflation and potential impacts on our revenue, operating margins and net income; disruption and volatility in the global currency, capital and credit markets; the financial strength of retail economies and the Company’s customers; the Company’s ability to implement its business strategy; the ability of the Company to execute and integrate acquisitions; the Company’s exposure to product liability or product warranty claims and other loss contingencies, including, without limitation, recalls and liability claims relating to certain avalanche beacon transceivers distributed by BDEL; disruptions and other impacts to the Company’s business, as a result of an outbreak of disease or similar public health threat, and government actions and restrictive measures implemented in response; stability of the Company’s manufacturing facilities and suppliers, as well as consumer demand for our products, in light of disease epidemics and health-related concerns; the impact that global climate change trends may have on the Company and its suppliers and customers, increased focus on sustainability issues as a result of global climate change; regulatory or market responses to global climate change; the Company’s ability to protect patents, trademarks and other intellectual property rights; any breaches of, or interruptions in, our information systems; the ability of our information technology systems or information security systems to operate effectively, including as a result of security breaches, viruses, hackers, malware, natural disasters, vendor business interruptions or other causes; our ability to properly maintain, protect, repair or upgrade our information technology systems or information security systems, or problems with our transitioning to upgraded or replacement systems; the impact of adverse publicity about the Company and/or its brands and products, including without limitation, through social media or in connection with brand damaging events and/or public perception; the potential impact of the Consumer Products Safety Commission’s and the U.S. Department of Justice’s investigations rela…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

Headquartered in Salt Lake City, Utah, Clarus is a global leader in the design and development of best-in-class equipment and lifestyle products for outdoor enthusiasts. Driven by our rich history of engineering and innovation, our objective is to provide safe, simple, effective and beautiful products so that our customers can maximize their outdoor pursuits and adventures. Each of our brands has a long history of continuous product innovation for core and everyday users alike. The Company’s products are principally sold globally under the Black Diamond®, Rhino-Rack®, MAXTRAX®, and TRED Outdoors® brand names through outdoor specialty and online retailers, our own websites, distributors and original equipment manufacturers. Our portfolio of iconic brands is well-positioned for sustainable, long-term growth underpinned by powerful industry trends across the outdoor and adventure sport end markets.

Current wording

Headquartered in Salt Lake City, Utah, Clarus is a global leading designer, developer, manufacturer and distributor of best-in-class outdoor equipment and lifestyle products focused on the outdoor enthusiast markets. Each of our brands has a long history of continuous product innovation for core and everyday users alike. The Company’s products are principally sold globally under the Black Diamond®, Rhino-Rack®, MAXTRAX®, and TRED Outdoors® brand names through outdoor specialty and online retailers, our own websites, distributors and original equipment manufacturers. Our portfolio of iconic brands is well-positioned for sustainable, long-term growth underpinned by powerful industry trends across the outdoor and adventure sport end markets.

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 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 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.

Previous 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.

Current 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.

Previous wording

On August 21, 2017, the Company acquired Sierra Bullets, L.L.C. (“Sierra”). On November 6, 2018, the Company acquired the assets of SKINourishment, Inc. (“SKINourishment”). During the first quarter of 2024, the Company ceased operations of SKINourishment. On October 2, 2020, the Company completed the acquisition of certain assets and liabilities constituting the Barnes business (“Barnes”). On July 1, 2021, the Company completed the acquisition of Australia-based Rhino-Rack Holdings Pty Ltd (“Rhino-Rack”). On December 1, 2021, the Company completed the acquisition of Australia-based MaxTrax Australia Pty Ltd (“MAXTRAX”). On October 9, 2023, the Company completed the acquisition of Australia-based TRED Outdoors Pty Ltd. (“TRED”).

Current wording

On August 21, 2017, the Company acquired Sierra Bullets, L.L.C. (“Sierra”). On October 2, 2020, the Company completed the acquisition of certain assets and liabilities constituting the Barnes business (“Barnes”). On July 1, 2021, the Company completed the acquisition of Australia-based Rhino-Rack Holdings Pty Ltd (“Rhino-Rack”). On December 1, 2021, the Company completed the acquisition of Australia-based MaxTrax Australia Pty Ltd (“MAXTRAX”). On October 9, 2023, the Company completed the acquisition of Australia-based TRED Outdoors Pty Ltd. (“TRED”). On December 5, 2024, the Company completed the acquisition of certain assets and liabilities constituting the RockyMounts business (“RockyMounts”).

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 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 net proceeds of approximately $37,871 in cash, after payment of certain fees and settlement of the Restated Credit Agreement, 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

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 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.

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 March 31, 2025 and 2024, the Company incurred $173 and $370, respectively, of restructuring charges related to these actions. The Company has incurred $5,344 of cumulative restructuring charges since the commencement of our 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 (loss) income. 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 ended December 31, 2025; 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 the year ended December 31, 2025.

Previous 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.

Current wording

Total sales decreased $8,878, or 12.8%, to $60,433 during the three months ended March 31, 2025, compared to total sales of $69,311 during the three months ended March 31, 2024. The decrease in sales was attributable to a decrease in sales at the Adventure and Outdoor segments of $6,178 and $2,700, respectively.

