10q10k10q10k.net

What changed in Clarus Corp's 10-K — 2022 vs 2023

vs

Paragraph-level year-over-year comparison of Clarus Corp's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+319 added−284 removedSource: 10-K (2024-03-07) vs 10-K (2023-02-27)

Top changes in Clarus Corp's 2023 10-K

319 paragraphs added · 284 removed · 217 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

61 edited+14 added−23 removed47 unchanged
Biggest changeEach of our brands is synonymous with the sport it serves, tracing its roots to the modern origins of each sport. Since 1957, our Black Diamond brand has been a global innovator in activity-based climbing, skiing, and mountain sports equipment. Our Sierra brand was founded in 1947 and, we believe, represents the most precise and accurate bullets and ammunition available for the hunting and sport shooting enthusiast. Our Barnes brand was founded in 1932 and produces some of the most technologically advanced lead- free bullets and premium ammunition. Our Rhino-Rack brand was founded in 1992 and has become well-respected and widely recognized for outdoor enthusiasts. Our MAXTRAX brand was founded in 2005 and has become the market leader in recovery boards for overlanding enthusiasts.
Biggest changeEach of our brands is synonymous with the sport it serves, tracing its roots to the modern origins of each sport. ● Since 1957, our Black Diamond brand has been a global innovator in activity-based climbing, skiing, and mountain sports equipment. ● Our Rhino-Rack brand was founded in 1992 and has become well-respected and widely recognized for outdoor enthusiasts. ● Our MAXTRAX brand was founded in 2005 and has become the market leader in recovery boards for overlanding enthusiasts. ● Our TRED brand was founded in 2012 and offers high-quality, reliable outdoor and recovery gear for the offroad, 4x4 automotive touring, camping and caravanning markets.
ITEM 1. BUSINESS Overview Headquartered in Salt Lake City, Utah, Clarus Corporation (which may be referred to as the “Company,” “Clarus,” “we,” “our” or “us”) is a global leading designer, developer, manufacturer and distributor of best-in-class outdoor equipment and lifestyle products focused on the outdoor and consumer enthusiast markets.
ITEM 1. BUSINESS Overview Headquartered in Salt Lake City, Utah, Clarus Corporation (which may be referred to as the “Company,” “Clarus,” “we,” “our” or “us”) is a global leading designer, developer, manufacturer and distributor of best-in-class outdoor equipment and lifestyle products focused on the outdoor enthusiast markets.
Combining off-road driving with backcountry lifestyle activities, such as camping, hiking, kayaking and mountain biking, we believe that overlanding has driven a new niche in the light truck, SUV and CUV segment for enthusiasts and light truck manufacturers, which is expected to directly benefit our Rhino-Rack and MAXTRAX brands .
Combining off-road driving with backcountry lifestyle activities, such as camping, hiking, kayaking and mountain biking, we believe that overlanding has driven a new niche in the light truck, SUV and CUV segment for enthusiasts and light truck manufacturers, which is expected to directly benefit our Rhino-Rack, MAXTRAX and TRED brands.
We anticipate 3 that the continuing impact of rising energy costs and inflation, along with positive memories consumers have from their previous pandemic “staycations”, will continue this trend of localized travel. In addition, the popularity of pickups and, more recently, their sibling sport utility vehicles (“SUVs”) and crossover utility vehicles (“CUVs”) continues to rise.
We anticipate that the continuing impact of rising energy costs and inflation, along with positive memories consumers have from their previous pandemic “staycations”, will continue this trend of localized travel. In addition, the popularity of pickups and, more recently, their sibling sport utility vehicles (“SUVs”) and crossover utility vehicles (“CUVs”) continues to rise.
Each segment is described below: Our Outdoor 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.
Each segment is described below: ● Our Outdoor segment, which includes Black Diamond Equipment and PIEPS, 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.
The Black Diamond Equipment, PIEPS, Rhino-Rack, and MAXTRAX manufacturing and distribution operations are ISO 9001–2015 certified and are audited annually by an independent certifying agency to ensure quality management systems meet the requirements of ISO 9001–2015, and to ensure that certified products meet all necessary performance certification requirements.
The Black Diamond Equipment, PIEPS, and Rhino-Rack manufacturing and distribution operations are ISO 9001–2015 certified and are audited annually by an independent certifying agency to ensure quality management systems meet the requirements of ISO 9001–2015, and to ensure that certified products meet all necessary performance certification requirements.
The demand for vehicles geared towards local travel is driving demand for extra luggage space and the automotive rack market, which is expected to directly benefit our Rhino-Rack and MAXTRAX brands. Rise of Overlanding .
The demand for vehicles geared towards local travel is driving demand for extra luggage space and the automotive rack market, which is expected to directly benefit our Rhino-Rack, MAXTRAX and TRED brands. Rise of Overlanding .
Supported by six decades of proven innovation, Black Diamond is an established global leader in high-performance, activity-based climbing, skiing, and technical mountain sports equipment. The brand is synonymous with premium performance, safety and reliability. Our Sierra and Barnes brands have been leading specialty manufacturers of bullets and ammunition for over 50 years.
Supported by six decades of proven innovation, Black Diamond is an established global leader in high-performance, activity-based climbing, skiing, and technical mountain sports equipment. The brand is synonymous with premium performance, safety and reliability. Our previously owned Sierra and Barnes brands have been leading specialty manufacturers of bullets and ammunition for over 50 years.
In addition, you may request a copy of any such materials, without charge, by submitting a written request to: Clarus Corporation, c/o the Secretary, 2084 East 3900 South, Salt Lake City, UT 84124. The contents of the websites identified above are not incorporated into this Annual Report on Form 10-K.
In addition, you may request a copy of any such materials, without charge, by submitting a written request to: Clarus Corporation, c/o the Secretary, 2084 East 3900 South, Salt Lake City, UT 84124. The contents of the websites identified above are not incorporated into this Annual Report on Form 10-K. 12 Table of Contents
Our commitment to quality, rigorous safety, and ultimately best-in-class design is evidenced by outstanding industry recognition, as we have received numerous product awards across our portfolio of super fan brands. Each of our brands represents a unique customer value proposition.
Our commitment to quality, rigorous safety, and ultimately best-in-class design is evidenced by outstanding industry recognition, as we have received numerous product awards across our portfolio of brands. Each of our brands represents a unique customer value proposition.
We design many of our products for extreme applications, such as high-altitude mountaineering, ice and rock climbing, as well as backcountry skiing and alpine touring. We also manufacture high-quality bullets and ammunition with the tightest tolerances in the industry that enhance the performance of competitive shooters and hunters.
We design many of our products for extreme applications, such as high-altitude mountaineering, ice and rock climbing, as well as backcountry skiing and alpine touring. We also previously manufactured high-quality bullets and ammunition with the tightest tolerances in the industry that enhance the performance of competitive shooters and hunters.
In addition, patent rights may not prevent our competitors from developing, using or selling products that are in similar product niches as ours. Seasonality The Company’s products are outdoor activity-based, however, there are not significant seasonal variations in sales and profitability.
In addition, patent rights may not prevent our competitors from developing, using or selling products that are in similar product niches as ours. Seasonality While the Company’s products are outdoor activity-based, there are no significant seasonal variations in sales and profitability.
Best known for its “north/south” roof rack design, Rhino-Rack’s product offering includes roof racks, luggage carriers, shade awnings, kayak carriers, bike carriers and load-securing accessories. Employing approximately 20 engineers, Rhino-Rack has a long track record of launching new, innovative products with state-of-the-art engineering serving and enhancing the outdoor enthusiast’s overlanding experience.
Best known for its “north/south” roof rack design, Rhino-Rack’s product offering includes roof racks, luggage carriers, shade awnings, kayak carriers, bike carriers and load-securing accessories. Rhino-Rack has a long track record of launching new, innovative products with state-of-the-art engineering serving and enhancing the outdoor enthusiast’s overlanding experience.
Our brands also appeal to everyday customers seeking high-quality products for outdoor or urban and suburban living. Our focus on innovation, safety and style differentiates us from our competitors. Outdoor Black Diamond Equipment: Black Diamond Equipment is a global innovator in climbing, skiing and mountain sports equipment enabling peak performance for outdoor enthusiasts.
Our brands also appeal to everyday customers seeking high-quality products for outdoor or urban and suburban living. Our focus on innovation, safety and style differentiates us from our competitors. 5 Table of Contents Outdoor Black Diamond Equipment: Black Diamond Equipment is a global innovator in climbing, skiing and mountain sports equipment enabling peak performance for outdoor enthusiasts.
Our Outdoor 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 6 mittens; and skincare and other sport-enhancing products.
Our Outdoor 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; and gloves and mittens.
Employing approximately 70 engineers, the brand is synonymous with innovation, performance, safety and durability. Headquartered in Salt Lake City at the base of the Wasatch Mountains, Black Diamond products are created and tested locally on its alpine peaks, slopes, crags and trails.
The brand is synonymous with innovation, performance, safety and durability. Headquartered in Salt Lake City at the base of the Wasatch Mountains, Black Diamond products are created and tested locally on its alpine peaks, slopes, crags and trails.
Operating Segments We operate our business structure within three segments. These segments are defined based on the internal financial reporting used by our chief operating decision maker to allocate resources and assess performance . Certain significant selling and general and administrative expenses are not allocated to the segments, including non-cash stock compensation expense.
These segments are defined based on the internal financial reporting used by our chief operating decision maker to allocate resources and assess performance. Certain significant selling and general and administrative expenses are not allocated to the segments, including non-cash stock compensation expense.
Founded in 1992, our Rhino-Rack brand is a globally-recognized designer and distributor of highly-engineered automotive roof racks and accessories to enhance the outdoor enthusiast’s overlanding experience. Founded in 2005, our MAXTRAX brand offers high-quality overlanding and off-road vehicle recovery and extraction tracks for the overland and off-road market. Clarus, incorporated in Delaware in 1991, acquired Black Diamond Equipment, Ltd.
Founded in 1992, our Rhino-Rack brand is a globally-recognized designer and distributor of highly-engineered automotive roof racks and accessories to enhance the outdoor enthusiast’s overlanding experience. Founded in 2005, our MAXTRAX brand offers high-quality overlanding and off-road vehicle recovery and extraction tracks for the overland and off-road market.
Of these employees, 380 were engaged in manufacturing, 280 in sales, marketing, product management and customer support, 80 in administrative functions (IT, Finance, HR, Legal and Compliance, etc.), 110 in R&D, engineering technology, manufacturing engineering and project management, 50 retail store associates and 20 in various executive and corporate functions.
Of these employees, 80 were engaged in manufacturing, 250 in sales, marketing, product management and customer support, 60 in administrative functions (IT, Finance, HR, Legal and Compliance, etc.), 100 in R&D, engineering technology, manufacturing engineering and project management, 40 retail store associates and 20 in various executive and corporate functions.
We have a long history of technical innovation and product development, backed by an extensive patent portfolio that continues to evolve and advance our markets. We currently employ approximately 120 engineers across the portfolio, focusing on enhancing our customers’ performance in the most critical moments.
We have a long history of technical innovation and product development, backed by an extensive patent portfolio that continues to evolve and advance our markets. We focus on enhancing our customers’ performance in the most critical moments.
Due to the nature of our operations and the frequently changing nature of environmental compliance standards and technology, we cannot predict with any certainty that future material capital or operating expenditures will not be required in order to comply with applicable environmental laws and regulations.
Due to the nature of our operations and the frequently changing nature of environmental compliance standards and technology, we cannot predict with any certainty that future material capital or operating expenditures will not be required in order to comply with applicable environmental laws and regulations. Regulatory Matters Our SKINourishment business is subject to substantial government regulation.
While we do not maintain a long-term manufacturing contract with those facilities, we believe that our long-term relationships with them will help to ensure that a sufficient supply of goods built to our specification are available in a timely manner and on satisfactory economic terms in the future. 8 Sourcing We source raw materials, components, finished goods from a variety of suppliers.
While we do not maintain a long-term manufacturing contract with those facilities, we believe that our long-term relationships with them will help to ensure that a sufficient supply of goods built to our specification are available in a timely manner and on satisfactory economic terms in the future.
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 constituting the Barnes business (“Barnes”). On July 1, 2021, the Company completed the acquisition of Australia-based Rhino-Rack Holdings Pty Ltd (“Rhino-Rack”).
On 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 constituting the Barnes business. On July 1, 2021, the Company completed the acquisition of Australia-based Rhino-Rack Holdings Pty Ltd (“Rhino-Rack”).
Our most recent acquisition, MAXTRAX, 4 has a leading market position in Australia and we believe it has a significant opportunity to grow in the U.S. Acquisition of Complementary Businesses. We expect to target acquisitions as a viable opportunity to gain access to new product group and customer channels, and increase penetration of existing markets.
Our most recent acquisitions, MAXTRAX and TRED, have leading market positions in Australia and we believe they have a significant opportunity to grow in the U.S. Acquisition of Complementary Businesses. We expect to target acquisitions as a viable opportunity to gain access to new product groups and customer channels, and increase penetration of existing markets.
Our primary materials include copper, lead, aluminum, steel, nylon, corrugated cardboard for packaging, metal, plastic and electrical components, and various textiles, foams, and fabrics. The raw materials and components used to manufacture our products are generally available from numerous suppliers in quantities sufficient to meet normal requirements.
Sourcing We source raw materials, components, finished goods from a variety of suppliers. Our primary materials include aluminum, steel, nylon, corrugated cardboard for packaging, metal, plastic and electrical components, and various textiles, foams, and fabrics. The raw materials and components used to manufacture our products are generally available from numerous suppliers in quantities sufficient to meet normal requirements.
Growing Demand for SUVs as “Staycations,” Road Trips and Short Breaks Increase in Popularity . Following the emergence of the COVID-19 pandemic, we believe that outdoor participation and the desire for more localized vacation trips experienced an uplift as consumers actively sought activities that conform to local social distancing guidelines, and avoided air and rail travel.
Following the emergence of the COVID-19 pandemic, we believe that outdoor participation and the desire for more localized vacation trips experienced an uplift as consumers actively sought activities that conform to local social distancing guidelines, and avoided air and rail travel.
(“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.
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”).
Furthermore, the 2020 Tokyo Olympics marked the first time that sport climbing debuted in an Olympic stadium, bringing the thrills of high-skill rock climbing to the living rooms of people across the globe. The 2024 Paris Summer Olympics will also include sport climbing events. Resurgence in Popularity of Hunting .
Furthermore, the 2020 Tokyo Olympics marked the first time that sport climbing debuted in an Olympic stadium, bringing the thrills of high-skill rock climbing to the living rooms of people across the globe.
As of December 31, 2022, we had 110 employees dedicated to research and development. Customers We market and distribute our products in over 50 countries, primarily through independent specialty stores and specialty chains, premium sporting goods and outdoor recreation stores, distributors and OEMs in the United States, Canada, Europe, Middle East, Asia, Australia, New Zealand, Africa, and South America.
We expense research and development costs as incurred in selling, general, and administrative expenses. 8 Table of Contents Customers We market and distribute our products in over 50 countries, primarily through independent specialty stores and specialty chains, premium sporting goods and outdoor recreation stores, distributors and OEMs in the United States, Canada, Europe, Middle East, Asia, Australia, New Zealand, Africa, and South America.
As the variety of outdoor sports activities continues to proliferate, and existing outdoor sports evolve and become more specialized, we believe there is demand in the marketplace to address the unique technical and performance needs of such enthusiasts.
The 2024 Paris Summer Olympics will also include sport climbing events. 4 Table of Contents As the variety of outdoor sports activities continues to proliferate, and existing outdoor sports evolve and become more specialized, we believe there is demand in the marketplace to address the unique technical and performance needs of such enthusiasts.
See Note 16 to our consolidated financial statements for financial information regarding our segments. Products Our products span 36 single product categories and include a wide variety of technical outdoor equipment and lifestyle products for a wide range of outdoor enthusiasts, including climbers, mountaineers, trail runners, skiers, backpackers and campers, competitive shooters, hunters and other outdoor-inspired consumers.
Products Our products span a large assortment of product categories and include a wide variety of technical outdoor equipment and lifestyle products for a wide range of outdoor enthusiasts, including climbers, mountaineers, trail runners, skiers, backpackers and campers, competitive shooters, hunters and other outdoor-inspired consumers.
We compete with niche, privately-owned companies as well as a number of brands owned by large, multinational companies, such as those set forth below. Outdoor: Our outdoor products and accessories, such as apparel, footwear, trekking poles, headlamps, gloves, backpacks, transceivers, protection, carabiners, helmets, and harnesses, compete with products from companies such as The North Face, Patagonia, La Sportiva, Prana, Hestra, Osprey, Arc’Teryx, Petzl, and Mammut. Precision Sport: We sell bullets and ammunition to both retailers and distributors for sale to consumers.
We compete with niche, privately-owned companies as well as a number of brands owned by large, multinational companies, such as those set forth below. ● Outdoor: Our outdoor products and accessories, such as apparel, footwear, trekking poles, headlamps, gloves, backpacks, transceivers, protection, carabiners, helmets, and harnesses, compete with products from companies such as The North Face, Patagonia, La Sportiva, Prana, Hestra, Osprey, Arc’Teryx, Petzl, and Mammut. ● Adventure: Our highly-engineered automotive roof racks, trays, mounting systems, luggage boxes, carriers, recovery tracks and accessories compete with products from companies such as Thule, Dometic, Yakima, and Front Runner. ● Precision Sport: Our former Precision Sport segment sells bullets and ammunition to both retailers and distributors for sale to consumers as well as supplies bullets to OEMs who also manufacture bullets.
In addition, our SKINourishment business is subject to substantial government regulation. This government regulation includes regulation in the United States and other countries regarding the research, development, formulation, manufacture and marketing of our SKINourishment skincare products. Human Capital As of December 31, 2022 , we had a total of over 900 employees worldwide.
This government regulation includes regulation in the United States and other countries regarding the research, development, formulation, manufacture and marketing of our SKINourishment skincare products. 11 Table of Contents Human Capital As of December 31, 2023, our continuing operations had a total of over 500 employees worldwide.
Warren Kanders, are substantial stockholders of the Company, and beneficially own approximately 24.3% of our outstanding common stock as of February 22, 2023, which we believe aligns the interests of our Board of Directors and our executive officers with that of our stockholders. Growth-oriented Capital Structure. Our capital structure provides us with the capacity to fund future growth.
Warren Kanders, are substantial stockholders of the Company, and beneficially own approximately 20.2% of our outstanding common stock as of March 4, 2024, which we believe aligns the interests of our Board of Directors and our executive officers with that of our stockholders. Growth-oriented Capital Structure.
We may also pursue acquisitions that diversify the Company within the outdoor and consumer enthusiast markets. To the extent we pursue future acquisitions, we intend to focus on super-fan brands with recurring revenue, sustainable margins and strong cash flow generation.
We may also pursue acquisitions that diversify the Company within the outdoor enthusiast markets. To the extent we pursue future acquisitions, we intend to focus on enthusiast brands with recurring revenue, sustainable margins and strong cash flow generation. We anticipate financing future acquisitions prudently through a combination of cash on hand, operating cash flow, bank financings, and capital markets offerings.
