10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended: September 30, 2020

or

¨ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from _________ to _________

Commission File Number: 001-34767

CLARUS CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	58-1972600
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

2084 East 3900 South Salt Lake City, Utah	84124
(Address of principal executive offices)	(Zip code)

(801) 278-5552

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes  x No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes  x No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	¨	Non-accelerated filer	¨
Accelerated filer	x	Smaller reporting company	¨
		Emerging growth company	¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, par value $.0001 per share	CLAR	NASDAQ Global Select Market

As of November 4, 2020, there were 31,063,094 shares of common stock, par value $0.0001, outstanding.

INDEX

CLARUS CORPORATION

PART I	FINANCIAL INFORMATION	Page
Item 1.	Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets – September 30, 2020 and December 31, 2019	3
	Condensed Consolidated Statements of Comprehensive Income – Three months ended September 30, 2020 and 2019	4
	Condensed Consolidated Statements of Comprehensive (Loss) Income – Nine months ended September 30, 2020 and 2019	5
	Condensed Consolidated Statements of Cash Flows – Nine months ended September 30, 2020 and 2019	6
	Condensed Consolidated Statements of Stockholders’ Equity – Three and nine months ended September 30, 2020 and 2019	7
	Notes to Condensed Consolidated Financial Statements	9
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	32
Item 4.	Controls and Procedures	32
PART II	OTHER INFORMATION
Item 1.	Legal Proceedings	33
Item 1A.	Risk Factors	33
Item 6.	Exhibits	35
Signature Page		36

2

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CLARUS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except per share amounts)
	September 30, 2020		December 31, 2019
Assets
Current assets
Cash	$	17,027	$	1,703
Accounts receivable, less allowance for credit losses and
doubtful accounts of $1,460 and $494, respectively		42,582		41,628
Inventories		64,897		73,432
Prepaid and other current assets		4,544		3,787
Income tax receivable		532		322
Total current assets		129,582		120,872
Property and equipment, net		22,691		22,919
Other intangible assets, net		13,610		15,816
Indefinite lived intangible assets		41,772		41,630
Goodwill		18,090		18,090
Deferred income taxes		8,728		7,904
Other long-term assets		33,365		3,034
Total assets	$	267,838	$	230,265
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable and accrued liabilities	$	29,157	$	24,304
Income tax payable		489		260
Current portion of long-term debt		4,000		-
Total current liabilities		33,646		24,564
Long-term debt		37,062		22,670
Deferred income taxes		1,219		1,224
Other long-term liabilities		624		615
Total liabilities		72,551		49,073
Stockholders' Equity
Preferred stock, $.0001 par value per share; 5,000
shares authorized; none issued		-		-
Common stock, $.0001 par value per share; 100,000 shares authorized;
35,021 and 33,615 issued and 31,051 and 29,760 outstanding, respectively		4		3
Additional paid in capital		511,331		492,353
Accumulated deficit		(292,393)		(288,592)
Treasury stock, at cost		(23,789)		(22,269)
Accumulated other comprehensive income (loss)		134		(303)
Total stockholders' equity		195,287		181,192
Total liabilities and stockholders' equity	$	267,838	$	230,265
See accompanying notes to condensed consolidated financial statements.

‎

3

CLARUS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
(In thousands, except per share amounts)
	Three Months Ended
	September 30, 2020		September 30, 2019
Sales
Domestic sales	$	34,686	$	28,794
International sales		29,805		31,409
Total sales		64,491		60,203
Cost of goods sold		42,822		39,646
Gross profit		21,669		20,557
Operating expenses
Selling, general and administrative		18,674		16,443
Transaction costs		1,440		37
Total operating expenses		20,114		16,480
Operating income		1,555		4,077
Other income (expense)
Interest expense, net		(232)		(353)
Other, net		449		(420)
Total other income (expense), net		217		(773)
Income before income tax		1,772		3,304
Income tax expense (benefit)		589		(188)
Net income		1,183		3,492
Other comprehensive income, net of tax:
Foreign currency translation adjustment		807		(726)
Unrealized (loss) gain on hedging activities		(600)		759
Other comprehensive income		207		33
Comprehensive income	$	1,390	$	3,525
Net income per share:
Basic	$	0.04	$	0.12
Diluted		0.04		0.11
Weighted average shares outstanding:
Basic		29,983		29,876
Diluted		30,986		31,077
See accompanying notes to condensed consolidated financial statements.

‎

4

CLARUS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
(Unaudited)
(In thousands, except per share amounts)
	Nine Months Ended
	September 30, 2020		September 30, 2019
Sales
Domestic sales	$	83,493	$	87,805
International sales		64,567		80,610
Total sales		148,060		168,415
Cost of goods sold		97,243		109,810
Gross profit		50,817		58,605
Operating expenses
Selling, general and administrative		50,537		51,215
Restructuring charge		-		13
Transaction costs		1,870		124
Total operating expenses		52,407		51,352
Operating (loss) income		(1,590)		7,253
Other expense
Interest expense, net		(800)		(978)
Other, net		324		(260)
Total other expense, net		(476)		(1,238)
(Loss) income before income tax		(2,066)		6,015
Income tax benefit		(542)		(570)
Net (loss) income		(1,524)		6,585
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment		773		(869)
Unrealized (loss) gain on hedging activities		(336)		171
Other comprehensive income (loss)		437		(698)
Comprehensive (loss) income	$	(1,087)	$	5,887
Net (loss) income per share:
Basic	$	(0.05)	$	0.22
Diluted		(0.05)		0.21
Weighted average shares outstanding:
Basic		29,854		29,841
Diluted		29,854		30,999
See accompanying notes to condensed consolidated financial statements.

 
‎

5

CLARUS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
		Nine Months Ended
		September 30, 2020		September 30, 2019
	Cash Flows From Operating Activities:
	Net (loss) income	$	(1,524)	$	6,585
	Adjustments to reconcile net (loss) income to net cash provided by operating activities:
	Depreciation of property and equipment		3,405		3,332
	Amortization of other intangible assets		2,290		2,665
	Amortization of debt issuance costs		230		206
	Loss on disposition of property and equipment		32		62
	Noncash lease expense		563		501
	Stock-based compensation		5,433		2,246
	Deferred income taxes		(885)		(551)
	Changes in operating assets and liabilities:
	Accounts receivable		(541)		(6,480)
	Inventories		9,477		(9,310)
	Prepaid and other assets		(971)		3
	Accounts payable and accrued liabilities		3,530		6,559
	Income taxes		9		(183)
	Net cash provided by operating activities		21,048		5,635
	Cash Flows From Investing Activities:
	Deposit for business acquisition		(30,500)		-
	Proceeds from disposition of property and equipment		327		20
	Purchase of property and equipment		(3,606)		(2,838)
	Net cash used in investing activities		(33,779)		(2,818)
	Cash Flows From Financing Activities:
	Proceeds from revolving credit facilities		49,265		106,934
	Repayments on revolving credit facilities		(50,014)		(104,088)
	Repayments of financing and capital leases		(1,000)		(31)
	Proceeds from issuance of long-term debt		20,000		-
	Payment of debt issuance costs		(44)		(680)
	Purchase of treasury stock		(1,520)		(4,167)
	Proceeds from exercise of stock options		862		896
	Cash dividends paid		(744)		(2,243)
	Proceeds from the sale of common stock		11,476		-
	Common stock issuance costs		(325)		-
	Net cash provided by (used in) financing activities		27,956		(3,379)
	Effect of foreign exchange rates on cash		99		(73)
	Change in cash		15,324		(635)
	Cash, beginning of period		1,703		2,486
	Cash, end of period	$	17,027	$	1,851
	Supplemental Disclosure of Cash Flow Information:
	Cash paid for income taxes	$	418	$	131
	Cash paid for interest	$	624	$	781
	Supplemental Disclosures of Non-Cash Investing and Financing Activities:
	Property and equipment purchased with accounts payable	$	286	$	133
	Lease liabilities arising from obtaining right of use assets	$	499	$	1,855
	Unpaid debt issuance costs	$	150	$	-
	Stock dividends	$	1,533	$	-
See accompanying notes to condensed consolidated financial statements.

6

CLARUS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Unaudited)
(In thousands, except per share amounts)
													Accumulated
					Additional								Other		Total
	Common Stock				Paid-In		Accumulated		Treasury Stock				Comprehensive		Stockholders'
	Shares		Amount		Capital		Deficit		Shares		Amount		Income (Loss)		Equity
Balance, December 31, 2018		33,244	$	3	$	488,404	$	(304,577)		(3,496)	$	(18,102)	$	477	$	166,205
Net income		-		-		-		3,787		-		-		-		3,787
Other comprehensive loss		-		-		-		-		-		-		(462)		(462)
Cash dividends ($0.025 per share)		-		-		-		(746)		-		-		-		(746)
Stock-based compensation expense		-		-		785		-		-		-		-		785
Balance, March 31, 2019		33,244	$	3	$	489,189	$	(301,536)		(3,496)	$	(18,102)	$	15	$	169,569
Net loss		-		-		-		(694)		-		-		-		(694)
Other comprehensive loss		-		-		-		-		-		-		(269)		(269)
Cash dividends ($0.025 per share)		-		-		-		(748)		-		-		-		(748)
Purchase of treasury stock		-		-		-		-		(116)		(1,505)		-		(1,505)
Stock-based compensation expense		-		-		783		-		-		-		-		783
Proceeds from exercise of options		351		-		804		-		-		-		-		804
Balance, June 30, 2019		33,595	$	3	$	490,776	$	(302,978)		(3,612)	$	(19,607)	$	(254)	$	167,940
Net income		-		-		-		3,492		-		-		-		3,492
Other comprehensive income		-		-		-		-		-		-		33		33
Cash dividends ($0.025 per share)		-		-		-		(749)		-		-		-		(749)
Purchase of treasury stock		-		-		-		-		(243)		(2,662)		-		(2,662)
Stock-based compensation expense		-		-		678		-		-		-		-		678
Proceeds from exercise of options		10		-		92		-		-		-		-		92
Balance, September 30, 2019		33,605	$	3	$	491,546	$	(300,235)		(3,855)	$	(22,269)	$	(221)	$	168,824

‎

7

CLARUS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Unaudited)
(In thousands, except per share amounts)
													Accumulated
					Additional								Other		Total
	Common Stock				Paid-In		Accumulated		Treasury Stock				Comprehensive		Stockholders'
	Shares		Amount		Capital		Deficit		Shares		Amount		Income (Loss)		Equity
Balance, December 31, 2019		33,615	$	3	$	492,353	$	(288,592)		(3,855)	$	(22,269)	$	(303)	$	181,192
Net income		-		-		-		36		-		-		-		36
Other comprehensive income		-		-		-		-		-		-		412		412
Cash dividends ($0.025 per share)		-		-		-		(744)		-		-		-		(744)
Stock-based compensation expense		-		-		613		-		-		-		-		613
Balance, March 31, 2020		33,615	$	3	$	492,966	$	(289,300)		(3,855)	$	(22,269)	$	109	$	181,509
Net loss		-		-		-		(2,743)		-		-		-		(2,743)
Other comprehensive loss		-		-		-		-		-		-		(182)		(182)
Stock dividends ($0.025 per share)		70		-		714		(714)		-		-		-		-
Purchase of treasury stock		-		-		-		-		(14)		(137)		-		(137)
Stock-based compensation expense		-		-		616		-		-		-		-		616
Proceeds from exercise of options		72		-		497		-		-		-		-		497
Balance, June 30, 2020		33,757	$	3	$	494,793	$	(292,757)		(3,869)	$	(22,406)	$	(73)	$	179,560
Net income		-		-		-		1,183		-		-		-		1,183
Other comprehensive income		-		-		-		-		-		-		207		207
Stock dividends ($0.025 per share)		63		-		819		(819)		-		-		-		-
Purchase of treasury stock		-		-		-		-		(101)		(1,383)		-		(1,383)
Stock-based compensation expense		244		-		4,204		-		-		-		-		4,204
Proceeds from exercise of options		57		-		365		-		-		-		-		365
Issuance of common stock, net of issuance costs		900		1		11,150		-		-		-		-		11,151
Balance, September 30, 2020		35,021	$	4	$	511,331	$	(292,393)		(3,970)	$	(23,789)	$	134	$	195,287
See accompanying notes to condensed consolidated financial statements.

8

CLARUS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(in thousands, except per share amounts)

NOTE 1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying unaudited condensed consolidated financial statements of Clarus Corporation and subsidiaries (which may be referred to as the “Company,” “Clarus,” “we,” “us” or “our”) as of September 30, 2020 and December 31, 2019 and for the three and nine months ended September 30, 2020 and 2019, have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), instructions to the Quarterly Report on Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring adjustments, except otherwise disclosed) necessary for a fair presentation of the unaudited condensed consolidated financial statements have been included. The results for the three and nine months ended September 30, 2020 are not necessarily indicative of the results to be obtained for the year ending December 31, 2020. These interim financial statements should be read in conjunction with the Company’s audited consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, filed with the Securities and Exchange Commission (the “SEC”) on March 9, 2020.

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. 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”).

On October 2, 2020, the Company completed the acquisition of certain assets and liabilities relating to the Barnes brand of bullets (“Barnes”) for a purchase price of $30,500. See Note 15 for a more detailed explanation of the acquisition.

On August 6, 2018, the Company announced that its Board of Directors approved the initiation of a quarterly cash dividend program of $0.025 per share of the Company’s common stock (the “Quarterly Cash Dividend”) or $0.10 per share on an annualized basis.  The declaration and payment of future Quarterly Cash Dividends is subject to the discretion of and approval of the Company’s Board of Directors. On May 1, 2020, the Company announced that, in light of the operational impact of the COVID-19 pandemic, its Board of Directors temporarily replaced its Quarterly Cash Dividend with a stock dividend (the “Quarterly Stock Dividend”). On October 19, 2020, the Company announced that its Board of Directors approved the reinstatement of its Quarterly Cash Dividend. The reinstated Quarterly Cash Dividend will be paid on November 20, 2020 to the shareholders of record of the Company’s common stock as of the close of business on November 9, 2020.

Nature of Business

Headquartered in Salt Lake City, Utah, Clarus, a company focused on the outdoor and consumer industries, is seeking opportunities to acquire and grow businesses that can generate attractive shareholder returns. The Company has net operating tax loss carryforwards which it is seeking to redeploy to maximize shareholder value. Clarus’ primary business is as a leading designer, developer, manufacturer and distributor of outdoor equipment and lifestyle products focused on the climb, ski, mountain, sport and skincare markets. The Company’s products are principally sold under the Black Diamond®, Sierra®, PIEPS® and SKINourishment® brand names through outdoor specialty and online retailers, distributors and original equipment manufacturers throughout the U.S. and internationally.

Through our Black Diamond, PIEPS, and SKINourishment brands, we offer a broad range of products including: high-performance, activity-based apparel (such as shells, insulation, midlayers, pants and logowear); rock-climbing footwear and equipment (such as carabiners, protection devices, harnesses, belay devices, helmets, and ice-climbing gear); technical backpacks and high-end day packs; trekking poles; headlamps and lanterns; gloves and mittens; and skincare and other sport-enhancing products. We also offer advanced skis, ski poles, ski skins, and snow safety products, including avalanche airbag systems, avalanche transceivers, shovels, and probes. Through our Sierra brand, we manufacture a wide range of high-performance bullets and ammunition for both rifles and pistols that are used for precision target shooting, hunting and military and law enforcement purposes.

Impact of COVID-19

The global outbreak of COVID-19 was declared a pandemic by the World Health Organization and a national emergency by the U.S. government in March 2020, with governments world-wide implementing safety measures restricting travel and requiring citizen lockdowns and self-confinements for quarantining purposes. This has negatively affected the U.S. and global economy, disrupted global

9

CLARUS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(Unaudited)

(in thousands, except per share amounts)

supply chains, and resulted in significant transport restrictions and disruption of financial markets. The impact of this pandemic has created significant uncertainty in the global economy and has affected our business, employees, retail and distribution partners, suppliers, and customers.

The decline in retail demand within our Black Diamond segment over the second half of March 2020 and during the three months ended June 30, 2020 and September 30, 2020, negatively impacted our sales and profitability for the first, second and third quarters of 2020. We also expect an impact on the Company’s sales and profitability in future periods. The duration of these trends and the magnitude of such impacts cannot be precisely estimated at this time, as they are affected by a number of factors (some of which are outside management’s control), including those presented in Item 1A. Risk Factors of our Quarterly Report for the quarterly period ended March 31, 2020.

We are mitigating some of the negative impacts to our operating results by taking significant actions to improve our current operating results and liquidity position, including drawing on the credit facility, suspending share repurchases and temporarily suspending cash dividends, postponing non-essential capital expenditures, reducing operating costs, modulating production in line with demand, initiating workforce reductions and furloughs, and substantially reducing discretionary spending. We will continue to adjust mitigation measures as needed related to health and safety. Those measures have and might continue to include temporarily suspending manufacturing or retail operations, modifying workspaces, continuing social distancing policies, implementing new personal protective equipment or health screening policies at our facilities, or such other industry best practices needed to continue maintain a healthy and safe environment for our employees amidst the pandemic.

These countermeasures are expected to partially mitigate the impacts of COVID-19 on our full year 2020 financial results. As the impact of the COVID-19 pandemic on the economy and our operations evolves, we will continue to assess the impact on the Company and respond accordingly.

Sustained adverse impacts to the Company, certain of its suppliers, dealers or customers may also affect the Company’s future cash flows, liquidity, and valuation of certain assets and therefore may increase the likelihood of an impairment charge, write-off, or reserve associated with such assets, including goodwill, indefinite and finite-lived intangible assets, property and equipment, inventories, accounts receivable, net deferred tax assets, and other assets.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Estimates are used to record the allowance for credit losses and doubtful accounts, liabilities for product warranties, excess or obsolete inventory, valuation of deferred tax assets, and valuation of long-lived assets, goodwill and other intangible assets. We base our estimates on historical experience and other assumptions that are believed to be reasonable under the circumstances. Actual results could differ from these estimates.

Significant Accounting Policies

Accounting Pronouncements not yet adopted

In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This ASU provides temporary optional expedients and exceptions to existing guidance on contract modifications and hedge accounting to facilitate the market transition from existing reference rates, such as the London Inter-Bank Offered Rate (“LIBOR”) which is being phased out in 2021, to alternate reference rates, such as the Secured Overnight Financing Rate (“SOFR”). The standard is currently effective and upon adoption may be applied prospectively to contract modifications made on or before December 31, 2022. The provisions have impact as contract modifications and other changes occur while LIBOR is phased out. The Company is in the process of evaluating the optional relief guidance provided within this ASU. Management will continue its assessment and monitor regulatory developments during the LIBOR transition period.

10

CLARUS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(Unaudited)

(in thousands, except per share amounts)

NOTE 2. INVENTORIES

Inventories, as of September 30, 2020 and December 31, 2019, were as follows:

	September 30, 2020		December 31, 2019
Finished goods	$	51,685	$	59,452
Work-in-process		4,984		7,474
Raw materials and supplies		8,228		6,506
	$	64,897	$	73,432

NOTE 3. PROPERTY AND EQUIPMENT

Property and equipment, net, as of September 30, 2020 and December 31, 2019, were as follows:

	September 30, 2020		December 31, 2019
Land	$	3,160	$	3,160
Building and improvements		6,958		6,964
Furniture and fixtures		5,654		5,255
Computer hardware and software		5,522		5,298
Machinery and equipment		22,265		21,578
Construction in progress		2,508		1,690
		46,067		43,945
Less accumulated depreciation		(23,376)		(21,026)
	$	22,691	$	22,919

NOTE 4. GOODWILL AND INTANGIBLE ASSETS

Goodwill

The following table summarizes the balances in goodwill by segment:

	Black Diamond		Sierra		Total
Balance at December 31, 2019	$	-	$	18,090	$	18,090
Balance at September 30, 2020	$	-	$	18,090	$	18,090

Indefinite Lived Intangible Assets

The following table summarizes the changes in indefinite lived intangible assets:

Balance at December 31, 2019	$	41,630
Impact of foreign currency exchange rates		142
Balance at September 30, 2020	$	41,772

11

CLARUS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(Unaudited)

(in thousands, except per share amounts)

Other Intangible Assets, net

The following table summarizes the changes in gross other intangible assets:

Gross balance at December 31, 2019	$	32,917
Impact of foreign currency exchange rates		205
Gross balance at September 30, 2020	$	33,122

Other intangible assets, net of amortization as of September 30, 2020 and December 31, 2019, were as follows:

	September 30, 2020		December 31, 2019
Customer lists and relationships	$	26,109	$	25,995
Product technologies		4,803		4,712
Tradename / trademark		1,263		1,263
Core technologies		947		947
		33,122		32,917
Less accumulated amortization		(19,512)		(17,101)
	$	13,610	$	15,816

NOTE 5. LONG-TERM DEBT

Long-term debt as of September 30, 2020 and December 31, 2019, was as follows:

	September 30, 2020		December 31, 2019
Revolving credit facility (a)	$	21,066	$	22,670
Foreign credit facilities (b)		996		-
Term note (c)		19,000		-
		41,062		22,670
Less current portion		(4,000)		-
	$	37,062	$	22,670

(a)As of September 30, 2020, the Company had drawn $21,066 on the $60,000 revolving commitment that was available under the credit agreement with JPMorgan Chase Bank, N.A., with a maturity date of May 3, 2024. The Company pays interest monthly on any borrowings on the Credit Agreement. As of September 30, 2020 and December 31, 2019, the rate was 1.6875% and 3.3125%, respectively.