Previous 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.

Current wording

Sales in the Outdoor segment were reduced by $696 due to foreign exchange impact from the strengthening of the U.S. dollar primarily against the euro during the three months ended March 31, 2025, compared to the prior period. Sales in the Adventure segment were reduced by $569 due to foreign exchange impact from the strengthening of the U.S. dollar against the Australian dollar during the three months ended March 31, 2025, compared to the prior period.

Previous 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.

Current wording

Sales in the Adventure segment decreased due to significantly lower demand from global original equipment manufacturer (“OEM”) customers and a challenging wholesale market in Australia for both Rhino-Rack and MAXTRAX, combined with a prior year large wholesale customer in North America not reoccurring in the three months ended March 31, 2025, partially offset by a $1,342 increase from the RockyMounts acquisition. Sales in the Outdoor segment decreased due to our product simplification and SKU rationalization strategy across Black Diamond, combined with the impact from the shift in timing for independent global distributor (“IGD”) revenues from the three months ended March 31, 2025.

Previous 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.

Current wording

Domestic sales decreased $3,475, or 12.3%, to $24,809 during the three months ended March 31, 2025, compared to domestic sales of $28,284 during the three months ended March 31, 2024. The decrease in sales was attributable to decreases at the Outdoor and Adventure segments of $2,936 and $539, respectively.

Previous 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.

Current wording

International sales decreased $5,403, or 13.2%, to $35,624 during the three months ended March 31, 2025, compared to international sales of $41,027 during the three months ended March 31, 2024. The decrease in sales was attributable to decreases at the Adventure segment of $5,639, partially offset by increases at the Outdoor segment of $236.

Previous 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.

Current wording

Cost of goods sold decreased $4,821, or 10.8%, to $39,639 during the three months ended March 31, 2025, compared to cost of goods sold of $44,460 during the three months ended March 31, 2024.

Previous 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.

Current wording

Gross profit decreased $4,057, or 16.3%, to $20,794 during the three months ended March 31, 2025, compared to gross profit of $24,851 during the three months ended March 31, 2024. Gross margin was 34.4% during the three months ended March 31, 2025, compared to a gross margin of 35.9% during the three months ended March 31, 2024. Gross margin during the three months ended March 31, 2025, decreased compared to the prior year as a result of lower volumes and unfavorable product mix at the Outdoor and Adventure segments. Specifically, the unfavorable product mix at Outdoor was related to high levels of discontinued merchandise that was sold during the quarter, including the vast majority of the remaining Per- and Polyfluoroalkyl Substances (“PFAS”) inventory. The unfavorable product mix at Adventure was primarily driven by promotional sales efforts in North America. This combined with lower wholesale volume at both Rhino-Rack and MAXTRAX in Australia drove the decline in gross margin compared to the three months ended March 31, 2024.

Previous wording

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 wording

Selling, general, and administrative expenses decreased $1,599, or 5.7%, to $26,616 during the three months ended March 31, 2025, compared to selling, general and administrative expenses of $28,215 during the three months ended March 31, 2024. Selling, general and administrative expenses at the Outdoor segment decreased by $1,042 primarily as a result of lower wages and digital marketing costs, as well as lower retail expenses at the Outdoor segment due to store closures and other expense reduction initiatives across both segments to manage costs. Selling, general and administrative expenses at the Adventure segment decreased by $346 primarily as a result of lower marketing and amortization costs, combined with other expense reduction initiatives, partially offset by a write-off of internally developed software during the three months ended March 31, 2025.

Previous 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.

Current wording

Restructuring charges decreased to $173 during the three months ended March 31, 2025, compared to restructuring charges of $370 during the three months ended March 31, 2024. The restructuring charges incurred during the three months ended March 31, 2025 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 $143 and lease exit and contract termination costs of $30.

Previous 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.

Current wording

Transaction costs increased to $142 during the three months ended March 31, 2025, compared to transaction costs of $38 during the three months ended March 31, 2024, which consisted of expenses related to the Company’s various acquisition efforts.

Previous 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.

Current wording

Legal costs and regulatory matter expenses decreased to $625 during the three months ended March 31, 2025, compared to legal costs and regulatory matter expenses of $3,002 during the three months ended March 31, 2024, 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 $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.

Current wording

Interest income, net decreased to $257 during the three months ended March 31, 2025, compared to interest income, net of $370 during the three months ended March 31, 2024. The decrease in interest income recognized during the three months ended March 31, 2025, was due to lower interest rates, compared to the prior period.

Previous 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.

Current wording

Other, net, changed by $1,368, or 150.5%, to $459 during the three months ended March 31, 2025, compared to other, net of ($909) during the three months ended March 31, 2024. 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 March 31, 2025.

Previous 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.