Sierra’s bullets and ammunition are used for precision target shooting, hunting and defense purposes. Sierra's products have cultivated a significant consumer following recognized by iconic “green box” packaging and include globally recognized bullet brands such as Sierra® MatchKing®, Sierra® GameKing® and Sierra® BlitzKing® and ammunition brands such as GameChanger®, Prairie Enemy TM , Outdoor Master® and Sport Master®.
Sierra’s products have cultivated a significant consumer following recognized by iconic “green box” packaging and include globally recognized bullet brands such as Sierra® MatchKing®, Sierra® GameKing® and Sierra® BlitzKing® and ammunition brands such as GameChanger®, Prairie Enemy TM , Outdoor Master® and Sport Master®. Barnes: Barnes Bullets is an industry leader in all-copper bullet technology and innovation.
This reputation is defined by innovative design, advanced manufacturing techniques and a core focus on the end-user. As a result, Barnes has generated a strong consumer following supported by its globally recognized bullet brands such as Barnes® TSX®, X Bullet®, Varmint Grenade® and Expander® and 5 ammunition brands VOR-TX® and TAC-XPD®.
As a result, Barnes has generated a strong consumer following supported by its globally recognized bullet brands such as Barnes® TSX®, X Bullet®, Varmint Grenade® and Expander® and ammunition brands VOR-TX® and TAC-XPD®.
The remaining approximately 70% to 75% of our products are also manufactured to our specifications in third-party, independently-owned facilities. We keep employees and agents on-site or via regular visits at these third-party, independently-owned facilities to ensure that our products are manufactured to meet our specifications.
We manufacture nearly all of the Black Diamond Equipment protection devices for climbing in our facilities in the United States. All other products are manufactured to our specifications in third-party, independently-owned facilities. We keep employees and agents on-site or via regular visits at these third-party, independently-owned facilities to ensure that our products are manufactured to meet our specifications.
Quality Assurance Quality assurance at the Company has two primary functions: The first is to ensure that the products that we design and develop are manufactured to meet or exceed the Company’s own standards and international regulatory standards.
We believe that all of our purchased products and materials could be readily obtained from alternative sources at comparable costs. 9 Table of Contents Quality Assurance Quality assurance at the Company has two primary functions: ● The first is to ensure that the products that we design and develop are manufactured to meet or exceed the Company’s own standards and international regulatory standards.
We believe our brands have an established reputation for innovation, style, quality, design, safety, and durability, and accordingly, we actively monitor and police our brands against infringement to ensure their viability and enforceability. In addition to trademarks, we hold over 300 patents and over 100 patents pending worldwide for a wide variety of technologies across our product lines.
We believe our brands have an established reputation for innovation, style, quality, design, safety, and durability, and accordingly, we actively monitor and police our brands against infringement to ensure their viability and enforceability.
Generally, we divide our product offerings into the following three primary categories: Outdoor: Our outdoor line consists of apparel, footwear, headlamps, lights, trekking poles, gloves, packs, avalanche airbags, poles, avalanche safety devices, and equipment such as carabiners, harnesses, protection devices, and various other climbing, mountaineering, hiking, and backcountry accessories and products.
Generally, we divide our product offerings into the following three primary categories: ● Outdoor: Our outdoor line consists of apparel, footwear, headlamps, lights, trekking poles, gloves, packs, avalanche airbags, poles, avalanche safety devices, and equipment such as carabiners, harnesses, protection devices, and various other climbing, mountaineering, hiking, and backcountry accessories and products. ● Precision Sport: Our former precision sport line consists of premium quality high-precision bullets and ammunition used in competitive shooting, hunting and other applications and environments. ● Adventure: Our adventure line consists of highly-engineered automotive roof racks, trays, mounting systems, luggage boxes, carriers, recovery tracks and accessories.
We anticipate financing future acquisitions prudently through a combination of cash on hand, operating cash flow, bank financings, and capital markets offerings. Competitive Strengths Authentic Portfolio of Iconic Super Fan Brands. We believe that our brands are iconic among devoted, active-outdoor enthusiasts with a strong reputation for innovation, style, quality, design, safety and durability.
Competitive Strengths Authentic Portfolio of Iconic Enthusiast Brands. We believe that our brands are iconic among devoted, active-outdoor enthusiasts with a strong reputation for innovation, style, quality, design, safety and durability.
Barnes: Barnes Bullets is an industry leader in all-copper bullet technology and innovation . The company manufactures some of the world’s most technologically advanced lead-free bullets and premium hunting, self-defense and tactical ammunition. Barnes has earned its strong reputation through unrivaled performance and terminal results.
The company manufactures some of the world’s most technologically advanced lead-free bullets and premium hunting, self-defense and tactical ammunition. Barnes has earned its strong reputation through unrivaled performance and terminal results. This reputation is defined by innovative design, advanced manufacturing techniques and a core focus on the end-user.
Furthermore, the foregoing impacts may significantly increase demand from online sales channels, including our website, and could impact our logistical operations, including our fulfillment and shipping functions, which may result in periodic delays in the delivery of our products. 11 We expect that an outbreak of disease or similar public health threat, such as the COVID-19 pandemic, could have, and in the case of the COVID-19 pandemic may continue to have, an impact on the Company’s sales and profitability in future periods.
We expect that an outbreak of disease or similar public health threat, such as the COVID-19 pandemic, could have, and in the case of the COVID-19 pandemic may continue to have, an impact on the Company’s sales and profitability in future periods.
According to Outdoor Foundation, over the past decade, many outdoor activities have experienced a consistent rise in participation rates. This heightened participation has grown in tandem with increasing consumer focus on health and wellness with many consumers acutely aware of the myriad of physical and mental health benefits associated with outdoor activities.
Select factors driving this acceleration include: Increasing Adoption of Outdoor Lifestyles and Focus on Health and Wellness . According to Outdoor Foundation, over the past decade, many outdoor activities have experienced a consistent rise in participation rates.
Our innovation pipeline is supported by approximately 120 engineers and additional quality control employees / associates. Experienced and Incentivized Senior Management Team. The members of our Board of Directors and our executive officers, including Mr.
Experienced and Incentivized Senior Management Team. The members of our Board of Directors and our executive officers, including Mr.
Additionally, long-term growth is underpinned by powerful industry trends across the outdoor and consumer enthusiast markets. Our growth initiatives include, but are not limited to the following: Black Diamond Product Category Expansions.
Additionally, long-term growth is underpinned by powerful industry trends across the outdoor enthusiast markets. Our growth initiatives include, but are not limited to the following: Growth in International Markets. We believe there is a significant opportunity to expand the presence and penetration of each of our brands globally.
From local and international shooting competitions to sport and hunting, Sierra is synonymous with precision, providing critical dependability to hunting and sport shooting enthusiasts. This performance is born from a proprietary manufacturing, testing and quality assurance process that enables the achievement of the tightest tolerances in the industry.
This performance is born from a proprietary manufacturing, testing and quality assurance process that enables the achievement of the tightest tolerances in the industry. Sierra’s bullets and ammunition are used for precision target shooting, hunting and defense purposes.
These bullets are used for precision target shooting, hunting and military and law enforcement purposes. Our Adventure segment, which includes Rhino-Rack and MAXTRAX, is a manufacturer of highly-engineered automotive roof racks, trays, mounting systems, luggage boxes, carriers, recovery boards and accessories in Australia and New Zealand and a growing presence in the United States.
We also offer advanced skis, ski poles, ski skins, and snow safety products, including avalanche airbag systems, avalanche transceivers, shovels, and probes. ● Our Adventure segment, which includes Rhino-Rack, MAXTRAX and TRED, is a manufacturer of highly-engineered automotive roof racks, trays, mounting systems, luggage boxes, carriers, recovery boards and accessories in Australia and New Zealand and a growing presence in the United States.
However, throughout 2022, the Company leveraged our balance sheet to secure additional inventory across all of our brands to ensure the right inventory is available to meet customer demand.
Working capital generally increases to support peak manufacturing and shipping periods and then decreases as accounts receivable are collected. However, throughout 2023, the Company leveraged our balance sheet to secure additional inventory across all of our brands to ensure the right inventory was available to meet customer demand.
In addition, in certain categories we compete with certain of our large wholesale customers who focus on the outdoor market, such as REI, Mountain Equipment Co-op and Decathlon, which manufacture, market and distribute their own climbing, mountaineering, and skiing products under their own private labels. 9 Intellectual Property We believe our registered and pending word and icon trademarks worldwide, including the Black Diamond and Diamond “C” logos, Black Diamond®, ATC ®, Camalot®, AvaLung ®, FlickLock®, Ascension™, Time is Life®, Hexentric®, Stopper®, Dawn Patrol®, Bibler®, “Use.Design.Build.Engineer.Repeat”®, Sierra®, Sierra® MatchKing®, Sierra® GameKing®, Sierra® BlitzKing®, Barnes®, TSX®, X Bullet®, VOR-TX®, PIEPS®, Rhino-Rack®, and Maxtrax® create international brand recognition for our products.
Intellectual Property We believe our registered and pending word and icon trademarks worldwide, including the Black Diamond and Diamond “C” logos, Black Diamond®, ATC ®, Camalot®, AvaLung ®, FlickLock®, Ascension™, Time is Life®, Hexentric®, Stopper®, Dawn Patrol®, 10 Table of Contents Bibler®, “Use.Design.Build.Engineer.Repeat”®, PIEPS®, Rhino-Rack®, Maxtrax®, and TRED® create international brand recognition for our products.
The Company’s products are principally sold globally under the Black Diamond®, Sierra®, Barnes®, Rhino-Rack® and MAXTRAX® brand names through outdoor specialty and online retailers, our own websites, distributors and original equipment manufacturers. Our portfolio of iconic brands is well-positioned for sustainable, long-term growth underpinned by powerful industry trends across the outdoor and adventure sport end markets.
Each of our brands has a long history of continuous product innovation for core and everyday users alike. The Company’s products are principally sold globally under the Black Diamond®, Rhino-Rack®, MAXTRAX® and TRED Outdoors® brand names through outdoor specialty and online retailers, our own websites, distributors and original equipment manufacturers.
We source packaging materials both domestically as well as from sources in Asia and Europe. We believe that all of our purchased products and materials could be readily obtained from alternative sources at comparable costs.
We source packaging materials both domestically as well as from sources in Asia and Europe.
The users of our products are loyal outdoor enthusiasts, including climbers, mountaineers, trail runners, skiers, mountain bikers, backpackers and campers, competitive shooters, hunters, adventure seekers, overlanders and other outdoor-inspired consumers.
The users of our products are loyal outdoor enthusiasts, including climbers, mountaineers, trail runners, skiers, mountain bikers, backpackers and campers, adventure seekers, overlanders and other outdoor-inspired consumers. We believe we have a strong reputation for innovation, style, quality, design, safety and durability in our core product lines, positioning us for sustainable growth amidst the acceleration of our market opportunity.
Our adventure line represented approximately 21% of our sales during the year ended December 31, 2022. 7 Product Design and Development We conduct our product research, evaluation, and design activities at our locations in Salt Lake City, Utah; Sedalia, Missouri; Mona, Utah; Lebring, Austria; Wimberly, Texas; Sydney, Australia; and Brisbane, Australia.
Product Design and Development We conduct our product research, evaluation, and design activities at our locations in Salt Lake City, Utah; Lebring, Austria; Wimberly, Texas; Sydney, Australia; and Brisbane, Australia. We typically bring new products from concept to market in approximately 18 to 36 months, depending upon the technology integration and complexity of the product.
With its products being sold through its online store, a variety of retailers and international distributors, Barnes’ customers include hunters, range shooters, military and law enforcement professionals around the world. Adventure Rhino-Rack : Headquartered in Sydney, Australia, Rhino-Rack has been a widely recognized, premier aftermarket automotive roof rack and accessories brand since 1992 with a leading market position in Australia.
With its products being sold through its online store, a variety of retailers and international distributors, Barnes’ customers include hunters, range shooters, military and law enforcement professionals around the world. Product Innovation and Development Capabilities at Clarus . We have a long history of technical innovation and product development.
Our precision sport line represented approximately 29% of our sales during the year ended December 31, 2022. Adventure: Our adventure line consists of highly-engineered automotive roof racks, trays, mounting systems, luggage boxes, carriers, recovery tracks and accessories.
We manufacture highly-engineered automotive roof racks, trays, mounting systems, luggage boxes, carriers, recovery tracks and accessories.
In 2022, approximately 51% of our sales were in the first half of the year while approximately 49% of our sales occurred in the second half of the year. Working capital requirements vary throughout the year. Working capital generally increases to support peak manufacturing and shipping periods and then decreases as accounts receivable are collected.
In 2023, approximately 45% of our sales from continuing operations were in the first half of the year while approximately 55% of our sales from continuing operations occurred in the second half of the year. Working capital requirements vary throughout the year.
On December 1, 2021, the Company completed the acquisition of Australia-based MaxTrax Australia Pty Ltd (“MAXTRAX”). Market Overview Our brands participate in the outdoor-oriented lifestyle that has and is expected to benefit from favorable long-term growth trends .
The activities of the Precision Sport segment have been segregated and reported as discontinued operations for all periods presented. See Note 3 to our consolidated financial statements for financial information regarding discontinued operations. 3 Table of Contents Market Overview Our brands participate in the outdoor-oriented lifestyle that has and is expected to benefit from favorable long-term growth trends.
One of the key elements of our sustained financial performance is our persistent focus on brand building through product initiatives. Our iconic brands are rooted in performance-defining technologies that enable our customers to have their best days outdoors.
We believe that our portfolio of iconic brands is well-positioned for sustainable, long-term growth underpinned by industry trends across the outdoor and adventure sport end markets. Our iconic brands are rooted in performance-defining technologies that enable our customers to have their best days outdoors.
Continuously recognized as an industry-leading innovator, Black Diamond has received over 500 industry awards over five years, including over 189 product awards in 2022 alone. Precision Sport Sierra: Sierra Bullets is dedicated to manufacturing the highest-quality, most accurate bullets and ammunition in the world.
Continuously recognized as an industry-leading innovator, Black Diamond has received over 500 industry awards over five years, including over 157 product awards in 2023 alone. Adventure Rhino-Rack : Headquartered in Sydney, Australia, Rhino-Rack has been a widely recognized, premier aftermarket automotive roof rack and accessories brand since 1992 with a leading market position in Australia.
Removed
Our mission is to identify, acquire and grow outdoor “super fan” brands through our unique “innovate and accelerate” strategy. We define a “super fan” brand as a brand that creates the world’s pre-eminent, performance-defining product that the best-in-class user cannot live without. Each of our brands has a long history of continuous product innovation for core and everyday users alike.
Added
Founded in 2012, our TRED brand offers high-quality, reliable outdoor and recovery gear for the offroad, 4x4 automotive touring, camping and caravanning markets. 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.
Removed
We believe we have a strong reputation for innovation, style, quality, design, safety and durability in our core product lines, positioning us for sustainable growth amidst the acceleration of our market opportunity. Select factors driving this acceleration include: Increasing Adoption of Outdoor Lifestyles and Focus on Health and Wellness .
Added
On December 1, 2021, the Company completed the acquisition of Australia-based MaxTrax Australia Pty Ltd (“MAXTRAX”). On October 9, 2023, the Company completed the acquisition of Australia-based TRED Outdoors Pty Ltd. (“TRED”).
Removed
After several years of falling participation, we believe that hunting continues to experience a resurgence as a popular outdoor activity. Additionally, the sport of hunting has experienced more diversity in participants, specifically women and younger people. The investment in hunting equipment and required training courses is expected to drive sustained activity in the sport.
Added
On February 29, 2024, the Company and Everest/Sapphire Acquisition, LLC, its wholly-owned subsidiary, completed the sale to Bullseye Acquisitions, LLC, an affiliate of JDH Capital Company, of all of the equity associated with the Company’s Precision Sport segment, which is comprised of the Company’s subsidiaries Sierra and Barnes Bullets – Mona, LLC (“Barnes”), pursuant to a Purchase and Sale Agreement dated as of December 29, 2023, by and among, Bullseye Acquisitions, LLC, Everest/Sapphire Acquisition, LLC and the Company (the “Precision Sport Purchase Agreement”).
Removed
Within our Outdoor segment, we intend to utilize our “innovate and accelerate” strategy to leverage our strong brand name, customer relationships, proven capacity to develop new innovative products and product extensions in each of our existing product categories, and to expand into new product categories.
Added
Under the terms of the Precision Sport Purchase Agreement, the Company received net proceeds of approximately $37,871,000 in cash, after payment of certain fees and settlement of the Restated Credit Agreement, for all of the equity associated with the Company’s Precision Sport segment.
Removed
Our new technologies are generally inspired by our continuing commitment to maximize the enjoyment and efficacy of the products for the outdoor sports for which we design.
Added
This heightened participation has grown in tandem with increasing consumer focus on health and wellness with many consumers acutely aware of the myriad of physical and mental health benefits associated with outdoor activities. Growing Demand for SUVs as “Staycations,” Road Trips and Short Breaks Increase in Popularity .
Removed
We intend to focus on the expansion of our apparel and footwear categories, driving further innovation in lights, trekking poles, snow safety, and climbing hard goods, while broadening our appeal in gloves and packs. Growth in International Markets. We believe there is a significant opportunity to expand the presence and penetration of each of our brands globally.
Added
MAXTRAX currently sells its products around the world to distributors, retailers, government agencies, third-party e-commerce sites and through its own website. TRED : Founded in 2012, TRED, which stands for Totally Reliable Explorer Driven, is designed and built for the “Seriously Adventurous” and is passionately supported by customers and consumers who live and breathe the lifestyle.
Removed
We believe there is also a significant opportunity to expand our Sierra and Barnes brands outside the U.S. market through additional sales and marketing commitments.
Added
TRED’s products, which are synonymous with quality and engineering, are all made in Australia using Australian-sourced and tested high-grade materials.
Removed
MAXTRAX currently sells its products around the world to distributors, retailers, government agencies, third-party e-commerce sites and through its own website. Product Innovation and Development Capabilities at Clarus . We have a long history of technical innovation and product development, with over 300 patents and over 100 patents pending worldwide.
Added
TRED is a trusted brand for key retailers and distributors primarily in Australia, with a growing export market including Canada, the Middle East, New Zealand, South Africa, and the U.S. 6 Table of Contents Precision Sport The activities of the Precision Sport segment have been segregated and reported as discontinued operations for all periods presented.
Removed
We also offer advanced skis, ski poles, ski skins, and snow safety products, including avalanche airbag systems, avalanche transceivers, shovels, and probes.  Our Precision Sport segment, which includes Sierra and Barnes, includes two iconic American manufacturers of a wide range of high-performance bullets and ammunition for both rifles and pistols.
Added
See Note 3 to our consolidated financial statements for financial information regarding discontinued operations. Sierra: Sierra Bullets is dedicated to manufacturing the highest-quality, most accurate bullets and ammunition in the world. From local and international shooting competitions to sport and hunting, Sierra is synonymous with precision, providing critical dependability to hunting and sport shooting enthusiasts.
Removed
We manufacture highly-engineered automotive roof racks, trays, mounting systems, luggage boxes, carriers, recovery tracks and accessories. We have also developed skincare products, such as lotions, lip balm, and sunscreen, as well as sport-enhancing supplements, nutrition, and other products using natural, organic or alternative ingredients.

