Clarus Corporation, headquartered in Salt Lake City, Utah, is a global leader in designing, developing, manufacturing, and distributing best-in-class outdoor equipment and lifestyle products. The company's diverse portfolio of iconic brands, including Black Diamond, Rhino-Rack, MAXTRAX, and TRED Outdoors, caters to the needs of outdoor enthusiasts worldwide.
Company History
Clarus' rich history dates back to 1991 when it was incorporated in Delaware. The company has undergone several name changes over the years, reflecting its evolving business focus. In May 2010, Clarus acquired Black Diamond Equipment, Ltd., a global innovator in activity-based climbing, skiing, and mountain sports equipment. This acquisition led to the company changing its name to Black Diamond, Inc. in January 2011. In October 2012, Clarus further expanded its portfolio by acquiring PIEPS Holding GmbH and its subsidiaries. On August 14, 2017, the company rebranded itself as Clarus Corporation and changed its stock ticker symbol from BDE to CLAR on the NASDAQ stock exchange.
Challenges and Opportunities
Throughout its history, Clarus has faced various challenges and opportunities. In 2021, the company received a letter from the U.S. Consumer Product Safety Commission (CPSC) regarding potential failures in timely reporting obligations under the Consumer Product Safety Act for certain avalanche transceiver models distributed by its Black Diamond Equipment subsidiary. This led to investigations by both the CPSC and the U.S. Department of Justice, presenting an ongoing risk that the company continues to address. The CPSC staff has recommended substantial civil monetary penalties, and Clarus is cooperating with the investigations while intending to defend against any claims.
Clarus has also navigated broader macroeconomic challenges, including supply chain disruptions, inflation, and shifts in consumer demand. Despite these obstacles, the company has made significant progress in transforming itself into a more focused and profitable entity. A key strategic move was the sale of its Precision Sport segment for $175 million in 2024, which allowed Clarus to pay down debt and strengthen its balance sheet.
Business Overview
Clarus is a global leading designer, developer, manufacturer, and distributor of outdoor equipment and lifestyle products focused on the outdoor enthusiast markets. The company operates through two primary business segments: Outdoor and Adventure.
Outdoor Segment
The Outdoor segment, which includes the Black Diamond and PIEPS brands, is a global leader in designing, manufacturing, and marketing innovative outdoor engineered equipment and apparel for activities such as climbing, mountaineering, trail running, backpacking, skiing, and other year-round outdoor recreation. This segment offers a broad range of products including high-performance apparel, rock-climbing equipment, technical backpacks, headlamps, and gloves and mittens. The Outdoor segment also provides advanced skis, ski poles, ski skins, and avalanche safety products.
In 2024, the Outdoor segment generated $183.6 million in sales, down from $204.1 million in 2023. This decrease was due to weakness in the European, independent global distributor, and North American markets, as well as the effects of the company's product simplification and SKU rationalization strategy. Selling, general and administrative expenses for the Outdoor segment were $59.4 million in 2024, down from $66.4 million in 2023, primarily due to lower retail expenses from store closures and other cost reduction initiatives.
Adventure Segment
The Adventure segment, which encompasses the Rhino-Rack, MAXTRAX, and TRED Outdoors brands, is a manufacturer of highly-engineered automotive roof racks, trays, mounting systems, luggage boxes, carriers, recovery boards, bicycle racks, and accessories. This segment primarily serves customers in Australia, New Zealand, and the United States, with a growing presence in Europe.
The Adventure segment generated $80.8 million in sales in 2024, down slightly from $82.0 million in 2023. The decrease was due to lower demand from original equipment manufacturer and wholesale customers in both Australia and North America, partially offset by a $3.0 million increase from the acquisition of TRED Outdoors in 2023. Selling, general and administrative expenses for the Adventure segment increased to $37.2 million in 2024 from $33.3 million in 2023, primarily due to investments in global marketing, e-commerce initiatives, and organizational leadership to accelerate growth, as well as the full year impact of the TRED Outdoors acquisition.
Financials
The company's financial performance has been a mix of successes and challenges in recent years. In 2024, Clarus reported total revenue of $264.3 million, a decrease of 7.6% from the previous year's $286.0 million. The company's consolidated gross margin improved significantly, reaching 38% in the fourth quarter of 2024, up from 34.7% in the same period of 2023, a 330 basis point increase. This margin expansion was primarily driven by the success of Clarus' product simplification and SKU rationalization efforts in its Outdoor segment, where adjusted gross margin improved by 410 basis points to 36.9%.
For the full year 2024, Clarus reported a net loss of $52.3 million, compared to a net income of $7.9 million in 2023. The company's operating cash flow was negative $7.3 million, and free cash flow was negative $14.0 million for the year.
