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Clarus Corp (CLAR)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 sales were $71.4M (-6.7% YoY), with adjusted EBITDA of $4.4M (6.1% margin) and free cash flow of $14.4M; GAAP loss from continuing ops was $(73.3)M driven by a $44.8M goodwill/intangible impairment and a $21.0M tax valuation allowance .
  • Outdoor returned to growth (+2% revenue) and expanded adjusted gross margin to 36.9% (up 410 bps YoY) on product simplification; Adventure revenue fell 22.9% on OEM and Australian wholesale softness, despite improving mix and RockyMounts acquisition .
  • Versus prior guidance, Q4 revenue slightly beat (~$70M guided), but adjusted EBITDA missed ($4.4M vs $5–$7M guided); management set FY2025 guidance at $250–$260M revenue and $14–$16M adjusted EBITDA, with FCF of $8–$10M .
  • Key debates: tariff headwind of $0–$2.5M to gross margin (not in guidance), DOJ subpoenas related to CPSC matter, and ~$8M FX headwind; dividend maintained at $0.025 per share (announced 3/5/25) .

What Went Well and What Went Wrong

What Went Well

  • Outdoor simplification drove structurally higher margins: “Outdoor adjusted gross margin improved to 36.9% in Q4 compared to 32.8%... led by product simplification and SKU rationalization” .
  • Cash and balance sheet strength: year-end cash $45.4M and total debt $1.9M tied to RockyMounts acquisition, reflecting de-leveraging post-Precision Sport sale .
  • Free cash flow seasonality intact: Q4 FCF $14.4M and management expects positive annual cash flow going forward .

What Went Wrong

  • Non-cash impairment and valuation allowance: $44.8M goodwill/intangibles impairment (Adventure) and $21.0M tax valuation allowance blew out GAAP loss in Q4 .
  • Adventure underperformance: OEM partner halted production in September (resumed Q1’25) and Australian wholesale weakness; adjusted EBITDA fell short of expectations .
  • Tariff risk and legal overhang: potential $0–$2.5M gross margin hit not in guidance, and DOJ subpoenas related to avalanche beacons increase uncertainty .

Financial Results

MetricQ2 2024Q3 2024Q4 2024
Revenue ($USD Millions)$56.5 $67.1 $71.4
Gross Margin (%)36.1% 35.0% 33.4%
Adjusted Gross Margin (%)37.4% 37.8% 38.0%
GAAP EPS – Continuing Ops ($)$(0.14) $(0.08) $(1.92)
Adjusted EPS – Continuing Ops ($)$(0.03) $0.05 $(0.08)
Adjusted EBITDA ($USD Millions)$(1.9) $2.4 $4.4
Adjusted EBITDA Margin (%)(3.4)% 3.6% 6.1%
Free Cash Flow ($USD Millions)$(0.7) $(9.4) $14.4

Segment performance

MetricQ2 2024Q3 2024Q4 2024
Outdoor Revenue ($USD Millions)$36.2 $49.3 $51.1
Adventure Revenue ($USD Millions)$20.3 $17.8 $20.3
Outdoor Adjusted EBITDA ($USD Millions)$(0.407) $4.397 $4.529
Adventure Adjusted EBITDA ($USD Millions)$1.173 $0.252 $1.607

KPIs and liquidity

MetricQ2 2024Q3 2024Q4 2024
Cash and Cash Equivalents ($USD Millions)$46.2 $36.4 $45.4
Total Debt ($USD Millions)$0.0 $0.0 $1.9

Notes:

  • Q4 revenue slightly exceeded Q3 presentation guidance (~$70M), while adjusted EBITDA missed the $5–$7M range .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Consolidated Net SalesFY2024$270–$280M (Aug 1) $260–$266M (Nov 7) Lowered
Adjusted EBITDAFY2024$11–$14M (Aug 1) $7–$9M (Nov 7) Lowered
CapexFY2024$6–$7M (Aug 1) $5–$6M (Nov 7) Lowered
Free Cash FlowFY2024$7–$9M (ex-Precision) (Aug 1) $(6)–$(8)M (incl. disposal) (Nov 7) Lowered
Consolidated Net SalesFY2025N/A$250–$260M New
Adjusted EBITDAFY2025N/A$14–$16M New
CapexFY2025N/A$4–$5M New
Free Cash FlowFY2025N/A$8–$10M New
Segment Sales (Outdoor/Adventure)FY2025N/AOutdoor $175M; Adventure $80M New
Segment EBITDA (Outdoor/Adventure)FY2025N/AOutdoor $17M; Adventure $7M New
Corporate CostsFY2025N/A$9M New
Q1 SalesQ1 2025N/A$55–$57M New
Q1 Adjusted EBITDAQ1 2025N/ABreakeven New
Tariff HeadwindFY2025N/A$0–$2.5M (not in guidance) Risk disclosure
Dividend per ShareQuarterly (Mar 2025)$0.025 (historical)$0.025 (confirmed) Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024)Previous Mentions (Q3 2024)Current Period (Q4 2024)Trend
Product simplification (Outdoor)Progress on SKU rationalization; NA wholesale stabilization Adjusted GM lift; OpEx down; aiming for double-digit EBITDA without top-line growth Q4 Outdoor adjusted GM 36.9%; building smaller, more profitable business Improving margins, execution intact
Adventure OEM/supply chainOEM demand strong; added leadership; inventory down in ANZ Largest OEM customer stopped production; market softness OEM resumed Q1’25; Adventure underperformed; building global scale; RockyMounts acquired Soft near-term, rebuilding
Tariffs/macroNot highlightedCaution in Outdoor market; industry recession post-2022 peak Tariffs could hit GM by $0–$2.5M; consumer sentiment risk Rising risk
Regulatory/legal—Legal costs included; CPSC matter ongoing DOJ grand jury subpoenas re avalanche beacons; 16(b) litigation status Elevated overhang
FX——$8M FY25 FX headwind ($4M per segment) Headwind
New product/R&DInvestments to accelerate long-term growth Roadmap in place; leadership hires >15 product launches planned; expanded vehicle fitments; relaunch campaigns Building pipeline
Regional trendsEU softness; NA DTC weak (Outdoor) NA wholesale +6.5%; IGD timing shift NA Outdoor ahead of plan; ANZ auto weakness weighing on Adventure Mixed by region

Management Commentary

  • “We remained focused on executing against our strategic roadmap... Outdoor adjusted gross margin improved to 36.9% in Q4 compared to 32.8%... Adventure required significant investment” — Warren Kanders, Executive Chairman .
  • “Q4 revenue of $71.4M was slightly above our guidance... adjusted EBITDA of $4.4M was short of our $5–$7M guide” — Mike Yates, CFO .
  • “Outdoor capable of delivering double-digit EBITDA margins... gross margins lifting and expected to continue to expand... tariffs could force consumer price increases” — Neil Fiske, President, Black Diamond .
  • “Tariff posture could affect gross margins by up to $2.5M; not in the numbers” — Mike Yates, CFO .

Q&A Highlights

  • Outdoor profitability path: Management targets ~10% EBITDA for Outdoor on $175M FY25 revenue, lower in H1 and above double digits in H2 .
  • Tariff clarity: $0–$2.5M potential GM headwind (excluded from guidance); mitigation via pricing, vendor/shipping partners .
  • RockyMounts contribution: historically $4–$5M revenue; strategic to unlock bike rack category in North America and cross-sell in Australia .
  • Segment phasing Q1: Outdoor affected by IGD delivery timing shift (from Q1 to Q4/Q2); Adventure still weaker near term in ANZ wholesale; Q1 consolidated sales guided to $55–$57M with breakeven EBITDA .
  • FX: $8M FY25 top-line headwind ($4M per segment) due to USD strength .

Estimates Context

  • Wall Street consensus (S&P Global) was unavailable at time of retrieval; comparisons to Street estimates are not provided. The company’s Q4 revenue slightly beat its own guidance (~$70M), while adjusted EBITDA missed ($4.4M vs $5–$7M) per management commentary .

Key Takeaways for Investors

  • Outdoor margin and cost structure have structurally improved; expect continued gross margin expansion and double-digit EBITDA margins on a smaller, higher-quality revenue base, a positive medium-term thesis element .
  • Adventure remains the swing factor: near-term demand softness in ANZ and OEM volatility, but leadership additions, expanded fitments, and RockyMounts broaden the North America addressable market .
  • FY2025 setup is conservative with $250–$260M revenue and $14–$16M adjusted EBITDA; watch H2 ramp and tariff resolution (headwind excluded from guidance) .
  • Legal and regulatory overhang (DOJ/CPSC; 16(b) lawsuits) introduces headline risk; legal costs currently minimal in Q4 but monitor progression toward late-2025 trial timelines .
  • FX headwinds (~$8M) and tariff uncertainty could pressure FY2025 margins; pricing and sourcing actions are key mitigation levers .
  • Liquidity is strong (cash $45.4M; minimal debt), supporting investment and resilience through cycle; dividend maintained at $0.025 per share .
  • Tactical angle: near-term trading likely tied to tariff headlines, Q1 phasing (breakeven EBITDA), and evidence of Adventure traction in U.S./EMEA; medium-term rerating hinges on Outdoor margin durability and Adventure scale execution .