… 18 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

65 edited+32 added−30 removed184 unchanged
Biggest changeRisk Factor Summary We are subject to risks related to our dependence on the strength of retail economies. Certain products we sell are inherently risky and could give rise to product liability, product warranty claims, and other loss contingencies. Our markets are highly competitive and are subject to dramatic changes in consumer preferences. Our operations, including but not limited to integrating acquisitions and our purchase of raw materials, are sensitive to changes in global cultural, political, and financial market conditions as well as potential changes in regulations, legislation and government policies. Technological advances, the introduction of new products, and new design and manufacturing techniques could adversely affect our operations unless we are able to adapt to the resulting change in conditions. We may seek to raise additional funds, finance acquisitions, or develop strategic relationships by issuing capital stock that would dilute your ownership. We may be unsuccessful in our future acquisition endeavors, if any, which may have an adverse effect on our business; in addition, some of the businesses we acquire may incur significant losses from operations. We have been required to recognize impairment charges and may be required to take future write downs or write-offs, restructuring, and impairment or other charges. Our business and growth may suffer if we are unable to attract and retain key officers or employees, including our Chief Executive Officer, Warren Kanders, as well as any loss of officers or employees due to illness or other events outside of our control. We are uncertain of our ability to manage our growth. We have significant payment obligations under the terms of our credit facility, $138,360,000 of which was outstanding as of December 31, 2022. The members of our Board of Directors and our executive officers beneficially own in excess of 24% of our common stock.
Biggest changeRisk Factor Summary ● We are subject to risks related to our dependence on the strength of retail economies. ● Certain products we sell are inherently risky and have given rise to product liability, product warranty claims, and other loss contingencies, including, without limitation, recalls and liability claims relating to our avalanche beacon transceivers. ● A Consumer Products Safety Commission’s (the “CPSC”) investigation under the Consumer Product Safety Act in connection with certain models of our avalanche transceivers has resulted in the CPSC’s staff to recommend that the CPSC impose substantial civil monetary penalties on us. ● Our products, including, without limitation, certain models of our avalanche transceivers, have been subject to adverse publicity. ● Our markets are highly competitive and are subject to dramatic changes in consumer preferences. ● Our operations, including but not limited to integrating acquisitions and our purchase of raw materials, are sensitive to changes in global cultural, political, and financial market conditions as well as potential changes in regulations, legislation and government policies. ● Technological advances, the introduction of new products, and new design and manufacturing techniques could adversely affect our operations unless we are able to adapt to the resulting change in conditions. ● We may require additional capital and funding to meet our financial obligations as well as to support our business operations and growth strategy, and this additional capital and funding may not be available on acceptable terms or at all. ● We may be unsuccessful in our future acquisition endeavors, if any, which may have an adverse effect on our business; in addition, some of the businesses we acquire may incur significant losses from operations. ● We have been required to recognize significant impairment charges and may be required to take future write downs or write-offs, restructuring, and impairment or other charges. ● Our business and growth may suffer if we are unable to attract and retain key officers or employees, including our Chief Executive Officer, Warren Kanders, as well as any loss of officers or employees due to illness or other events outside of our control. ● The members of our Board of Directors and our executive officers beneficially own in excess of 20.2% of our common stock.
We may be unable to meet our labor needs and control our costs due to external factors such as the availability of a sufficient number of qualified persons in the workforce of the markets in which we operate, competition, unemployment levels, demand for certain labor expertise, prevailing wage rates, wage inflation, changing demographics, health and other insurance costs, adoption of new or revised employment and labor laws and regulations, and the impacts of man-made or natural disasters, such as tornadoes, hurricanes, and public health emergencies, such as the ongoing COVID-19 pandemic.
We may be unable to meet our labor needs and control our costs due to external factors such as the availability of a sufficient number of qualified persons in the workforce of the markets in which we operate, competition, unemployment levels, demand for certain labor expertise, prevailing wage rates, wage inflation, changing demographics, health and other insurance costs, adoption of new or revised employment and labor laws and regulations, and the impacts of man-made or natural disasters, such as tornadoes, hurricanes, and public health emergencies, such as the COVID-19 pandemic.
Additionally, shifts in consumer purchasing patterns, including the growth of e-commerce and large one-stop digital marketplaces, e-commerce off-price retailing and online comparison shopping in our key markets may have an adverse effect on our direct-to-consumer 14 operations and the financial health of certain of our wholesale customers, some of whom may reduce their brick and mortar store fleet, file for protection under bankruptcy laws, restructure, or cease operations.
Additionally, shifts in consumer purchasing patterns, including the growth of e-commerce and large one-stop digital marketplaces, e-commerce off-price retailing and online comparison shopping in our key markets may have an adverse effect on our direct-to-consumer operations and the financial health of certain of our wholesale customers, some of whom may reduce their brick and mortar store fleet, file for protection under bankruptcy laws, restructure, or cease operations.
In general, an ownership change occurs when, as of any testing date, the aggregate of the increase in percentage points of the total amount of a corporation’s stock owned by one or more “5- 24 percent shareholders” within the meaning of Section 382 of the Internal Revenue Code (“Code”) whose percentage ownership of the stock has increased as of such date over the aggregate of the lowest percentage of the stock owned by such 5-percent shareholder at any time during the three-year period preceding such date is more than 50 percentage points.
In general, an ownership change occurs when, as of any testing date, the aggregate of the increase in percentage points of the total amount of a corporation’s stock owned by one or more “5-percent shareholders” within the meaning of Section 382 of the Internal Revenue Code (“Code”) whose percentage ownership of the stock has increased as of such date over the aggregate of the lowest percentage of the stock owned by such 5-percent shareholder at any time during the three-year period preceding such date is more than 50 percentage points.
In addition, many of our senior executives have strong industry reputations, which aid us in identifying acquisition and borrowing opportunities, and having such opportunities brought to us. The loss of the services of these key personnel could materially 25 and adversely affect our operations because of diminished relationships with lenders, existing and prospective tenants, property sellers and industry personnel.
In addition, many of our senior executives have strong industry reputations, which aid us in identifying acquisition and borrowing opportunities, and having such opportunities brought to us. The loss of the services of these key personnel could materially and adversely affect our operations because of diminished relationships with lenders, existing and prospective tenants, property sellers and industry personnel.
These requirements could result in greater expense associated with compliance efforts, and failure to comply with these regulations could result in a delay, non-delivery, recall, or destruction of inventory shipments during key seasons 16 or in other financial penalties. Significant or continuing noncompliance with these standards and laws could disrupt our business and harm our reputation.
These requirements could result in greater expense associated with compliance efforts, and failure to comply with these regulations could result in a delay, non-delivery, recall, or destruction of inventory shipments during key seasons or in other financial penalties. Significant or continuing noncompliance with these standards and laws could disrupt our business and harm our reputation.
In addition, obtaining real estate and effectively renewing real estate leases for our direct-to-consumer brick and 17 mortar operations is subject to the real estate market and we may not be able to secure adequate new locations or successfully renew leases for existing locations. Changes in effective tax rates could adversely affect our results.
In addition, obtaining real estate and effectively renewing real estate leases for our direct-to-consumer brick and mortar operations is subject to the real estate market and we may not be able to secure adequate new locations or successfully renew leases for existing locations. Changes in effective tax rates could adversely affect our results.
We have been required to recognize impairment charges and may be required to take future write downs or write-offs, restructuring, and impairment or other charges that could have a significant negative effect on our financial condition, results of operations and our stock price, which could cause you to lose some or all of your investment.
We have been required to recognize impairment charges and may be required to take future write downs or write-offs, restructuring, and impairment or other charges that have had a significant negative effect on our financial condition, results of operations and our stock price, which could cause you to lose some or all of your investment.
Our inability to do any of these things could have a material adverse effect on our business, results of operations and financial condition. 15 If we fail to adequately protect our intellectual property rights, competitors may manufacture and market products similar to ours, which could adversely affect our market share and results of operations.
Our inability to do any of these things could have a material adverse effect on our business, results of operations and financial condition. If we fail to adequately protect our intellectual property rights, competitors may manufacture and market products similar to ours, which could adversely affect our market share and results of operations.
If the IRS were successful with respect to any such challenge, the potential tax benefit of the NOL carryforwards to us could be substantially reduced. Certain protective measures implemented by us to preserve our NOL may not be effective or may have some unintended negative effects.
If the IRS were successful with respect to any such challenge, the potential tax benefit of the NOL carryforwards to us could be substantially reduced. Certain protective measures implemented by us to preserve our NOLs may not be effective or may have some unintended negative effects.
The interdependence of these processes and systems is a significant risk to the successful completion and continued refinement of these initiatives, and the failure of any aspect could have a material adverse effect on the functionality of our overall 22 business.
The interdependence of these processes and systems is a significant risk to the successful completion and continued refinement of these initiatives, and the failure of any aspect could have a material adverse effect on the functionality of our overall business.
The Amendment generally restricts direct and indirect acquisitions of our equity securities if such acquisition will affect the percentage of the Company’s capital stock that is treated as owned by a “5% stockholder.” Additionally, on February 7, 2008, our Board of Directors approved a rights agreement which is designed to assist in limiting the number of 5% or more owners and thus reduce the risk of a possible “change of ownership” under Section 382 of the Code.
The Amendment generally restricts direct and indirect acquisitions of our equity securities if such acquisition will affect 28 Table of Contents the percentage of the Company’s capital stock that is treated as owned by a “5% stockholder.” Additionally, on February 7, 2008, our Board of Directors approved a rights agreement which is designed to assist in limiting the number of 5% or more owners and thus reduce the risk of a possible “change of ownership” under Section 382 of the Code.
Kanders, our Chairman of the Board, of which he has 4,840,971 hypothecated and/or pledged as security for loans from financial institutions and that may be sold by such financial institutions in the event of a foreclosure of these loans.
Kanders, our Chairman of the Board, of which he has 4,840,971 pledged as security for loans from financial institutions and that may be sold by such financial institutions in the event of a foreclosure of these loans.
Even though these charges may be non-cash items and not have an immediate impact on our liquidity, the fact that we report charges of this nature could contribute to negative market perceptions about us or our common stock. Risks Related to our Common Stock Our Amended and Restated Certificate of Incorporation authorizes the issuance of shares of preferred stock.
Even though these charges may be non-cash items and not have an immediate impact on our liquidity, the fact that we report charges of this nature could contribute to negative market perceptions about us or our common stock. 29 Table of Contents Risks Related to our Common Stock Our Amended and Restated Certificate of Incorporation authorizes the issuance of shares of preferred stock.
Variations in financial results, announcements of material events, changes in our dividend policy, technological innovations or new products by us or our competitors, our quarterly operating results, changes in general conditions in the economy or the outdoor and consumer industries, other developments affecting us or our competitors or general price and volume fluctuations in the market are among the many factors that could cause the market price of our common stock to fluctuate substantially.
Variations in financial results, announcements of material events, changes in our dividend policy, technological innovations or new products by us or our competitors, our quarterly operating results, changes in general conditions in the economy or the outdoor industry, other developments affecting us or our competitors or general price and volume fluctuations in the market are among the many factors that could cause the market price of our common stock to fluctuate substantially.
On July 24, 2003, at our Annual Meeting of Stockholders, our stockholders approved an amendment (the “Amendment”) to our Amended and Restated Certificate of Incorporation to restrict certain acquisitions of our securities in order to help assure the preservation of our NOL.
On July 24, 2003, at our Annual Meeting of Stockholders, our stockholders approved an amendment (the “Amendment”) to our Amended and Restated Certificate of Incorporation to restrict certain acquisitions of our securities in order to help assure the preservation of our NOLs.
Exposure occurs if one of our products is alleged to have resulted in property damage, bodily injury or other adverse effects. Any such product liability claims may include allegations of defects in manufacturing and/or design, failure to warn of dangers inherent in the product or activities associated with the product, negligence, strict liability, and/or breach of warranties.
Exposure occurs if one of our products is alleged to have resulted in property damage, bodily injury or other adverse effects. Any such product liability claims have included allegations of defects in manufacturing and/or design, failure to warn of dangers inherent in the product or activities associated with the product, negligence, strict liability, and/or breach of warranties.
Our reputation and ability to attract, retain and serve consumers is dependent upon the reliable performance of our underlying technology infrastructure and external service providers, including third-party cloud-based solutions. These systems are vulnerable to damage or interruption and we have experienced interruptions in the past.
Our reputation and ability to attract, retain and serve consumers is dependent upon the reliable performance of our underlying technology infrastructure and external service providers, including third-party cloud-based solutions. These systems are vulnerable to damage or 26 Table of Contents interruption and we have experienced interruptions in the past.
We cannot assure you that we will be successful in the introduction, manufacturing, and marketing of any new products or product innovations, or develop and introduce, in a timely manner, innovations to our existing products that satisfy customer needs or achieve market acceptance.
We cannot assure you that we will be successful in the 19 Table of Contents introduction, manufacturing, and marketing of any new products or product innovations, or develop and introduce, in a timely manner, innovations to our existing products that satisfy customer needs or achieve market acceptance.
There can be no assurance that we will be able to successfully manage inventory levels to meet future order and reorder requirements. Competition in our industries may hinder our ability to execute our business strategy, achieve profitability, or maintain relationships with existing customers. We operate in a highly competitive industry.
There can be no assurance that we will be able to successfully manage inventory levels to meet future order and reorder requirements. 17 Table of Contents Competition in our industries may hinder our ability to execute our business strategy, achieve profitability, or maintain relationships with existing customers. We operate in a highly competitive industry.
An outbreak of disease or similar public health threat, such as the COVID-19 pandemic, could have, and in the case of the COVID-19 pandemic has had and is expected to continue to have, an adverse impact on our business, financial condition and operating results, including in the form of lowered net sales and the delay of inventory production and fulfillment in impacted regions.
An outbreak of disease or similar public health threat, such as the COVID-19 pandemic, could have, and in the case of the COVID-19 pandemic has had, an adverse impact on our business, financial condition and operating results, including in the form of lowered net sales and the delay of inventory production and fulfillment in impacted regions.
Such a situation could be costly and time-consuming, and could divert management’s attention from our day-to-day operations. Even if such allegations are ultimately proven to be groundless, allegations against us could severely impact the market price of our common stock and our business operations. ITEM 1B. UNRESOLVED STAFF COMMENTS None. 28
Such a situation could be costly and time-consuming, and could divert management’s attention from our day-to-day operations. Even if such allegations are ultimately proven to be groundless, allegations against us could severely impact the market price of our common stock and our business operations. ITEM 1B. UNRESOLVED STAFF COMMENTS None. 31 Table of Contents
Any such reduction in purchases could have a material adverse effect on our business, financial condition, and results of operations. 13 Moreover, declining economic conditions create the potential for future impairments of goodwill and other intangible and long-lived assets that may negatively impact our financial condition and results of operations.
Any such reduction in purchases could have a material adverse effect on our business, financial condition, and results of operations. 15 Table of Contents Moreover, declining economic conditions create the potential for future impairments of goodwill and other intangible and long-lived assets that may negatively impact our financial condition and results of operations.
In addition, our growth strategy may create perceived uncertainties as to our future direction and may result in the loss of employees, customers or business partners. 20 Turmoil across various sectors of the financial markets may negatively impact the Company’s business, financial condition, and/or operating results as well as our ability to effectively execute our growth strategy.
In addition, our growth strategy may create perceived uncertainties as to our future direction and may result in the loss of employees, customers or business partners. 23 Table of Contents Turmoil across various sectors of the financial markets may negatively impact the Company’s business, financial condition, and/or operating results as well as our ability to effectively execute our growth strategy.
Our operations in international markets, and earnings in those markets, may be affected by changes in global cultural, political, and financial market conditions as well as potential changes in regulations, legislation and government policies. Approximately 47% of our sales for the year ended December 31, 2022 were earned in international markets.
Our operations in international markets, and earnings in those markets, may be affected by changes in global cultural, political, and financial market conditions as well as potential changes in regulations, legislation and government policies. Approximately 61% of our sales for the year ended December 31, 2023 were earned in international markets.
Fear of contracting COVID-19, individuals contracting COVID-19 and the actions taken, and that may be taken, by governmental authorities, our third-party logistics providers, our landlords, our competitors or by us relating to the COVID-19 pandemic may: cause disruptions in the supply chain, including the ability to produce and deliver product as expected; result in canceled orders, non-payment for orders received and/or delayed payment for orders received; restrict the operation of our retail store operations and our ability to meet consumer demand at our stores; cause inflation and currency rate fluctuations; result in a misalignment between demand and supply; result in labor shortages, including as a result of any vaccine mandate or our return to work policies; 18 increase reliance by consumers on e-commerce platforms; impair the financial health of certain of our customers; impact previous business assumptions; increase the reliance of our employees on digital solutions; restrict global business and travel; impair our ability to ship product through our owned or affiliated distribution centers, including as a result of capacity reductions, shift changes, labor shortages, higher than normal absenteeism and/or the complete shutdowns of facilities for deep cleaning procedures; cause rapid changes to employment and tax law; impair our key personnel; result in incremental costs from the adoption of preventative measures, including providing facial coverings and hand sanitizer, rearranging operations to follow social distancing protocols, conducting temperature checks and undertaking regular and thorough disinfecting of surfaces, and providing testing; and/or cause any number of other disruptions to our business, the risks of which may be otherwise identified herein.
Fear of contracting diseases, individuals contracting diseases and the actions taken, and that may be taken, by governmental authorities, our third-party logistics providers, our landlords, our competitors or by us relating to diseases, analogous to the COVID-19 pandemic may: ● cause disruptions in the supply chain, including the ability to produce and deliver product as expected; ● result in canceled orders, non-payment for orders received and/or delayed payment for orders received; ● restrict the operation of our retail store operations and our ability to meet consumer demand at our stores; ● cause inflation and currency rate fluctuations; ● result in a misalignment between demand and supply; ● result in labor shortages, including as a result of any vaccine mandate or our return to work policies; ● increase reliance by consumers on e-commerce platforms; ● impair the financial health of certain of our customers; ● impact previous business assumptions; ● increase the reliance of our employees on digital solutions; ● restrict global business and travel; ● impair our ability to ship product through our owned or affiliated distribution centers, including as a result of capacity reductions, shift changes, labor shortages, higher than normal absenteeism and/or the complete shutdowns of facilities for deep cleaning procedures; ● cause rapid changes to employment and tax law; ● impair our key personnel; ● result in incremental costs from the adoption of preventative measures, including providing facial coverings and hand sanitizer, rearranging operations to follow social distancing protocols, conducting temperature checks and undertaking regular and thorough disinfecting of surfaces, and providing testing; and/or ● cause any number of other disruptions to our business, the risks of which may be otherwise identified herein. 21 Table of Contents In addition, the impact of pandemics, such as the COVID-19 pandemic, may also exacerbate other risks discussed in this Item 1A, any of which could have a material effect on us.
While we intend to pay regular Quarterly Cash Dividends for the foreseeable future, all subsequent dividends will be reviewed quarterly and declared at the discretion and approval of our Board of Directors and will depend upon, among other things, our results of operations, capital requirements, general business conditions, contractual restrictions under our credit facility on the payment of dividends, legal and regulatory restrictions on the payment of dividends, and other factors our Board of Directors deems relevant.
While we intend to pay regular Quarterly Cash Dividends for the foreseeable future, all subsequent dividends will be reviewed quarterly and declared at the discretion and approval of our Board of Directors and will depend upon, among other things, our results of operations, capital requirements, general business conditions, contractual restrictions under any new credit facility that we may enter into in the future on the payment of dividends, legal and regulatory restrictions on the payment of dividends, and other factors our Board of Directors deems relevant.
As a manufacturer and distributor of consumer products, we are subject to g overnment regulation in the United States and other countries, including, without limitation, the Consumer Products Safety Act, which empowers the Consumer Products Safety Commission to exclude from the market products that are found to be unsafe or hazardous.