In the fourth quarter of 2024, Clarus reported revenue of $71.4 million, a 7.6% decrease year-over-year. The net loss for the quarter was $65.5 million, primarily due to goodwill and intangible asset impairment charges.
Segment Performance
Clarus' Outdoor segment remains the company's core business, accounting for approximately 70% of total revenue in 2024. The segment's focus on simplifying the product portfolio, improving inventory management, and reshaping the organization has resulted in a smaller, more profitable business. In 2024, Outdoor segment revenue declined 9.9% year-over-year to $183.6 million, but adjusted EBITDA increased by 80% to $11.4 million, demonstrating the positive impact of the company's strategic initiatives.
The company's Adventure segment faced some challenges in 2024, with revenue declining 1.5% to $80.8 million. This was primarily due to weakness in the Australian and New Zealand markets, as well as lower demand from original equipment manufacturers (OEMs) and wholesale customers. However, the segment's management team has been actively addressing these issues, investing in global marketing, e-commerce initiatives, and organizational leadership to drive future growth.
In 2024, Clarus recorded a goodwill impairment charge of $36.3 million in the Adventure reporting unit due to challenging market conditions and declining revenue and profitability. Additionally, the company recognized $8.5 million in impairment charges related to the Rhino-Rack and MAXTRAX indefinite-lived trademarks within the Adventure segment.
Strategic Acquisitions
In December 2024, Clarus completed the acquisition of RockyMounts, a Colorado-based brand specializing in bicycle transport products. This strategic move is expected to strengthen the company's position in the North American market, where hitch-mounted bike racks represent a significant growth opportunity. The integration of RockyMounts is expected to provide immediate scale and synergies, further enhancing Clarus' Adventure segment capabilities.
Future Outlook
Looking ahead, Clarus is cautiously optimistic about its prospects for 2025. The company has provided full-year guidance, expecting sales to range between $250 million and $260 million and adjusted EBITDA to be in the range of $14 million to $16 million. This guidance reflects the company's focus on profitable growth, with anticipated gross margin improvements and continued cost management initiatives.
For the Outdoor segment, Clarus is initiating 2025 sales guidance of $175 million and expects EBITDA of $17 million. For the Adventure segment, the company is guiding for 2025 sales of $80 million and EBITDA of $7 million. Clarus expects corporate costs of $9 million in 2025.
The company anticipates capital expenditures to range between $4 million and $5 million and free cash flow to range between $8 million to $10 million for the full year 2025. For the first quarter of 2025, Clarus expects sales between $55 million and $57 million and breakeven adjusted EBITDA.
It's worth noting that Clarus' outlook does not include any expense for ongoing litigation or the DOJ investigation. Additionally, the company estimates that the current tariff posture could affect their gross margins by up to $2.5 million, which is not included in the guidance.
Despite the challenges faced in 2024, Clarus remains well-positioned to capitalize on the growing demand for outdoor and adventure sports equipment. The company's extensive portfolio of innovative, performance-driven brands, coupled with its commitment to product development, sustainability, and customer satisfaction, positions it as a leader in the dynamic outdoor enthusiast market.
Industry Trends
The outdoor recreation industry has seen favorable long-term growth trends, driven by increasing adoption of outdoor lifestyles and focus on health/wellness, the rise of overlanding and off-roading, and climbing becoming more mainstream. The industry is expected to continue growing at a healthy rate, which bodes well for Clarus' future prospects.
Liquidity
As Clarus navigates the evolving market landscape, its strong balance sheet provides financial flexibility to pursue strategic acquisitions and further strengthen its competitive position. As of December 31, 2024, the company had $45.4 million in cash and no third-party bank debt. The debt-to-equity ratio stood at 0.07, reflecting the company's conservative financial approach.
Clarus terminated its credit facility in 2024, further reducing its financial obligations. While the company's current and quick ratios are reported as 0.00, this unusual figure may be due to specific accounting treatments or reporting conventions and should be interpreted cautiously.
Conclusion
In conclusion, Clarus Corporation is a well-established player in the outdoor and adventure sports equipment industry, with a diverse portfolio of iconic brands and a commitment to innovation and operational excellence. While the company faced some headwinds in 2024, its focus on streamlining operations, expanding its product offerings, and strategic acquisitions positions it for potential growth and value creation in the years ahead. The company's experienced management team, led by Executive Chairman Warren Kanders, is dedicated to driving long-term shareholder value through disciplined execution of its strategic initiatives.
As Clarus moves forward, it will need to navigate ongoing regulatory challenges, adapt to changing market conditions, and continue to innovate to meet the evolving needs of outdoor enthusiasts. With its strong brand portfolio, improving operational efficiency, and strategic focus on high-growth segments of the outdoor recreation market, Clarus is poised to leverage industry tailwinds and potentially emerge as a stronger, more profitable company in the coming years.