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Clarus Corp (CLAR)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 revenue beat consensus and improved sequential gross margin, but EPS missed as promotional mix at Adventure and FX/tariff dynamics weighed; sales were $55.2M vs $56.5M prior year, gross margin 35.6%, adjusted gross margin 36.5%, adjusted EPS $(0.03) vs Street $(0.01) and revenue beat by ~3% . Revenue consensus $53.5M*, Primary EPS consensus $(0.01)*.
  • Outdoor delivered year-over-year growth and margin expansion; Adventure declined on OEM weakness in Australia, partly offset by RockyMounts and D2C promotions .
  • Guidance remains withdrawn due to tariff and macro uncertainty; prior FY25 guide from March (Revenue $250–$260M; Adj. EBITDA $14–$16M) was withdrawn in May and not reinstated in Q2 .
  • Portfolio actions continue: sale of PIEPS snow safety brand for €7.8M (~$9.1M) completed July 11; regular $0.025 quarterly dividend confirmed July 30, 2025 .
  • Management emphasized “sum of the parts” value, cost reduction and simplification; tariff mitigation and FX impacts outlined as key drivers for H2 trajectory .

What Went Well and What Went Wrong

What Went Well

  • Outdoor segment grew 1% YoY to $36.7M and improved adjusted gross margin to 36.1% amid simplification and full‑price mix shift; management: “positioned Black Diamond for a return to growth” .
  • Revenue beat the Street by ~$1.75M (actual $55.247M vs consensus $53.494M*) as IGD timing aided Outdoor and RockyMounts contributed in Adventure .
  • Strategic portfolio action: PIEPS divestiture for ~$9.1M strengthened balance sheet and simplified Outdoor; “highly successful outcome… recognized the value of the brand” .

What Went Wrong

  • EPS missed: adjusted EPS $(0.03) vs Street $(0.01)*, driven by Adventure promotional mix, lower OEM volumes in Australia, and FX headwinds (net ~$383K impact) .
  • Free cash flow usage increased to $(11.3)M in Q2 due to working capital (inventory pull‑forward to mitigate tariffs; AR) and cash declined to $28.5M from $41.3M in Q1 .
  • Continued legal/regulatory overhang: ongoing Section 16B litigation appeals and DOJ/CPSC investigations regarding avalanche beacons; legal costs were $1.8M in Q2 and $2.5M H1 .

Financial Results

Consolidated Performance vs prior periods

MetricQ4 2024Q1 2025Q2 2025
Revenue ($USD Millions)$71.405 $60.433 $55.247
Gross Margin % (GAAP)33.4% 34.4% 35.6%
Adjusted Gross Margin %38.0% 34.6% 36.5%
Diluted EPS (GAAP)$(1.71) $(0.14) $(0.22)
Adjusted EPS$(0.08) $(0.02) $(0.03)
Adjusted EBITDA ($USD Millions)$4.354 $(0.761) $(2.096)
Adjusted EBITDA Margin %6.1% (1.3)% (3.8)%

Interpretation:

  • Sequential revenue declined (seasonality and Adventure headwinds), while GAAP and adjusted gross margins improved vs Q1, reflecting Outdoor mix improvement and product simplification .
  • EPS pressure persisted; adjusted EBITDA declined sequentially due to promotional activity and Australia wholesale softness in Adventure .

Segment Breakdown

SegmentQ4 2024 Revenue ($M)Q1 2025 Revenue ($M)Q2 2025 Revenue ($M)Q4 2024 Adj. EBITDA ($M)Q1 2025 Adj. EBITDA ($M)Q2 2025 Adj. EBITDA ($M)
Outdoor$51.072 $44.323 $36.661 $4.529 $1.732 $(0.214)
Adventure$20.333 $16.110 $18.586 $1.607 $(0.211) $0.311

Notes:

  • Outdoor improved YoY in Q2 on wholesale and distributor timing shifts; Adventure declined YoY on OEM demand reduction in Australia, partially offset by RockyMounts and promotions .

Key KPIs and Liquidity

KPIQ4 2024Q1 2025Q2 2025
Cash & Cash Equivalents ($M)$45.359 $41.315 $28.474
Free Cash Flow ($M)$14.4 $(3.3) $(11.3)
Inventories ($M)$82.278 $87.483 $91.527
Total Debt ($M)$1.888 $1.919 $1.949

Drivers:

  • Working capital usage in Q2 from inventory pull‑forward to mitigate tariffs and higher AR; management expects cash to grow in H2 and inventories to decline by ~$10M by year‑end .