As a manufacturer and distributor of consumer products, we are subject to government regulation in the United States and other countries, including, without limitation, the Consumer Products Safety Act, which empowers the CPSC to exclude from the market products that are found to be unsafe or hazardous.
We spend substantial resources ensuring compliance with governmental and other applicable standards. However, compliance with these standards does not necessarily prevent individual or class action lawsuits, which can entail significant cost and risk. We do not maintain insurance against many types of claims involving alleged defects in our products that do not involve personal injury or property damage.
However, compliance with these standards does not necessarily prevent individual or class action lawsuits, which can entail significant cost and risk. We do not maintain insurance against many types of claims involving alleged defects in our products that do not involve personal injury or property damage.
These short attacks have, in the past, led to selling of shares in the market. 27 If we were to become the subject of unfavorable allegations contained in short reports, whether such allegations are proven to be true or untrue, we may have to expend a significant amount of resources to investigate such allegations and/or defend ourselves.
If we were to become the subject of unfavorable allegations contained in short reports, whether such allegations are proven to be true or untrue, we may have to expend a significant amount of resources to investigate such allegations and/or defend ourselves.
The Company announced that it is seeking to invest in high-quality, durable, cash flow-producing assets in order to diversify our business within the outdoor and consumer markets as part of our previously announced growth strategy.
Our previously announced growth strategy may negatively impact our business, financial condition and results of operations. The Company announced that it is seeking to invest in high-quality, durable, cash flow-producing assets in order to diversify our business within the outdoor markets as part of our previously announced growth strategy.
If we do not have sufficient taxable income in future years to use the tax benefits before they expire, we will lose the benefit of these NOL carryforwards permanently.
However, our ability to use these tax benefits in future years will depend upon the amount of our otherwise taxable income. If we do not have sufficient taxable income in future years to use the tax benefits before they expire, we will lose the benefit of these NOL carryforwards permanently.
A significant deterioration in the financial condition of our major customers could have a material adverse effect on our sales and profitability. We regularly monitor and evaluate the credit status of our customers and attempt to adjust sales terms as appropriate.
A significant deterioration in the financial condition of our major customers, including, without limitation, Recreational Equipment, Inc. (REI), would have a material adverse effect on our sales and profitability. We regularly monitor and evaluate the credit status of our customers and attempt to adjust sales terms as appropriate.
As a result, our Board of Directors and executive officer, to the extent they vote their shares in a similar manner, have influence over our affairs and could exercise such influence in a manner that is not in the best interests of our other stockholders, including by attempting to delay, defer or prevent a change of control transaction that might otherwise be in the best interests of our stockholders.
As a result, our Board of Directors and executive officer, to the extent they vote their shares in a similar manner, have influence over our affairs and could exercise such influence in a manner that is not in the best interests of our other stockholders, including by attempting to delay, defer or prevent a change of control transaction that might otherwise be in the best interests of our stockholders. 27 Table of Contents We may be unable to realize the benefits of our net operating losses and tax credit carryforwards.
Any of the above risks could have a material adverse effect on the market price of our common stock and our business, financial condition and results of operations. Our previously announced growth strategy may negatively impact our business, financial condition and results of operations.
Any of the above risks could have a material adverse effect on the market price of our common stock and our business, financial condition and results of operations.
As a result, our efforts to comply with evolving laws, regulations, and standards have resulted in, and are likely to continue to result in, increased general and administrative expenses and a diversion of management time and attention from revenue-generating activities to compliance activities. We could face particular challenges in maintaining and reporting on our internal control over financial reporting.
As a result, our efforts to comply with evolving laws, regulations, and standards have resulted in, and are likely to continue to result in, increased general and administrative expenses and a diversion of management time and attention from revenue-generating activities to compliance activities.
We rely on information technology systems, including third-party cloud-based solutions, and any failure of these systems may result in disruptions or outages in our e-commerce and in-store retail platforms, loss of processing capabilities, and/or loss of data, any of which may have a material adverse effect on our financial condition, results of operations or cash flow.
We rely on information technology systems, including third-party cloud-based solutions, and any failure of these systems, including, without limitation, due to outages and/or cyberattacks, may result in disruptions or outages, loss of processing capabilities, and/or loss of data, any of which may have a material adverse effect on our business, operations, and financial results.
Furthermore, 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.
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.
In identifying, evaluating and selecting a target business or assets for a potential acquisition or investment, we expect to encounter intense competition from other entities, including blank check companies, private equity groups, venture capital funds, leveraged buyout funds, and operating businesses seeking strategic acquisitions.
In identifying, evaluating and selecting a target business or assets for a potential acquisition or investment, we expect to encounter intense competition from other entities, including blank check companies, private equity groups, venture capital funds, leveraged buyout funds, and operating businesses seeking strategic acquisitions. 22 Table of Contents Many of these entities are well-established and have extensive experience identifying and effecting business combinations directly or through affiliates.
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.
If the reputation, culture or image of any of our brands and products, including, without limitation, recalls and liability claims relating to our avalanche beacon transceivers, is tarnished or if we receive negative publicity, then our sales, financial condition and results of operations could be materially and adversely affected.
The members of our Board of Directors and our executive officers, which includes Mr. Warren B. Kanders, beneficially own approximately 24.3% of our outstanding common stock as of February 22, 2023.
The members of our Board of Directors and our executive officers, which includes Mr. Warren B. Kanders, beneficially own approximately 20.2% of our outstanding common stock as of March 4, 2024.
Failure to use our products for their intended purposes, failure to use or care for them properly, or their malfunction, or, in some limited circumstances, even correct use of our products, could result in serious bodily injury or death. We remain exposed to product liability claims by the nature of the products we produce.
Failure to use our products for their intended purposes, failure to use or care for them properly, or their malfunction, or, in some limited circumstances, even correct use of our products, have resulted in serious bodily injury or death. 13 Table of Contents We remain exposed to product liability claims by the nature of the products we produce, including, without limitation, recalls and liability claims relating to our avalanche beacon transceivers.
Under certain circumstances, the Consumer Products Safety Commission could require us to repurchase or recall one or more of our products. Additionally, laws regulating certain consumer products exist in some cities and states, as well as in other countries in which we sell our products, and more restrictive laws and regulations may be adopted in the future.
Additionally, laws regulating certain consumer products exist in some cities and states, as well as in other countries in which we sell our products, and more restrictive laws and regulations may be adopted in the future.
See “Business — Regulatory Matters.” 19 Compliance costs related to environmental requirements could negatively impact our financial results.
Compliance costs related to environmental requirements could negatively impact our financial results.
We regularly implement business process improvement and information technology initiatives intended to optimize our operational and financial performance. Transitioning to these new or upgraded processes and systems requires significant capital investments and personnel resources. Implementation is also highly dependent on the coordination of numerous employees, contractors and software and system providers.
Transitioning to these new or upgraded processes and systems requires significant capital investments and personnel resources. Implementation is also highly dependent on the coordination of numerous employees, contractors and software and system providers.
We may be negatively affected by changes in the policies of our retailer customers, such as inventory destocking, limitations on access to and time on shelf space, use of private label brands, price demands, payment terms, and other conditions, which could negatively impact our results of operations.
This requires us to shorten our lead time for production in certain cases and more closely anticipate demand, which could in the future require us to carry additional inventories. 16 Table of Contents We may be negatively affected by changes in the policies of our retailer customers, such as inventory destocking, limitations on access to and time on shelf space, use of private label brands, price demands, payment terms, and other conditions, which could negatively impact our results of operations.
Many of these entities are well-established and have extensive experience identifying and effecting business combinations directly or through affiliates. Moreover, many of these competitors possess greater financial, technical, human and other resources than us which will give them a competitive advantage in pursuing the acquisition of certain target businesses.
Moreover, many of these competitors possess greater financial, technical, human and other resources than us which will give them a competitive advantage in pursuing the acquisition of certain target businesses.
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.
Adverse publicity about the Company and/or its brands and products, including with respect to certain models of our avalanche transceivers through social media or connection with other media or brand damaging events and/or public perception could negatively impact our business and reputation.
Although we cannot predict whether or in what form these proposals will pass, several of the proposals considered, if enacted into law, could have an adverse impact on our effective tax rate, income tax expense and cash flows.
Although we cannot predict whether or in what form these proposals will pass, several of the proposals considered, if enacted into law, could have an adverse impact on our effective tax rate, income tax expense and cash flows. 20 Table of Contents Other changes in the tax laws of the jurisdictions where we do business, including an increase in tax rates or an adverse change in the treatment of an item of income or expense, could result in a material increase in our tax expense.
In addition, challenges implementing new or modified technology systems may cause disruptions in our business operations and have an adverse effect on our business operations if not anticipated and appropriately mitigated. Breaches of our information systems could adversely affect our reputation, disrupt our operations, and result in increased costs and loss of revenue.
In addition, challenges implementing new or modified technology systems may cause disruptions in our business operations and, if not anticipated and appropriately mitigated, could have a material adverse effect on our business operations.
In addition, increases in distribution costs, including but not limited to trucking, air and freight costs, could (as is currently the case) adversely affect our costs, which we may not be able to offset through price increases or decreased promotions.
In addition, increases in distribution costs, including but not limited to trucking, air and freight costs, could (as is currently the case) adversely affect our costs, which we may not be able to offset through price increases or decreased promotions. 18 Table of Contents We receive our products from third-party logistics providers at our owned and leased distribution centers in the United States, Australia, Austria, and New Zealand.
We use foreign suppliers and manufacturing facilities for a significant portion of our raw materials and finished products, and disruptions to international trade, such as disease epidemics or potential ‘trade wars,’ pose a risk to our business operations.
We use foreign suppliers and manufacturing facilities for a significant portion of our raw materials and finished products, and disruptions to international trade, such as disease epidemics or potential ‘trade wars,’ pose a risk to our business operations. ​ A majority of our products sold were produced by and purchased from independent manufacturers primarily located in Asia and Eastern Europe, with substantially all of the remainder produced by our manufacturing facilities located in Utah.
Any repurchase or recall of our products could be costly to us and could damage our reputation. If we are required to remove, or we voluntarily remove, our products from the market, our reputation could be tarnished and we might have large quantities of finished products that we ae unable to sell.
If we are required to remove, or if we voluntarily remove, our products from the market, our reputation could be tarnished and we might have large quantities of finished products that we are unable to sell. We spend substantial resources ensuring compliance with governmental and other applicable standards.
Both our on-premises and cloud-based infrastructure may be susceptible to outages due to any number of reasons, including, human error, fire, floods, power loss, telecommunications failures, terrorist attacks and similar events.
We have also designed a significant portion of our software and computer systems to utilize data processing and storage capabilities from third-party cloud solution providers. Both our on-premises and cloud-based infrastructure may be susceptible to outages due to any number of reasons, including, human error, fire, floods, power loss, telecommunications failures, terrorist attacks and similar events.
In addition, upon an event of default under our credit facility, we are prohibited from declaring or paying any dividends on our common stock or generally making other distributions to our stockholders. 26 The sale of a substantial amount of our common stock in the public market could adversely affect the prevailing market price of our common stock.
In addition, upon an event of default under any new credit facility that we may enter into in the future, we may be prohibited from declaring or paying any dividends on our common stock or generally making other distributions to our stockholders.
We may be unable to realize the benefits of our net operating losses and tax credit carryforwards. Net operating losses (“NOLs”) may be carried forward to offset federal and state taxable income in future years and eliminate income taxes otherwise payable on such taxable income, subject to certain adjustments.
Net operating losses (“NOLs”) may be carried forward to offset federal and state taxable income in future years and eliminate income taxes otherwise payable on such taxable income, subject to certain adjustments. Based on current federal corporate income tax rates, our NOL and other carryforwards could provide a benefit to us, if fully utilized, of significant future tax savings.
If we and/or our cloud-based solution providers are not successful in preventing or effectively responding to outages and cyberattacks, our financial condition, results of operations and cash flow could be materially and adversely affected.
Any transition of the cloud-based solutions currently provided to different cloud providers would be difficult to implement and may cause us to incur significant time and expense. If we and/or our cloud-based solution providers are not successful in preventing or effectively responding to outages and cyberattacks, our business, operations, and financial results could be materially and adversely affected.
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.
Negative claims or publicity involving us, our board of directors, our brands, our products, including, without limitation, recalls and liability claims relating to our avalanche beacon transceivers, 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. 14 Table of Contents Furthermore, social media, which accelerates and potentially amplifies the scope of negative publicity, can increase the challenges of responding to negative claims.
If securities or industry analysts do not publish or cease publishing research or reports about us, our business, or our market, or if they change their recommendations regarding our securities adversely, the price and trading volume of our securities could decline.
The issuance of a large number of shares of common stock in connection with an acquisition could also have a negative effect on our ability to use our NOLs. 30 Table of Contents If securities or industry analysts do not publish or cease publishing research or reports about us, our business, or our market, or if they change their recommendations regarding our securities adversely, the price and trading volume of our securities could decline.
These factors could cause investors to lose confidence in our reported financial information and could have a negative effect on the trading price of our stock. Initiatives to upgrade our business processes and information technology systems to optimize our operational and financial performance involve many risks which could result in, among other things, business interruptions, higher costs and lost profits.
Initiatives to upgrade our business processes and information technology systems to optimize our operational and financial performance involve many risks which could result in, among other things, business interruptions, higher costs and lost profits. We regularly implement business process improvement and information technology initiatives intended to optimize our operational and financial performance.
As such, the concentration of our capital stock ownership with insiders will likely limit your ability to influence corporate matters. 12 Risks Related to Our Industry Many of the products we sell are used for inherently risky outdoor pursuits and could give rise to product liability or product warranty claims and other loss contingencies, which could affect our earnings and financial condition.
Risks Related to Our Industry Many of the products we sell are used for inherently risky outdoor pursuits and have given rise to product liability or product warranty claims and other loss contingencies including, without limitation, recalls and liability claims relating to our avalanche beacon transceivers, which could affect our earnings and financial condition.
We may issue common stock in the future for other purposes as well, including in connection with financings, for compensation purposes, in connection with strategic transactions or for other purposes. The issuance of a large number of shares of common stock in connection with an acquisition could also have a negative effect on our ability to use our NOLs.
We may issue common stock in the future for other purposes as well, including in connection with financings, for compensation purposes, in connection with strategic transactions or for other purposes.
Any failure to adequately manage our growth could have a material adverse effect on the market price of our common stock and our business, financial condition, and results of operations. Our credit agreement contains financial and restrictive covenants that may limit our ability to operate our business.
Any failure to adequately manage our growth could have a material adverse effect on the market price of our common stock and our business, financial condition, and results of operations. 24 Table of Contents Compliance with changing laws, regulations and standards of corporate governance and public disclosure may result in additional expenses.
As a result, product recalls or product liability claims could have a material adverse effect on our business, results of operations and financial condition. We are subject to risks related to our dependence on the strength of retail economies in various parts of the world, and our performance may be affected by general economic conditions.
Also, we have reporting obligations to safety regulators in all jurisdictions where we sell our products, where reporting may trigger further regulatory investigations. We are subject to risks related to our dependence on the strength of retail economies in various parts of the world, and our performance may be affected by general economic conditions.
We have outstanding an aggregate of 37,073,635 shares of our common stock as of February 22, 2023. This includes 6,353,234 shares of common stock that are beneficially owned by Mr.
The sale of a substantial amount of our common stock in the public market could adversely affect the prevailing market price of our common stock. We have outstanding an aggregate of 38,236,268 shares of our common stock as of March 4, 2024. This includes 6,525,421 shares of common stock that are beneficially owned by Mr.
Removed
This requires us to shorten our lead time for production in certain cases and more closely anticipate demand, which could in the future require us to carry additional inventories.
Added
As such, the concentration of our capital stock ownership with insiders will likely limit your ability to influence corporate matters.
Removed
We receive our products from third-party logistics providers at our owned and leased distribution centers in the United States, Australia, Austria, and New Zealand.
Added
Under certain circumstances, the CPSC could require us to repurchase or recall one or more of our products and/or subject us to financial penalties. For example, as disclosed in Item 3. “Legal Proceedings,” Black Diamond Equipment, Ltd.
Removed
Other changes in the tax laws of the jurisdictions where we do business, including an increase in tax rates or an adverse change in the treatment of an item of income or expense, could result in a material increase in our tax expense.
Added
(“BDEL”) was notified by the CPSC that the agency staff believes we failed to timely meet our statutory reporting obligations under the Consumer Product Safety Act with respect to certain models of BDEL’s avalanche transceivers either switching unexpectedly out of “send” mode and/or out of “search” mode, that we made material misrepresentations in reports to the CPSC, and that the agency staff has recommended that the CPSC impose substantial civil monetary penalties on us.
Removed
In addition, the impact of the COVID-19 pandemic may also exacerbate other risks discussed in this Item 1A, any of which could have a material effect on us.
Added
Any such recalls or repurchases of our products and/or imposition of financial penalties on us could be costly to us and could damage our business and reputation as well as have a material adverse effect on the Company’s liquidity, stock price, consolidated financial position, results of operations and/or cash flows.
Removed
The COVID-19 pandemic is ongoing, and its dynamic nature, including uncertainties relating to the duration of the pandemic, the return of consumer confidence and actions that may be taken by governmental authorities, landlords, our competitors or by us to contain the pandemic or to treat its impact, makes it difficult to forecast the degree to, or the time period over, which our sales and operations will be affected.
Added
As a result, product recalls or product liability claims, including, without limitation, recalls and liability claims and/or financial penalties, including, without limitation, the imposition by the CPSC of substantial civil monetary penalties on us relating to our avalanche beacon transceivers, could be costly to us and could damage our business and reputation as well as have a material adverse effect on the Company’s liquidity, stock price, consolidated financial position, results of operations and/or cash flows.
Removed
A majority of our products sold were produced by and purchased from independent manufacturers primarily located in Asia and Eastern Europe, with substantially all of the remainder produced by our manufacturing facilities located in Utah and Missouri.
Added
From time to time, we have been and may be subject to legal proceedings, regulatory investigations or disputes, and governmental inquiries that could cause us to incur significant expenses, divert our management’s attention, damage our business and reputation as well as have a material adverse effect on the Company’s liquidity, stock price, consolidated financial position, results of operations and/or cash flows.
Removed
Changes in governmental regulation, legislation or public opinion regarding the manufacture and sale of bullets, or the possession and use of firearms and ammunition, could adversely affect our Precision Sport segment and overall financial results.
Added
From time to time, we have been and may be subject to claims, lawsuits, government investigations, and other proceedings involving products liability, competition and antitrust, intellectual property, privacy, consumer protection, securities, tax, labor and employment, commercial disputes, and other matters that could adversely affect our business operations and financial condition.
Removed
The manufacture and sale of bullets by our Precision Sport segment, and the possession and use of firearms and ammunition by our customers, is subject to significant governmental regulation. We hold all licenses necessary for the legal manufacture and sale of our bullets.