The Credit Agreement contains restrictions on the Company’s ability to pay dividends or make distributions or other restricted payments if certain conditions in the Credit Agreement are not fulfilled. The Credit Agreement also includes other customary affirmative and negative covenants, including financial covenants relating to the Company’s consolidated total leverage ratio and fixed charge coverage ratio. The Company was in compliance with the debt covenants set forth in the Credit Agreement as of September 30, 2020.

(b)A foreign subsidiary of the Company has a revolving credit facility with a financial institution which matures on March 31, 2022. The foreign subsidiary pays interest monthly on any borrowings on the credit facility. As of September 30, 2020, the rate was 1.3387%.

(c)Under the Credit Agreement, the Company had access to a term loan facility that was available for drawdown until May 3,

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CLARUS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(Unaudited)

(in thousands, except per share amounts)

2020.  On April 30, 2020, the Company borrowed $20,000 under such term loan facility. The Company is required to repay the term loan through quarterly payments of $1,000 each beginning with September 30, 2020, and any remaining obligations will be repaid in full on the maturity date of the Credit Agreement of May 3, 2024. The Company pays interest monthly on any borrowings on the Credit Agreement. As of September 30, 2020, the rate was 1.6875%.

NOTE 6. DERIVATIVE FINANCIAL INSTRUMENTS

The Company’s primary exchange rate risk management objective is to mitigate the uncertainty of anticipated cash flows attributable to changes in foreign currency exchange rates. The Company primarily focuses on mitigating changes in cash flows resulting from sales denominated in currencies other than the U.S. dollar. The Company manages this risk primarily by using currency forward and option contracts. If the anticipated transactions are deemed probable, the resulting relationships are formally designated as cash flow hedges. The Company accounts for these contracts as cash flow hedges and tests effectiveness by determining whether changes in the expected cash flow of the derivative offset, within a range, changes in the expected cash flow of the hedged item.

At September 30, 2020, the Company’s derivative contracts had remaining maturities of less than one and one-half years. The counterparties to these transactions had both long-term and short-term investment grade credit ratings. The maximum net exposure of the Company’s credit risk to the counterparties is generally limited to the aggregate unrealized loss of all contracts with that counterparty, which is $688 as of September 30, 2020. The Company’s exposure of counterparty credit risk is limited to the aggregate unrealized gain on all contracts. At September 30, 2020, there was no such exposure to the counterparties. The Company’s derivative counterparties have strong credit ratings and as a result, the Company does not require collateral to facilitate transactions.

The Company held the following contracts designated as hedging instruments as of September 30, 2020 and December 31, 2019:

	September 30, 2020
	Notional	Latest
	Amount	Maturity
Foreign exchange contracts - Canadian Dollars	$8,279	August 2021
Foreign exchange contracts - Euros	€ 25,962	February 2022

	December 31, 2019
	Notional	Latest
	Amount	Maturity
Foreign exchange contracts - Canadian Dollars	$15,932	February 2021
Foreign exchange contracts - Euros	€ 18,168	February 2021
Foreign exchange contracts - Swiss Francs	CHF 661	August 2020

For contracts that qualify as effective hedge instruments, the effective portion of gains and losses resulting from changes in fair value of the instruments are included in accumulated other comprehensive income (loss) and reclassified to sales in the period the underlying hedged transaction is recognized in earnings. Gains (losses) of $(376) and $261 were reclassified to sales during the three months ended September 30, 2020 and 2019, respectively, and $206 and $844 were reclassified to sales during the nine months ended September 30, 2020 and 2019, respectively.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(Unaudited)

(in thousands, except per share amounts)

The following table presents the balance sheet classification and fair value of derivative instruments as of September 30, 2020 and December 31, 2019:

	Classification	September 30, 2020		December 31, 2019
Derivative instruments in asset positions:
Forward exchange contracts	Prepaid and other current assets	$	89	$	226
Forward exchange contracts	Other long-term assets	$	36	$	-
Derivative instruments in liability positions:
Forward exchange contracts	Accounts payable and accrued liabilities	$	813	$	152
Forward exchange contracts	Other long-term liabilities	$	-	$	29

NOTE 7. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

Accumulated other comprehensive income (loss) (“AOCI”) primarily consists of foreign currency translation adjustments and changes in our forward foreign exchange contracts. The following table sets forth the changes in AOCI, net of tax, for the three months ended September 30, 2020:

	Foreign Currency Translation Adjustments		Unrealized Gains (Losses) on Cash Flow Hedges		Total
Balance as of June 30, 2020	$	(320)	$	247	$	(73)
Other comprehensive income (loss) before reclassifications		807		(886)		(79)
Amounts reclassified from other comprehensive income (loss)		-		286		286
Net current period other comprehensive income (loss)		807		(600)		207
Balance as of September 30, 2020	$	487	$	(353)	$	134

The following table sets forth the changes in AOCI, net of tax, for the three months ended September 30, 2019:

	Foreign Currency Translation Adjustments		Unrealized Gains (Losses) on Cash Flow Hedges		Total
Balance as of June 30, 2019	$	(70)	$	(184)	$	(254)
Other comprehensive (loss) income before reclassifications		(726)		1,115		389
Amounts reclassified from other comprehensive (loss) income		-		(356)		(356)
Net current period other comprehensive (loss) income		(726)		759		33
Balance as of September 30, 2019	$	(796)	$	575	$	(221)

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(Unaudited)

(in thousands, except per share amounts)

The following table sets forth the changes in AOCI, net of tax, for the nine months ended September 30, 2020:

	Foreign Currency Translation Adjustments		Unrealized Gains (Losses) on Cash Flow Hedges		Total
Balance as of December 31, 2019	$	(286)	$	(17)	$	(303)
Other comprehensive income (loss) before reclassifications		773		(180)		593
Amounts reclassified from other comprehensive income (loss)		-		(156)		(156)
Net current period other comprehensive income (loss)		773		(336)		437
Balance as of September 30, 2020	$	487	$	(353)	$	134

The following table sets forth the changes in AOCI, net of tax, for the nine months ended September 30, 2019:

	Foreign Currency Translation Adjustments		Unrealized Gains (Losses) on Cash Flow Hedges		Total
Balance as of December 31, 2018	$	73	$	404	$	477
Other comprehensive (loss) income before reclassifications		(869)		954		85
Amounts reclassified from other comprehensive (loss) income		-		(783)		(783)
Net current period other comprehensive (loss) income		(869)		171		(698)
Balance as of September 30, 2019	$	(796)	$	575	$	(221)

The effects on net income of amounts reclassified from unrealized gains on cash flow hedges for foreign exchange contracts for the three and nine months ended September 30, 2020 and 2019, were as follows:

	Gains reclassified from AOCI to the Consolidated Statements of Comprehensive Income (Loss)
Affected line item in the Consolidated	Three Months Ended				Nine Months Ended
Statements of Comprehensive Income (Loss)	September 30, 2020		September 30, 2019		September 30, 2020		September 30, 2019
Foreign exchange contracts:
Sales	$	(376)	$	261	$	206	$	844
Less: Income tax (benefit) expense		(90)		(95)		50		61
Amount reclassified, net of tax	$	(286)	$	356	$	156	$	783
Total reclassifications from AOCI	$	(286)	$	356	$	156	$	783

NOTE 8. FAIR VALUE MEASUREMENTS

We measure certain financial assets and liabilities at fair value on a recurring basis. Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants, under a three-tier fair value hierarchy that prioritizes the inputs used in measuring fair value as follows:

Level 1 - inputs to the valuation methodology are quoted market prices for identical assets or liabilities in active markets.

Level 2 - inputs to the valuation methodology include quoted prices in markets that are not active or model inputs that are

observable either directly or indirectly for substantially the full term of the asset or liability.

Level 3 - inputs to the valuation methodology are based on prices or valuation techniques that are unobservable.

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CLARUS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(Unaudited)

(in thousands, except per share amounts)

Assets and liabilities measured at fair value on a recurring basis at September 30, 2020 and December 31, 2019 were as follows:

	September 30, 2020
	Level 1		Level 2		Level 3		Total
Assets
Forward exchange contracts	$	-	$	125	$	-	$	125
	$	-	$	125	$	-	$	125
Liabilities
Forward exchange contracts	$	-	$	813	$	-	$	813
	$	-	$	813	$	-	$	813
	December 31, 2019
	Level 1		Level 2		Level 3		Total
Assets
Forward exchange contracts	$	-	$	226	$	-	$	226
	$	-	$	226	$	-	$	226
Liabilities
Forward exchange contracts	$	-	$	181	$	-	$	181
	$	-	$	181	$	-	$	181

Derivative financial instruments are recorded at fair value based on current market pricing models. No nonrecurring fair value measurements existed at September 30, 2020 and December 31, 2019.

NOTE 9. EARNINGS (LOSS) PER SHARE

Basic earnings (loss) per share is computed by dividing earnings (loss) by the weighted average number of common shares outstanding during each period. Diluted earnings (loss) per share is computed by dividing earnings (loss) by the total of the weighted average number of shares of common stock outstanding during each period, plus the effect of dilutive outstanding stock options and unvested restricted stock grants. Potentially dilutive securities are excluded from the computation of diluted earnings (loss) per share if their effect is anti-dilutive to the loss from continuing operations.

The following table is a reconciliation of basic and diluted shares of common stock outstanding used in the calculation of earnings (loss) per share:

	Three Months Ended				Nine Months Ended
	September 30, 2020		September 30, 2019		September 30, 2020		September 30, 2019
Weighted average shares outstanding - basic		29,983		29,876		29,854		29,841
Effect of dilutive stock awards		1,003		1,201		-		1,158
Weighted average shares outstanding - diluted		30,986		31,077		29,854		30,999
Net income (loss) per share:
Basic	$	0.04	$	0.12	$	(0.05)	$	0.22
Diluted		0.04		0.11		(0.05)		0.21

For the three months ended September 30, 2020 and 2019, equity awards of 927 and 798, respectively, and for the nine months ended September 30, 2020 and 2019, equity awards of 4,384 and 669, respectively, were anti-dilutive and therefore not included in the calculation of earnings (loss) per share for these periods.

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CLARUS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(Unaudited)

(in thousands, except per share amounts)

NOTE 10. STOCK-BASED COMPENSATION PLAN

Under the Company’s current 2015 Stock Incentive Plan (the “2015 Plan”), the Company’s Board of Directors has flexibility to determine the type and amount of awards to be granted to eligible participants, who must be employees, directors, officers or consultants of the Company or its subsidiaries. The 2015 Plan allows for grants of incentive stock options, nonqualified stock options, restricted stock awards, stock appreciation rights, and restricted units. The aggregate number of shares of common stock that may be granted through awards under the 2015 Plan to any employee in any calendar year may not exceed 500 shares. The 2015 Plan will continue in effect until December 2025 unless terminated sooner. 

Options Granted:

During the nine months ended September 30, 2020, the Company issued stock options for an aggregate of 613 shares under the 2015 Plan to directors and employees of the Company. Of the 613 options issued, 38 options vest in four equal consecutive quarterly tranches from the date of grant. 145 options issued vest in four equal annual tranches beginning December 31, 2020. 50 options issued vest in five equal annual tranches beginning December 31, 2020. 30 options issued vest in three equal annual tranches beginning December 31, 2020. The remaining 350 options issued vest in three equal annual tranches beginning August 27, 2021.

For computing the fair value of the stock-based awards, the fair value of each option grant has been estimated as of the date of grant using the Black-Scholes option-pricing model with the following assumptions:

Number of options	613
Option vesting period	1 - 5 Years
Grant price (per share)	$9.99 - $15.00
Dividend yield	0.79% - 1.00%
Expected volatility (a)	40.9% - 44.2%
Risk-free interest rate	0.41% - 0.65%
Expected life (years) (b)	5.31 - 6.38
Weighted average fair value (per share)	$3.72 - $4.35

(a)Expected volatility is based upon the Company’s historical volatility.

(b)The expected term was determined based upon the underlying terms of the awards and the category and employment history of employee award recipient.

The grant date fair value of the stock options granted during the nine months ended September 30, 2020 was $2,581, which will be recognized over the vesting period of the options.

Stock Award Granted:

On September 14, 2020, the Company issued and granted to the Executive Chairman a stock award of 244 shares under the 2015 Plan which vested immediately. The fair value of the stock award was calculated as of the date of grant using the closing market price. The grant date fair value of the stock award granted during the nine months ended September 30, 2020 was $3,314, which was recognized immediately.

Market Condition Restricted Shares Granted:

On August 27, 2020, the Company issued and granted to an employee a restricted stock award of 100 restricted shares under the 2015 Plan, of which 100 restricted shares will vest if, on or before August 27, 2023, the Fair Market Value (as defined in the Plan) of the Company’s common stock shall have equaled or exceeded $15.00 per share for twenty consecutive trading days. For computing the fair value of the 100 restricted shares with a market condition, the fair value of the restricted stock award grant has been estimated as of the date of grant using the Monte-Carlo pricing model with the assumptions below.

17

CLARUS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(Unaudited)

(in thousands, except per share amounts)

	August 27, 2020
Number issued	100
Vesting period	$15.00 stock price target
Grant price (per share)	$12.72
Dividend yield	0.79%
Expected volatility	41.1%
Risk-free interest rate	0.19%
Expected term (years)	0.52
Weighted average fair value (per share)	$9.91

Using these assumptions, the fair value of the market condition restricted stock award granted on August 27, 2020 was $991.

The total non-cash stock compensation expense related to restricted stock, stock options and stock awards recorded by the Company for the three months ended September 30, 2020 and 2019 was $4,204 and $678, respectively, and for the nine months ended September 30, 2020 and 2019 was $5,433 and $2,246, respectively. For the three and nine months ended September 30, 2020 and 2019, the majority of stock-based compensation costs were classified as selling, general and administrative expenses.

As of September 30, 2020, there were 1,744 unvested stock options and unrecognized compensation cost of $5,354 related to unvested stock options, as well as 600 unvested restricted stock awards and unrecognized compensation costs of $3,119 related to unvested restricted stock awards.

NOTE 11. COMMITMENTS AND CONTINGENCIES

As a consumer goods manufacturer and distributor, the Company faces the risk of product liability and related lawsuits involving claims for substantial money damages, product recall actions and higher than anticipated rates of warranty returns or other returns of goods. The Company is therefore vulnerable to various personal injury and property damage lawsuits relating to its products and incidental to its business.

The Company is involved in various legal disputes and other legal proceedings that arise from time to time in the ordinary course of business. Based on currently available information, the Company does not believe that it is reasonably possible that the disposition of any of the legal disputes the Company or its subsidiaries is currently involved in will have a material adverse effect upon the Company’s consolidated financial condition, results of operations or cash flows. There is a reasonable possibility of loss from contingencies in excess of the amounts accrued by the Company in the accompanying condensed consolidated balance sheets; however, the actual amounts of such possible losses cannot currently be reasonably estimated by the Company at this time. It is possible that, as additional information becomes available, the impact on the Company could have a different effect.

NOTE 12. INCOME TAXES

The Company’s U.S. federal statutory tax rate of 21% and its foreign operations that are considered to be permanently reinvested have statutory tax rates of approximately 25%.

The difference between the Company’s estimated effective tax rate and the U.S. federal statutory tax rate of 21% for the three and nine months ended September 30, 2020, was due to permanent book to tax differences primarily related to incentive stock options.

As of December 31, 2019, the Company’s gross deferred tax asset was $43,945. The Company had recorded a valuation allowance of $28,632, resulting in a net deferred tax asset of $15,313, before deferred tax liabilities of $8,633. The Company has provided a valuation allowance against a portion of the deferred tax assets as of September 30, 2020 and December 31, 2019, because the ultimate realization of those assets did not meet the more likely than not criteria. The majority of the Company’s deferred tax assets consist of net operating loss (“NOL”) carryforwards for federal tax purposes. If a change in control were to occur, these could be limited under Section 382 of the Internal Revenue Code of 1986 (“Code”), as amended.

In assessing the realizability of deferred income tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible and net operating loss and credit

18

CLARUS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(Unaudited)

(in thousands, except per share amounts)

carryforwards expire. The estimates and judgments associated with the Company’s valuation allowance on deferred tax assets are considered critical due to the amount of deferred tax assets recorded by the Company on its consolidated balance sheet and the judgment required in determining the Company’s future taxable income. The need for a valuation allowance is reassessed at each interim reporting period.

As of December 31, 2019, the Company had NOL and research and experimentation credit for U.S. federal income tax purposes of $131,621 and $4,250, respectively. The Company believes its NOL will offset some of its future U.S. federal income taxes. The majority of the Company’s pre-tax income is currently earned and expected to be earned in the U.S., or taxed in the U.S. as Subpart F income and will be offset with the NOL.

NOLs available to offset taxable income, subject to compliance with Section 382 of the Code, begin to expire based upon the following schedule:

Net Operating Loss Carryforward Expiration Dates
December 31, 2019
Expiration Dates December 31,	Net Operating Loss Amount
2022	$	111,049
2023		5,712
2024		3,566
2025 and beyond		11,294
Total	$	131,621

NOTE 13. SEGMENT INFORMATION

We operate our business structure within two segments. These segments are defined based on the internal financial reporting used by management. Certain significant selling and general and administrative expenses are not allocated to the segments including non-cash stock compensation expense. Each segment is described below:

Our Black Diamond segment, which includes Black Diamond Equipment, PIEPS, and SKINourishment, is a global leader in designing, manufacturing, and marketing innovative outdoor engineered equipment and apparel for climbing, mountaineering, trail running, backpacking, skiing, and a wide range of other year-round outdoor recreation activities. Our Black Diamond segment offers a broad range of products including: high-performance, activity-based apparel (such as shells, insulation, midlayers, pants and logowear); rock-climbing footwear and equipment (such as carabiners, protection devices, harnesses, belay devices, helmets, and ice-climbing gear); technical backpacks and high-end day packs; trekking poles; headlamps and lanterns; gloves and mittens; and skincare and other sport-enhancing products. We also offer advanced skis, ski poles, ski skins, and snow safety products, including avalanche airbag systems, avalanche transceivers, shovels, and probes.

Our Sierra segment, which includes Sierra, is an iconic American manufacturer of a wide range of high-performance bullets and ammunition for both rifles and pistols. These bullets and ammunition are used for precision target shooting, hunting and military and law enforcement purposes.

As noted above, the Company has a wide variety of technical outdoor equipment and lifestyle products focused on the climb, ski, mountain and sport product categories that are sold to a variety of customers in multiple end markets. While there are multiple products sold, the terms and nature of revenue recognition policy is similar for all segments. The sport product category represents the Sierra segment revenue.

We divide our product offerings into four primary categories of climb, mountain, ski and sport.  Revenue by category as a percentage of total consolidated revenues is as follows:

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CLARUS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(Unaudited)

(in thousands, except per share amounts)

	Three Months Ended				Nine Months Ended
	September 30, 2020		September 30, 2019		September 30, 2020		September 30, 2019
Climb	27	%	30	%	33	%	34	%
Mountain	33	%	37	%	30	%	35	%
Ski	17	%	22	%	15	%	17	%
Sport	23	%	11	%	22	%	14	%

Contract liabilities are recorded as a component of accounts payable and accrued liabilities when customers remit contractual cash payments in advance of us satisfying performance obligations which are satisfied at a future point of time. Contract liabilities were not material at September 30, 2020 and December 31, 2019. Contract liabilities are derecognized when the performance obligation is satisfied. Revenue recognized from satisfaction of performance obligations relating to the advanced payments during the three and nine months ended September 30, 2020 and 2019 were not material. No other material remaining performance obligations exist at September 30, 2020.

Financial information for our segments is as follows:

	Three Months Ended				Nine Months Ended
	September 30, 2020		September 30, 2019		September 30, 2020		September 30, 2019
Sales to external customers:
Black Diamond
Domestic sales	$	21,953	$	23,634	$	56,381	$	70,315
International sales		27,411		30,118		58,980		73,683
Total Black Diamond		49,364		53,752		115,361		143,998
Sierra
Domestic sales		12,733		5,160		27,112		17,490
International sales		2,394		1,291		5,587		6,927
Total Sierra		15,127		6,451		32,699		24,417
Total sales to external customers		64,491		60,203		148,060		168,415
Segment operating income:
Black Diamond		4,035		5,388		1,709		10,096
Sierra		4,393		735		8,211		3,814
Total segment operating income		8,428		6,123		9,920		13,910
Restructuring charge		-		-		-		(13)
Transaction costs		(1,440)		(37)		(1,870)		(124)
Corporate and other expenses		(4,984)		(2,429)		(9,316)		(6,780)
Interest expense, net		(232)		(353)		(800)		(978)
Income (loss) before income tax	$	1,772	$	3,304	$	(2,066)	$	6,015

There were no intercompany sales between the Black Diamond and Sierra segments for the periods presented. Restructuring charges for the periods presented relate to the Black Diamond segment.

20

CLARUS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(Unaudited)

(in thousands, except per share amounts)

Total assets by segment, as of September 30, 2020 and December 31, 2019, were as follows:

	September 30, 2020		December 31, 2019
Black Diamond	$	140,751	$	147,261
Sierra		74,707		72,104
Corporate		52,380		10,900
	$	267,838	$	230,265

Capital expenditures, depreciation and amortization by segment is as follows.