Actual vs Wall Street Consensus (S&P Global)

MetricQ2 2025 ConsensusQ2 2025 Actual
Revenue ($USD Millions)$53.494*$55.247
Primary EPS ($)$(0.01)*$(0.03) (Adjusted EPS)

Values retrieved from S&P Global.*

Guidance Changes

MetricPeriodPrevious GuidanceCurrent (Q2 2025)Change
RevenueFY 2025$250–$260M (Mar 6, 2025) No guidance (withdrawn, maintained) Withdrawn/maintained
Adjusted EBITDAFY 2025$14–$16M (Mar 6, 2025) No guidance (withdrawn, maintained) Withdrawn/maintained
CapExFY 2025$4–$5M (Mar 6, 2025) No guidance Withdrawn
Free Cash FlowFY 2025$8–$10M (Mar 6, 2025) No guidance Withdrawn
DividendQ3 2025Regular quarterly $0.025/share Confirmed; payable Aug 20, 2025 Maintained

Rationale: Ongoing uncertainty related to tariffs, consumer sentiment, macro conditions .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4’24, Q1’25)Current Period (Q2’25)Trend
Tariffs/macroRaised FY25 guide initially; noted tariff risk and uncertainty; withdrew guidance in Q1 Mitigation plan (price increases, vendor concessions, airfreight, exit China); est. 2025 headwind ~$3.4M (Outdoor), ~$3.9M consolidated net of mitigation Headwind building; mitigation underway
Currency/FXNoted European exposure FX contracts loss ~$447K; EU translation lifted revenue ~$1.4M; net hit ~$383K in Q2 Manageable; hedges roll off
D2C strategyMove to full‑price model; reduce PFAS/discontinued sell-down NA D2C down ~20% YoY due to less discounting & earlier price hikes; mix shift to full‑price Strategic reset; margin‑accretive over time
Wholesale/order bookOutdoor wholesale healthy, IGD timing shifts NA wholesale +1.9% YoY; Europe flat cc; order books up Europe ~5%, NA double-digit Improving bookings; execution risk remains
Inventory qualityPFAS largely worked through in 2024 Better composition; A‑styles concentration; inventories $64.2M Outdoor, pull‑forward for tariffs Healthier mix; elevated level near term
Adventure OEM weaknessAustralia OEM/wholesale slowdown; Maxtrax issues OEM down ~$3.1M YoY; anniv in H2; promotional sales to clear slow‑moving inventory Bottoming through H2 anniversary
Litigation/regulatoryDOJ/CPSC matters initiated late 2024 Ongoing DOJ subpoenas; new CPSC inquiry; Section 16B appeals; Q2 legal costs $1.8M Persistent overhang; cooperation ongoing
Apparel & productRevamped apparel; Q1 bookings up NA/Europe Apparel +11.3%; reduced discontinued sales; Shopify migration launched Positive product/infra progress
Portfolio actionsRockyMounts acquisition Q4 PIEPS sale closed (≈$9.1M); accretive (PIEPS lost ~$0.6M EBITDA in Q2) Simplification continues

Management Commentary

  • “We have positioned Black Diamond for a return to growth, highlighted by a simplified product portfolio, sharper… marketing… and a rationalized inventory position.” — Warren Kanders .
  • “We believe that the sum of the parts of our two segments exceeds today's market valuation, and we are committed to maximizing long‑term value for our shareholders.” — Warren Kanders .
  • “We initiated our tariff mitigation plan… raising prices… vendor concessions… accelerating our exit out of China.” — Neil Fiske .
  • “For the quarter, the loss on FX contracts was about $447,000… FX lifted EU revenues by $1.4 million… net hit… $383,000.” — Neil Fiske .
  • “Adjusted EBITDA for Outdoor was a loss of $213,000… excluding PIEPS loss of $516,000, adjusted EBITDA… came in at $303,000.” — Neil Fiske .

Q&A Highlights

  • Adventure fitments: increased to 579 vehicles YTD 2025 (vs +113 in 2024); focus on top‑selling vehicles, “80/20” prioritization .
  • Promotional clearance in Adventure: moved ~half of identified slow‑moving inventory since January; margin drag but cost recovery .
  • PIEPS: included in Q2/H1 results; accretive after sale; PIEPS lost ~$0.6M EBITDA in Q2; H2 2024 sales “couple million dollars” .
  • Tariff sourcing mix (Outdoor): ~25% China, 31% Taiwan, 15% Vietnam, 12% Philippines; Adventure largely China/Australia .
  • Working capital outlook: target inventory down ~$10M by year‑end; cash to grow in H2; capex disciplined; dividend maintained .

Estimates Context

  • Q2 2025: Revenue beat Street (~3.3%); Primary EPS missed by $0.02. Prior quarter (Q1) saw a revenue beat but EPS miss, reflecting continued margin pressure vs expectations.*

Implications for models: Move revenue up modestly for Outdoor wholesale strength and IGD timing; lower EPS/EBITDA on Adventure mix, FX and tariff headwinds. Explicit guidance remains withdrawn.

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Revenue resilience with Outdoor mix improvement and strategic simplification; but EPS/EBITDA headwinds persist from Adventure and FX/tariffs .
  • Street adjustments likely: raise revenue modestly, trim EPS/EBITDA near‑term; watch H2 tariff pass‑through and D2C full‑price transition .
  • Portfolio rationalization is accretive (PIEPS sale) and supports balance sheet flexibility; RockyMounts traction is building in specialty channels .
  • Order books healthy (Europe +~5%, NA double‑digit), but conversion depends on consumer and competitive pricing dynamics amid tariff resets .
  • Legal/regulatory matters represent non‑operational drag and headline risk; monitor DOJ/CPSC developments and Section 16B appeals timeline (1Q26 oral arguments expected) .
  • H2 working capital release and inventory normalization are critical catalysts for FCF recovery; management guiding to cash build seasonally .
  • Dividend maintained signals confidence; “sum of the parts” commentary indicates ongoing strategic review and potential value‑unlock pathways .