… 47 more changes not shown on this page.

Item 2. Properties

Properties — owned and leased real estate

4 edited+3 added−0 removed0 unchanged
Biggest changeDistribution and Manufacturing Facilities: Salt Lake City, Utah Leased/Owned Black Diamond European Sales and Marketing Office: Innsbruck, Austria Leased PIEPS Sales and Marketing Office: Lebring, Austria Leased Black Diamond HQ Retail Store Salt Lake City, Utah Leased Black Diamond Trolley Square Retail Store Salt Lake City, Utah Leased Black Diamond Park City Retail Store Park City, Utah Leased Black Diamond Jackson Retail Store Jackson, Wyoming Leased Black Diamond Big Sky Retail Store Big Sky, Montana Leased Black Diamond Boulder Retail Store Boulder, Colorado Leased Black Diamond Bend Retail Store Bend, Oregon Leased Black Diamond Burlington Retail Store Burlington, Vermont Leased Precision Sport Segment Sierra U.S.
Biggest changeDistribution and Manufacturing Facilities: ​ Salt Lake City, Utah ​ Leased/Owned ​ ​ ​ ​ ​ Black Diamond European Sales and Marketing Office: ​ Innsbruck, Austria ​ Leased ​ ​ ​ ​ ​ PIEPS Sales and Marketing Office: ​ Lebring, Austria ​ Leased ​ ​ ​ ​ ​ Black Diamond HQ Retail Store ​ Salt Lake City, Utah ​ Leased ​ ​ ​ ​ ​ Black Diamond Trolley Square Retail Store ​ Salt Lake City, Utah ​ Leased ​ ​ ​ ​ ​ Black Diamond Jackson Retail Store ​ Jackson, Wyoming ​ Leased ​ ​ ​ ​ ​ Black Diamond Boulder Retail Store ​ Boulder, Colorado ​ Leased ​ ​ ​ ​ ​ Black Diamond Seattle Retail Store ​ Seattle, Washington ​ Leased ​ ​ ​ ​ ​ Adventure Segment ​ ​ ​ ​ ​ ​ ​ ​ ​ Rhino-Rack Australia Headquarters: ​ Sydney, Australia ​ Leased ​ ​ ​ ​ ​ Rhino-Rack Australia Perth Distribution Facility: ​ Perth, Australia ​ Leased ​ ​ ​ ​ ​ Rhino-Rack U.S.
ITEM 2. PROPERTIES Our corporate headquarters, as well as our primary research, evaluation and design studios, is located in a facility owned by the Company in Salt Lake City, Utah. In addition, at December 31, 2022, the Company and its subsidiaries lease or own facilities throughout the U.S., Europe, Australia and New Zealand.
ITEM 2. PROPERTIES Our corporate headquarters, as well as our primary research, evaluation and design studios, is located in a facility owned by the Company in Salt Lake City, Utah. In addition, at December 31, 2023, the Company and its subsidiaries lease or own facilities throughout the U.S., Europe, Australia and New Zealand.
In general, our properties are well maintained, considered adequate and being utilized for their intended purposes. The following table identifies and provides certain information regarding our principal facilities: Activity Location Owned/Leased Corporate Headquarters: Salt Lake City, Utah Owned Outdoor Segment Black Diamond U.S.
The following table identifies and provides certain information regarding our principal facilities: ​ ​ ​ ​ ​ Activity ​ Location ​ Owned/Leased ​ ​ ​ ​ ​ Corporate Headquarters: ​ Salt Lake City, Utah ​ Owned ​ ​ ​ ​ ​ Outdoor Segment ​ ​ ​ ​ ​ ​ ​ ​ ​ Black Diamond U.S.
Distribution and Manufacturing Facilities: Sedalia, Missouri Owned Barnes U.S. Distribution and Manufacturing Facilities: Mona, Utah Owned Adventure Segment Rhino-Rack Australia Headquarters: Sydney, Australia Leased Rhino-Rack Australia Perth Distribution Facility: Perth, Australia Leased Rhino-Rack U.S. Distribution Facility: Denver, Colorado Leased Rhino-Rack N.Z. Distribution Facility: Wellington, New Zealand Leased MAXTRAX Australia Headquarters: Brisbane, Australia Leased 29
Distribution Facility: ​ Wellington, New Zealand ​ Leased ​ ​ ​ ​ ​ MAXTRAX and TRED Australia Headquarters: ​ Brisbane, Australia ​ Leased ​ ​ ​ ​ ​ Discontinued Operations ​ ​ ​ ​ ​ ​ ​ ​ ​ Precision Sport Segment ​ ​ ​ ​ ​ ​ ​ ​ ​ Sierra U.S.
Added
In general, our properties are well maintained, considered adequate and being utilized for their intended purposes.
Added
Distribution Facility: ​ Denver, Colorado ​ Leased ​ ​ ​ ​ ​ Rhino-Rack N.Z.
Added
Distribution and Manufacturing Facilities: ​ Sedalia, Missouri ​ Owned ​ ​ ​ ​ ​ Barnes U.S. Distribution and Manufacturing Facilities: ​ Mona, Utah ​ Owned ​ ​ ​ 33 Table of Contents

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

4 edited+14 added−0 removed8 unchanged
Biggest changeAmounts 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.
Biggest changeAmounts 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 and other expenses or costs for defending such actions, which legal fees and expenses or costs are expensed as incurred.
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.
Based on currently available information, and except as disclosed herein, 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.
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.
Based on currently available information, and except as disclosed herein, the Company does not believe that the existence 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.
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 4. MINE SAFETY DISCLOSURES Not applicable. ‎ 30 PART II
Except as disclosed herein, 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 business, brand reputation, liquidity, stock price, consolidated financial position, results of operations and/or cash flows. U.S. Consumer Product Safety Commission In January 2021, Black Diamond Equipment, Ltd.
Added
The costs are accrued when it is both probable that a liability has been incurred and the amount can be reasonably estimated.
Added
(“BDEL”) wrote to the U.S. Consumer Product Safety Commission (“CPSC”) outlining its new cradle solution for certain models of its avalanche beacon transceivers to prevent such transceivers from switching unexpectedly out of “send” mode.
Added
The proposed new cradle solution was designed to improve transceiver safety by locking the transceiver into “send” mode prior to use so that it would not switch unexpectedly out of “send” mode. BDEL also requested approval for the CPSC Fast-Track Program for a voluntary product recall to implement this cradle solution.
Added
The CPSC approved the recall and entered into a Corrective Action Plan agreement with BDEL in March 2021.
Added
BDEL received a letter from the CPSC, dated October 28, 2021, stating that the CPSC is investigating whether BDEL has timely complied with the reporting requirements of Section 15(b) of the Consumer Protection Safety Act and related regulations regarding certain models of avalanche transceivers switching unexpectedly out of “send” mode.
Added
Separately, on April 21, 2022, BDEL filed a Section 15(b) report and applied for Fast-Track consideration for a voluntary recall, consisting of free repair or replacement of such malfunctioning models of avalanche transceivers, which would not switch from “send” mode to “search” mode due to an electronic malfunction in the reed switch or foil.
Added
The CPSC approved the recall and entered into a 34 Table of Contents Corrective Action Plan agreement with BDEL in August 2022.
Added
BDEL received a letter from the CPSC, dated January 17, 2023, stating that the CPSC is investigating whether BDEL has timely complied with the reporting requirements of Section 15(b) of the Consumer Protection Safety Act and related regulations regarding the malfunction in the reed switch or foil in certain models of avalanche transceivers switching out of “search” mode.
Added
BDEL responded to the CPSC’s investigation by letter dated March 31, 2023, accompanied with documents responsive to the CPSC’s requests. The CPSC asked for further clarification and documents, and BDEL sent a responsive letter accompanied by additional documents on June 23, 2023.
Added
On September 6, 2023, the CPSC requested further clarification and information regarding the reed switch issue, to which BDEL responded on October 6 and 13, 2023.
Added
By letters dated October 12, 2023 and December 18, 2023, BDEL was notified by the CPSC that the agency staff had concluded we failed to timely meet our statutory reporting obligations under the Consumer Product Safety Act with respect to certain models of BDEL’s avalanche transceivers switching unexpectedly out of “send” mode and certain models of BDEL’s avalanche transceivers not switching from “send” mode into “search” mode, that we made a material misrepresentation in a report to the CPSC, and that the agency staff intends to recommend that the CPSC impose substantial civil monetary penalties.
Added
On November 20, 2023 and February 8, 2024, respectively, we submitted a comprehensive response disputing the CPSC’s findings and conclusions in the October 12, 2023 and December 18, 2023 letters, including the amount of any potential penalties.
Added
The CPSC may ultimately disagree with our position and the agency staff has recommended substantial civil monetary penalties which the Company intends to strongly contest and vigorously defend against. We cannot assure on what terms this matter will be resolved.
Added
Any penalties imposed by the CPSC or other regulators, could be costly to us and could damage our business and reputation as well as have a material adverse effect on the Company’s liquidity, stock price, consolidated financial position, results of operations and/or cash flows. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. ​ 35 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

9 edited+0 added−1 removed4 unchanged
Biggest changeTotal Return Analysis 12/31/2017 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 Clarus Corporation $ 100.00 $ 128.92 $ 174.87 $ 199.89 $ 361.10 $ 103.43 The Russell 2000 Index $ 100.00 $ 87.82 $ 108.66 $ 128.61 $ 146.23 $ 114.70 NASDAQ Global Select Market $ 100.00 $ 96.32 $ 130.62 $ 186.83 $ 230.03 $ 155.00 Stockholders On February 22, 2023, the last reported sales price for our common stock was $9.69 per share.
Biggest changeHistorical stock price performance should not be relied on as indicative of future stock price performance. ​ Total Return Analysis ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2018 ​ 2019 ​ 2020 ​ 2021 ​ 2022 ​ 2023 Clarus Corporation $ 100.00 ​ $ 134.98 ​ $ 154.29 ​ $ 278.73 ​ $ 79.84 ​ $ 71.28 The Russell 2000 Index $ 100.00 ​ $ 123.72 ​ $ 146.44 ​ $ 166.50 ​ $ 130.60 ​ $ 150.31 NASDAQ Global Select Market $ 100.00 ​ $ 135.60 ​ $ 193.97 ​ $ 238.82 ​ $ 160.92 ​ $ 233.41 ​ Stockholders On March 4, 2024, the last reported sales price for our common stock was $5.80 per share.
The program was replaced with a new stock repurchase program that allows the repurchase of up to $50,000,000 of the Company’s outstanding common stock, which still had $42,829,217 available as of December 31, 2022. No repurchases of shares of the Company’s common stock occurred during the three months ended December 31, 2022.
The program was replaced with a new stock repurchase program that allows the repurchase of up to $50,000,000 of the Company’s outstanding common stock, which still had $42,829,217 available as of December 31, 2023. No repurchases of shares of the Company’s common stock occurred during the three months ended December 31, 2023.
Performance Graph Set forth below is a line graph comparing the yearly percentage change in the cumulative total stockholder return on our common stock to the cumulative total return of the NASDAQ Global Select Market Composite and the Russell 2000 Index for the period commencing on December 31, 2017 and ending on December 31, 2022 (the “Measuring Period”).
Performance Graph Set forth below is a line graph comparing the yearly percentage change in the cumulative total stockholder return on our common stock to the cumulative total return of the NASDAQ Global Select Market Composite and the Russell 2000 Index for the period commencing on December 31, 2018 and ending on December 31, 2023 (the “Measuring Period”).
The graph assumes that the value of the investment in our common stock and the indexes was $100 on December 31, 2017.
The graph assumes that the value of the investment in our common stock and the indexes was $100 on December 31, 2018.
Securities Authorized for Issuance Under Equity Compensation Plans The following table sets forth certain information regarding our equity plans as of December 31, 2022: Plan Category (A) ‎ Number of securities to be issued upon exercise of outstanding, warrants and rights (B) ‎ Weighted-average exercise price of outstanding options, warrants and rights (C) ‎ Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (A)) Equity compensation plans approved by security holders (1) 5,792,180 $ 18.36 7,400,248 Total 5,792,180 $ 18.36 7,400,248 (1) Consists of stock options and restricted stock awards issued and issuable under the 2005 Stock Incentive Plan and the 2015 Stock Incentive Plan.
Securities Authorized for Issuance Under Equity Compensation Plans The following table sets forth certain information regarding our equity plans as of December 31, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ Plan Category ​ (A) Number of securities to be issued upon exercise of outstanding, warrants and rights ​ (B) Weighted-average exercise price of outstanding options, warrants and rights ​ (C) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (A)) Equity compensation plans approved by security holders (1) ​ 4,856,347 ​ $ 18.45 ​ 10,186,530 ​ ​ ​ ​ ​ ​ ​ ​ Total ​ 4,856,347 ​ $ 18.45 ​ 10,186,530 ​ (1) Consists of stock options and restricted stock awards issued and issuable under the 2005 Stock Incentive Plan and the 2015 Stock Incentive Plan.
As of February 22, 2023, there were 71 holders of record of our common stock. Dividends 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 or $0.10 per share on an annualized basis.
As of March 4, 2024, there were 70 holders of record of our common stock. 36 Table of Contents Dividends 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 or $0.10 per share on an annualized basis.
There are a total of 1,545,833 restricted stock awards included in column (A) that do not have an exercise price. Excluding these restricted stock awards, the weighted average exercise price of outstanding options, warrants and rights is $11.46. ‎ 32 ITEM 6. [RESERVED] ‎ 33
There are a total of 1,616,666 restricted stock awards included in column (A) that do not have an exercise price. Excluding these restricted stock awards, the weighted average exercise price of outstanding options, warrants and rights is $11.45. ​ ITEM 6. [RESERVED] ​ 37 Table of Contents
In 2020, our total Quarterly Stock Dividends were $1,533,000, which combined with our cash dividend of $1,520,000, resulted in total dividends of $3,053,000. 31 On February 24, 2023, the Company announced that its Board of Directors approved the payment on March 17, 2023 of the Quarterly Cash Dividend to the record holders of shares of the Company’s common stock as of the close of business on March 7, 2023.
On March 5, 2024, the Company announced that its Board of Directors approved the payment on March 18, 2024 of the Quarterly Cash Dividend to the record holders of shares of the Company’s common stock as of the close of business on March 28, 2024.
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 Quarterly Stock Dividend. In 2022, 2021 and 2020, our total Quarterly Cash Dividends were $3,721,000, $3,335,000, and $1,520,000 respectively.
In 2023, 2022 and 2021, our total Quarterly Cash Dividends were $3,750,000, $3,721,000, and $3,335,000 respectively.
Removed
Historical stock price performance should not be relied on as indicative of future stock price performance.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