	Three Months Ended				Nine Months Ended
	September 30, 2020		September 30, 2019		September 30, 2020		September 30, 2019
Capital expenditures:
Black Diamond	$	583	$	673	$	1,888	$	1,863
Sierra		1,002		171		1,718		975
Total capital expenditures	$	1,585	$	844	$	3,606	$	2,838
Depreciation:
Black Diamond	$	685	$	610	$	2,073	$	1,852
Sierra		455		480		1,332		1,480
Total depreciation	$	1,140	$	1,090	$	3,405	$	3,332
Amortization:
Black Diamond	$	258	$	278	$	803	$	834
Sierra		495		610		1,487		1,831
Total amortization	$	753	$	888	$	2,290	$	2,665

NOTE 14. RELATED PARTY TRANSACTIONS

During the three months ended September 30, 2020, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with three existing stockholders of the Company. Pursuant to the Purchase Agreement, the Company sold its common stock in a registered direct offering (the “Offering”). Upon the Company’s closing of the Offering, the Company paid a fee in the amount of $250 to Kanders & Company, Inc. (“Kanders & Company”), which were deducted from the net proceeds, in consideration of the significant support received by the Company from Kanders & Company in sourcing, structuring, and negotiating the Offering. Mr. Warren B. Kanders, the Company’s Executive Chairman of the Board of Directors is a member of the Board of Directors and sole stockholder of Kanders & Company.

Additionally, as of September 30, 2020, the Company recorded a liability in the amount of $500 owed to Kanders & Company, which is included in transaction costs, in consideration of the significant support received by the Company from Kanders & Company in sourcing, structuring, performing due diligence and negotiating the acquisition of Barnes.

NOTE 15. SUBSEQUENT EVENT

Barnes Acquisition

On September 30, 2020, Sierra entered into an Asset Purchase Agreement (the “Barnes Asset Purchase Agreement”) with Remington Outdoor Company, Inc. and certain of its subsidiaries (the “Seller”), pursuant to which Sierra agreed to (i) acquire certain assets of the Seller relating to the Barnes brand of bullets (“Barnes”), including equipment, inventory, intellectual property (including exclusive use of Barnes’ intellectual property in the all-copper and powdered metallurgy ammunition fields as well as its trademarks) and a leasehold interest in certain real property located in Mona, Utah (collectively, the “Barnes Purchased Assets”) and (ii) assume certain liabilities related to the Barnes Purchased Assets in a transaction to be effected in Seller’s bankruptcy proceeding under Chapter 11 of title 11 of the United States Code, §§ 101 et seq. (the “Bankruptcy Code”) which commenced on July 27, 2020 in the United States Bankruptcy

21

CLARUS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(Unaudited)

(in thousands, except per share amounts)

Court for the Northern District of Alabama (the “Bankruptcy Court”). Pursuant to the Barnes Asset Purchase Agreement, the purchase price to be paid for the Barnes Purchased Assets is $30,500 (the “Barnes Purchase Price”). Sierra paid to Seller a $30,500 deposit to be applied to the Barnes Purchase Price which was recorded in Other long-term assets as of September 30, 2020.

The acquisition of the Barnes Purchased Assets (the “Barnes Acquisition”) contemplated by the Barnes Asset Purchase Agreement was subject to a number of closing conditions, including, among others (i) the Sale Order entered on September 30, 2020 by the Bankruptcy Court in the Seller’s Chapter 11 case being in effect as of the closing of the Acquisition, and (ii) compliance with the obligations of each party set forth in the Asset Purchase Agreement. The Seller and Sierra have each made representations, warranties and covenants in the Asset Purchase Agreement customary for transactions of this type under the Bankruptcy Code. On October 2, 2020, Sierra completed the acquisition of the Barnes Purchased Assets.

Based upon the timing of the Barnes Acquisition, the initial accounting is not yet complete as the Company gathers additional information related to the Barnes Purchased Assets. The Company is in the process of obtaining third-party valuations of certain intangible assets. The preliminary application of acquisition accounting to the Barnes Purchased Assets, as well as the results of operations of Barnes, will first be reflected in the Company's consolidated financial results as of and for the three and twelve months ending December 31, 2020. The operating results of Barnes are expected to be included within the Sierra segment. Acquisition-related costs for the Barnes Acquisition, which were included in transaction costs during the three and nine months ended September 30, 2020 were $850.

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CLARUS CORPORATION

MANAGEMENT DISCUSSION AND ANALYSIS

(in thousands, except per share amounts)

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

Please note that in this Quarterly Report on Form 10-Q Clarus Corporation (which may be referred to as the “Company,” “Clarus,” “we,” “our” or “us”) may use words such as “appears,” “anticipates,” “believes,” “plans,” “expects,” “intends,” “future” and similar expressions which constitute forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are made based on our expectations and beliefs concerning future events impacting the Company and therefore involve a number of risks and uncertainties. We caution that forward-looking statements are not guarantees and that actual results could differ materially from those expressed or implied in the forward-looking statements.

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; disruption and volatility in the global currency, capital and credit markets; the financial strength of the Company’s customers; the Company’s ability to implement its business strategy; the ability of the Company to execute and integrate acquisitions; changes in governmental regulation, legislation or public opinion relating to the manufacture and sale of bullets and ammunition by our Sierra segment, and the possession and use of firearms and ammunition by our customers; the Company’s exposure to product liability or product warranty claims and other loss contingencies; disruptions and other impacts to the Company’s business, as a result of 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; the Company’s ability to protect patents, trademarks and other intellectual property rights; 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, including without limitation, through social media or in connection with brand damaging events and/or public perception; fluctuations in the price, availability and quality of raw materials and contracted products as well as foreign currency fluctuations; our ability to utilize our net operating loss carryforwards; changes in tax laws and liabilities, tariffs, legal, regulatory, political and economic risks; and the Company’s ability to maintain a quarterly dividend. More information on potential factors that could affect the Company’s financial results is included from time to time in the Company’s public reports filed with the Securities and Exchange Commission, including the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. All forward-looking statements included in this Quarterly Report on Form 10-Q are based upon information available to the Company as of the date of this Quarterly Report on Form 10-Q, and speak only as of the date hereof. We assume no obligation to update any forward-looking statements to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q.

Overview

Headquartered in Salt Lake City, Utah, Clarus, a company focused on the outdoor and consumer industries, is seeking opportunities to acquire and grow businesses that can generate attractive shareholder returns. The Company has net operating tax loss carryforwards which it is seeking to redeploy to maximize shareholder value. Clarus’ primary business is as a leading designer, developer, manufacturer and distributor of outdoor equipment and lifestyle products focused on the climb, ski, mountain, sport and skincare markets. The Company’s products are principally sold under the Black Diamond®, Sierra®, PIEPS® and SKINourishment® brand names through outdoor specialty and online retailers, distributors and original equipment manufacturers throughout the U.S. and internationally.

Through our Black Diamond, PIEPS, and SKINourishment brands, we offer a broad range of products including: high-performance, activity-based apparel (such as shells, insulation, midlayers, pants and logowear); rock-climbing footwear and equipment (such as carabiners, protection devices, harnesses, belay devices, helmets, and ice-climbing gear); technical backpacks and high-end day packs; trekking poles; headlamps and lanterns; gloves and mittens; and skincare and other sport-enhancing products. We also offer advanced skis, ski poles, ski skins, and snow safety products, including avalanche airbag systems, avalanche transceivers, shovels, and probes. Through our Sierra brand, we manufacture a wide range of high-performance bullets and ammunition for both rifles and pistols that are used for precision target shooting, hunting and military and law enforcement purposes.

23

CLARUS CORPORATION

MANAGEMENT DISCUSSION AND ANALYSIS

(in thousands, except per share amounts)

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. 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”).

On October 2, 2020, the Company completed the acquisition of certain assets and liabilities relating to the Barnes brand of bullets (“Barnes”) for a purchase price of $30,500. See Note 15 of the unaudited condensed consolidated financial statements for a more detailed explanation of the acquisition.

On August 6, 2018, the Company announced that its Board of Directors approved the initiation of a quarterly cash dividend program of $0.025 per share of the Company’s common stock (the “Quarterly Cash Dividend”) or $0.10 per share on an annualized basis.  The declaration and payment of future Quarterly Cash Dividends is subject to the discretion of and approval of the Company’s Board of Directors. On May 1, 2020, the Company announced that, in light of the operational impact of the COVID-19 pandemic, its Board of Directors temporarily replaced its Quarterly Cash Dividend with a stock dividend (the “Quarterly Stock Dividend”). On October 19, 2020, the Company announced that its Board of Directors approved the reinstatement of its Quarterly Cash Dividend. The reinstated Quarterly Cash Dividend will be paid on November 20, 2020 to the shareholders of record of the Company’s common stock as of the close of business on November 9, 2020.

Impact of COVID-19

The global outbreak of COVID-19 was declared a pandemic by the World Health Organization and a national emergency by the U.S. government in March 2020, with governments world-wide implementing safety measures restricting travel and requiring citizen lockdowns and self-confinements for quarantining purposes. This has negatively affected the U.S. and global economy, disrupted global supply chains, and resulted in significant transport restrictions and disruption of financial markets. The impact of this pandemic has created significant uncertainty in the global economy and has affected our business, employees, retail and distribution partners, suppliers, and customers.

The decline in retail demand within our Black Diamond segment over the second half of March 2020 and during the three months ended June 30, 2020 and September 30, 2020, negatively impacted our sales and profitability for the first, second and third quarters of 2020. We also expect an impact on the Company’s sales and profitability in future periods. The duration of these trends and the magnitude of such impacts cannot be precisely estimated at this time, as they are affected by a number of factors (some of which are outside management’s control), including those presented in Item 1A. Risk Factors of our Quarterly Report for the quarterly period ended March 31, 2020. We generally expect the second quarter of 2020 to be the most significantly impacted with sequential improvement throughout the remainder of the fiscal year.

We are mitigating some of the negative impacts to our operating results by taking significant actions to improve our current operating results and liquidity position, including drawing on the credit facility, suspending share repurchases and temporarily suspending cash dividends, postponing non-essential capital expenditures, reducing operating costs, modulating production in line with demand, initiating workforce reductions and furloughs, and substantially reducing discretionary spending. We will continue to adjust mitigation measures as needed related to health and safety. Those measures have and might continue to include temporarily suspending manufacturing or retail operations, modifying workspaces, continuing social distancing policies, implementing new personal protective equipment or health screening policies at our facilities, or such other industry best practices needed to continue maintain a healthy and safe environment for our employees amidst the pandemic.

These countermeasures are expected to partially mitigate the impacts of COVID-19 on our full year 2020 financial results. As the impact of the COVID-19 pandemic on the economy and our operations evolves, we will continue to assess the impact on the Company and respond accordingly.

Sustained adverse impacts to the Company, certain of its suppliers, dealers or customers may also affect the Company’s future cash flows, liquidity, and valuation of certain assets and therefore may increase the likelihood of an impairment charge, write-off, or reserve associated with such assets, including goodwill, indefinite and finite-lived intangible assets, property and equipment, inventories, accounts receivable, net deferred tax assets, and other assets.

24

CLARUS CORPORATION

MANAGEMENT DISCUSSION AND ANALYSIS

(in thousands, except per share amounts)

Critical Accounting Policies and Use of Estimates

Management’s discussion of our financial condition and results of operations is based on the condensed consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). The preparation of the condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the condensed consolidated financial statements. Estimates also affect the reported amounts of revenues and expenses during the reporting periods. We base our estimates on historical experience and other assumptions that are believed to be reasonable under the circumstances. Actual results could differ from these estimates.

There have been no significant changes to our critical accounting policies as described in our Annual Report on Form 10-K for the year ended December 31, 2019.

Accounting Pronouncements Issued Not Yet Adopted

See “Accounting Pronouncements Not Yet Adopted” in Note 1 of the unaudited condensed consolidated financial statements.

‎

25

CLARUS CORPORATION

MANAGEMENT DISCUSSION AND ANALYSIS

(in thousands, except per share amounts)

Results of Operations

Condensed Consolidated Three Months Ended September 30, 2020 Compared to Condensed Consolidated Three Months Ended September 30, 2019

The following presents a discussion of condensed consolidated operations for the three months ended September 30, 2020, compared with the condensed consolidated three months ended September 30, 2019.

	Three Months Ended
	September 30, 2020		September 30, 2019
Sales
Domestic sales	$	34,686	$	28,794
International sales		29,805		31,409
Total sales		64,491		60,203
Cost of goods sold		42,822		39,646
Gross profit		21,669		20,557
Operating expenses
Selling, general and administrative		18,674		16,443
Transaction costs		1,440		37
Total operating expenses		20,114		16,480
Operating income		1,555		4,077
Other income (expense)
Interest expense, net		(232)		(353)
Other, net		449		(420)
Total other income (expense), net		217		(773)
Income before income tax		1,772		3,304
Income tax expense (benefit)		589		(188)
Net income	$	1,183	$	3,492

Sales

Consolidated sales increased $4,288, or 7.1%, to $64,491 during the three months ended September 30, 2020, compared to consolidated sales of $60,203 during the three months ended September 30, 2019. The increase in sales was attributable to the increase in the quantity of new and existing sport products sold of $8,676. We also experienced an increase in sales of $279 due to the weakening of the U.S. dollar against foreign currencies during the three months ended September 30, 2020 compared to the prior period. We believe these increases were partially offset by lower consumer demand related to the COVID-19 pandemic, which drove a decrease in the quantity of new and existing climb, mountain, and ski products sold during the period.

Consolidated domestic sales increased $5,892, or 20.5%, to $34,686 during the three months ended September 30, 2020, compared to consolidated domestic sales of $28,794 during the three months ended September 30, 2019. The increase in sales was attributable to the increase in the quantity of new and existing sport products sold of $7,573. We believe the increase in domestic sales was partially offset by lower consumer demand related to the COVID-19 pandemic, which drove a decrease in the quantity of new and existing climb, mountain, and ski products sold during the period.

Consolidated international sales decreased $1,604, or 5.1%, to $29,805 during the three months ended September 30, 2020, compared to consolidated international sales of $31,409 during the three months ended September 30, 2019. We believe the decrease in international sales was attributable to lower consumer demand related to the COVID-19 pandemic, which drove a decrease in the

26

CLARUS CORPORATION

MANAGEMENT DISCUSSION AND ANALYSIS

(in thousands, except per share amounts)

quantity of new and existing climb, mountain, and ski products sold during the period. The decrease was partially offset by an increase in the quantity of new and existing sport products sold of $1,103 and an increase in sales of $279 due to the weakening of the U.S. dollar against foreign currencies during the three months ended September 30, 2020 compared to the prior period.

Cost of Goods Sold

Consolidated cost of goods sold increased $3,176, or 8.0%, to $42,822 during the three months ended September 30, 2020, compared to consolidated cost of goods sold of $39,646 during the three months ended September 30, 2019. The increase in cost of goods sold was primarily attributable to an increase in the number of units sold.

Gross Profit

Consolidated gross profit increased $1,112 or 5.4%, to $21,669 during the three months ended September 30, 2020, compared to consolidated gross profit of $20,557 during the three months ended September 30, 2019. Consolidated gross margin was 33.6% during the three months ended September 30, 2020, compared to a consolidated gross margin of 34.1% during the three months ended September 30, 2019. Consolidated gross margin during the three months ended September 30, 2020, decreased compared to the prior year due to unfavorable impacts on our supply chain and logistic activities due to the COVID-19 pandemic.

Selling, General and Administrative

Consolidated selling, general, and administrative expenses increased $2,231, or 13.6%, to $18,674 during the three months ended September 30, 2020, compared to consolidated selling, general and administrative expenses of $16,443 during the three months ended September 30, 2019. The increase in selling, general and administrative expenses reflect an increase of stock compensation of $3,526 during the three months ended September 30, 2020 compared to the prior year. The increase was partially offset by the cost-saving initiatives implemented in response to the COVID-19 pandemic, primarily related to reductions within sales, marketing, research and development, and brand supporting activities.

Transaction Costs

Consolidated transaction expense increased to $1,440 during the three months ended September 30, 2020, compared to consolidated transaction costs of $37 during the three months ended September 30, 2019, which consisted of expenses related to the Company’s various acquisition efforts, including acquiring the Barnes Purchased Assets.

Interest Expense, net

Consolidated interest expense, net during the three months ended September 30, 2020 remained relatively consistent with consolidated interest expense, net, during the three months ended September 30, 2019.

Other, net

Consolidated other, net, income increased $869, or 206.9%, to $449 during the three months ended September 30, 2020, compared to consolidated other, net expense of $420 during the three months ended September 30, 2019. The increase in other, net, was primarily attributable to an increase in remeasurement gains recognized on the Company’s foreign denominated accounts receivable and accounts payable. This decrease was partially offset by losses on mark-to-market adjustments on non-hedged foreign currency contracts.

Income Taxes

Consolidated income tax expense increased $777, or 413.3%, to $589 during the three months ended September 30, 2020, compared to a consolidated income tax benefit of $188 during the same period in 2019. Our effective income tax rate was 33.2% for the three months ended September 30, 2020, and was higher compared to the statutory tax rates due to permanent book to tax differences primarily related to incentive stock options. For the three months ended September 30, 2019, our effective income tax rate was 5.7% and was lower compared to the statutory tax rates due to a stock compensation windfall.

27

CLARUS CORPORATION

MANAGEMENT DISCUSSION AND ANALYSIS

(in thousands, except per share amounts)

Results of Operations

Condensed Consolidated Nine Months Ended September 30, 2020 Compared to Condensed Consolidated Nine Months Ended September 30, 2019

The following presents a discussion of condensed consolidated operations for the nine months ended September 30, 2020, compared with the condensed consolidated nine months ended September 30, 2019.

	Nine Months Ended
	September 30, 2020		September 30, 2019
Sales
Domestic sales	$	83,493	$	87,805
International sales		64,567		80,610
Total sales		148,060		168,415
Cost of goods sold		97,243		109,810
Gross profit		50,817		58,605
Operating expenses
Selling, general and administrative		50,537		51,215
Restructuring charge		-		13
Transaction costs		1,870		124
Total operating expenses		52,407		51,352
Operating (loss) income		(1,590)		7,253
Other expense
Interest expense, net		(800)		(978)
Other, net		324		(260)
Total other expense, net		(476)		(1,238)
(Loss) income before income tax		(2,066)		6,015
Income tax benefit		(542)		(570)
Net (loss) income	$	(1,524)	$	6,585

Sales

Consolidated sales decreased $20,355, or 12.1%, to $148,060 during the nine months ended September 30, 2020, compared to consolidated sales of $168,415 during the nine months ended September 30, 2019. We believe lower consumer demand related to the COVID-19 pandemic drove a decrease in the quantity of new and existing climb, mountain, and ski products sold during the period. We also experienced a decrease in sales of $297 due to the strengthening of the U.S. dollar against foreign currencies during the nine months ended September 30, 2020 compared to the prior period. These decreases were partially offset by an increase in the quantity of new and existing sport products sold of $8,282.

Consolidated domestic sales decreased $4,312, or 4.9%, to $83,493 during the nine months ended September 30, 2020, compared to consolidated domestic sales of $87,805 during the nine months ended September 30, 2019. We believe the decrease in domestic sales was attributable to lower consumer demand related to the COVID-19 pandemic, which drove a decrease in the quantity of new and existing climb, mountain, and ski products sold during the period. This decrease was partially offset by an increase in the quantity of new and existing sport products sold of $9,622.

Consolidated international sales decreased $16,043, or 19.9%, to $64,567 during the nine months ended September 30, 2020, compared to consolidated international sales of $80,610 during the nine months ended September 30, 2019. We believe the decrease in

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CLARUS CORPORATION

MANAGEMENT DISCUSSION AND ANALYSIS

(in thousands, except per share amounts)

international sales was attributable to lower consumer demand related to the COVID-19 pandemic, which drove a decrease in the quantity of new and existing climb, mountain, and ski products sold during the period. We also experienced a decrease in the quantity of new and existing sport products sold of $1,340 and a decrease in sales of $297 due to the strengthening of the U.S. dollar against foreign currencies during the nine months ended September 30, 2020 compared to the prior period.

Cost of Goods Sold

Consolidated cost of goods sold decreased $12,567, or 11.4%, to $97,243 during the nine months ended September 30, 2020, compared to consolidated cost of goods sold of $109,810 during the nine months ended September 30, 2019. The decrease in cost of goods sold was primarily attributable to a decrease in the number of units sold due to lower consumer demand related to the COVID-19 pandemic.

Gross Profit

Consolidated gross profit decreased $7,788 or 13.3%, to $50,817 during the nine months ended September 30, 2020, compared to consolidated gross profit of $58,605 during the nine months ended September 30, 2019. Consolidated gross margin was 34.3% during the nine months ended September 30, 2020, compared to a consolidated gross margin of 34.8% during the nine months ended September 30, 2019. Consolidated gross margin during the nine months ended September 30, 2020, decreased compared to the prior year due to unfavorable impacts on our supply chain and logistic activities due to the COVID-19 pandemic, along with negative impacts from foreign currency and tariffs.

