(OIC) Clarus Corporation, the parent company of Black Diamond, Sierra Bullets and SKINourishment, continues to make acqusitions in adjacent sectors. It has announced the takeover of SKB Corporation, a leading U.S. producer of protective cases. The purchase price of around $96 million will consist of $85 million in cash and 1,153,846 shares in Clarus. This is based on SKB’s adjusted Ebitda of more than $9.5 million on sales of $53 million in 2019.
SKB’s well-designed molded polymer cases are said to be engineered to provide superior protection in the transportation of a variety of products in the music sector and others including sports, electronics, healthcare and photography. Clarus plans to accelerate SKB’s growth through its financial muscle and its sales and marketing expertise.
Big tax benefits of $10.4 million boosted Clarus’ net income in the fourth quarter of 2019, making them triple to $12.4 million. Revenues went up by 7 percent from the year-ago quarter to $61.0 million, or by 8 percent in constant currencies. This was driven by the direct business, which grew by 38 percent, as well as the continued momentum of Black Diamond across all regions and product categories.
Overall, the group’s sales in the U.S. were up by only 3 percent to $33.9 million due to problems at Sierra Bullets, which were offset by healthy sales trends at Black Diamond. In the rest of the world, sales jumped by 11 percent to $27.1 million, thanks in particular to solid orders for snow safety equipment in the European market. In the group’s distributor markets, sales were boosted by improved product availability, early launches of spring 2020 products and higher replenishment orders.
Black Diamond, the biggest brand of the group, contributed a sales increase of 13 percent. The growth was driven by a strong performance in men’s and women’s sportswear, technical outerwear and logowear, which resulted in a 25 percent increase for the brand’s apparel business. Another highlight was the Climb category, which grew by 19 percent on strong sales of footwear, harnesses, carabiners and helmets. The ski business advanced by 13 percent. Snow safety products such as beacons and the new line of JetForce packs did well, along with equipment for alpine touring such as bindings and skins. In the Mountain business, sales rose by 4 percent due to some early launches of spring products across international distributor markets, with particularly strong growth in trekking poles and gloves.
Meanwhile, the recently added Sierra Bullets operation saw sales decline by 35 percent, due to continued headwinds in the bullet and ammunition market.
Clarus’ gross margin inched down by 0.1 percentage point to 35.5 percent in the quarter, weighed down by the strengthening U.S. dollar and the impact of recent tariff increases for products imported into the U.S. from China. The adjusted Ebitda margin also inched down by 0.1 percentage point to 11.5 percent.
For the full year, Clarus’ total revenues rose by 8 percent to $229.4 million, Black Diamond gained 13 percent from the previous year, but Sierra was down by 17 percent, hit by continued softness in the ammunition market. Overall, the gross margin inched up by 0.1 percentage point to 35.0 percent, but the group’s net income soared by 160 percent to $19.0 million.
Clarus anticipates that sales will progress by about 6 percent to $244 million in 2020, with a high single-digit gain for Black Diamond and a low single-digit decline for Sierra. The forecast includes the estimated impact of the Covid-19 outbreak on sales in Asia and Europe through the first half. Ebitda is also expected to rise by about 6 percent to $24 million.
As previously reported, Clarus has created a new Performance Sports division focused on sport-enhancing products for performance-driven athletes such as skincare, supplements, nutrition and accessories. The new division will start by taking care of SKINourishment, a brand that Clarus took over last November to access its 100 percent food-grade, plant-based skin products, which are genetically unmodified and vegan, and have not been tested on animals.
Clarus pointed out that it still has about $132 million in federal income tax carryforwards to offset future profits.