67 edited+35 added−10 removed58 unchanged
Biggest changeRecent Accounting Pronouncements See “Recent Accounting Pronouncements” in Note 1 to the notes to consolidated financial statements. ‎ 37 Results of Operations (In Thousands) Year Ended December 31, 2022 Compared to Year Ended December 31, 2021 The following presents a discussion of operations for the year ended December 31, 2022, compared with the year ended December 31, 2021: Year Ended December 31, 2022 2021 Sales Domestic sales $ 238,144 $ 225,878 International sales 209,962 149,916 Total sales 448,106 375,794 Cost of goods sold 284,690 238,862 Gross profit 163,416 136,932 Operating expenses Selling, general and administrative 135,039 105,494 Transaction costs 2,967 11,843 Contingent consideration expense (benefit) 493 (1,605) Impairment of goodwill and indefinite-lived intangible assets 92,311 - Total operating expenses 230,810 115,732 Operating (loss) income (67,394) 21,200 Other income (expense) Interest expense, net (7,895) (2,939) Other, net (1,842) (4,382) Total other expense, net (9,737) (7,321) (Loss) income before income tax (77,131) 13,879 Income tax benefit (7,351) (12,214) Net (loss) income $ (69,780) $ 26,093 Sales Sales increased $72,312, or 19.2%, to $448,106 during the year ended December 31, 2022, compared to sales of $375,794 during the year ended December 31, 2021.
Biggest changeRecent Accounting Pronouncements See “Recent Accounting Pronouncements” in Note 1 of our consolidated financial statements. 42 Table of Contents Results of Operations (In Thousands) Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 The following presents a discussion of operations for the year ended December 31, 2023, compared with the year ended December 31, 2022: ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2023 2022 ​ ​ ​ ​ ​ ​ Sales ​ ​ ​ ​ ​ Domestic sales $ 112,385 ​ $ 132,818 International sales ​ 173,635 ​ ​ 182,433 Total sales ​ 286,020 ​ ​ 315,251 ​ ​ ​ ​ ​ ​ Cost of goods sold ​ 188,509 ​ ​ 205,298 Gross profit ​ 97,511 ​ ​ 109,953 ​ ​ ​ ​ ​ ​ Operating expenses ​ ​ ​ ​ ​ Selling, general and administrative ​ 116,367 ​ ​ 120,814 Restructuring charges ​ 3,223 ​ ​ - Transaction costs ​ 593 ​ ​ 2,818 Contingent consideration (benefit) expense ​ (1,565) ​ ​ 493 Impairment of goodwill and indefinite-lived intangible assets ​ - ​ ​ 92,311 ​ ​ ​ ​ ​ ​ Total operating expenses ​ 118,618 ​ ​ 216,436 ​ ​ ​ ​ ​ ​ Operating loss ​ (21,107) ​ ​ (106,483) ​ ​ ​ ​ ​ ​ Other income (expense) ​ ​ ​ ​ ​ Interest income, net ​ 67 ​ ​ - Other, net ​ 961 ​ ​ (1,035) ​ ​ ​ ​ ​ ​ Total other income (expense), net ​ 1,028 ​ ​ (1,035) ​ ​ ​ ​ ​ ​ Loss before income tax ​ (20,079) ​ ​ (107,518) Income tax benefit ​ (4,291) ​ ​ (14,716) Loss from continuing operations ​ (15,788) ​ ​ (92,802) ​ ​ ​ ​ ​ ​ Discontinued operations, net of tax ​ 5,642 ​ ​ 23,022 ​ ​ ​ ​ ​ ​ Net loss $ (10,146) ​ $ (69,780) ​ Sales Total sales decreased $29,231, or 9.3%, to $286,020 during the year ended December 31, 2023, compared to sales of $315,251 during the year ended December 31, 2022.
All obligations under the Restated Credit Agreement, and the guarantees of those obligations (as well as banking services obligations and certain swap agreements), are secured by pledges and liens on 100% of the equity interests of domestic subsidiaries, either 100% or 65% of the equity interests of certain foreign subsidiaries, and the accounts receivable, inventory, intellectual property and certain real property or other 43 assets of the Loan Parties pursuant to (i) a Pledge and Security Agreement, dated as of May 3, 2019, by and among certain of the Loan Parties and the Administrative Agent (as amended from time to time prior to the Effective Date, the “PSA”), (ii) a General Security Deed, dated as of August 30, 2021, by and among certain of the Loan Parties and the Administrative Agent (the “Oscar GSD”), (iii) a General Security Deed, dated as of January 31, 2022, by and among certain of the Loan Parties and the Administrative Agent (the “Simpson GSD”) or (iv) a mortgage or other applicable security agreement or instrument.
All obligations under the Restated Credit Agreement, and the guarantees of those obligations (as well as banking services obligations and certain swap agreements), are secured by pledges and liens on 100% of the equity interests of domestic subsidiaries, either 100% or 65% of the equity interests of certain foreign subsidiaries, and the accounts receivable, inventory, intellectual property and certain real property or other assets of the Loan Parties pursuant to (i) a Pledge and Security Agreement, dated as of May 3, 2019, by and among certain of the Loan Parties and the Administrative Agent (as amended from time to time prior to the Effective Date, the “PSA”), (ii) a General Security Deed, dated as of August 30, 2021, by and among certain of the Loan Parties and the Administrative Agent (the “Oscar GSD”), (iii) a General Security Deed, dated as of January 31, 2022, by and among certain of the Loan Parties and the Administrative Agent (the “Simpson GSD”) or (iv) a mortgage or other applicable security agreement or instrument.
We assume no obligation to update any forward-looking statements to reflect events or circumstances after the date of this Annual Report on Form 10-K. Overview Headquartered in Salt Lake City, Utah, Clarus is a global leading designer, developer, manufacturer and distributor of best-in-class outdoor equipment and lifestyle products focused on the outdoor and consumer enthusiast markets.
We assume no obligation to update any forward-looking statements to reflect events or circumstances after the date of this Annual Report on Form 10-K. Overview Headquartered in Salt Lake City, Utah, Clarus is a global leading designer, developer, manufacturer and distributor of best-in-class outdoor equipment and lifestyle products focused on the outdoor enthusiast markets.
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.
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.
Through and including the payment due on March 31, 2023, the scheduled amortization payment is $1,563 per quarter, and each scheduled amortization payment due thereafter through the Maturity Date is $3,125 per quarter. 42 The Borrowers may elect to have the Revolving Loans and Term Loans under the Restated Credit Agreement bear interest at an applicable rate plus either: (i) in the case of alternate base rate borrowings, a rate per annum generally equal to the greatest of: (a) the prime rate in effect on such day; (b) 0.50% plus the greater of the Federal Reserve Bank of New York’s effective federal funds rate or the Federal Reserve Bank of New York’s overnight bank funding rate in effect on such day; and (c) 1.00% plus the adjusted term SOFR rate for a 1-month interest period; provided that, in certain circumstances where the alternate base rate is being used as an alternate rate of interest, the alternate base rate shall be determined only according to (a) and (b), and shall be subject to a 1.00% floor; or (ii) in the case of term benchmark borrowings, a rate per annum as follows: (a) for borrowings denominated in U.S.
Through and including the payment due on March 31, 2023, the scheduled amortization payment is $1,563 per quarter, and each scheduled amortization payment due thereafter through the Maturity Date is $3,125 per quarter. 50 Table of Contents The Borrowers may elect to have the Revolving Loans and Term Loans under the Restated Credit Agreement bear interest at an applicable rate plus either: (i) in the case of alternate base rate borrowings, a rate per annum generally equal to the greatest of: (a) the prime rate in effect on such day; (b) 0.50% plus the greater of the Federal Reserve Bank of New York’s effective federal funds rate or the Federal Reserve Bank of New York’s overnight bank funding rate in effect on such day; and (c) 1.00% plus the adjusted term SOFR rate for a 1-month interest period; provided that, in certain circumstances where the alternate base rate is being used as an alternate rate of interest, the alternate base rate shall be determined only according to (a) and (b), and shall be subject to a 1.00% floor; or (ii) in the case of term benchmark borrowings, a rate per annum as follows: (a) for borrowings denominated in U.S.
Impact of COVID-19 The global outbreak of COVID-19 was declared a pandemic by the World Health Organization and a national emergency by each of the U.S., European, and Australian governments in March 2020, with governments world-wide implementing safety measures restricting travel and requiring citizen lockdowns and self-confinements for quarantining 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 each of the U.S., European, and Australian governments in March 2020, with governments worldwide implementing safety measures restricting travel and requiring citizen lockdowns and self-confinements for quarantining purposes.
Changes in any of the assumptions, judgments and estimates mentioned above related to the realizability of deferred tax assets, could materially affect our financial position and results of operations. 36 Goodwill and indefinite-lived intangible assets – We assess the recoverability of our reporting unit’s carrying value of goodwill by performing a qualitative assessment and/or a quantitative goodwill impairment test.
Changes in any of the assumptions, judgments and estimates mentioned above related to the realizability of deferred tax assets, could materially affect our financial position and results of operations. ● Goodwill and indefinite-lived intangible assets – We assess the recoverability of our reporting units’ carrying value of goodwill by performing a qualitative assessment and/or a quantitative goodwill impairment test.
The excess of the purchase price over these fair values is recorded as goodwill. We engage independent third-party valuation specialists to assist us in determining the fair values of certain assets acquired and liabilities assumed. Such valuations require management to make significant estimates and assumptions, especially with respect to intangible assets.
The excess of the purchase price over these fair values is recorded as goodwill. We engage independent third-party valuation specialists to assist us in determining the fair values of certain assets acquired and liabilities assumed. Such valuations require management to make significant estimates and 40 Table of Contents assumptions, especially with respect to intangible assets.
I f we do not achieve the results reflected in the assumptions and estimates, our goodwill impairment evaluations could be adversely affected, and we may impair a portion or all of our intangible assets, which would adversely affect our operating results in the period of impairment . Income taxes – We account for income taxes using the asset and liability method.
If we do not achieve the results reflected in the assumptions and estimates, our goodwill impairment evaluations could be adversely affected, and we may impair a portion or all of our intangible assets, which would adversely affect our operating results in the period of impairment. ● Income taxes – We account for income taxes using the asset and liability method.
Based on the results of the Company’s impairment analysis completed as of December 31, 2022, the Company determined that goodwill at the Adventure reporting unit and certain indefinite-lived intangible assets, specifically the Rhino-Rack trademark, were impaired and recognized a charge of $52,071 and $40,240, respectively.
Based on the results of the Company’s impairment analysis completed as of December 31, 2022, the Company determined that goodwill at the Adventure reporting unit and certain indefinite-lived intangible assets, specifically the Rhino-Rack trademark, were impaired and recognized a charge of $52,071 and $40,240, respectively, during the year ended December 31, 2022.
We estimate the reporting unit’s fair value using a combination of the income approach based upon projected discounted cash flows of the reporting unit and the market approach based upon the market multiple of comparable publicly traded companies.
We estimate the reporting units’ fair value using a combination of the income approach based upon projected discounted cash flows of the reporting unit and the market approach based upon the market multiple of comparable publicly traded companies.
The reporting unit’s current EBITDA is multiplied by the market multiple to estimate its current estimated fair value. Key assumptions utilized in estimating the reporting unit’s EBITDA include revenue and cash flow projections.
The reporting unit’s EBITDA projections are multiplied by the market multiple to estimate its current estimated fair value. Key assumptions utilized in estimating the reporting unit’s EBITDA include revenue and cash flow projections.
Gross margin during the year ended December 31, 2022, increased compared to the prior year as gross margin was negatively impacted by $4,769 due to the sale of Barnes, Rhino-Rack, and MAXTRAX inventory that was recorded at its fair value in purchase accounting during the year ended December 31, 2021.
Gross margin during the year ended December 31, 2022, increased compared to the prior year as gross margin was negatively impacted by $4,408 due to the sale of Rhino-Rack and MAXTRAX inventory that was recorded at its fair value in purchase accounting during the year ended December 31, 2021.
Our effective income tax rate was a benefit of 9.5% for the year ended December 31, 2022, and differed compared to the statutory tax rates primarily due to the impact of impairment of goodwill as well as officer compensation limitations, partially offset by the impact of foreign earnings taxed at applicable statutory rates, tax credits, and permanent book to tax differences related to incentive stock options.
Our effective income tax rate was a benefit of 13.7% for the year ended December 31, 2022, and differed compared to the statutory tax rates primarily due to the impact of impairment of goodwill as well as officer compensation limitations, partially offset by the impact of foreign earnings taxed at applicable statutory rates, tax credits, and permanent book to tax differences related to incentive stock options.
Our effective income tax rate was a benefit of 88% for the year ended December 31, 2021, and differed compared to the statutory tax rates due to the partial release of a valuation allowance offsetting deferred tax assets and discrete charges recorded during the period.
Our effective income tax rate was a benefit of 112.4% for the year ended December 31, 2021, and differed compared to the statutory tax rates due to the partial release of a valuation allowance offsetting deferred tax assets and discrete charges recorded during the period.
Risk Factors. 35 Critical Accounting Policies and Use of Estimates Management’s discussion of our financial condition and results of operations is based on the consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”).
Critical Accounting Policies and Use of Estimates Management’s discussion of our financial condition and results of operations is based on the consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”).
At a minimum, we perform an annual assessment of possible goodwill impairment as of each December 31.
At a minimum, we perform an annual assessment of possible goodwill impairment as of December 31 st of each year.
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 Annual Report on Form 10-K 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, 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 an outbreak of disease or similar public health threat, such as the COVID-19 global pandemic, and government actions and restrictive measures implemented in response; stability of the Company’s manufacturing facilities and suppliers, as well as consumer demand for our products, in light of disease epidemics and health-related concerns such as the COVID-19 global pandemic; the impact that global climate change trends may have on the Company and its suppliers and customers, increased focus on sustainability issues as a result of global climate change; regulatory or market responses to global climate change; the Company's ability to protect patents, trademarks and other intellectual property rights; any breaches of, or interruptions in, our information systems; the ability of our information technology systems or information security systems to operate effectively, including as a result of security breaches, viruses, hackers, malware, natural disasters, vendor business interruptions or other causes; our ability to properly maintain, protect, repair or upgrade our information technology systems or information security systems, or problems with our transitioning to upgraded or replacement systems; the impact of adverse publicity about the Company and/or its brands, 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; ongoing disruptions and delays in the shipping and transportation of our products due to port congestion, container ship availability and/or other logistical challenges; our ability to utilize our net operating loss carryforwards; changes in tax laws and liabilities, tariffs, legal, regulatory, political and economic risks; the Company’s ability to maintain a quarterly dividend ; and any material differences in the actual financial results of the Company’s past and future acquisitions, including, without limitation, its previous acquisition of Rhino-Rack as compared with expectations, including the impact of acquisitions and any recognition of impairment or other charges relating to any such acquisitions on the Company’s future earnings per share.
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 Annual Report on Form 10-K include, but are not limited to, the overall level of consumer demand on our products; general economic conditions and other factors affecting consumer confidence, preferences, and behavior, including, without limitation, the impact of inflation; disruption and volatility in the global currency, capital and credit markets; the financial strength of retail economies and the Company’s customers; the Company’s ability to implement its business strategy; the ability of the Company to execute and integrate acquisitions; the Company’s exposure to product liability or product warranty claims and other loss contingencies, including, without limitation, recalls and liability claims relating to our avalanche beacon transceivers; disruptions and other impacts to the Company’s business, as a result of an outbreak of disease or similar public health threat, such as the COVID 19 global pandemic, and government actions and restrictive measures implemented in response; stability of the Company’s manufacturing facilities and suppliers, as well as consumer demand for our products, in light of disease epidemics and health-related concerns such as the COVID 19 global pandemic; the impact that global climate change trends may have on the Company and its suppliers and customers, increased focus on sustainability issues as a result of global climate change; regulatory or market responses to global climate change; the Company’s ability to protect patents, trademarks and other intellectual property rights; any breaches of, or interruptions in, our information systems; the ability of our information technology systems or information security systems to operate effectively, including as a result of security breaches, viruses, hackers, malware, natural disasters, vendor business interruptions or other causes; our ability to properly maintain, protect, repair or upgrade our information technology systems or information security systems, or problems with our transitioning to upgraded or replacement systems; the impact of adverse publicity about the Company and/or its brands and products, including without limitation, through social media or in connection with brand damaging events and/or public perception; the potential impact of the Consumer Products Safety Commission’s investigation related to the Company’s reporting obligations under the Consumer Product Safety Act in connection with the Company’s recall of certain models of its avalanche transceivers on our business, results of operations, and financial condition; fluctuations in the price, availability and quality of raw materials and contracted products as well as foreign currency fluctuations; ongoing disruptions and delays in the shipping and transportation of our products due to port congestion, container ship availability and/or other logistical challenges; the impact of political unrest, natural disasters or other crises, terrorist acts, acts of war and/or military operations; our ability to utilize our net operating loss carryforwards; changes in tax laws and liabilities, tariffs, legal, regulatory, political and economic risks; the Company’s ability to maintain a quarterly dividend; our ability to obtain additional capital and funding on acceptable terms to meet our financial obligations as well as to support our business operations and growth strategy; and any material differences in the actual financial results of the Company’s past and future acquisitions, including the impact of acquisitions and any recognition of impairment or other charges relating to any such acquisitions on the Company’s future earnings per share.
During the year ended December 31, 2022, we recorded $92,311,000 of impairment of goodwill and indefinite-lived intangible assets, specifically the Rhino-Rack trademark, in our Adventure reporting unit. No impairment was recorded during the years ended December 31, 2021, and 2020.
No impairment was recorded during the years ended December 31, 2023 and 2021. During the year ended December 31, 2022, we recorded $92,311,000 of impairment of goodwill and indefinite-lived intangible assets, specific to the Adventure reporting unit and the Rhino-Rack trademark.
The Restated Credit Agreement also contains customary events of default, including, but not limited to: (i) failure to pay amounts due under the Restated Credit Agreement; (ii) materially incorrect representations and warranties; (iii) failure to comply with covenants; (iv) change of control; and (v) default under other indebtedness aggregating at least $3,000.
The Restated Credit Agreement also contains customary events of default, including, but not limited to: (i) failure to pay amounts due under the Restated Credit Agreement; (ii) materially incorrect representations and warranties; (iii) failure to comply with covenants; (iv) change of control; and (v) default under other indebtedness aggregating at least $3,000. 51 Table of Contents The obligations of each Loan Party under the Restated Credit Agreement are guaranteed by each other Loan Party.
Sales increases in the Outdoor and Adventure segments were partially offset by a decrease in sales of $6,613 and $2,328, respectively, due to the strengthening of the U.S. dollar against foreign currencies during the year ended December 31, 2022, compared to the prior period.
The increase in sales was primarily attributable to an increase in sales at the Adventure and Outdoor segments of $47,767 and $1,513, respectively. ​ Sales increases in the Outdoor and Adventure segments were partially offset by a decrease in sales of $6,613 and $2,328, respectively, due to the strengthening of the U.S. dollar against foreign currencies during the year ended December 31, 2022, compared to the prior period.
Free cash flow, defined as net cash provided by (used in) operating activities less capital expenditures, of $6,360 was generated during the year ended December 31, 2022 compared to ($17,687) of negative free cash flow during the same period in 2021.
Free cash flow, defined as net cash provided by operating activities less capital expenditures, of $26,207 was generated during the year ended December 31, 2023 compared to $6,360 of free cash flow during the same period in 2022.
A reconciliation of free cash flows to comparable GAAP financial measures is set forth below: Year Ended December 31, 2022 2021 Net cash provided by (used in) operating activities $ 14,610 $ (304) Purchase of property and equipment (8,250) (17,383) Free cash flow $ 6,360 $ (17,687) Net Cash From Investing Activities Net cash used in investing activities was $7,751 during the year ended December 31, 2022 compared to net cash used in investing activities of $178,142 during the year ended December 31, 2021 .
A reconciliation of free cash flows to comparable GAAP financial measures is set forth below: ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2023 ​ 2022 ​ ​ ​ ​ ​ ​ Net cash provided by operating activities $ 31,924 ​ $ 14,610 Purchase of property and equipment ​ (5,717) ​ ​ (8,250) Free cash flow $ 26,207 ​ $ 6,360 ​ Net Cash From Investing Activities Net cash used in investing activities was $11,416 during the year ended December 31, 2023 compared to net cash used in investing activities of $7,751 during the year ended December 31, 2021.
On December 1, 2021, the Company completed the acquisition of Australia-based MaxTrax Australia Pty Ltd (“MAXTRAX”). 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.
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 2022 increase was partially offset by the $269 MAXTRAX fair value inventory charge due to purchase accounting during the year ended December 31, 2022, as well as unfavorable foreign exchange impacts due to a strong U.S. dollar against foreign currencies and abnormally high freight costs.
The 2022 increase was partially offset by the $269 MAXTRAX fair value inventory charge due to purchase accounting during the year ended December 31, 2022, as well as unfavorable foreign exchange impacts due to a strong U.S. dollar against foreign currencies and abnormally high freight costs. ​ Selling, General and Administrative ​ Selling, general, and administrative expenses increased $30,154, or 33.3%, to $120,814 during the year ended December 31, 2022, compared to selling, general and administrative expenses of $90,660 during the year ended December 31, 2021.
We currently employ approximately 120 engineers across the portfolio, focusing on enhancing our customers’ performance in the most critical moments. Our commitment to quality, rigorous safety, and ultimately best-in-class design is evidenced by outstanding industry recognition, as we have received numerous product awards across our portfolio of super fan brands. Each of our brands represents a unique customer value proposition.
Our commitment to quality, rigorous safety, and ultimately best-in-class design is evidenced by outstanding industry recognition, as we have received numerous product awards across our portfolio of brands. Each of our brands represents a unique customer value proposition.
The decrease in other, net was primarily attributable to losses from non-hedged foreign currency contracts during the year ended December 31, 2021, not repeating in the current period. The decrease was partially offset by an increase in remeasurement losses recognized on the Company’s foreign denominated accounts receivable and accounts payable.
The change in other, net was primarily attributable to an increase in remeasurement gains recognized on the Company’s foreign denominated accounts receivable and accounts payable, partially offset by changes in mark-to-market adjustments on non-hedged foreign currency contracts during the year ended December 31, 2023.
The discount rates are consistent with those used for investment decisions and take into account our future operating plans and strategies. Certain other key assumptions utilized, including revenue and cash flow projections, are based on estimates consistent with those utilized in our annual budgeting and planning process that we believe are reasonable.
Certain other key assumptions utilized, including revenue and cash flow projections, are based on estimates consistent with those utilized in our annual budgeting and planning process that we believe are reasonable.
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.
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.
The increase at the Adventure segment is due to the full year ownership of the Adventure brands during the year ended December 31, 2022, compared to the partial year of ownership in the prior period.
The increase in sales was primarily attributable to an increase in sales at the Adventure segment of $12,470. The increase at the Adventure segment is due to the full year ownership of Rhino-Rack and MAXTRAX during the year ended December 31, 2022, compared to the partial year of ownership in the prior period.