Selling, General and Administrative

Consolidated selling, general, and administrative expenses decreased $678, or 1.3%, to $50,537 during the nine months ended September 30, 2020, compared to consolidated selling, general and administrative expenses of $51,215 during the nine months ended September 30, 2019. The decrease in selling, general and administrative expenses reflect the cost-saving initiatives implemented in response to the COVID-19 pandemic, primarily related to reductions within sales, marketing, and logistics. The decrease was partially offset by an increase of stock compensation of $3,187 during the nine months ended September 30, 2020 compared to the prior year.

Restructuring Charges

Consolidated restructuring expense decreased to $0 during the nine months ended September 30, 2020, compared to consolidated restructuring expense of $13 during the nine months ended September 30, 2019. Restructuring expenses incurred during the nine months ended September 30, 2019, related to costs associated with the formal closure and liquidation of the Company’s Black Diamond Equipment manufacturing operations in Zhuhai, China.

Transaction Costs

Consolidated transaction expense increased to $1,870 during the nine months ended September 30, 2020, compared to consolidated transaction costs of $124 during the nine months ended September 30, 2019, which consisted of expenses related to the Company’s various acquisition efforts, including acquiring the Barnes Purchased Assets.

Interest Expense, net

Consolidated interest expense, net during the nine months ended September 30, 2020 remained relatively consistent with consolidated interest expense, net, during the nine months ended September 30, 2019.

Other, net

Consolidated other, net, increased $584, or 224.6%, to income of $324 during the nine months ended September 30, 2020, compared to consolidated other, net expense of $260 during the nine months ended September 30, 2019. The increase in other, net, was primarily attributable to an increase in remeasurement gains recognized on the Company’s foreign denominated accounts receivable and accounts payable. This increase was partially offset by losses on mark-to-market adjustments on non-hedged foreign currency contracts.

Income Taxes

Consolidated income tax benefit decreased $28, or 4.9%, to $542 during the nine months ended September 30, 2020, compared to a consolidated income tax benefit of $570 during the same period in 2019. Our effective income tax rate was 26.2% for the nine months

29

CLARUS CORPORATION

MANAGEMENT DISCUSSION AND ANALYSIS

(in thousands, except per share amounts)

ended September 30, 2020, and was higher compared to the statutory tax rates due to permanent book to tax differences primarily related to incentive stock options. For the nine months ended September 30, 2019, our effective income tax rate was 9.5% and is lower compared to the statutory tax rates due to a discrete benefit associated with a release of a tax reserve. Factors that could cause our annual effective tax rate to differ materially from our quarterly effective tax rates include changes in the geographic mix of taxable income and discrete events that may occur.

Liquidity and Capital Resources

Condensed Consolidated Nine Months Ended September 30, 2020 Compared to Condensed Consolidated Nine Months Ended September 30, 2019

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 activities associated with the expansion into new product categories. We plan to fund these activities through a combination of our future operating cash flows and revolving credit facility which had approximately $38,900 available to borrow at September 30, 2020. We believe that our liquidity requirements for at least the next 12 months will be adequately covered by cash provided by operations and our existing revolving credit facility. However, as the impact of the COVID-19 pandemic on the economy and our operations evolves, we will continue to assess our liquidity needs. The COVID-19 pandemic has negatively affected the U.S. and global economies, disrupted global supply chains, and resulted in significant travel and transport restrictions and disruption of financial markets. An extended period of global supply chain and economic disruption could materially affect our business, results of operations, ability to meet debt covenants, access to sources of liquidity and financial condition. Given the economic uncertainty as a result of the pandemic, we have taken actions to improve our current liquidity position, including drawing on the credit facility, suspending share repurchases and cash dividends, postponing nonessential capital expenditures, reducing operating costs, modulating production in line with demand, initiating workforce reductions and furloughs, and substantially reducing discretionary spending.

Further, we borrowed $20,000 under the term loan portion of the Credit Agreement to increase our overall liquidity. The Company is required to repay the term loan through quarterly payments of $1,000 each beginning with September 30, 2020, and any remaining obligations will be repaid in full on the maturity date of the Credit Agreement of May 3, 2024.

Additionally, during the three months ended September 30, 2020, the Company entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”) with three existing stockholders of the Company. Pursuant to the Securities Purchase Agreement, the Company sold its common stock in a registered direct offering (the “Offering”). The net proceeds to the Company from the Offering were $11,151, after deducting estimated Offering expenses payable by the Company, and were used to pay down amounts outstanding on our revolving loan commitment. The Offering was made pursuant to the Company’s effective registration statement on Form S-3 (File No. 333-218751), previously filed with and declared effective by the Securities and Exchange Commission

At September 30, 2020, we had total cash of $17,027, compared to a cash balance of $1,703 at December 31, 2019, which was substantially controlled by the Company’s U.S. entities. At September 30, 2020, the Company had $6,093 of the $17,027 in cash held by foreign entities, of which $762 is considered permanently reinvested.

The following presents a discussion of cash flows for the condensed consolidated nine months ended September 30, 2020 compared with the condensed consolidated nine months ended September 30, 2019.

	Nine Months Ended
	September 30, 2020		September 30, 2019
Net cash provided by operating activities	$	21,048	$	5,635
Net cash used in investing activities		(33,779)		(2,818)
Net cash provided by (used in) financing activities		27,956		(3,379)
Effect of foreign exchange rates on cash		99		(73)
Change in cash		15,324		(635)
Cash, beginning of period		1,703		2,486
Cash, end of period	$	17,027	$	1,851

30

CLARUS CORPORATION

MANAGEMENT DISCUSSION AND ANALYSIS

(in thousands, except per share amounts)

Net Cash From Operating Activities

Consolidated net cash provided by operating activities was $21,048 during the nine months ended September 30, 2020, compared to $5,635 during the nine months ended September 30, 2019. The increase in net cash provided by operating activities during 2020 is primarily due to an increase in net operating assets, or non-cash working capital, of $20,915, and stock compensation of $3,187, partially offset by a decrease in net income during the nine months ended September 30, 2020, compared to the same period in 2019.

Free cash flow, defined as net cash provided by operating activities less capital expenditures, of $17,442 was generated during the nine months ended September 30, 2020 compared to $2,797 generated during the same period in 2019. 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 comparable GAAP financial measures is set forth below:

	Nine Months Ended
	September 30, 2020		September 30, 2019
Net cash provided by operating activities	$	21,048	$	5,635
Purchase of property and equipment		(3,606)		(2,838)
Free cash flow	$	17,442	$	2,797

Net Cash From Investing Activities

Consolidated net cash used in investing activities was $33,779 during the nine months ended September 30, 2020, compared to $2,818 during the nine months ended September 30, 2019. The increase in cash used during the nine months ended September 30, 2020 is due to a deposit the Company paid to be applied to the purchase of the assets of the Barnes brand as well as an increase in purchases of property and equipment, compared to the same period in 2019.

Net Cash From Financing Activities

Consolidated net cash provided by financing activities was $27,956 during the nine months ended September 30, 2020, compared to consolidated net cash used of $3,379 during the nine months ended September 30, 2019. The increase in cash provided during the nine months ended September 30, 2020 compared to the same period in 2019 was primarily due to the proceeds of $20,000 borrowed under the term loan and the net proceeds from the Offering of $11,151. These increases were partially offset by net repayments to the revolving line of credit and repayments of the term loan.

Net Operating Loss

As of December 31, 2019, the Company had net operating loss and research and experimentation credit for U.S. federal income tax purposes of $131,621 and $4,250, respectively. The Company believes its U.S. Federal NOL will offset some of its future U.S. Federal income taxes. The majority of the Company’s pre-tax income is currently earned and expected to be earned in the U.S., or taxed in the U.S. as Subpart F income and will be offset with the NOL. $131,621 of net operating losses available to offset taxable income does not expire until 2022 or later, subject to compliance with Section 382 of the Internal Revenue Code of 1986, as amended.

As of December 31, 2019, the Company’s gross deferred tax asset was $43,945. The Company has recorded a valuation allowance of $28,632, resulting in a net deferred tax asset of $15,313, before deferred tax liabilities of $8,633. The Company has provided a valuation allowance against a portion of the net deferred tax assets as of September 30, 2020 and December 31, 2019, 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 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 Internal Revenue Code of 1986 (“Code”), as amended.

Credit Agreement

On May 3, 2019, the Company together with certain of its direct and indirect domestic subsidiaries (the “Borrowers”) and the other loan parties party thereto entered into a Credit Agreement with JPMorgan Chase Bank, N.A., as administrative agent, and the lenders from time to time party thereto, for borrowings of up to $60,000 under a revolving credit facility (including up to $5,000 for letters of credit), and borrowings of up to $40,000 under a term loan facility that is available to be drawn until May 3, 2020. The Credit Agreement also

31

CLARUS CORPORATION

MANAGEMENT DISCUSSION AND ANALYSIS

(in thousands, except per share amounts)

permits the Borrowers, subject to certain requirements, to arrange with lenders for an aggregate of up to $50,000 of additional revolving and/or term loan commitments (both of which are currently uncommitted), for potential aggregate revolving and term loan commitments under the Credit Agreement of up to $150,000. The Credit Agreement matures on May 3, 2024.

The Borrowers may elect to have the revolving and term loans under the Credit Agreement bear interest at an alternate base rate or a Eurodollar rate plus an applicable rate. The applicable rate for these borrowings will range from 0.50% to 1.25% per annum, in the case of alternate base rate borrowings, and 1.50% to 2.25% per annum, in the case of Eurodollar borrowings. The applicable rate was initially 0.875% per annum, in the case of alternate base rate borrowings, and 1.875% per annum, in the case of Eurodollar borrowings, however, it may be adjusted from time to time based upon the level of the Company’s consolidated total leverage ratio. The Credit Agreement also requires the Borrowers to pay a commitment fee on the unused portion of the revolving and term loan commitments. Such commitment fee will range between 0.15% and 0.25% per annum, and is also based upon the level of the Company’s consolidated total leverage ratio.

As of September 30, 2020, the Company had drawn approximately $21,066 of the $60,000 revolving loan commitment that was available for borrowing under the Credit Agreement, and $19,000 outstanding under the term loan commitment. As of September 30, 2020, the interest rate for each loan was 1.6875%. On April 30, 2020, the Company borrowed $20,000 under the term loan facility and used the proceeds to pay down amounts outstanding under the revolving portion of the Credit Agreement. The Company is required to repay the term loan through quarterly payments of $1,000 each beginning with September 30, 2020, and any remaining obligations will be repaid in full on the maturity date of the Credit Agreement of May 3, 2024.

The Credit Agreement contains restrictions on the Company’s ability to pay dividends or make distributions or other restricted payments if certain conditions in the Credit Agreement are not fulfilled. The Credit Agreement also includes other customary affirmative and negative covenants, including financial covenants relating to the Company’s consolidated total leverage ratio and fixed charge coverage ratio. The Company was in compliance with the debt covenants set forth in the Credit Agreement as of September 30, 2020.

Off-Balance Sheet Arrangements

We do not engage in any transactions or have relationships or other arrangements with unconsolidated entities. These include special purpose and similar entities or other off-balance sheet arrangements. We also do not engage in energy, weather or other commodity-based contracts.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There has not been any material change in the market risk disclosure contained in our Annual Report on Form 10-K for the year ended December 31, 2019.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

The Company’s management carried out an evaluation, under the supervision and with the participation of the Company’s Executive Chairman and Chief Administrative Officer/Chief Financial Officer, its principal executive officer and principal financial officer, respectively, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15I and 15d-15(e) under the Securities Exchange Act of 1934, as amended (“Exchange Act”)) as of September 30, 2020, pursuant to Exchange Act Rule 13a-15. Such disclosure controls and procedures are designed to ensure that information required to be disclosed by the Company is accumulated and communicated to the appropriate management on a basis that permits timely decisions regarding disclosure. Based upon that evaluation, the Company’s Executive Chairman and Chief Administrative Officer/Chief Financial Officer concluded that the Company’s disclosure controls and procedures as of September 30, 2020, were effective.

Changes in Internal Control over Financial Reporting

There has been no change in our internal control over financial reporting that occurred during the nine months ended September 30, 2020, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

32

CLARUS CORPORATION

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Legal Proceedings

The Company is involved in various legal disputes and other legal proceedings that arise from time to time in the ordinary course of business. Based on currently available information, the Company does not believe that the disposition of any of the legal disputes the Company or its subsidiaries is currently involved in will have a material adverse effect upon the Company’s consolidated financial condition, results of operations or cash flows. It is possible that, as additional information becomes available, the impact on the Company of an adverse determination could have a different effect.

Litigation

The Company is involved in various lawsuits arising from time to time that the Company considers ordinary routine litigation incidental to its business. Amounts accrued for litigation matters represent the anticipated costs (damages and/or settlement amounts) in connection with pending litigation and claims and related anticipated legal fees for defending such actions, which legal fees are expensed as incurred. The costs are accrued when it is both probable that a liability has been incurred and the amount can be reasonably estimated. The accruals are based upon the Company’s assessment, after consultation with counsel (if deemed appropriate), of probable loss based on the facts and circumstances of each case, the legal issues involved, the nature of the claim made, the nature of the damages sought and any relevant information about the plaintiffs and other significant factors that vary by case. When it is not possible to estimate a specific expected cost to be incurred, the Company evaluates the range of probable loss and records the minimum end of the range. Based on currently available information, the Company does not believe that it is reasonably possible that the disposition of any of the legal disputes the Company or its subsidiaries is currently involved in will have a material adverse effect upon the Company’s consolidated financial condition, results of operations or cash flows. There is a reasonable possibility of loss from contingencies in excess of the amounts accrued by the Company in the accompanying condensed consolidated balance sheets; however, the actual amounts of such possible losses cannot currently be reasonably estimated by the Company at this time. It is possible that, as additional information becomes available, the impact on the Company could have a different effect.

Product Liability

As a consumer goods manufacturer and distributor, the Company faces the risk of product liability and related lawsuits involving claims for substantial money damages, product recall actions and higher than anticipated rates of warranty returns or other returns of goods. The Company is therefore vulnerable to various personal injury and property damage lawsuits relating to its products and incidental to its business.

Based on current information, there are no pending product liability claims and lawsuits of the Company, which the Company believes in the aggregate, will have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows.

ITEM 1A. RISK FACTORS

Except for the risk factors discussed below and the risk factors presented in Item 1A. Risk Factors of our Quarterly Report for the quarterly period ended March 31, 2020, there have been no material changes in our risk factors from those disclosed in Part I, Item 1A. of the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

Breaches of our information systems could adversely affect our reputation, disrupt our operations, and result in increased costs and loss of revenue.

There have been an increasing number of recent global cyber security incidents affecting companies, including us. These incidents could cause operational failures or compromise sensitive or confidential corporate and personal data. Because we are interconnected with and dependent on third-party vendors, we could also be adversely affected if we or any of our vendors are subject to a successful cyber-attack or other information security event. Such cyber security incidents may result in the loss or compromise of customer, financial, or operational data; disruption of billing, collections, or normal operating activities; disruption of electronic monitoring and control of operational systems; and delays in financial reporting and other management functions, and our acquisition activities could increase such risk. There can be no guarantees that such a cyber incident would not result in the unauthorized access to or the disclosure of customer data, our trade secrets or other intellectual property, or personal information of our employees. There can be no guarantee that the disclosure of any of this information would not have a material adverse effect on our business, reputation, financial condition, and results of operations. We continually evaluate our systems and may implement further controls and additional preventative actions to further strengthen our systems against attacks. We cannot assure you that such measures will provide absolute security, that we will be

33

CLARUS CORPORATION

able to react in a timely manner, or that our remediation efforts following past or future attacks will be successful. Possible impacts associated with a cyber security incident may include, among other things, business interruption, ransom payments, the identification of material weaknesses or significant deficiencies, remediation costs related to lost, stolen, or compromised data; repairs to data processing systems; increased cyber security protection costs; reputational damage; and adverse effects on our compliance with privacy and other laws and regulations that are applicable to us. We have insurance coverage to protect us against losses from certain cyber security incidents, including liability for third-party vendors who mishandle our information. However, there can be no guarantee that every potential loss due to cyber-attack or theft of information has been insured against, nor that the limits of the insurance we have acquired will be sufficient to cover all such losses.

Adverse publicity about the Company and/or its brands, including without limitation, through social media or in connection with brand damaging events and/or public perception could negatively impact our business.

Negative claims or publicity involving us, our board of directors, our brands, our products, services and experiences, consumer data, or any of our key employees, endorsers, or suppliers could seriously damage our reputation and the image of our brands, regardless of whether such claims are accurate.

Social media, which accelerates and potentially amplifies the scope of negative publicity, can increase the challenges of responding to negative claims. Adverse publicity could also damage our reputation and the image of our brands, undermine consumer confidence in us and reduce long-term demand for our products, even if such adverse publicity is unfounded or not material to our operations. If the reputation, culture or image of any of our brands is tarnished or if we receive negative publicity, then our sales, financial condition and results of operations could be materially and adversely affected.

‎

34

CLARUS CORPORATION

ITEM 6. EXHIBITS

Exhibit	Description
10.1	Employment Agreement, dated as of August 27, 2020, between Clarus Corporation and Aaron Kuehne (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on September 1, 2020 and incorporated herein by reference).
10.2	Securities Purchase Agreement, September 25, 2020, by and between Clarus Corporation and the Purchasers thereto (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on September 29, 2020 and incorporated herein by reference).
10.3	Letter to Brown Advisory Incorporated dated September 25, 2020 (filed as Exhibit 99.2 to the Company’s Current Report on Form 8-K filed with the SEC on September 29, 2020 and incorporated herein by reference).
10.4	Asset Purchase Agreement dated September 30, 2020, by and among Sierra Bullets, L.L.C., as Buyer, and Remington Outdoor Company, Inc., certain of its subsidiaries, as Seller (filed as Exhibit 2.1 to the Company’s Current Report on Form 8-K filed with the SEC on October 2, 2020 and incorporated herein by reference).
31.1	Certification of Principal Executive Officer pursuant to Rule 13a-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *
31.2	Certification of Principal Financial Officer pursuant to Rule 13a-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *
32.1	Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. **
32.2	Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. **
101.INS	XBRL Instance Document *
101.SCH	XBRL Taxonomy Extension Schema Document *
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document*
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document *
101.LAB	XBRL Taxonomy Extension Label Linkbase Document *
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document *
*	Filed herewith
**	Furnished herewith

‎

35

CLARUS CORPORATION

SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	CLARUS CORPORATION
Date: November 9, 2020	By:	/s/ Warren B. Kanders
	Name:	Warren B. Kanders
	Title:	Executive Chairman
		(Principal Executive Officer)
Date: November 9, 2020	By:	/s/ Aaron J. Kuehne
	Name:	Aaron J. Kuehne
	Title:	Chief Administrative Officer and
		Chief Financial Officer
		(Principal Financial Officer)

36

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

I, Warren B. Kanders, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Clarus Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 9, 2020	By:	/s/ Warren B. Kanders
	Name:	Warren B. Kanders
	Title:	Executive Chairman
		(Principal Executive Officer)

EX-31.2

EXHIBIT 31.2  

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

I, Aaron J. Kuehne, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Clarus Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 9, 2020	By:	/s/ Aaron J. Kuehne
	Name:	Aaron J. Kuehne
	Title:	Chief Administrative Officer and
		Chief Financial Officer
		(Principal Financial Officer)

EX-32.1

EXHIBIT 32.1 

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Clarus Corporation (the “Company”) on Form 10-Q for the period ended September30, 2020 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Warren B. Kanders, Executive Chairman, certify to my knowledge, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: 

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. 

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

Date: November 9, 2020	By:	/s/ Warren B. Kanders
	Name:	Warren B. Kanders
	Title:	Executive Chairman
		(Principal Executive Officer)

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Clarus Corporation (the “Company”) on Form 10-Q for the period ended September 30, 2020 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Aaron Kuehne, Chief Administrative Officer and Chief Financial Officer, certify to my knowledge, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: 

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. 

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request. 