Current wording

Income tax benefit decreased by $49, or 5.8%, to $802 during the three months ended March 31, 2025, compared to $851 during the same period in 2024. Our effective income tax rate was a benefit of 13.3% for the three months ended March 31, 2025, and differed compared to the statutory tax rates primarily due to the impact of valuation allowance, stock compensation, and research and experimentation expenditures and credits. For the three months ended March 31, 2024, our effective income tax rate was a benefit of 11.6% 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 shortfalls.

Previous 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.

Current wording

Net income from discontinued operations was $0 during the three months ended March 31, 2025, compared to net income from discontinued operations of $28,346 during the three months ended March 31, 2024. 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 March 31, 2025.

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 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.

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 net proceeds from the sale of our Precision Sport segment. 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 the net proceeds from the sale of the Precision Sport segment after the settlement of the Restated Credit Agreement. Additionally, long-term contractual obligations are also currently expected to be funded from cash from operations and net proceeds from the sale of the Precision Sport segment after the settlement of the Restated Credit Agreement.

Previous 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.

Current wording

At March 31, 2025, we had total cash of $41,315, compared to total cash of $45,359 at December 31, 2024. At March 31, 2025, the Company had $6,894 of the $41,315 in cash held by foreign entities, of which $5,524 is considered permanently reinvested.

Previous 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.

Current wording

The following presents a discussion of cash flows for the condensed consolidated three months ended March 31, 2025 compared with the condensed consolidated three months ended March 31, 2024.

Previous 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.

Current wording

Net cash used in operating activities was $2,073 during the three months ended March 31, 2025, compared to net cash used in operating activities of $16,361 during the three months ended March 31, 2024. The change in net cash used in operating activities during 2025 is primarily due to the gain on sale of $40,585 during the three months ended March 31, 2024 related to the disposition of the Precision Sport segment and a decrease in cash outflows related to working capital of $8,899. These were partially offset by a decrease in net income and deferred income taxes during the three months ended March 31, 2025, compared to the same period in 2024.

Previous 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:

Current wording

Free cash flow, defined as net cash used in operating activities less capital expenditures, of $3,254 was used during the three months ended March 31, 2025 compared to $18,258 used during the same period in 2024. 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 $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.

Current wording

Net cash used in investing activities was $1,181 during the three months ended March 31, 2025, compared to net cash provided by investing activities of $173,608 during the three months ended March 31, 2024. The change in cash (used in) provided by investing activities during the three months ended March 31, 2025 is primarily due to the cash received related to the disposition of the Precision Sport segment during the three months ended March 31, 2024.

Previous wording

Net cash used in financing activities was $122,281 during the nine months ended September 30, 2024, compared to net cash used in financing activities of $16,191 during the nine months ended September 30, 2023. The change in net cash used in financing activities during the nine months ended September 30, 2024, compared to the same period in 2023 was primarily due to the settlement of all outstanding borrowings on our revolving credit facility and term debt under the Restated Credit Agreement.

Current wording

Net cash used in financing activities was $1,001 during the three months ended March 31, 2025, compared to net cash used in financing activities of $120,848 during the three months ended March 31, 2024. The change in net cash used in financing activities during the three months ended March 31, 2025, compared to the same period in 2024 was primarily due to the settlement of all outstanding borrowings on our revolving credit facility and term debt under the Restated Credit Agreement during the three months ended March 31, 2024.

Previous wording

As of December 31, 2023, the Company had net operating loss carryforwards (“NOLs”) and research and experimentation credit for U.S. federal income tax purposes of $7,699 and $2,997, respectively. The Company believes its U.S. Federal NOLs will offset a portion of its future U.S. Federal income taxes. The Company has $7,699 of NOLs, of which, $0 expire on December 31, 2024. These NOLs are subject to compliance with Section 382 of the Internal Revenue Code of 1986 (“Code”), as amended.

Current wording

As of December 31, 2024, the Company had net operating loss carryforwards (“NOLs”) and research and experimentation credit for U.S. federal income tax purposes of $0 and $5,439, respectively.

Previous wording

As of December 31, 2023, the Company’s gross deferred tax asset was $39,893. The Company has recorded a valuation allowance of $714, resulting in a net deferred tax asset of $39,179, before deferred tax liabilities of $34,434. The Company has provided a valuation allowance against a portion of the net deferred tax assets as of December 31, 2023, because the ultimate realization of those assets does not meet the more-likely-than-not criteria. Part of the Company’s deferred tax assets consist of net operating loss carryforwards for federal tax purposes. If a change in control were to occur, these could be limited under Section 382 of the Code.

Current wording

As of December 31, 2024, the Company’s gross deferred tax asset was $35,658. The Company has recorded a valuation allowance of $23,344, resulting in a net deferred tax asset of $12,314, before deferred tax liabilities of $24,488. The Company has provided a full valuation allowance against all of the net U.S. deferred tax assets as of December 31, 2024, because the ultimate realization of those assets does not meet the more-likely-than-not criteria. The majority of the Company’s deferred tax assets consist of research and experimentation credits and capitalized costs for federal tax purposes. 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. If a change in control were to occur, these future NOLs could be limited under Section 382 of the Internal Revenue Code of 1986 (“Code”), as amended.