If the estimated fair value of the reporting entity exceeds the carrying value, the goodwill is not impaired, and no further review is required. However, if the carrying value exceeds the estimated fair value of the reporting unit, an impairment expense should be recognized for the excess of the carrying value over the fair value.
If the estimated fair value of the reporting entity exceeds the carrying value, the goodwill is not impaired, and no further review is required.
Sales increases in the Outdoor and Adventure segments were partially offset by a decrease in sales 38 of $6,613 and $2,328, respectively, due to the strengthening of the U.S. dollar against foreign currencies during the year ended December 31, 2022, compared to the prior period.
Sales in the Adventure and Outdoor segments were reduced by $2,786 and $1,561, respectively, due to foreign exchange impacts from the strengthening of the U.S. dollar against foreign currencies during the year ended December 31, 2023, compared to the prior period.
Year Ended December 31, 2022 2021 Net cash provided by (used in) operating activities $ 14,610 $ (304) Net cash used in investing activities (7,751) (178,142) Net cash (used in) provided by financing activities (13,858) 180,677 Effect of foreign exchange rates on cash (405) (555) Change in cash (7,404) 1,676 Cash, beginning of year 19,465 17,789 Cash, end of period $ 12,061 $ 19,465 Net Cash From Operating Activities Net cash provided by operating activities was $14,610 during the year ended December 31, 2022, compared to net cash used in operating activities of $304 during the year ended December 31, 2021.
The following presents a discussion of cash flows for the year ended December 31, 2023 compared with the year ended December 31, 2022. ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2023 ​ 2022 ​ ​ ​ ​ ​ ​ Net cash provided by operating activities $ 31,924 ​ $ 14,610 Net cash used in investing activities ​ (11,416) ​ ​ (7,751) Net cash used in financing activities ​ (20,255) ​ ​ (13,858) Effect of foreign exchange rates on cash ​ (990) ​ ​ (405) Change in cash ​ (737) ​ ​ (7,404) Cash, beginning of year ​ 12,061 ​ ​ 19,465 Cash, end of period $ 11,324 ​ $ 12,061 ​ Net Cash From Operating Activities Net cash provided by operating activities was $31,924 during the year ended December 31, 2023, compared to net cash provided by operating activities of $14,610 during the year ended December 31, 2022.
Income Taxes Income tax benefit decreased $4,863, or 39.8%, to $7,351 during the year ended December 31, 2022, compared to an income tax benefit of $12,214 during the same period in 2021.
Income Taxes Income tax benefit decreased $10,425, or 70.8%, to $4,291 during the year ended December 31, 2023, compared to an income tax benefit of $14,716 during the same period in 2022.
Transaction Costs Transaction expense decreased to $2,967 during the year ended December 31, 2022, compared to transaction costs of $11,843 during the year ended December 31, 2021, which consisted of expenses related to the Company’s various acquisition efforts.
Transaction Costs Transaction expense decreased to $593 during the year ended December 31, 2023, compared to transaction costs of $2,818 during the year ended December 31, 2022. The 2023 transaction costs primarily related to the TRED Outdoor acquisition and other expenses related to the Company’s various acquisition efforts.
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 NOLs. The Company has $17,663 of NOLs, of which, $1,851 expire on December 31, 2023.
The Company believes its U.S. Federal NOLs will substantially offset its future U.S. Federal income taxes until expiration. 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 NOLs.
Additionally, the Company incurred higher Corporate costs of $4,083 primarily related to increased payroll and stock compensation of $3,546 during the year ended December 31, 2022, compared to the prior year. The remaining increase was primarily attributable to the Company’s investments in retail and direct-to-consumer initiatives at the Outdoor segment.
Additionally, the Company incurred higher Corporate costs of $3,920 primarily related to increased payroll and stock compensation during the year ended December 31, 2022, compared to the prior year.
The increase in sales was primarily attributable to an increase in sales at the Adventure, Precision Sport, and Outdoor segments of $50,095, $23,032, and $8,126, respectively.
The increase in sales was primarily attributable to an increase in sales at Adventure and Outdoor segments of $35,297 and $5,984, respectively.
Our iconic brands are rooted in performance-defining technologies that enable our customers to have their best days outdoors. We have a long history of technical innovation and product development, backed by an extensive patent portfolio that continues to evolve and advance our markets.
We have a long history of technical innovation and product development, backed by an extensive patent portfolio that continues to evolve and advance our markets. We focus on enhancing our customers’ performance in the most critical moments.
Interest Expense, net Interest expense, net increased to $7,895 during the year ended December 31, 2022, compared to interest expense, net of $2,939 during the year ended December 31, 2021.
Interest Income, net Interest income, net increased to $67 during the year ended December 31, 2023, compared to interest income, net of $0 during the year ended December 31, 2022.
The Company’s products are principally sold globally under the Black Diamond®, Sierra®, Barnes® and Rhino-Rack® and MAXTRAX® brand names through outdoor specialty and online retailers, our own websites, distributors and original equipment manufacturers.
Each of our brands has a long history of continuous product innovation for core and everyday users alike. The Company’s products are principally sold globally under the Black Diamond®, 38 Table of Contents Rhino-Rack®, MAXTRAX®, and TRED Outdoors® brand names through outdoor specialty and online retailers, our own websites, distributors and original equipment manufacturers.
The Company has provided a valuation allowance against a portion of the net deferred tax assets as of December 31, 2022, 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.
The Company has recorded a valuation allowance of $714, resulting in a net deferred tax asset of $39,719, before deferred tax liabilities of $34,434. The Company has provided a valuation allowance against a portion of the net deferred tax assets as of December 31, 2023, because the ultimate realization of those assets does not meet the more-likely-than-not criteria.
The increase in cost of goods sold was primarily attributable to an increase in the number of units sold and a full year of ownership of the Adventure brands during the year ended December 31, 2022.
The increase in cost of goods sold was primarily attributable to an increase in the number of units sold and a full year of ownership of Rhino-Rack and MAXTRAX during the year ended December 31, 2022. ​ Gross Profit ​ Gross profit increased $22,079, or 25.1%, to $109,953 during the year ended December 31, 2022, compared to gross profit of $87,874 during the year ended December 31, 2021.
Founded in 1992, our Rhino-Rack brand is a globally-recognized designer and distributor of highly-engineered automotive roof racks and accessories to enhance the outdoor enthusiast’s overlanding experience. Founded in 2005, our MAXTRAX brand offers high-quality overlanding and off-road vehicle recovery and extraction tracks for the overland and off-road market. Clarus, incorporated in Delaware in 1991, acquired Black Diamond Equipment, Ltd.
Founded in 2005, our MAXTRAX brand offers high-quality overlanding and off-road vehicle recovery and extraction tracks for the overland and off-road market. Similarly, TRED, founded in 2012, is a trusted brand for key retailers and distributors in the overlanding and off-road vehicle recovery market. Clarus, incorporated in Delaware in 1991, acquired Black Diamond Equipment, Ltd.
Contingent Consideration Expense (Benefit) Contingent consideration expense was $493 during the year ended December 31, 2022, compared to a $1,605 contingent consideration benefit during the year ended December 31, 2021, which consisted of changes in estimated fair value of contingent consideration liabilities.
Contingent Consideration (Benefit) Expense Contingent consideration benefit was $1,565 during the year ended December 31, 2023, compared to a $493 contingent consideration expense during the year ended December 31, 2022, which consisted of changes in estimated fair value of contingent consideration liabilities associated with our acquisition of MAXTRAX in 2021. 44 Table of Contents Impairment of Goodwill and Indefinite-Lived Intangible Assets Impairment of goodwill and indefinite-lived intangible assets decreased to $0 during the year ended December 31, 2023, compared to impairment of goodwill and indefinite-lived intangible assets of $92,311 during the year ended December 31, 2022.
The change in net cash provided by (used in) operating activities during 2022 is primarily due to increases in depreciation and amortization expenses, as well as improvements in working capital and increases in stock compensation and contingent consideration expense during the year ended December 31, 2022, compared to the same period in 2021.
The change in net cash provided by operating activities during 2023 is primarily due to a decrease in cash outflows related to working capital of $56,604, partially offset by a decrease in stock compensation and amortization of other intangible assets, and an increase in contingent consideration benefit during the year ended December 31, 2023, compared to the same period in 2022.
The increase at the Adventure segment is due to the full year ownership of the Adventure brands during the year ended December 31, 2022, compared to the partial year of ownership in the prior period. This increase was partially offset by a decrease in sales at the Outdoor segment of $4,471.
This increase was partially offset by a decrease in sales at the Outdoor segment of $4,471. ​ International sales increased $41,281, or 29.2%, to $182,433 during the year ended December 31, 2022, compared to international sales of $141,152 during the year ended December 31, 2021.
The increase at the Adventure segment is due to the full year ownership of the Adventure brands during the year ended December 31, 2022, compared to the partial year of ownership in the prior period.
The increase at the Adventure segment is due to the full year ownership of Rhino-Rack and MAXTRAX during the year ended December 31, 2022, compared to the partial year of ownership in the prior period. ​ Cost of Goods Sold ​ Cost of goods sold increased $27,201, or 15.3%, to $205,298 during the year ended December 31, 2022, compared to cost of goods sold of $178,097 during the year ended December 31, 2021.
This release of the valuation allowance is primarily due to a change in accounting method which increased taxable income and the ability to utilize NOLs. 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.
This release of the valuation allowance is primarily due to a change in accounting method which increased taxable income and the ability to utilize NOLs.
We believe that our liquidity requirements and contractual obligations for at least the next 12 months will be adequately covered by cash provided by operations and our existing revolving credit facility. Additionally, long-term contractual obligations are also currently expected to be funded from cash from operations and availability under our existing credit facilities.
We believe that our liquidity requirements and contractual obligations for at least the next 12 months will be adequately covered by cash provided by operations and the net proceeds from the sale of the Precision Sport segment after the settlement of the Restated Credit Agreement.
For additional information regarding the Company’s existing credit facilities, see the section titled “Credit Agreement” below. At December 31, 2022, we had total cash of $12,061, compared to cash of $19,465 at December 31, 2021. At December 31, 2022, the Company had $7,921 of the $12,061 in cash held by foreign entities, of which $5,719 is considered permanently reinvested.
At December 31, 2023, we had total cash of $11,324, compared to cash of $12,061 at December 31, 2022. At December 31, 2023, the Company had $7,415 of the $11,324 in cash held by foreign entities, of which $4,950 is considered permanently reinvested.
Supported by six decades of proven innovation, Black Diamond is an established global leader in high-performance, activity-based climbing, skiing, and technical mountain sports equipment. The brand is synonymous with premium performance, safety and reliability. Our Sierra and Barnes brands have been leading specialty manufacturers of bullets and ammunition for over 50 years.
Supported by six decades of proven innovation, Black Diamond is an established global leader in high-performance, activity-based climbing, skiing, and technical mountain sports equipment. The brand is synonymous with premium performance, safety and reliability. Founded in 1992, our Rhino-Rack brand is a globally-recognized designer and distributor of highly-engineered automotive roof racks and accessories to enhance the outdoor enthusiast’s overlanding experience.
Our portfolio of iconic brands is well-positioned for sustainable, long-term growth underpinned by powerful industry trends across the outdoor and adventure sport end markets. 34 One of the key elements of our sustained financial performance is our persistent focus on brand building through product initiatives.
Our portfolio of iconic brands is well-positioned for sustainable, long-term growth underpinned by powerful industry trends across the outdoor and adventure sport end markets. Our iconic brands are rooted in performance-defining technologies that enable our customers to have their best days outdoors.
The decrease in cash provided during the year ended December 31, 2022, compared to the same period in 2021 was primarily due to a decrease in net proceeds to the revolving line of credit and term loan, a decrease in proceeds from the sale of common stock, and an increase in purchases of treasury stock.
The increase in cash used during the year ended December 31, 2023, compared to the same period in 2022 was primarily due to a decrease in net proceeds from the revolving line of credit and term loan, partially offset by a decrease in purchases of treasury stock. 49 Table of Contents Net Operating Loss As of December 31, 2023, the Company had net operating loss carryforwards (“NOLs”) and research and experimentation credit for U.S. federal income tax purposes of $7,699 and $2,997, respectively.
These NOLs are subject to compliance with Section 382 of the Internal Revenue Code of 1986, as amended. As of December 31, 2022, the Company’s gross deferred tax asset was $32,972. The Company has recorded a valuation allowance of $3,323, resulting in a net deferred tax asset of $29,649, before deferred tax liabilities of $30,243.
The Company has $7,669 of NOLs, none of which will expire until December 31, 2027. These NOLs are subject to compliance with Section 382 of the Internal Revenue Code of 1986, as amended. As of December 31, 2023, the Company’s gross deferred tax asset was $39,893.
Cost of Goods Sold Cost of goods sold increased $45,828, or 19.2%, to $284,690 during the year ended December 31, 2022, compared to cost of goods sold of $238,862 during the year ended December 31, 2021.
Cost of Goods Sold Cost of goods sold decreased $16,789, or 8.2%, to $188,509 during the year ended December 31, 2023, compared to cost of goods sold of $205,298 during the year ended December 31, 2022.
Gross Profit Gross profit increased $26,484 or 19.3%, to $163,416 during the year ended December 31, 2022, compared to gross profit of $136,932 during the year ended December 31, 2021. Gross margin was 36.5% during the year ended December 31, 2022, compared to a gross margin of 36.4% during the year ended December 31, 2021.
Gross margin was 34.9% during the year ended December 31, 2022, compared to a gross margin of 33.0% during the year ended December 31, 2021.
Selling, General and Administrative Selling, general, and administrative expenses increased $29,545, or 28.0%, to $135,039 during the year ended December 31, 2022, compared to selling, general and administrative expenses of $105,494 during the year ended December 31, 2021.
Selling, General and Administrative Selling, general, and administrative expenses decreased $4,447, or 3.7%, to $116,367 during the year ended December 31, 2023, compared to selling, general and administrative expenses of $120,814 during the year ended December 31, 2022.
Under the income approach, the estimated discounted cash flows are based on the best information available to us at the time, including supportable assumptions and projections we believe are reasonable. Our discounted cash flow estimates use discount rates that correspond to a weighted-average cost of capital consistent with a market-participant view.
Our discounted cash flow estimates use discount rates that correspond to a weighted-average cost of capital consistent with a market-participant view. The discount rates are consistent with those used for investment decisions and take into account our future operating plans and strategies.
The increase in interest expense recognized during the year ended December 31, 2022, was primarily associated with the increase in the average outstanding debt amounts during the period compared to the prior year, higher interest rates, and the recording of certain debt issuance costs. 39 Other, net Other, net expense decreased by $2,540, or 58.0%, to $1,842 during the year ended December 31, 2022, compared to other, net expense of $4,382 during the year ended December 31, 2021.
The decrease in net income from discontinued operations was primarily attributable to an increase in interest expense of $4,973 due to an increase in the average outstanding debt amounts, higher interest rates, and the recording of certain debt issuance costs during the period compared to the prior year and a net decrease in the direct results of the Precision Sport segment.
The decrease in cash used during the year ended December 31, 2022 is due to the acquisition of Rhino-Rack and MAXTRAX during the year ended December 31, 2021, as well as a decrease in purchases of property and equipment, primarily due to the purchase of the Barnes facility during the year ended December 31, 2021. 41 Net Cash From Financing Activities Net cash used in financing activities was $13,858 during the year ended December 31, 2022 , compared to net cash provided by financing activities of $180,677 during the year ended December 31, 2021 .
The increase in cash used during the year ended December 31, 2023 is due to the acquisition of Tred, partially offset by a decrease in purchases of property and equipment during the year ended December 31, 2023.
Domestic sales increased $12,266, or 5.4%, to $238,144 during the year ended December 31, 2022, compared to domestic sales of $225,878 during the year ended December 31, 2021. The increase in sales was primarily attributable to an increase in sales at the Adventure and Precision Sport segments of $12,470 and $4,267, respectively.
Domestic sales decreased $20,433, or 15.4%, to $112,385 during the year ended December 31, 2023, compared to domestic sales of $132,818 during the year ended December 31, 2022. The decrease in sales was primarily attributable to a decrease in sales at the Adventure and Outdoor segments of $11,160 and $9,273, respectively.
On February 24, 2023, the Company announced that its Board of Directors approved the payment on March 17, 2023 of the Quarterly Cash Dividend to the record holders of shares of the Company’s common stock as of the close of business on March 7, 2023.
On March 5, 2024, the Company announced that its Board of Directors approved the payment on March 18, 2024 of the Quarterly Cash Dividend of $0.025 to the record holders of shares of the Company’s common stock as of the close of business on March 28, 2024. 39 Table of Contents Restructuring Starting in 2023, the Company began incurring expenses to facilitate long-term sustainable growth through cost reduction actions, consisting of employee reductions, facility rationalization and contract termination costs.
As of December 31, 2022, the interest rates on the revolving loan and term loan commitments were approximately 6.3%. The Company was in compliance with the debt covenants set forth in the Restated Credit Agreement as of December 31, 2022.
Credit Agreement As of December 31, 2023, the Company had drawn approximately $10,375 on the revolving loan commitment at December 31, 2023 and $109,375 was outstanding under the term loan commitment. As of December 31, 2023, the interest rates on the revolving loan and term loan commitments ranged between approximately 7.7% and 9.8%.
On October 19, 2020, the Company announced that its Board of Directors approved the reinstatement of its Quarterly Cash Dividend. In 2022, 2021 and 2020, our total Quarterly Cash Dividends were $3,721,000, $3,335,000, and $1,520,000 respectively. In 2020, our total Quarterly Stock Dividends were $1,533,000, which combined with our cash dividend of $1,520,000, resulted in total dividends of $3,053,000.
The declaration and payment of future Quarterly Cash Dividends is subject to the discretion of and approval of the Company’s Board of Directors. In 2023, 2022 and 2021 our total Quarterly Cash Dividends were $3,750,000, $3,721,000, and $3,335,000, respectively.
International sales increased $60,046, or 40.1%, to $209,962 during the year ended December 31, 2022, compared to international sales of $149,916 during the year ended December 31, 2021. The increase in sales was primarily attributable to an increase in sales at Adventure, Precision Sport, and Outdoor segments of $37,625, $18,765, and $12,597, respectively.
International sales decreased $8,798, or 4.8%, to $173,635 during the year ended December 31, 2023, compared to international sales of $182,433 during the year ended December 31, 2022. The decrease in sales was primarily attributable to a decrease in sales at the Outdoor segment of $9,019, partially offset by an increase in sales at the Adventure segment of $221.
Impairment of Goodwill and Indefinite-Lived Intangible Assets Impairment of goodwill and indefinite-lived intangible assets increased to $92,311 during the year ended December 31, 2022, compared to impairment of goodwill and indefinite-lived intangible assets of $0 during the year ended December 31, 2021.
The decrease in transaction costs was primarily attributable to transaction costs incurred during the year ended December 31, 2021 related to the acquisition of Rhino-Rack and MAXTRAX that did not recur during the same period in 2022. ​ Contingent Consideration Expense (Benefit) ​ Contingent consideration expense was $493 during the year ended December 31, 2022, compared to a $1,605 contingent consideration benefit during the year ended December 31, 2021, which consisted of changes in estimated fair value of contingent consideration liabilities associated with our acquisition of Rhino-Rack and MAXTRAX in 2021. ​ 47 Table of Contents Impairment of Goodwill and Indefinite-Lived Intangible Assets ​ Impairment of goodwill and indefinite-lived intangible assets increased to $92,311 during the year ended December 31, 2022, compared to impairment of goodwill and indefinite-lived intangible assets of $0 during the year ended December 31, 2021.
Removed
A discussion of changes in our financial condition and the results of operations from the year ended December 31, 2021 to December 31, 2020 can be found in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10-K for the year ended December 31, 2021, filed on March 7, 2022.
Added
On December 1, 2021, the Company completed the acquisition of Australia-based MaxTrax Australia Pty Ltd (“MAXTRAX”). On October 9, 2023, the Company completed the acquisition of Australia-based TRED Outdoors Pty Ltd. (“TRED”).
Removed
Our mission is to identify, acquire and grow outdoor “super fan” brands through our unique “innovate and accelerate” strategy. We define a “super fan” brand as a brand that creates the world’s pre-eminent, performance-defining product that the best-in-class user cannot live without. Each of our brands has a long history of continuous product innovation for core and everyday users alike.
Added
On February 29, 2024, the Company and Everest/Sapphire Acquisition, LLC, its wholly-owned subsidiary, completed the sale to Bullseye Acquisitions, LLC, an affiliate of JDH Capital Company, of all of the equity associated with the Company’s Precision Sport segment, which is comprised of the Company’s subsidiaries Sierra and Barnes Bullets – Mona, LLC (“Barnes”), pursuant to a Purchase and Sale Agreement dated as of December 29, 2023, by and among, Bullseye Acquisitions, LLC, Everest/Sapphire Acquisition, LLC and the Company (the “Precision Sport Purchase Agreement”).
Removed
Since 1947, Sierra has been dedicated to manufacturing the highest-quality, most accurate bullets in the world for hunting and sport shooting enthusiasts. Barnes traces its history back to 1932, and since 1989 has manufactured technologically-advanced lead-free bullets and premium ammunition for hunters, range shooters, military and law enforcement professionals.
Added
Under the terms of the Precision Sport Purchase Agreement, the Company received net proceeds of approximately $37,871,000 in cash, after payment of certain fees and settlement of the Restated Credit Agreement, for all of the equity associated with the Company’s Precision Sport segment.
Removed
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”).
Added
The activities of the Precision Sport segment have been segregated and reported as discontinued operations for all periods presented. See Note 3 to our consolidated financial statements for financial information regarding discontinued operations.
Removed
Year Ended December 31, 2021 Compared to Year Ended December 31, 2020 The following presents the Company’s results of operations for the year ended December 31, 2021, compared with the year ended December 31, 2020: Year Ended December 31, 2021 2020 Sales Domestic sales $ 225,878 $ 132,226 International sales 149,916 91,781 Total sales 375,794 224,007 Cost of goods sold 238,862 146,212 Gross profit 136,932 77,795 Operating expenses Selling, general and administrative 105,494 71,428 Contingent consideration benefit (1,605) – Transaction costs 11,843 2,433 Total operating expenses 115,732 73,861 Operating income 21,200 3,934 Other income (expense) Interest expense, net (2,939) (1,261) Other, net (4,382) 912 Total other expense, net (7,321) (349) Income before income tax 13,879 3,585 Income tax benefit (12,214) (1,960) Net income $ 26,093 $ 5,545 40 Liquidity and Capital Resources (In Thousands) Year Ended December 31, 2022 Compared to Year Ended December 31, 2021 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 with the various brands.
Added
During the year ended December 31, 2023, the Company incurred $3,223,000 of restructuring charges related to these actions. The Company accrues for restructuring costs when they are probable and reasonably estimable. These costs include severance costs, exit costs, and other restructuring costs and are included in Restructuring charges in the consolidated statements of comprehensive (loss) income.
Removed
We plan to fund these activities through a combination of our future operating cash flows and borrowings on our revolving credit facility which had approximately $98,000 available to borrow at December 31, 2022, while currently maintaining compliance with the consolidated total leverage ratio per the Restated Credit Agreement of 3.75 to 1.
Added
Severance costs primarily consist of severance benefits through payroll continuation, conditional separation costs and employer tax liabilities, while exit costs primarily consist of lease exit and contract termination costs.
Removed
The following presents a discussion of cash flows for the year ended December 31, 2022 compared with the year ended December 31, 2021.