N
Date: November 9, 2020	By:	/s/ Aaron J. Kuehne
	Name:	Aaron J. Kuehne
	Title:	Chief Administrative Officer and
		Chief Financial Officer
		(Principal Financial Officer)

XML

Document And Entity Information - shares	9 Months Ended
	Sep. 30, 2020	Nov. 04, 2020
Document And Entity Information [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2020
Document Fiscal Year Focus	2020
Document Transition Report	false
Entity File Number	001-34767
Entity Registrant Name	CLARUS CORPORATION
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	58-1972600
Entity Address, Address Line One	2084 East 3900 South
Entity Address, City or Town	Salt Lake City
Entity Address, State or Province	UT
Entity Address, Postal Zip Code	84124
City Area Code	801
Local Phone Number	278-5552
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Title of 12(b) Security	Common Stock, par value $.0001 per share
Trading Symbol	CLAR
Security Exchange Name	NASDAQ
Entity Common Stock, Shares Outstanding		31,063,094
Entity Central Index Key	0000913277
Current Fiscal Year End Date	--12-31
Document Fiscal Period Focus	Q3
Amendment Flag	false

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Current assets
Cash	$ 17,027	$ 1,703
Accounts receivable, less allowance for doubtful accounts of $1,460 and $494, respectively	42,582	41,628
Inventories	64,897	73,432
Prepaid and other current assets	4,544	3,787
Income tax receivable	532	322
Total current assets	129,582	120,872
Property and equipment, net	22,691	22,919
Definite lived intangible assets, net	13,610	15,816
Indefinite lived intangible assets	41,772	41,630
Goodwill	18,090	18,090
Deferred income taxes	8,728	7,904
Other long-term assets	33,365	3,034
Total assets	267,838	230,265
Current liabilities
Accounts payable and accrued liabilities	29,157	24,304
Income tax payable	489	260
Current portion of long-term debt	4,000
Total current liabilities	33,646	24,564
Long-term debt	37,062	22,670
Deferred income taxes	1,219	1,224
Other long-term liabilities	624	615
Total liabilities	72,551	49,073
Stockholders' Equity
Preferred stock, $.0001 par value per share; 5,000 shares authorized; none issued
Common stock, $.0001 par value per share; 100,000 shares authorized; 35,021 and 33,615 issued and 31,051 and 29,760 outstanding, respectively	4	3
Additional paid in capital	511,331	492,353
Accumulated deficit	(292,393)	(288,592)
Treasury stock, at cost	(23,789)	(22,269)
Accumulated other comprehensive income (loss)	134	(303)
Total stockholders' equity	195,287	181,192
Total liabilities and stockholders' equity	$ 267,838	$ 230,265

XML

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Dec. 31, 2020	Sep. 30, 2020	Dec. 31, 2019
Consolidated Balance Sheets
Accounts receivable,allowance for doubtful accounts		$ 1,460	$ 494
Preferred stock, par value	$ 0.0001	$ 0.0001
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares issued	0	0
Common stock, shares authorized	100,000,000	100,000,000
Common stock, shares issued		35,021,000	33,615,000
Common stock, shares outstanding		31,051,000	29,760,000

XML

Consolidated Statements Of Comprehensive Income (Loss) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Sales
Sales	$ 64,491	$ 60,203	$ 148,060	$ 168,415
Cost of goods sold	42,822	39,646	97,243	109,810
Gross profit	21,669	20,557	50,817	58,605
Operating expenses
Selling, general and administrative	18,674	16,443	50,537	51,215
Restructuring charge				13
Transaction costs	1,440	37	1,870	124
Total operating expenses	20,114	16,480	52,407	51,352
Operating income (loss)	1,555	4,077	(1,590)	7,253
Other income (expense)
Interest income (expense), net	(232)	(353)	(800)	(978)
Other, net	449	(420)	324	(260)
Total other income (expense), net	217	(773)	(476)	(1,238)
Income (loss) before income tax	1,772	3,304	(2,066)	6,015
Income tax (benefit) expense	589	(188)	(542)	(570)
Net income (loss)	1,183	3,492	(1,524)	6,585
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment	807	(726)	773	(869)
Unrealized gain (loss) on hedging activities	(600)	759	(336)	171
Other comprehensive income (loss)	207	33	437	(698)
Comprehensive income (loss)	$ 1,390	$ 3,525	$ (1,087)	$ 5,887
Net income (loss) per share:
Basic	$ 0.04	$ 0.12	$ (0.05)	$ 0.22
Diluted	$ 0.04	$ 0.11	$ (0.05)	$ 0.21
Weighted average shares outstanding:
Basic	29,983	29,876	29,854	29,841
Diluted	30,986	31,077	29,854	30,999
Domestic Sales [Member]
Sales
Sales	$ 34,686	$ 28,794	$ 83,493	$ 87,805
International Sales [Member]
Sales
Sales	$ 29,805	$ 31,409	$ 64,567	$ 80,610

XML

Consolidated Statements Of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019
Cash Flows From Operating Activities:
Net income (loss)	$ (1,524)	$ 6,585
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation of property and equipment	3,405	3,332
Amortization of other intangible assets	2,290	2,665
Amortization of debt issuance costs	230	206
(Gain) loss on disposition of assets	32	62
Noncash lease expense	563	501
Stock-based compensation	5,433	2,246
Deferred income taxes	(885)	(551)
Changes in operating assets and liabilities:
Accounts receivable	(541)	(6,480)
Inventories	9,477	(9,310)
Prepaid and other assets	(971)	3
Accounts payable and accrued liabilities	3,530	6,559
Income taxes	9	(183)
Net cash provided by (used in) operating activities	21,048	5,635
Cash Flows From Investing Activities:
Deposit for business acquisition	(30,500)
Proceeds from disposition of property and equipment	327	20
Purchase of property and equipment	(3,606)	(2,838)
Net cash provided by (used in) investing activities	(33,779)	(2,818)
Cash Flows From Financing Activities:
Proceeds from revolving credit facilities	49,265	106,934
Repayments on revolving credit facilities	(50,014)	(104,088)
Repayments of financing and capital leases	(1,000)	(31)
Proceeds from issuance of long-term debt	20,000
Payment of debt issuance costs	(44)	(680)
Purchase of treasury stock	(1,520)	(4,167)
Proceeds from exercise of stock options	862	896
Cash dividends paid	(744)	(2,243)
Proceeds from the sale of common stock	11,476
Common stock issuance costs	(325)
Net cash provided by (used in) financing activities	27,956	(3,379)
Effect of foreign exchange rates on cash	99	(73)
Change in cash	15,324	(635)
Cash, beginning of period	1,703	2,486
Cash, end of period	17,027	1,851
Supplemental Disclosure of Cash Flow Information:
Cash paid (received) for income taxes	418	131
Cash paid for interest	624	781
Supplemental Disclosures of Non-Cash Investing and Financing Activities:
Property and equipment purchased with accounts payable	286	133
Unpaid debt issuance costs	150
Lease liabilities arising from obtaining right of use assets	499	$ 1,855
Stock dividends	$ 1,533

XML

Consolidated Statements Of Stockholders' Equity - USD ($) shares in Thousands, $ in Thousands	Common Stock [Member]	Additional Paid-In Capital [Member]	Accumulated Deficit [Member]	Treasury Stock [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Total
Balance at Dec. 31, 2018	$ 3	$ 488,404	$ (304,577)	$ (18,102)	$ 477	$ 166,205
Balance, shares at Dec. 31, 2018	33,244			(3,496)
Net income (loss)			3,787			3,787
Other comprehensive income (loss)					(462)	(462)
Cash dividends ($0.025 per share)			(746)			(746)
Stock compensation expense		785				785
Balance at Mar. 31, 2019	$ 3	489,189	(301,536)	$ (18,102)	15	169,569
Balance, shares at Mar. 31, 2019	33,244			(3,496)
Balance at Dec. 31, 2018	$ 3	488,404	(304,577)	$ (18,102)	477	166,205
Balance, shares at Dec. 31, 2018	33,244			(3,496)
Net income (loss)						6,585
Other comprehensive income (loss)						(698)
Stock compensation expense						2,246
Balance at Sep. 30, 2019	$ 3	491,546	(300,235)	$ (22,269)	(221)	168,824
Balance, shares at Sep. 30, 2019	33,605			(3,855)
Balance at Mar. 31, 2019	$ 3	489,189	(301,536)	$ (18,102)	15	169,569
Balance, shares at Mar. 31, 2019	33,244			(3,496)
Net income (loss)			(694)			(694)
Other comprehensive income (loss)					(269)	(269)
Cash dividends ($0.025 per share)			(748)			(748)
Purchase of treasury stock, value				$ (1,505)		(1,505)
Purchase of treasury stock, shares				(116)
Stock compensation expense		783				783
Proceeds from exercise of options		804				804
Proceeds from exercise of options, shares	351
Balance at Jun. 30, 2019	$ 3	490,776	(302,978)	$ (19,607)	(254)	167,940
Balance, shares at Jun. 30, 2019	33,595			(3,612)
Net income (loss)			3,492			3,492
Other comprehensive income (loss)					33	33
Cash dividends ($0.025 per share)			(749)			(749)
Purchase of treasury stock, value				$ (2,662)		(2,662)
Purchase of treasury stock, shares				(243)
Stock compensation expense		678				678
Proceeds from exercise of options		92				92
Proceeds from exercise of options, shares	10
Balance at Sep. 30, 2019	$ 3	491,546	(300,235)	$ (22,269)	(221)	168,824
Balance, shares at Sep. 30, 2019	33,605			(3,855)
Balance at Dec. 31, 2019	$ 3	492,353	(288,592)	$ (22,269)	(303)	181,192
Balance, shares at Dec. 31, 2019	33,615			(3,855)
Net income (loss)			36			36
Other comprehensive income (loss)					412	412
Cash dividends ($0.025 per share)			(744)			(744)
Stock compensation expense		613				613
Balance at Mar. 31, 2020	$ 3	492,966	(289,300)	$ (22,269)	109	181,509
Balance, shares at Mar. 31, 2020	33,615			(3,855)
Balance at Dec. 31, 2019	$ 3	492,353	(288,592)	$ (22,269)	(303)	181,192
Balance, shares at Dec. 31, 2019	33,615			(3,855)
Net income (loss)						(1,524)
Other comprehensive income (loss)						437
Stock dividends ($0.025 per share), value						1,533
Stock compensation expense						5,433
Balance at Sep. 30, 2020	$ 4	511,331	(292,393)	$ (23,789)	134	195,287
Balance, shares at Sep. 30, 2020	35,021			(3,970)
Balance at Mar. 31, 2020	$ 3	492,966	(289,300)	$ (22,269)	109	181,509
Balance, shares at Mar. 31, 2020	33,615			(3,855)
Net income (loss)			(2,743)			(2,743)
Other comprehensive income (loss)					(182)	(182)
Stock dividends ($0.025 per share), value		714	(714)
Stock dividends ($0.025 per share), shares	70
Purchase of treasury stock, value				$ (137)		(137)
Purchase of treasury stock, shares				(14)
Stock compensation expense		616				616
Proceeds from exercise of options		497				497
Proceeds from exercise of options, shares	72
Balance at Jun. 30, 2020	$ 3	494,793	(292,757)	$ (22,406)	(73)	179,560
Balance, shares at Jun. 30, 2020	33,757			(3,869)
Net income (loss)			1,183			1,183
Other comprehensive income (loss)					207	207
Stock dividends ($0.025 per share), value		819	(819)
Stock dividends ($0.025 per share), shares	63
Purchase of treasury stock, value				$ (1,383)		(1,383)
Purchase of treasury stock, shares				(101)
Stock compensation expense	$ 244	4,204				4,204
Proceeds from exercise of options		365				365
Proceeds from exercise of options, shares	57
Issuance of common stock, net of issuance costs, value	$ 1	11,150				11,151
Issuance of common stock, net of issuance costs, shares	(900)
Balance at Sep. 30, 2020	$ 4	$ 511,331	$ (292,393)	$ (23,789)	$ 134	$ 195,287
Balance, shares at Sep. 30, 2020	35,021			(3,970)

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Consolidated Statements Of Stockholders' Equity (Parenthetical) - $ / shares	3 Months Ended
	Sep. 30, 2020	Jun. 30, 2020
Consolidated Statements Of Stockholders' Equity [Abstract]
Stock dividends per share	$ 0.025	$ 0.025

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Nature Of Operations And Summary Of Significant Accounting Policies	9 Months Ended
	Sep. 30, 2020
Nature Of Operations And Summary Of Significant Accounting Policies [Abstract]
Nature Of Operations And Summary Of Significant Accounting Policies	NOTE 1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accompanying unaudited condensed consolidated financial statements of Clarus Corporation and subsidiaries (which may be referred to as the “Company,” “Clarus,” “we,” “us” or “our”) as of September 30, 2020 and December 31, 2019 and for the three and nine months ended September 30, 2020 and 2019, have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), instructions to the Quarterly Report on Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring adjustments, except otherwise disclosed) necessary for a fair presentation of the unaudited condensed consolidated financial statements have been included. The results for the three and nine months ended September 30, 2020 are not necessarily indicative of the results to be obtained for the year ending December 31, 2020. These interim financial statements should be read in conjunction with the Company’s audited consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, filed with the Securities and Exchange Commission (the “SEC”) on March 9, 2020. 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. 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”). On October 2, 2020, the Company completed the acquisition of certain assets and liabilities relating to the Barnes brand of bullets (“Barnes”) for a purchase price of $30,500. See Note 15 for a more detailed explanation of the acquisition. On August 6, 2018, the Company announced that its Board of Directors approved the initiation of a quarterly cash dividend program of $0.025 per share of the Company’s common stock (the “Quarterly Cash Dividend”) or $0.10 per share on an annualized basis.  The declaration and payment of future Quarterly Cash Dividends is subject to the discretion of and approval of the Company’s Board of Directors. On May 1, 2020, the Company announced that, in light of the operational impact of the COVID-19 pandemic, its Board of Directors temporarily replaced its Quarterly Cash Dividend with a stock dividend (the “Quarterly Stock Dividend”). On October 19, 2020, the Company announced that its Board of Directors approved the reinstatement of its Quarterly Cash Dividend. The reinstated Quarterly Cash Dividend will be paid on November 20, 2020 to the shareholders of record of the Company’s common stock as of the close of business on November 9, 2020. Nature of Business Headquartered in Salt Lake City, Utah, Clarus, a company focused on the outdoor and consumer industries, is seeking opportunities to acquire and grow businesses that can generate attractive shareholder returns. The Company has net operating tax loss carryforwards which it is seeking to redeploy to maximize shareholder value. Clarus’ primary business is as a leading designer, developer, manufacturer and distributor of outdoor equipment and lifestyle products focused on the climb, ski, mountain, sport and skincare markets. The Company’s products are principally sold under the Black Diamond®, Sierra®, PIEPS® and SKINourishment® brand names through outdoor specialty and online retailers, distributors and original equipment manufacturers throughout the U.S. and internationally. Through our Black Diamond, PIEPS, and SKINourishment brands, we offer a broad range of products including: high-performance, activity-based apparel (such as shells, insulation, midlayers, pants and logowear); rock-climbing footwear and equipment (such as carabiners, protection devices, harnesses, belay devices, helmets, and ice-climbing gear); technical backpacks and high-end day packs; trekking poles; headlamps and lanterns; gloves and mittens; and skincare and other sport-enhancing products. We also offer advanced skis, ski poles, ski skins, and snow safety products, including avalanche airbag systems, avalanche transceivers, shovels, and probes. Through our Sierra brand, we manufacture a wide range of high-performance bullets and ammunition for both rifles and pistols that are used for precision target shooting, hunting and military and law enforcement purposes. Impact of COVID-19 The global outbreak of COVID-19 was declared a pandemic by the World Health Organization and a national emergency by the U.S. government in March 2020, with governments world-wide implementing safety measures restricting travel and requiring citizen lockdowns and self-confinements for quarantining purposes. This has negatively affected the U.S. and global economy, disrupted global supply chains, and resulted in significant transport restrictions and disruption of financial markets. The impact of this pandemic has created significant uncertainty in the global economy and has affected our business, employees, retail and distribution partners, suppliers, and customers. The decline in retail demand within our Black Diamond segment over the second half of March 2020 and during the three months ended June 30, 2020 and September 30, 2020, negatively impacted our sales and profitability for the first, second and third quarters of 2020. We also expect an impact on the Company’s sales and profitability in future periods. The duration of these trends and the magnitude of such impacts cannot be precisely estimated at this time, as they are affected by a number of factors (some of which are outside management’s control), including those presented in Item 1A. Risk Factors of our Quarterly Report for the quarterly period ended March 31, 2020. We are mitigating some of the negative impacts to our operating results by taking significant actions to improve our current operating results and liquidity position, including drawing on the credit facility, suspending share repurchases and temporarily suspending cash dividends, postponing non-essential capital expenditures, reducing operating costs, modulating production in line with demand, initiating workforce reductions and furloughs, and substantially reducing discretionary spending. We will continue to adjust mitigation measures as needed related to health and safety. Those measures have and might continue to include temporarily suspending manufacturing or retail operations, modifying workspaces, continuing social distancing policies, implementing new personal protective equipment or health screening policies at our facilities, or such other industry best practices needed to continue maintain a healthy and safe environment for our employees amidst the pandemic. These countermeasures are expected to partially mitigate the impacts of COVID-19 on our full year 2020 financial results. As the impact of the COVID-19 pandemic on the economy and our operations evolves, we will continue to assess the impact on the Company and respond accordingly. Sustained adverse impacts to the Company, certain of its suppliers, dealers or customers may also affect the Company’s future cash flows, liquidity, and valuation of certain assets and therefore may increase the likelihood of an impairment charge, write-off, or reserve associated with such assets, including goodwill, indefinite and finite-lived intangible assets, property and equipment, inventories, accounts receivable, net deferred tax assets, and other assets. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Estimates are used to record the allowance for credit losses and doubtful accounts, liabilities for product warranties, excess or obsolete inventory, valuation of deferred tax assets, and valuation of long-lived assets, goodwill and other intangible assets. We base our estimates on historical experience and other assumptions that are believed to be reasonable under the circumstances. Actual results could differ from these estimates. Significant Accounting Policies Accounting Pronouncements not yet adopted In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This ASU provides temporary optional expedients and exceptions to existing guidance on contract modifications and hedge accounting to facilitate the market transition from existing reference rates, such as the London Inter-Bank Offered Rate (“LIBOR”) which is being phased out in 2021, to alternate reference rates, such as the Secured Overnight Financing Rate (“SOFR”). The standard is currently effective and upon adoption may be applied prospectively to contract modifications made on or before December 31, 2022. The provisions have impact as contract modifications and other changes occur while LIBOR is phased out. The Company is in the process of evaluating the optional relief guidance provided within this ASU. Management will continue its assessment and monitor regulatory developments during the LIBOR transition period.

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Inventories

9 Months Ended

Sep. 30, 2020

Inventories [Abstract]

Inventories

NOTE 2. INVENTORIES

Inventories, as of September 30, 2020 and December 31, 2019, were as follows:

	September 30, 2020		December 31, 2019
Finished goods	$	51,685	$	59,452
Work-in-process		4,984		7,474
Raw materials and supplies		8,228		6,506
	$	64,897	$	73,432

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Property And Equipment

9 Months Ended

Sep. 30, 2020

Property And Equipment [Abstract]

Property And Equipment

NOTE 3. PROPERTY AND EQUIPMENT

Property and equipment, net, as of September 30, 2020 and December 31, 2019, were as follows:

	September 30, 2020		December 31, 2019
Land	$	3,160	$	3,160
Building and improvements		6,958		6,964
Furniture and fixtures		5,654		5,255
Computer hardware and software		5,522		5,298
Machinery and equipment		22,265		21,578
Construction in progress		2,508		1,690
		46,067		43,945
Less accumulated depreciation		(23,376)		(21,026)
	$	22,691	$	22,919

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Goodwill And Other Intangible Assets

9 Months Ended

Sep. 30, 2020

Goodwill And Other Intangible Assets [Abstract]

Goodwill And Other Intangible Assets

NOTE 4. GOODWILL AND INTANGIBLE ASSETS

Goodwill

The following table summarizes the balances in goodwill by segment:

	Black Diamond		Sierra		Total
Balance at December 31, 2019	$	-	$	18,090	$	18,090
Balance at September 30, 2020	$	-	$	18,090	$	18,090

Indefinite Lived Intangible Assets

The following table summarizes the changes in indefinite lived intangible assets:

Balance at December 31, 2019	$	41,630
Impact of foreign currency exchange rates		142
Balance at September 30, 2020	$	41,772

Other Intangible Assets, net

The following table summarizes the changes in gross other intangible assets:

Gross balance at December 31, 2019	$	32,917
Impact of foreign currency exchange rates		205
Gross balance at September 30, 2020	$	33,122

Other intangible assets, net of amortization as of September 30, 2020 and December 31, 2019, were as follows:

	September 30, 2020		December 31, 2019
Customer lists and relationships	$	26,109	$	25,995
Product technologies		4,803		4,712
Tradename / trademark		1,263		1,263
Core technologies		947		947
		33,122		32,917
Less accumulated amortization		(19,512)		(17,101)
	$	13,610	$	15,816

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Long-Term Debt

9 Months Ended

Sep. 30, 2020

Long-Term Debt [Abstract]

Long-Term Debt

NOTE 5. LONG-TERM DEBT

Long-term debt as of September 30, 2020 and December 31, 2019, was as follows:

	September 30, 2020		December 31, 2019
Revolving credit facility (a)	$	21,066	$	22,670
Foreign credit facilities (b)		996		-
Term note (c)		19,000		-
		41,062		22,670
Less current portion		(4,000)		-
	$	37,062	$	22,670

(a)As of September 30, 2020, the Company had drawn $21,066 on the $60,000 revolving commitment that was available under the credit agreement with JPMorgan Chase Bank, N.A., with a maturity date of May 3, 2024. The Company pays interest monthly on any borrowings on the Credit Agreement. As of September 30, 2020 and December 31, 2019, the rate was 1.6875% and 3.3125%, respectively.

The Credit Agreement contains restrictions on the Company’s ability to pay dividends or make distributions or other restricted payments if certain conditions in the Credit Agreement are not fulfilled. The Credit Agreement also includes other customary affirmative and negative covenants, including financial covenants relating to the Company’s consolidated total leverage ratio and fixed charge coverage ratio. The Company was in compliance with the debt covenants set forth in the Credit Agreement as of September 30, 2020.

(b)A foreign subsidiary of the Company has a revolving credit facility with a financial institution which matures on March 31, 2022. The foreign subsidiary pays interest monthly on any borrowings on the credit facility. As of September 30, 2020, the rate was 1.3387%.

(c)Under the Credit Agreement, the Company had access to a term loan facility that was available for drawdown until May 3,

2020.  On April 30, 2020, the Company borrowed $20,000 under such term loan facility. The Company is required to repay the term loan through quarterly payments of $1,000 each beginning with September 30, 2020, and any remaining obligations will be repaid in full on the maturity date of the Credit Agreement of May 3, 2024. The Company pays interest monthly on any borrowings on the Credit Agreement. As of September 30, 2020, the rate was 1.6875%.