… 32 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

7 edited+4 added−3 removed3 unchanged
Biggest changeDerivatives are such that a specific debt instrument, contract, or anticipated purchase determines the amount, maturity, and other specifics of the hedge. If a derivative contract is entered into, we either determine that it is an economic hedge or we designate the derivative as a cash flow or fair value hedge.
Biggest changeDerivative instruments are used only for risk management purposes and not for speculation or trading. Derivatives are such that a specific debt instrument, contract, or anticipated purchase determines the amount, maturity, and other specifics of the hedge.
A hypothetical 10% change in foreign currency rates would not have a material effect on foreign currency gains and losses related to the foreign currency derivatives or the net fair value of the Company’s foreign currency derivatives.
A hypothetical 10% change in foreign currency rates would not have a material effect on foreign currency gains and losses related to the foreign currency derivatives or the net fair value of the Company’s foreign currency derivatives. Gains or losses on the fair value of derivative contracts would generally be offset by gains and losses on the underlying hedged transaction.
Given the current geopolitical environment and other economic uncertainties worldwide, changes in the relation to these and other currencies to the U.S. dollar will affect our sales and profitability and could result in exchange losses.
We transact business predominantly in U.S. dollars, Australian dollars, Euros (EUR), and Canadian dollars ($CAD). Given the current geopolitical environment and other economic uncertainties worldwide, changes in these and other currencies in relation to the U.S. dollar will affect our sales and profitability and could result in exchange losses.
For the year ending December 31, 2022, approximately 37% of our sales were denominated in foreign currencies (compared to 41% of our pro forma sales in the prior year), the most significant of which were the Australian Dollar, Euro, Canadian Dollar, Norwegian Kroner, and Swiss Franc.
For the year ending December 31, 2023, approximately 54% of our sales from continuing operations were denominated in foreign currencies (compared to 53% of our sales from continuing operations in the prior year), the most significant of which were the Australian Dollar, Euro, Canadian Dollar, Norwegian Kroner, and Swiss Franc.
The applicable interest rate for the outstanding borrowings under our credit facility as of December 31, 2022 and 2021 was approximately 6.3% and 2.4 %, respectively. Amounts outstanding as of December 31, 2022 and 2021 were $138,360,000 and $140,375,000, respectively.
The applicable interest rate for the outstanding borrowings under our credit facility as of December 31, 2023 ranged between approximately 7.7% and 9.8%. As of December 31, 2022, the interest rate was approximately 6.3%. Amounts outstanding as of December 31, 2023 and 2022 were $119,750,000 and $138,360,000, respectively.
Derivative Instruments We employ a variety of practices to manage these market risks, including operating and financing activities and, where deemed appropriate, the use of derivative instruments. Derivative instruments are used only for risk management purposes and not for speculation or trading.
These offsetting gains and losses are not reflected above. See Note 9 to our consolidated financial statements for additional discussion of our foreign currency contracts. Derivative Instruments We employ a variety of practices to manage these market risks, including operating and financing activities and, where deemed appropriate, the use of derivative instruments.
We do not hold derivative financial investments, derivative commodity investments, engage in foreign currency hedging or other transactions that expose us to material market risks. ‎ 44
If a derivative contract is entered into, we either determine that it is an economic hedge or we designate the derivative as a cash flow or fair value hedge. We do not hold derivative financial investments, derivative commodity investments, engage in foreign currency hedging or other transactions that expose us to material market risks. ​ 53 Table of Contents
Removed
A change of 100-basis points in market interest rates would cause an impact of approximately $1,384,000 to annual interest expense as of December 31, 2022. Foreign Currency Risks We transact business predominantly in U.S. dollars, Australian dollars, Euros, and Canadian dollars.
Added
Subsequent to year end and upon the closing of the sale of the Precision Sport segment, the Company terminated and settled all outstanding borrowings on our revolving credit facility and term debt under the Restated Credit Agreement. Foreign Currency Risks Our consolidated financial statements are denominated in, and our principal currency is, the U.S. dollar.
Removed
The primary purpose of our foreign currency hedging activities is to mitigate the foreign currency exchange rate exposure on the cash flows related to forecasted inventory purchases and sales.
Added
Our Australian Dollar denominated expenses associated with our Australian operations (which include business operations and distribution facilities) provide a natural hedge for Australian Dollar denominated revenues. The Company’s primary exchange rate risk management objective is to attempt to mitigate the uncertainty of anticipated cash flows attributable to changes in foreign currency exchange rates.
Removed
We have not held a material amount of foreign assets during the years ended December 31, 2022, 2021, and 2020, and do not believe our foreign assets expose us to a material foreign currency risk.
Added
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. As of December 31, 2023 and 2022, we had entered into foreign currency forward contracts for Euros and Canadian dollars, which qualified as cash flow hedges.
Added
As of December 31, 2023 and 2022, the aggregate notional amounts of Euro contracts were EUR 20,612,000 and EUR 20,760,000, respectively, and the aggregate notional amounts of Canadian dollar contracts were $CAD 52 Table of Contents 7,925,000 and $CAD 2,807,000, respectively.

Other CLAR 10-K year-over-year comparisons