 

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Derivative Financial Instruments

9 Months Ended

Sep. 30, 2020

Derivative Financial Instruments [Abstract]

Derivative Financial Instruments

NOTE 6. DERIVATIVE FINANCIAL INSTRUMENTS

The Company’s primary exchange rate risk management objective is to mitigate the uncertainty of anticipated cash flows attributable to changes in foreign currency exchange rates. The Company primarily focuses on mitigating changes in cash flows resulting from sales denominated in currencies other than the U.S. dollar. The Company manages this risk primarily by using currency forward and option contracts. If the anticipated transactions are deemed probable, the resulting relationships are formally designated as cash flow hedges. The Company accounts for these contracts as cash flow hedges and tests effectiveness by determining whether changes in the expected cash flow of the derivative offset, within a range, changes in the expected cash flow of the hedged item.

At September 30, 2020, the Company’s derivative contracts had remaining maturities of less than one and one-half years. The counterparties to these transactions had both long-term and short-term investment grade credit ratings. The maximum net exposure of the Company’s credit risk to the counterparties is generally limited to the aggregate unrealized loss of all contracts with that counterparty, which is $688 as of September 30, 2020. The Company’s exposure of counterparty credit risk is limited to the aggregate unrealized gain on all contracts. At September 30, 2020, there was no such exposure to the counterparties. The Company’s derivative counterparties have strong credit ratings and as a result, the Company does not require collateral to facilitate transactions.

The Company held the following contracts designated as hedging instruments as of September 30, 2020 and December 31, 2019:

	September 30, 2020
	Notional	Latest
	Amount	Maturity
Foreign exchange contracts - Canadian Dollars	$8,279	August 2021
Foreign exchange contracts - Euros	€ 25,962	February 2022

	December 31, 2019
	Notional	Latest
	Amount	Maturity
Foreign exchange contracts - Canadian Dollars	$15,932	February 2021
Foreign exchange contracts - Euros	€ 18,168	February 2021
Foreign exchange contracts - Swiss Francs	CHF 661	August 2020

For contracts that qualify as effective hedge instruments, the effective portion of gains and losses resulting from changes in fair value of the instruments are included in accumulated other comprehensive income (loss) and reclassified to sales in the period the underlying hedged transaction is recognized in earnings. Gains (losses) of $(376) and $261 were reclassified to sales during the three months ended September 30, 2020 and 2019, respectively, and $206 and $844 were reclassified to sales during the nine months ended September 30, 2020 and 2019, respectively.

The following table presents the balance sheet classification and fair value of derivative instruments as of September 30, 2020 and December 31, 2019:

	Classification	September 30, 2020		December 31, 2019
Derivative instruments in asset positions:
Forward exchange contracts	Prepaid and other current assets	$	89	$	226
Forward exchange contracts	Other long-term assets	$	36	$	-
Derivative instruments in liability positions:
Forward exchange contracts	Accounts payable and accrued liabilities	$	813	$	152
Forward exchange contracts	Other long-term liabilities	$	-	$	29

 

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Accumulated Other Comprehensive Income

9 Months Ended

Sep. 30, 2020

Accumulated Other Comprehensive Income [Abstract]

Accumulated Other Comprehensive Income

NOTE 7. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

Accumulated other comprehensive income (loss) (“AOCI”) primarily consists of foreign currency translation adjustments and changes in our forward foreign exchange contracts. The following table sets forth the changes in AOCI, net of tax, for the three months ended September 30, 2020:

	Foreign Currency Translation Adjustments		Unrealized Gains (Losses) on Cash Flow Hedges		Total
Balance as of June 30, 2020	$	(320)	$	247	$	(73)
Other comprehensive income (loss) before reclassifications		807		(886)		(79)
Amounts reclassified from other comprehensive income (loss)		-		286		286
Net current period other comprehensive income (loss)		807		(600)		207
Balance as of September 30, 2020	$	487	$	(353)	$	134

The following table sets forth the changes in AOCI, net of tax, for the three months ended September 30, 2019:

	Foreign Currency Translation Adjustments		Unrealized Gains (Losses) on Cash Flow Hedges		Total
Balance as of June 30, 2019	$	(70)	$	(184)	$	(254)
Other comprehensive (loss) income before reclassifications		(726)		1,115		389
Amounts reclassified from other comprehensive (loss) income		-		(356)		(356)
Net current period other comprehensive (loss) income		(726)		759		33
Balance as of September 30, 2019	$	(796)	$	575	$	(221)

The following table sets forth the changes in AOCI, net of tax, for the nine months ended September 30, 2020:

	Foreign Currency Translation Adjustments		Unrealized Gains (Losses) on Cash Flow Hedges		Total
Balance as of December 31, 2019	$	(286)	$	(17)	$	(303)
Other comprehensive income (loss) before reclassifications		773		(180)		593
Amounts reclassified from other comprehensive income (loss)		-		(156)		(156)
Net current period other comprehensive income (loss)		773		(336)		437
Balance as of September 30, 2020	$	487	$	(353)	$	134

The following table sets forth the changes in AOCI, net of tax, for the nine months ended September 30, 2019:

	Foreign Currency Translation Adjustments		Unrealized Gains (Losses) on Cash Flow Hedges		Total
Balance as of December 31, 2018	$	73	$	404	$	477
Other comprehensive (loss) income before reclassifications		(869)		954		85
Amounts reclassified from other comprehensive (loss) income		-		(783)		(783)
Net current period other comprehensive (loss) income		(869)		171		(698)
Balance as of September 30, 2019	$	(796)	$	575	$	(221)

The effects on net income of amounts reclassified from unrealized gains on cash flow hedges for foreign exchange contracts for the three and nine months ended September 30, 2020 and 2019, were as follows:

	Gains reclassified from AOCI to the Consolidated Statements of Comprehensive Income (Loss)
Affected line item in the Consolidated	Three Months Ended				Nine Months Ended
Statements of Comprehensive Income (Loss)	September 30, 2020		September 30, 2019		September 30, 2020		September 30, 2019
Foreign exchange contracts:
Sales	$	(376)	$	261	$	206	$	844
Less: Income tax (benefit) expense		(90)		(95)		50		61
Amount reclassified, net of tax	$	(286)	$	356	$	156	$	783
Total reclassifications from AOCI	$	(286)	$	356	$	156	$	783

 

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Fair Value Of Measurements

9 Months Ended

Sep. 30, 2020

Fair Value Of Measurements [Abstract]

Fair Value Of Measurements

NOTE 8. FAIR VALUE MEASUREMENTS

We measure certain financial assets and liabilities at fair value on a recurring basis. Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants, under a three-tier fair value hierarchy that prioritizes the inputs used in measuring fair value as follows:

Level 1 - inputs to the valuation methodology are quoted market prices for identical assets or liabilities in active markets.

Level 2 - inputs to the valuation methodology include quoted prices in markets that are not active or model inputs that are

observable either directly or indirectly for substantially the full term of the asset or liability.

Level 3 - inputs to the valuation methodology are based on prices or valuation techniques that are unobservable.

Assets and liabilities measured at fair value on a recurring basis at September 30, 2020 and December 31, 2019 were as follows:

	September 30, 2020
	Level 1		Level 2		Level 3		Total
Assets
Forward exchange contracts	$	-	$	125	$	-	$	125
	$	-	$	125	$	-	$	125
Liabilities
Forward exchange contracts	$	-	$	813	$	-	$	813
	$	-	$	813	$	-	$	813
	December 31, 2019
	Level 1		Level 2		Level 3		Total
Assets
Forward exchange contracts	$	-	$	226	$	-	$	226
	$	-	$	226	$	-	$	226
Liabilities
Forward exchange contracts	$	-	$	181	$	-	$	181
	$	-	$	181	$	-	$	181

Derivative financial instruments are recorded at fair value based on current market pricing models. No nonrecurring fair value measurements existed at September 30, 2020 and December 31, 2019.

 

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Earnings Per Share

9 Months Ended

Sep. 30, 2020

Earnings Per Share [Abstract]

Earnings Per Share

NOTE 9. EARNINGS (LOSS) PER SHARE

Basic earnings (loss) per share is computed by dividing earnings (loss) by the weighted average number of common shares outstanding during each period. Diluted earnings (loss) per share is computed by dividing earnings (loss) by the total of the weighted average number of shares of common stock outstanding during each period, plus the effect of dilutive outstanding stock options and unvested restricted stock grants. Potentially dilutive securities are excluded from the computation of diluted earnings (loss) per share if their effect is anti-dilutive to the loss from continuing operations.

The following table is a reconciliation of basic and diluted shares of common stock outstanding used in the calculation of earnings (loss) per share:

	Three Months Ended				Nine Months Ended
	September 30, 2020		September 30, 2019		September 30, 2020		September 30, 2019
Weighted average shares outstanding - basic		29,983		29,876		29,854		29,841
Effect of dilutive stock awards		1,003		1,201		-		1,158
Weighted average shares outstanding - diluted		30,986		31,077		29,854		30,999
Net income (loss) per share:
Basic	$	0.04	$	0.12	$	(0.05)	$	0.22
Diluted		0.04		0.11		(0.05)		0.21

For the three months ended September 30, 2020 and 2019, equity awards of 927 and 798, respectively, and for the nine months ended September 30, 2020 and 2019, equity awards of 4,384 and 669, respectively, were anti-dilutive and therefore not included in the calculation of earnings (loss) per share for these periods.

 

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Stock-Based Compensation Plan

9 Months Ended

Sep. 30, 2020

Stock-Based Compensation Plan [Abstract]

Stock-Based Compensation Plan

NOTE 10. STOCK-BASED COMPENSATION PLAN

Under the Company’s current 2015 Stock Incentive Plan (the “2015 Plan”), the Company’s Board of Directors has flexibility to determine the type and amount of awards to be granted to eligible participants, who must be employees, directors, officers or consultants of the Company or its subsidiaries. The 2015 Plan allows for grants of incentive stock options, nonqualified stock options, restricted stock awards, stock appreciation rights, and restricted units. The aggregate number of shares of common stock that may be granted through awards under the 2015 Plan to any employee in any calendar year may not exceed 500 shares. The 2015 Plan will continue in effect until December 2025 unless terminated sooner. 

Options Granted:

During the nine months ended September 30, 2020, the Company issued stock options for an aggregate of 613 shares under the 2015 Plan to directors and employees of the Company. Of the 613 options issued, 38 options vest in four equal consecutive quarterly tranches from the date of grant. 145 options issued vest in four equal annual tranches beginning December 31, 2020. 50 options issued vest in five equal annual tranches beginning December 31, 2020. 30 options issued vest in three equal annual tranches beginning December 31, 2020. The remaining 350 options issued vest in three equal annual tranches beginning August 27, 2021.

For computing the fair value of the stock-based awards, the fair value of each option grant has been estimated as of the date of grant using the Black-Scholes option-pricing model with the following assumptions:

Number of options	613
Option vesting period	1 - 5 Years
Grant price (per share)	$9.99 - $15.00
Dividend yield	0.79% - 1.00%
Expected volatility (a)	40.9% - 44.2%
Risk-free interest rate	0.41% - 0.65%
Expected life (years) (b)	5.31 - 6.38
Weighted average fair value (per share)	$3.72 - $4.35

(a)Expected volatility is based upon the Company’s historical volatility.

(b)The expected term was determined based upon the underlying terms of the awards and the category and employment history of employee award recipient.

The grant date fair value of the stock options granted during the nine months ended September 30, 2020 was $2,581, which will be recognized over the vesting period of the options.

Stock Award Granted:

On September 14, 2020, the Company issued and granted to the Executive Chairman a stock award of 244 shares under the 2015 Plan which vested immediately. The fair value of the stock award was calculated as of the date of grant using the closing market price. The grant date fair value of the stock award granted during the nine months ended September 30, 2020 was $3,314, which was recognized immediately.

Market Condition Restricted Shares Granted:

On August 27, 2020, the Company issued and granted to an employee a restricted stock award of 100 restricted shares under the 2015 Plan, of which 100 restricted shares will vest if, on or before August 27, 2023, the Fair Market Value (as defined in the Plan) of the Company’s common stock shall have equaled or exceeded $15.00 per share for twenty consecutive trading days. For computing the fair value of the 100 restricted shares with a market condition, the fair value of the restricted stock award grant has been estimated as of the date of grant using the Monte-Carlo pricing model with the assumptions below.

	August 27, 2020
Number issued	100
Vesting period	$15.00 stock price target
Grant price (per share)	$12.72
Dividend yield	0.79%
Expected volatility	41.1%
Risk-free interest rate	0.19%
Expected term (years)	0.52
Weighted average fair value (per share)	$9.91

Using these assumptions, the fair value of the market condition restricted stock award granted on August 27, 2020 was $991.

The total non-cash stock compensation expense related to restricted stock, stock options and stock awards recorded by the Company for the three months ended September 30, 2020 and 2019 was $4,204 and $678, respectively, and for the nine months ended September 30, 2020 and 2019 was $5,433 and $2,246, respectively. For the three and nine months ended September 30, 2020 and 2019, the majority of stock-based compensation costs were classified as selling, general and administrative expenses.

As of September 30, 2020, there were 1,744 unvested stock options and unrecognized compensation cost of $5,354 related to unvested stock options, as well as 600 unvested restricted stock awards and unrecognized compensation costs of $3,119 related to unvested restricted stock awards.

 

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Commitments And Contingencies	9 Months Ended
	Sep. 30, 2020
Commitments And Contingencies [Abstract]
Commitments And Contingencies	NOTE 11. COMMITMENTS AND CONTINGENCIES As a consumer goods manufacturer and distributor, the Company faces the risk of product liability and related lawsuits involving claims for substantial money damages, product recall actions and higher than anticipated rates of warranty returns or other returns of goods. The Company is therefore vulnerable to various personal injury and property damage lawsuits relating to its products and incidental to its business. The Company is involved in various legal disputes and other legal proceedings that arise from time to time in the ordinary course of business. Based on currently available information, the Company does not believe that it is reasonably possible that the disposition of any of the legal disputes the Company or its subsidiaries is currently involved in will have a material adverse effect upon the Company’s consolidated financial condition, results of operations or cash flows. There is a reasonable possibility of loss from contingencies in excess of the amounts accrued by the Company in the accompanying condensed consolidated balance sheets; however, the actual amounts of such possible losses cannot currently be reasonably estimated by the Company at this time. It is possible that, as additional information becomes available, the impact on the Company could have a different effect.

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Income Taxes

9 Months Ended

Sep. 30, 2020

Income Taxes [Abstract]

Income Taxes

NOTE 12. INCOME TAXES

The Company’s U.S. federal statutory tax rate of 21% and its foreign operations that are considered to be permanently reinvested have statutory tax rates of approximately 25%.

The difference between the Company’s estimated effective tax rate and the U.S. federal statutory tax rate of 21% for the three and nine months ended September 30, 2020, was due to permanent book to tax differences primarily related to incentive stock options.

As of December 31, 2019, the Company’s gross deferred tax asset was $43,945. The Company had recorded a valuation allowance of $28,632, resulting in a net deferred tax asset of $15,313, before deferred tax liabilities of $8,633. The Company has provided a valuation allowance against a portion of the deferred tax assets as of September 30, 2020 and December 31, 2019, because the ultimate realization of those assets did not meet the more likely than not criteria. The majority of the Company’s deferred tax assets consist of net operating loss (“NOL”) carryforwards for federal tax purposes. If a change in control were to occur, these could be limited under Section 382 of the Internal Revenue Code of 1986 (“Code”), as amended.

In assessing the realizability of deferred income tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible and net operating loss and credit

carryforwards expire. The estimates and judgments associated with the Company’s valuation allowance on deferred tax assets are considered critical due to the amount of deferred tax assets recorded by the Company on its consolidated balance sheet and the judgment required in determining the Company’s future taxable income. The need for a valuation allowance is reassessed at each interim reporting period.

As of December 31, 2019, the Company had NOL and research and experimentation credit for U.S. federal income tax purposes of $131,621 and $4,250, respectively. The Company believes its NOL will offset some of its future U.S. federal income taxes. The majority of the Company’s pre-tax income is currently earned and expected to be earned in the U.S., or taxed in the U.S. as Subpart F income and will be offset with the NOL.

NOLs available to offset taxable income, subject to compliance with Section 382 of the Code, begin to expire based upon the following schedule:

Net Operating Loss Carryforward Expiration Dates
December 31, 2019
Expiration Dates December 31,	Net Operating Loss Amount
2022	$	111,049
2023		5,712
2024		3,566
2025 and beyond		11,294
Total	$	131,621

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Segment Information

9 Months Ended

Sep. 30, 2020

Segment Information [Abstract]

Segment Information

NOTE 13. SEGMENT INFORMATION

We operate our business structure within two segments. These segments are defined based on the internal financial reporting used by management. Certain significant selling and general and administrative expenses are not allocated to the segments including non-cash stock compensation expense. Each segment is described below:

Our Black Diamond segment, which includes Black Diamond Equipment, PIEPS, and SKINourishment, is a global leader in designing, manufacturing, and marketing innovative outdoor engineered equipment and apparel for climbing, mountaineering, trail running, backpacking, skiing, and a wide range of other year-round outdoor recreation activities. Our Black Diamond segment offers a broad range of products including: high-performance, activity-based apparel (such as shells, insulation, midlayers, pants and logowear); rock-climbing footwear and equipment (such as carabiners, protection devices, harnesses, belay devices, helmets, and ice-climbing gear); technical backpacks and high-end day packs; trekking poles; headlamps and lanterns; gloves and mittens; and skincare and other sport-enhancing products. We also offer advanced skis, ski poles, ski skins, and snow safety products, including avalanche airbag systems, avalanche transceivers, shovels, and probes.

Our Sierra segment, which includes Sierra, is an iconic American manufacturer of a wide range of high-performance bullets and ammunition for both rifles and pistols. These bullets and ammunition are used for precision target shooting, hunting and military and law enforcement purposes.

As noted above, the Company has a wide variety of technical outdoor equipment and lifestyle products focused on the climb, ski, mountain and sport product categories that are sold to a variety of customers in multiple end markets. While there are multiple products sold, the terms and nature of revenue recognition policy is similar for all segments. The sport product category represents the Sierra segment revenue.

We divide our product offerings into four primary categories of climb, mountain, ski and sport.  Revenue by category as a percentage of total consolidated revenues is as follows:

	Three Months Ended				Nine Months Ended
	September 30, 2020		September 30, 2019		September 30, 2020		September 30, 2019
Climb	27	%	30	%	33	%	34	%
Mountain	33	%	37	%	30	%	35	%
Ski	17	%	22	%	15	%	17	%
Sport	23	%	11	%	22	%	14	%

Contract liabilities are recorded as a component of accounts payable and accrued liabilities when customers remit contractual cash payments in advance of us satisfying performance obligations which are satisfied at a future point of time. Contract liabilities were not material at September 30, 2020 and December 31, 2019. Contract liabilities are derecognized when the performance obligation is satisfied. Revenue recognized from satisfaction of performance obligations relating to the advanced payments during the three and nine months ended September 30, 2020 and 2019 were not material. No other material remaining performance obligations exist at September 30, 2020.

Financial information for our segments is as follows:

	Three Months Ended				Nine Months Ended
	September 30, 2020		September 30, 2019		September 30, 2020		September 30, 2019
Sales to external customers:
Black Diamond
Domestic sales	$	21,953	$	23,634	$	56,381	$	70,315
International sales		27,411		30,118		58,980		73,683
Total Black Diamond		49,364		53,752		115,361		143,998
Sierra
Domestic sales		12,733		5,160		27,112		17,490
International sales		2,394		1,291		5,587		6,927
Total Sierra		15,127		6,451		32,699		24,417
Total sales to external customers		64,491		60,203		148,060		168,415
Segment operating income:
Black Diamond		4,035		5,388		1,709		10,096
Sierra		4,393		735		8,211		3,814
Total segment operating income		8,428		6,123		9,920		13,910
Restructuring charge		-		-		-		(13)
Transaction costs		(1,440)		(37)		(1,870)		(124)
Corporate and other expenses		(4,984)		(2,429)		(9,316)		(6,780)
Interest expense, net		(232)		(353)		(800)		(978)
Income (loss) before income tax	$	1,772	$	3,304	$	(2,066)	$	6,015

There were no intercompany sales between the Black Diamond and Sierra segments for the periods presented. Restructuring charges for the periods presented relate to the Black Diamond segment.

Total assets by segment, as of September 30, 2020 and December 31, 2019, were as follows:

	September 30, 2020		December 31, 2019
Black Diamond	$	140,751	$	147,261
Sierra		74,707		72,104
Corporate		52,380		10,900
	$	267,838	$	230,265

Capital expenditures, depreciation and amortization by segment is as follows.

	Three Months Ended				Nine Months Ended
	September 30, 2020		September 30, 2019		September 30, 2020		September 30, 2019
Capital expenditures:
Black Diamond	$	583	$	673	$	1,888	$	1,863
Sierra		1,002		171		1,718		975
Total capital expenditures	$	1,585	$	844	$	3,606	$	2,838
Depreciation:
Black Diamond	$	685	$	610	$	2,073	$	1,852
Sierra		455		480		1,332		1,480
Total depreciation	$	1,140	$	1,090	$	3,405	$	3,332
Amortization:
Black Diamond	$	258	$	278	$	803	$	834
Sierra		495		610		1,487		1,831
Total amortization	$	753	$	888	$	2,290	$	2,665

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Related Party Transactions

9 Months Ended

Sep. 30, 2020

Related Party Transactions [Abstract]

Related Party Transactions

NOTE 14. RELATED PARTY TRANSACTIONS

During the three months ended September 30, 2020, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with three existing stockholders of the Company. Pursuant to the Purchase Agreement, the Company sold its common stock in a registered direct offering (the “Offering”). Upon the Company’s closing of the Offering, the Company paid a fee in the amount of $250 to Kanders & Company, Inc. (“Kanders & Company”), which were deducted from the net proceeds, in consideration of the significant support received by the Company from Kanders & Company in sourcing, structuring, and negotiating the Offering. Mr. Warren B. Kanders, the Company’s Executive Chairman of the Board of Directors is a member of the Board of Directors and sole stockholder of Kanders & Company.

Additionally, as of September 30, 2020, the Company recorded a liability in the amount of $500 owed to Kanders & Company, which is included in transaction costs, in consideration of the significant support received by the Company from Kanders & Company in sourcing, structuring, performing due diligence and negotiating the acquisition of Barnes.

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Subsequent Event

9 Months Ended

Sep. 30, 2020

Subsequent Event [Abstract]

Subsequent Event

NOTE 15. SUBSEQUENT EVENT

Barnes Acquisition

On September 30, 2020, Sierra entered into an Asset Purchase Agreement (the “Barnes Asset Purchase Agreement”) with Remington Outdoor Company, Inc. and certain of its subsidiaries (the “Seller”), pursuant to which Sierra agreed to (i) acquire certain assets of the Seller relating to the Barnes brand of bullets (“Barnes”), including equipment, inventory, intellectual property (including exclusive use of Barnes’ intellectual property in the all-copper and powdered metallurgy ammunition fields as well as its trademarks) and a leasehold interest in certain real property located in Mona, Utah (collectively, the “Barnes Purchased Assets”) and (ii) assume certain liabilities related to the Barnes Purchased Assets in a transaction to be effected in Seller’s bankruptcy proceeding under Chapter 11 of title 11 of the United States Code, §§ 101 et seq. (the “Bankruptcy Code”) which commenced on July 27, 2020 in the United States Bankruptcy

Court for the Northern District of Alabama (the “Bankruptcy Court”). Pursuant to the Barnes Asset Purchase Agreement, the purchase price to be paid for the Barnes Purchased Assets is $30,500 (the “Barnes Purchase Price”). Sierra paid to Seller a $30,500 deposit to be applied to the Barnes Purchase Price which was recorded in Other long-term assets as of September 30, 2020.

The acquisition of the Barnes Purchased Assets (the “Barnes Acquisition”) contemplated by the Barnes Asset Purchase Agreement was subject to a number of closing conditions, including, among others (i) the Sale Order entered on September 30, 2020 by the Bankruptcy Court in the Seller’s Chapter 11 case being in effect as of the closing of the Acquisition, and (ii) compliance with the obligations of each party set forth in the Asset Purchase Agreement. The Seller and Sierra have each made representations, warranties and covenants in the Asset Purchase Agreement customary for transactions of this type under the Bankruptcy Code. On October 2, 2020, Sierra completed the acquisition of the Barnes Purchased Assets.

Based upon the timing of the Barnes Acquisition, the initial accounting is not yet complete as the Company gathers additional information related to the Barnes Purchased Assets. The Company is in the process of obtaining third-party valuations of certain intangible assets. The preliminary application of acquisition accounting to the Barnes Purchased Assets, as well as the results of operations of Barnes, will first be reflected in the Company's consolidated financial results as of and for the three and twelve months ending December 31, 2020. The operating results of Barnes are expected to be included within the Sierra segment. Acquisition-related costs for the Barnes Acquisition, which were included in transaction costs during the three and nine months ended September 30, 2020 were $850.

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Nature Of Operations And Summary Of Significant Accounting Policies (Policy)

9 Months Ended

Sep. 30, 2020

Nature Of Operations And Summary Of Significant Accounting Policies [Abstract]

Basis Of Presentation And Organization

The accompanying unaudited condensed consolidated financial statements of Clarus Corporation and subsidiaries (which may be referred to as the “Company,” “Clarus,” “we,” “us” or “our”) as of September 30, 2020 and December 31, 2019 and for the three and nine months ended September 30, 2020 and 2019, have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), instructions to the Quarterly Report on Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring adjustments, except otherwise disclosed) necessary for a fair presentation of the unaudited condensed consolidated financial statements have been included. The results for the three and nine months ended September 30, 2020 are not necessarily indicative of the results to be obtained for the year ending December 31, 2020. These interim financial statements should be read in conjunction with the Company’s audited consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, filed with the Securities and Exchange Commission (the “SEC”) on March 9, 2020.

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. 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”).

On October 2, 2020, the Company completed the acquisition of certain assets and liabilities relating to the Barnes brand of bullets (“Barnes”) for a purchase price of $30,500. See Note 15 for a more detailed explanation of the acquisition.

On August 6, 2018, the Company announced that its Board of Directors approved the initiation of a quarterly cash dividend program of $0.025 per share of the Company’s common stock (the “Quarterly Cash Dividend”) or $0.10 per share on an annualized basis.  The declaration and payment of future Quarterly Cash Dividends is subject to the discretion of and approval of the Company’s Board of Directors. On May 1, 2020, the Company announced that, in light of the operational impact of the COVID-19 pandemic, its Board of Directors temporarily replaced its Quarterly Cash Dividend with a stock dividend (the “Quarterly Stock Dividend”). On October 19, 2020, the Company announced that its Board of Directors approved the reinstatement of its Quarterly Cash Dividend. The reinstated Quarterly Cash Dividend will be paid on November 20, 2020 to the shareholders of record of the Company’s common stock as of the close of business on November 9, 2020.

Nature Of Business

Nature of Business

Headquartered in Salt Lake City, Utah, Clarus, a company focused on the outdoor and consumer industries, is seeking opportunities to acquire and grow businesses that can generate attractive shareholder returns. The Company has net operating tax loss carryforwards which it is seeking to redeploy to maximize shareholder value. Clarus’ primary business is as a leading designer, developer, manufacturer and distributor of outdoor equipment and lifestyle products focused on the climb, ski, mountain, sport and skincare markets. The Company’s products are principally sold under the Black Diamond®, Sierra®, PIEPS® and SKINourishment® brand names through outdoor specialty and online retailers, distributors and original equipment manufacturers throughout the U.S. and internationally.

Through our Black Diamond, PIEPS, and SKINourishment brands, we offer a broad range of products including: high-performance, activity-based apparel (such as shells, insulation, midlayers, pants and logowear); rock-climbing footwear and equipment (such as carabiners, protection devices, harnesses, belay devices, helmets, and ice-climbing gear); technical backpacks and high-end day packs; trekking poles; headlamps and lanterns; gloves and mittens; and skincare and other sport-enhancing products. We also offer advanced skis, ski poles, ski skins, and snow safety products, including avalanche airbag systems, avalanche transceivers, shovels, and probes. Through our Sierra brand, we manufacture a wide range of high-performance bullets and ammunition for both rifles and pistols that are used for precision target shooting, hunting and military and law enforcement purposes.

Impact of COVID-19

Impact of COVID-19

The global outbreak of COVID-19 was declared a pandemic by the World Health Organization and a national emergency by the U.S. government in March 2020, with governments world-wide implementing safety measures restricting travel and requiring citizen lockdowns and self-confinements for quarantining purposes. This has negatively affected the U.S. and global economy, disrupted global

supply chains, and resulted in significant transport restrictions and disruption of financial markets. The impact of this pandemic has created significant uncertainty in the global economy and has affected our business, employees, retail and distribution partners, suppliers, and customers.

The decline in retail demand within our Black Diamond segment over the second half of March 2020 and during the three months ended June 30, 2020 and September 30, 2020, negatively impacted our sales and profitability for the first, second and third quarters of 2020. We also expect an impact on the Company’s sales and profitability in future periods. The duration of these trends and the magnitude of such impacts cannot be precisely estimated at this time, as they are affected by a number of factors (some of which are outside management’s control), including those presented in Item 1A. Risk Factors of our Quarterly Report for the quarterly period ended March 31, 2020.

We are mitigating some of the negative impacts to our operating results by taking significant actions to improve our current operating results and liquidity position, including drawing on the credit facility, suspending share repurchases and temporarily suspending cash dividends, postponing non-essential capital expenditures, reducing operating costs, modulating production in line with demand, initiating workforce reductions and furloughs, and substantially reducing discretionary spending. We will continue to adjust mitigation measures as needed related to health and safety. Those measures have and might continue to include temporarily suspending manufacturing or retail operations, modifying workspaces, continuing social distancing policies, implementing new personal protective equipment or health screening policies at our facilities, or such other industry best practices needed to continue maintain a healthy and safe environment for our employees amidst the pandemic.

These countermeasures are expected to partially mitigate the impacts of COVID-19 on our full year 2020 financial results. As the impact of the COVID-19 pandemic on the economy and our operations evolves, we will continue to assess the impact on the Company and respond accordingly.

Sustained adverse impacts to the Company, certain of its suppliers, dealers or customers may also affect the Company’s future cash flows, liquidity, and valuation of certain assets and therefore may increase the likelihood of an impairment charge, write-off, or reserve associated with such assets, including goodwill, indefinite and finite-lived intangible assets, property and equipment, inventories, accounts receivable, net deferred tax assets, and other assets.

Use Of Estimates

Use of EstimatesThe preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Estimates are used to record the allowance for credit losses and doubtful accounts, liabilities for product warranties, excess or obsolete inventory, valuation of deferred tax assets, and valuation of long-lived assets, goodwill and other intangible assets. We base our estimates on historical experience and other assumptions that are believed to be reasonable under the circumstances. Actual results could differ from these estimates.

Recent Accounting Pronouncements

Significant Accounting Policies

Accounting Pronouncements not yet adopted

In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This ASU provides temporary optional expedients and exceptions to existing guidance on contract modifications and hedge accounting to facilitate the market transition from existing reference rates, such as the London Inter-Bank Offered Rate (“LIBOR”) which is being phased out in 2021, to alternate reference rates, such as the Secured Overnight Financing Rate (“SOFR”). The standard is currently effective and upon adoption may be applied prospectively to contract modifications made on or before December 31, 2022. The provisions have impact as contract modifications and other changes occur while LIBOR is phased out. The Company is in the process of evaluating the optional relief guidance provided within this ASU. Management will continue its assessment and monitor regulatory developments during the LIBOR transition period.

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Inventories (Tables)

9 Months Ended

Sep. 30, 2020

Inventories [Abstract]

Inventories

	September 30, 2020		December 31, 2019
Finished goods	$	51,685	$	59,452
Work-in-process		4,984		7,474
Raw materials and supplies		8,228		6,506
	$	64,897	$	73,432

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Property And Equipment (Tables)

9 Months Ended

Sep. 30, 2020

Property And Equipment [Abstract]

Property And Equipment

	September 30, 2020		December 31, 2019
Land	$	3,160	$	3,160
Building and improvements		6,958		6,964
Furniture and fixtures		5,654		5,255
Computer hardware and software		5,522		5,298
Machinery and equipment		22,265		21,578
Construction in progress		2,508		1,690
		46,067		43,945
Less accumulated depreciation		(23,376)		(21,026)
	$	22,691	$	22,919

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Goodwill And Other Intangible Assets (Tables)

9 Months Ended

Sep. 30, 2020

Goodwill And Other Intangible Assets [Abstract]

Schedule Of Goodwill

	Black Diamond		Sierra		Total
Balance at December 31, 2019	$	-	$	18,090	$	18,090
Balance at September 30, 2020	$	-	$	18,090	$	18,090

Schedule Of Indefinite Lived Intangible Assets

Balance at December 31, 2019	$	41,630
Impact of foreign currency exchange rates		142
Balance at September 30, 2020	$	41,772

Schedule Of Definite Lived Intangible Assets, Net

Gross balance at December 31, 2019	$	32,917
Impact of foreign currency exchange rates		205
Gross balance at September 30, 2020	$	33,122

Schedule Of Intangible Assets, Net Of Amortization

	September 30, 2020		December 31, 2019
Customer lists and relationships	$	26,109	$	25,995
Product technologies		4,803		4,712
Tradename / trademark		1,263		1,263
Core technologies		947		947
		33,122		32,917
Less accumulated amortization		(19,512)		(17,101)
	$	13,610	$	15,816

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Long-Term Debt (Tables)

9 Months Ended

Sep. 30, 2020

Long-Term Debt [Abstract]

Components Of Long-Term Debt

	September 30, 2020		December 31, 2019
Revolving credit facility (a)	$	21,066	$	22,670
Foreign credit facilities (b)		996		-
Term note (c)		19,000		-
		41,062		22,670
Less current portion		(4,000)		-
	$	37,062	$	22,670

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Derivative Financial Instruments - (Tables)

9 Months Ended

Sep. 30, 2020

Derivative Financial Instruments [Abstract]

Schedule Of Contracts Designated As Hedged Instruments

	September 30, 2020
	Notional	Latest
	Amount	Maturity
Foreign exchange contracts - Canadian Dollars	$8,279	August 2021
Foreign exchange contracts - Euros	€ 25,962	February 2022

	December 31, 2019
	Notional	Latest
	Amount	Maturity
Foreign exchange contracts - Canadian Dollars	$15,932	February 2021
Foreign exchange contracts - Euros	€ 18,168	February 2021
Foreign exchange contracts - Swiss Francs	CHF 661	August 2020

Schedule Of Derivative Instruments Fair Value And Balance Sheet Classification

	Classification	September 30, 2020		December 31, 2019
Derivative instruments in asset positions:
Forward exchange contracts	Prepaid and other current assets	$	89	$	226
Forward exchange contracts	Other long-term assets	$	36	$	-
Derivative instruments in liability positions:
Forward exchange contracts	Accounts payable and accrued liabilities	$	813	$	152
Forward exchange contracts	Other long-term liabilities	$	-	$	29

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Accumulated Other Comprehensive Income (Tables)

9 Months Ended

Sep. 30, 2020

Accumulated Other Comprehensive Income [Abstract]

Components Of Accumulated Other Comprehensive Income

	Foreign Currency Translation Adjustments		Unrealized Gains (Losses) on Cash Flow Hedges		Total
Balance as of June 30, 2020	$	(320)	$	247	$	(73)
Other comprehensive income (loss) before reclassifications		807		(886)		(79)
Amounts reclassified from other comprehensive income (loss)		-		286		286
Net current period other comprehensive income (loss)		807		(600)		207
Balance as of September 30, 2020	$	487	$	(353)	$	134

The following table sets forth the changes in AOCI, net of tax, for the three months ended September 30, 2019:

	Foreign Currency Translation Adjustments		Unrealized Gains (Losses) on Cash Flow Hedges		Total
Balance as of June 30, 2019	$	(70)	$	(184)	$	(254)
Other comprehensive (loss) income before reclassifications		(726)		1,115		389
Amounts reclassified from other comprehensive (loss) income		-		(356)		(356)
Net current period other comprehensive (loss) income		(726)		759		33
Balance as of September 30, 2019	$	(796)	$	575	$	(221)

The following table sets forth the changes in AOCI, net of tax, for the nine months ended September 30, 2020:

	Foreign Currency Translation Adjustments		Unrealized Gains (Losses) on Cash Flow Hedges		Total
Balance as of December 31, 2019	$	(286)	$	(17)	$	(303)
Other comprehensive income (loss) before reclassifications		773		(180)		593
Amounts reclassified from other comprehensive income (loss)		-		(156)		(156)
Net current period other comprehensive income (loss)		773		(336)		437
Balance as of September 30, 2020	$	487	$	(353)	$	134

The following table sets forth the changes in AOCI, net of tax, for the nine months ended September 30, 2019:

	Foreign Currency Translation Adjustments		Unrealized Gains (Losses) on Cash Flow Hedges		Total
Balance as of December 31, 2018	$	73	$	404	$	477
Other comprehensive (loss) income before reclassifications		(869)		954		85
Amounts reclassified from other comprehensive (loss) income		-		(783)		(783)
Net current period other comprehensive (loss) income		(869)		171		(698)
Balance as of September 30, 2019	$	(796)	$	575	$	(221)

Reclassification Out Of Accumulated Other Comprehensive Income

	Gains reclassified from AOCI to the Consolidated Statements of Comprehensive Income (Loss)
Affected line item in the Consolidated	Three Months Ended				Nine Months Ended
Statements of Comprehensive Income (Loss)	September 30, 2020		September 30, 2019		September 30, 2020		September 30, 2019
Foreign exchange contracts:
Sales	$	(376)	$	261	$	206	$	844
Less: Income tax (benefit) expense		(90)		(95)		50		61
Amount reclassified, net of tax	$	(286)	$	356	$	156	$	783
Total reclassifications from AOCI	$	(286)	$	356	$	156	$	783

XML

Fair Value Of Measurements (Tables)

9 Months Ended

Sep. 30, 2020

Fair Value Of Measurements [Abstract]

Schedule Of Assets And Liabilities Measured On A Recurring Basis

	September 30, 2020
	Level 1		Level 2		Level 3		Total
Assets
Forward exchange contracts	$	-	$	125	$	-	$	125
	$	-	$	125	$	-	$	125
Liabilities
Forward exchange contracts	$	-	$	813	$	-	$	813
	$	-	$	813	$	-	$	813
	December 31, 2019
	Level 1		Level 2		Level 3		Total
Assets
Forward exchange contracts	$	-	$	226	$	-	$	226
	$	-	$	226	$	-	$	226
Liabilities
Forward exchange contracts	$	-	$	181	$	-	$	181
	$	-	$	181	$	-	$	181

XML

Earnings Per Share (Tables)

9 Months Ended

Sep. 30, 2020

Earnings Per Share [Abstract]

Schedule Of Reconciliation Of Basic And Diluted Shares Of Common Stock Outstanding Used In Calculation Of Earnings Per Share

	Three Months Ended				Nine Months Ended
	September 30, 2020		September 30, 2019		September 30, 2020		September 30, 2019
Weighted average shares outstanding - basic		29,983		29,876		29,854		29,841
Effect of dilutive stock awards		1,003		1,201		-		1,158
Weighted average shares outstanding - diluted		30,986		31,077		29,854		30,999
Net income (loss) per share:
Basic	$	0.04	$	0.12	$	(0.05)	$	0.22
Diluted		0.04		0.11		(0.05)		0.21

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Stock-Based Compensation Plan (Tables)

9 Months Ended

Sep. 30, 2020

Schedule Of Share Based Payment Award Restricted Stock Valuation Assumptions

	August 27, 2020
Number issued	100
Vesting period	$15.00 stock price target
Grant price (per share)	$12.72
Dividend yield	0.79%
Expected volatility	41.1%
Risk-free interest rate	0.19%
Expected term (years)	0.52
Weighted average fair value (per share)	$9.91

Stock Options [Member]

Schedule Of Valuation Assumptions Used In Computing Fair Value Of Stock-Based Awards

Number of options	613
Option vesting period	1 - 5 Years
Grant price (per share)	$9.99 - $15.00
Dividend yield	0.79% - 1.00%
Expected volatility (a)	40.9% - 44.2%
Risk-free interest rate	0.41% - 0.65%
Expected life (years) (b)	5.31 - 6.38
Weighted average fair value (per share)	$3.72 - $4.35

(a)Expected volatility is based upon the Company’s historical volatility.

(b)The expected term was determined based upon the underlying terms of the awards and the category and employment history of employee award recipient.

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Income Taxes (Tables)

9 Months Ended

Sep. 30, 2020

Income Taxes [Abstract]

Summary Of Tax Credit Carryforwards

Net Operating Loss Carryforward Expiration Dates
December 31, 2019
Expiration Dates December 31,	Net Operating Loss Amount
2022	$	111,049
2023		5,712
2024		3,566
2025 and beyond		11,294
Total	$	131,621

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Segment Information (Tables)

9 Months Ended

Sep. 30, 2020

Segment Information [Abstract]

Schedule Of Revenue By Category

	Three Months Ended				Nine Months Ended
	September 30, 2020		September 30, 2019		September 30, 2020		September 30, 2019
Climb	27	%	30	%	33	%	34	%
Mountain	33	%	37	%	30	%	35	%
Ski	17	%	22	%	15	%	17	%
Sport	23	%	11	%	22	%	14	%

Financial Information for Segments

	Three Months Ended				Nine Months Ended
	September 30, 2020		September 30, 2019		September 30, 2020		September 30, 2019
Sales to external customers:
Black Diamond
Domestic sales	$	21,953	$	23,634	$	56,381	$	70,315
International sales		27,411		30,118		58,980		73,683
Total Black Diamond		49,364		53,752		115,361		143,998
Sierra
Domestic sales		12,733		5,160		27,112		17,490
International sales		2,394		1,291		5,587		6,927
Total Sierra		15,127		6,451		32,699		24,417
Total sales to external customers		64,491		60,203		148,060		168,415
Segment operating income:
Black Diamond		4,035		5,388		1,709		10,096
Sierra		4,393		735		8,211		3,814
Total segment operating income		8,428		6,123		9,920		13,910
Restructuring charge		-		-		-		(13)
Transaction costs		(1,440)		(37)		(1,870)		(124)
Corporate and other expenses		(4,984)		(2,429)		(9,316)		(6,780)
Interest expense, net		(232)		(353)		(800)		(978)
Income (loss) before income tax	$	1,772	$	3,304	$	(2,066)	$	6,015

Total Assets by Segment

	September 30, 2020		December 31, 2019
Black Diamond	$	140,751	$	147,261
Sierra		74,707		72,104
Corporate		52,380		10,900
	$	267,838	$	230,265

Depreciation and Amortization by Segment

	Three Months Ended				Nine Months Ended
	September 30, 2020		September 30, 2019		September 30, 2020		September 30, 2019
Capital expenditures:
Black Diamond	$	583	$	673	$	1,888	$	1,863
Sierra		1,002		171		1,718		975
Total capital expenditures	$	1,585	$	844	$	3,606	$	2,838
Depreciation:
Black Diamond	$	685	$	610	$	2,073	$	1,852
Sierra		455		480		1,332		1,480
Total depreciation	$	1,140	$	1,090	$	3,405	$	3,332
Amortization:
Black Diamond	$	258	$	278	$	803	$	834
Sierra		495		610		1,487		1,831
Total amortization	$	753	$	888	$	2,290	$	2,665

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Nature Of Operations And Summary Of Significant Accounting Policies (Details) - USD ($) $ / shares in Units, $ in Thousands				3 Months Ended						9 Months Ended
	Oct. 02, 2020	May 01, 2020	Aug. 06, 2018	Sep. 30, 2020	Jun. 30, 2020	Mar. 31, 2020	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Sep. 30, 2020
Nature Of Operations And Summary Of Significant Accounting Policies [Line Items]
Aggregate cost of tender offer				$ 1,383	$ 137		$ 2,662	$ 1,505
Dividend annualized			$ 0.10
Dividend per quarter			$ 0.025
Dividends						$ 744	$ 749	$ 748	$ 746
Dividends per share						$ 0.025	$ 0.025	$ 0.025	$ 0.025
Dividend date declared										Aug. 06, 2018
Subsequent Event [Member]
Nature Of Operations And Summary Of Significant Accounting Policies [Line Items]
Dividend date declared		May 01, 2020
Barnes Acquisition [Member] | Subsequent Event [Member]
Nature Of Operations And Summary Of Significant Accounting Policies [Line Items]
Acquisition purchase price	$ 30,500

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Inventories (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Inventories [Abstract]
Finished goods	$ 51,685	$ 59,452
Work-in-process	4,984	7,474
Raw materials and supplies	8,228	6,506
Inventories	$ 64,897	$ 73,432

XML

Property And Equipment (Property And Equipment) (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Property And Equipment [Abstract]
Land	$ 3,160	$ 3,160
Buildings and improvements	6,958	6,964
Furniture and fixtures	5,654	5,255
Computer hardware and software	5,522	5,298
Machinery and equipment	22,265	21,578
Construction in progress	2,508	1,690
Property and equipment, gross	46,067	43,945
Less accumulated depreciation	(23,376)	(21,026)
Property and equipment	$ 22,691	$ 22,919

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Goodwill And Other Intangible Assets (Schedule Of Goodwill) (Details) $ in Thousands	Sep. 30, 2020 USD ($)
Goodwill [Line Items]
Beginning Balance	$ 18,090
Ending Balance	18,090
Sierra [Member]
Goodwill [Line Items]
Beginning Balance	18,090
Ending Balance	$ 18,090

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Goodwill And Other Intangible Assets (Schedule Of Indefinite Lived Intangible Assets) (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2020 USD ($)
Acquisition [Abstract]
Balance at December 31, 2019	$ 41,630
Impact of foreign currency exchange rates	142
Balance at September 30, 2020	$ 41,772

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Goodwill And Other Intangible Assets (Schedule Of Definite Lived Intangible Assets, Net) (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2020 USD ($)
Acquisition [Abstract]
Gross balance at December 31, 2019	$ 32,917
Impact of foreign currency exchange rates	205
Gross balance at September 30, 2020	$ 33,122

XML

Goodwill And Other Intangible Assets (Schedule Of Intangible Assets, Net Of Amortization) (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Finite-Lived Intangible Assets [Line Items]
Intangible assets, gross	$ 33,122	$ 32,917
Less accumulated amortization	(19,512)	(17,101)
Intangible assets, net	13,610	15,816
Customer Lists And Relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible assets, gross	26,109	25,995
Product Technologies [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible assets, gross	4,803	4,712
Trade Names and Trademarks [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible assets, gross	1,263	1,263
Core Technologies [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible assets, gross	$ 947	$ 947

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Long-Term Debt (Components Of Long-Term Debt) (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2020	Apr. 30, 2020	Dec. 31, 2019
Line Of Credit Facility And Long Term Debt [Line Items]
Total carrying amount of long-term debt	$ 41,062		$ 22,670
Less current portion	(4,000)
Long-term debt, net	37,062		22,670
Term Loan Facility [Member]
Line Of Credit Facility And Long Term Debt [Line Items]
Term note	19,000	$ 20,000
Quarterly payment	$ 1,000
Interest rate during the year	1.6875%
Revolving Credit Facility [Member]
Line Of Credit Facility And Long Term Debt [Line Items]
Credit facility	$ 21,066		$ 22,670
Credit facility current borrowing capacity	$ 60,000
Credit facility, Interest rate at end of period	1.6875%		3.3125%
Foreign Credit Facility [Member]
Line Of Credit Facility And Long Term Debt [Line Items]
Credit facility	$ 996
Credit facility, Interest rate at end of period	1.3387%

XML

Derivative Financial Instruments (Narrative) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Maximum net exposure to company			$ 688
Sales	$ 64,491	$ 60,203	148,060	$ 168,415
Reclassification Out Of Accumulated Other Comprehensive Income [Member] | Unrealized Gains (Losses) on Cash Flow Hedges [Member]
Sales	$ (376)	$ 261	$ 206	$ 844

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Derivative Financial Instruments (Schedule Of Contracts Designated As Hedged Instruments) (Details) - Designated as Hedging Instrument [Member] € in Thousands, SFr in Thousands, $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2020 CAD ($)	Dec. 31, 2019 CAD ($)	Sep. 30, 2020 EUR (€)	Dec. 31, 2019 EUR (€)	Dec. 31, 2019 CHF (SFr)
Canadian Dollars [Member]
Foreign Exchange Contracts [Line Items]
Foreign exchange contracts, Notional Amount | $	$ 8,279	$ 15,932
Derivative, Maturity Date	Aug. 31, 2021	Feb. 01, 2021
Euro [Member]
Foreign Exchange Contracts [Line Items]
Foreign exchange contracts, Notional Amount | €			€ 25,962	€ 18,168
Derivative, Maturity Date	Feb. 28, 2022	Feb. 01, 2021
Swiss Francs [Member]
Foreign Exchange Contracts [Line Items]
Foreign exchange contracts, Notional Amount | SFr					SFr 661
Derivative, Maturity Date		Aug. 01, 2020

XML

Derivative Financial Instruments (Schedule Of Derivative Instruments Fair Value And Balance Sheet Classification) (Details) - Forward exchange contracts [Member] - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Prepaid And Other Current Assets [Member]
Derivative instruments in asset positions, Forward exchange contracts	$ 89	$ 226
Other Long-Term Assets [Member]
Derivative instruments in asset positions, Forward exchange contracts	36
Accounts Payable And Accrued Liabilities [Member]
Derivative instruments in liability positions, Forward exchange contracts	$ 813	152
Other Long-Term Liabilities [Member]
Derivative instruments in liability positions, Forward exchange contracts		$ 29

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Accumulated Other Comprehensive Income (Components Of Accumulated Other Comprehensive Income) (Details) - USD ($) $ in Thousands	3 Months Ended						9 Months Ended
	Sep. 30, 2020	Jun. 30, 2020	Mar. 31, 2020	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Sep. 30, 2020	Sep. 30, 2019
Accumulated Other Comprehensive Income (Loss) [Line Items]
Balance	$ (73)		$ (303)	$ (254)		$ 477	$ (303)	$ 477
Other comprehensive income (loss) before reclassifications	(79)			389			593	85
Amounts reclassified from other comprehensive income (loss)	286			(356)			(156)	(783)
Net current period other comprehensive income (loss)	207	$ (182)	412	33	$ (269)	(462)	437	(698)
Balance	134	(73)		(221)	(254)		134	(221)
Foreign Currency Translation Adjustments [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Balance	(320)		(286)	(70)		73	(286)	73
Other comprehensive income (loss) before reclassifications	807			(726)			773	(869)
Net current period other comprehensive income (loss)	807			(726)			773	(869)
Balance	487	(320)		(796)	(70)		487	(796)
Unrealized Gains (Losses) on Cash Flow Hedges [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Balance	247		$ (17)	(184)		$ 404	(17)	404
Other comprehensive income (loss) before reclassifications	(886)			1,115			(180)	954
Amounts reclassified from other comprehensive income (loss)	286			(356)			(156)	(783)
Net current period other comprehensive income (loss)	(600)			759			(336)	171
Balance	$ (353)	$ 247		$ 575	$ (184)		$ (353)	$ 575

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Accumulated Other Comprehensive Income (Reclassification Out Of Accumulated Other Comprehensive Income) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Sales	$ 64,491	$ 60,203	$ 148,060	$ 168,415
Less: Income tax expense	589	(188)	(542)	(570)
Total reclassificaitons from AOCI	(286)	356	156	783
Unrealized Gains (Losses) on Cash Flow Hedges [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Total reclassificaitons from AOCI	(286)	356	156	783
Reclassification Out Of Accumulated Other Comprehensive Income [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Total reclassificaitons from AOCI	(286)	356	156	783
Reclassification Out Of Accumulated Other Comprehensive Income [Member] | Unrealized Gains (Losses) on Cash Flow Hedges [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Sales	(376)	261	206	844
Less: Income tax expense	(90)	(95)	50	61
Total reclassificaitons from AOCI	$ (286)	$ 356	$ 156	$ 783

XML

Fair Value Of Measurements (Schedule Of Assets And Liabilities Measured On A Recurring Basis) (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Forward exchange contract, asset, fair value	$ 125	$ 226
Forward exchange contract, liability, fair value	813	181
Assets fair value	125	226
Liabilities fair value	813	181
Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Forward exchange contract, asset, fair value
Forward exchange contract, liability, fair value
Assets fair value
Liabilities fair value
Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Forward exchange contract, asset, fair value	125	226
Forward exchange contract, liability, fair value	813	181
Assets fair value	125	226
Liabilities fair value	813	181
Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Forward exchange contract, asset, fair value
Forward exchange contract, liability, fair value
Assets fair value
Liabilities fair value

XML

Earnings Per Share - (Narrative) (Details) - shares shares in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Earnings Per Share [Abstract]
Antidilutive securities excluded from computation of earnings per share, number of shares	927	798	4,384	669

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Earnings Per Share (Schedule Of Reconciliation Of Basic And Diluted Shares Of Common Stock Outstanding Used In Calculation Of Earnings Per Share) (Details) - $ / shares shares in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Earnings Per Share [Abstract]
Weighted average number of shares outstanding - basic	29,983	29,876	29,854	29,841
Effect of dilutive stock awards	1,003	1,201		1,158
Weighted average number of shares outstanding - diluted	30,986	31,077	29,854	30,999
Basic net income (loss) per share	$ 0.04	$ 0.12	$ (0.05)	$ 0.22
Diluted net income (loss) per share	$ 0.04	$ 0.11	$ (0.05)	$ 0.21

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Stock-Based Compensation Plan (Narrative) (Details) $ / shares in Units, shares in Thousands, $ in Thousands		3 Months Ended		9 Months Ended
	Aug. 27, 2020 USD ($) $ / shares shares	Sep. 30, 2020 USD ($) shares	Sep. 30, 2019 USD ($)	Sep. 30, 2020 USD ($) item shares	Sep. 30, 2019 USD ($)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares authorized under the plan		500		500
Stock options granted fair value | $				$ 2,581
Allocated Share-based Compensation Expense | $		$ 4,204	$ 678	5,433	$ 2,246
Unrecognized compensation cost related to unvested stock options | $		$ 5,354		$ 5,354
Unvested restricted stock awards		600		600
Unvested stock options		1,744		1,744
Unrecognized compensation cost related to unvested restricted stock awards | $		$ 3,119		$ 3,119
2015 Plan [Member] | Stock Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of stock options issued under a plan				613
2015 Plan [Member] | Stock Options [Member] | Executive Officer [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of stock options issued under a plan				244
Stock options granted fair value | $				$ 3,314
2015 Plan [Member] | Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of stock options issued under a plan	100
Vesting period per share price qualification | $ / shares	$ 15.00
Fair value of the restricted stock awards granted | $	$ 991
Minimum [Member] | 2015 Plan [Member] | Stock Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period				1 year
Maximum [Member] | 2015 Plan [Member] | Stock Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period				5 years
Vest In Four Equal Consecutive Quarterly Tranches From The Date Of Grant [Member] | 2015 Plan [Member] | Stock Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of stock options issued under a plan				38
Number of Vesting Tranches | item				4
Vest In Four Equal Installments [Member] | 2015 Plan [Member] | Stock Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of stock options issued under a plan				145
Number of Vesting Tranches | item				4
Vest In Five Equal Installments [Member] | 2015 Plan [Member] | Stock Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of stock options issued under a plan				50
Number of Vesting Tranches | item				5
Vesting In Three Installments [Member] | 2015 Plan [Member] | Stock Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of stock options issued under a plan				30
Number of Vesting Tranches | item				3

XML

Stock-Based Compensation Plan (Schedule Of Valuation Assumptions Used In Computing Fair Value Of Stock-Based Awards) (Details) - 2015 Plan [Member] - Stock Options [Member] shares in Thousands	9 Months Ended
	Sep. 30, 2020 $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options granted | shares	613
Vest In Four Equal Consecutive Quarterly Tranches From The Date Of Grant [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options granted | shares	38
Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period	1 year
Grant price	$ 9.99
Dividend yield	0.79%
Expected Volatility	40.90%	[1]
Risk-free interest rate	0.41%
Expected term (years)	5 years 3 months 21 days	[2]
Weighted average fair value (per share)	$ 3.72
Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period	5 years
Grant price	$ 15.00
Dividend yield	1.00%
Expected Volatility	44.20%
Risk-free interest rate	0.65%
Expected term (years)	6 years 4 months 17 days
Weighted average fair value (per share)	$ 4.35

[1] Number of options 613 Option vesting period 1 - 5 Years Grant price (per share) $9.99 - $15.00 Dividend yield 0.79% - 1.00% Expected volatility (a) 40.9% - 44.2% Risk-free interest rate 0.41% - 0.65% Expected life (years) (b) 5.31 - 6.38 Weighted average fair value (per share) $3.72 - $4.35 (a)Expected volatility is based upon the Company’s historical volatility.

[2] The expected term was determined based upon the underlying terms of the awards and the category and employment history of employee award recipient.

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Stock-Based Compensation Plan (Schedule Of Share Based Payment Award Restricted Stock Valuation Assumptions) (Details) - 2015 Plan [Member] - Restricted Stock [Member] $ / shares in Units, $ in Thousands	Aug. 27, 2020 USD ($) $ / shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number issued | $	$ 100
Vesting period per share price qualification	$ 15.00
Grant price	$ 12.72
Dividend yield	0.79%
Expected Volatility	41.10%
Risk-free interest rate	0.19%
Expected term (years)	6 months 7 days
Weighted average fair value (per share)	$ 9.91

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Income Taxes (Narrative) (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2020	Dec. 31, 2019
Income Taxes [Abstract]
Statutory income tax (benefit) expense	21.00%	21.00%
Foreign statutory tax rate, foreign operations	25.00%	25.00%
Gross deferred tax asset			$ 43,945
Valuation allowance			28,632
Net deferred tax asset			15,313
Deferred tax liabilities, gross			8,633
Net operating loss carryforwards for U.S. federal income tax purposes			131,621
Research and experimentation credit carryforwards			$ 4,250

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Income Taxes (Summary Of Tax Credit Carryforwards) (Details) $ in Thousands	Dec. 31, 2019 USD ($)
Tax Credit Carryforward [Line Items]
Total net operating loss amount	$ 131,621
Operating loss carryforward expiration year 2022
Tax Credit Carryforward [Line Items]
Net operating loss amount	111,049
Operating loss carryforward expiration year 2023
Tax Credit Carryforward [Line Items]
Net operating loss amount	5,712
Operating loss carryforward expiration year 2024
Tax Credit Carryforward [Line Items]
Net operating loss amount	3,566
Operating loss carryforward expiration year 2025 and beyond [Member]
Tax Credit Carryforward [Line Items]
Net operating loss amount	$ 11,294

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Segment Information (Narrative) (Details)	9 Months Ended
	Sep. 30, 2020 segment
Segment Information [Abstract]
Number of segments	2

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Segment Information (Schedule Of Revenue By Category) (Details) - Revenue Benchmark [Member] - Product Concentration Risk [Member]	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Climb [Member]
Product Information [Line Items]
Concentration risk, percentage	27.00%	30.00%	33.00%	34.00%
Mountain [Member]
Product Information [Line Items]
Concentration risk, percentage	33.00%	37.00%	30.00%	35.00%
Ski [Member]
Product Information [Line Items]
Concentration risk, percentage	17.00%	22.00%	15.00%	17.00%
Sport [Member]
Product Information [Line Items]
Concentration risk, percentage	23.00%	11.00%	22.00%	14.00%

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Segment Information (Financial Information for Segments) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Segment Reporting Information [Line Items]
Sales to external customers	$ 64,491	$ 60,203	$ 148,060	$ 168,415
Operating income (expense)	1,555	4,077	(1,590)	7,253
Restructuring charges				(13)
Transaction costs	(1,440)	(37)	(1,870)	(124)
Corporate and other expenses	(4,984)	(2,429)	(9,316)	(6,780)
Interest income (expense), net	(232)	(353)	(800)	(978)
Income (loss) before income tax	1,772	3,304	(2,066)	6,015
Operating Segments [Member]
Segment Reporting Information [Line Items]
Operating income (expense)	8,428	6,123	9,920	13,910
Black Diamond [Member]
Segment Reporting Information [Line Items]
Sales to external customers	49,364	53,752	115,361	143,998
Black Diamond [Member] | Operating Segments [Member]
Segment Reporting Information [Line Items]
Operating income (expense)	4,035	5,388	1,709	10,096
Sierra [Member]
Segment Reporting Information [Line Items]
Sales to external customers	15,127	6,451	32,699	24,417
Sierra [Member] | Operating Segments [Member]
Segment Reporting Information [Line Items]
Operating income (expense)	4,393	735	8,211	3,814
Domestic Sales [Member]
Segment Reporting Information [Line Items]
Sales to external customers	34,686	28,794	83,493	87,805
Domestic Sales [Member] | Black Diamond [Member]
Segment Reporting Information [Line Items]
Sales to external customers	21,953	23,634	56,381	70,315
Domestic Sales [Member] | Sierra [Member]
Segment Reporting Information [Line Items]
Sales to external customers	12,733	5,160	27,112	17,490
International Sales [Member]
Segment Reporting Information [Line Items]
Sales to external customers	29,805	31,409	64,567	80,610
International Sales [Member] | Black Diamond [Member]
Segment Reporting Information [Line Items]
Sales to external customers	27,411	30,118	58,980	73,683
International Sales [Member] | Sierra [Member]
Segment Reporting Information [Line Items]
Sales to external customers	$ 2,394	$ 1,291	$ 5,587	$ 6,927

XML

Segment Information (Total Assets by Segments) (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Segment Reporting Information [Line Items]
Assets	$ 267,838	$ 230,265
Black Diamond [Member]
Segment Reporting Information [Line Items]
Assets	140,751	147,261
Sierra [Member]
Segment Reporting Information [Line Items]
Assets	74,707	72,104
Corporate [Member]
Segment Reporting Information [Line Items]
Assets	$ 52,380	$ 10,900

XML

Segment Information (Capital Expenditures, Depreciation and Amortization by Segment) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Segment Reporting Information [Line Items]
Capital expenditures	$ 1,585	$ 844	$ 3,606	$ 2,838
Depreciation	1,140	1,090	3,405	3,332
Amortization	753	888	2,290	2,665
Black Diamond [Member]
Segment Reporting Information [Line Items]
Capital expenditures	583	673	1,888	1,863
Depreciation	685	610	2,073	1,852
Amortization	258	278	803	834
Sierra [Member]
Segment Reporting Information [Line Items]
Capital expenditures	1,002	171	1,718	975
Depreciation	455	480	1,332	1,480
Amortization	$ 495	$ 610	$ 1,487	$ 1,831

XML

Related Party Transactions (Narrative) (Details) - Kanders & Company [Member] $ in Thousands	3 Months Ended
	Sep. 30, 2020 USD ($)
Related Party Transactions [Line Items]
Costs from related party transaction	$ 250
Amounts due to related party	$ 500

XML

Subsequent Event (Details) - Barnes Acquisition [Member] - USD ($) $ in Thousands		9 Months Ended
	Oct. 02, 2020	Sep. 30, 2020
Subsequent Event [Line Items]
Cash paid for acquisition		$ 30,500
Acquisition transaction costs		$ 850
Subsequent Event [Member]
Subsequent Event [Line Items]
Acquisition purchase price	$ 30,500