Clarus Corp. reported a jump in net earnings on an adjusted basis of 97 percent to $4.53 million in the third quarter ended Sept. 30, as sales grew by 69 percent to a record $109.0 million, with a 67 percent gain in constant currencies. On a pro forma basis, including the revenues of the recently acquired Barnes and Rhino-Rack businesses for the year-ago period, sales were up by 18 percent. Barnes and Rhino-Rack contributed incremental sales of $13.2 million and $19.6 million during the quarter, respectively.
Clarus’ biggest operation, Black Diamond, saw sales rise by 20 percent to $59 million in the quarter, lifted by gains of 20 percent in the ski segment, 18 percent in mountain products and 14 percent in climbing. Across the various categories, equipment went up by 19 percent, footwear by 33 percent and apparel by 28 percent.
Sierra Bullets grew by 100 percent to $30.3 million, or by 13 percent excluding Barnes. The group also owns Pieps and ClimbOn Skinourishment.
Clarus’ gross margin improved by 2.4 percentage points to 36.0 percent, but on an adjusted basis, it rose by 5.2 percentage points to 38.8 percent, due mostly to improvements in channel and product mix. Adjusted Ebitda more than doubled to a record $19.2 million, resulting in an adjusted Ebitda margin of 17.7 percent, compared with 14.1 percent in the year-ago period.
Revising its outlook for the full financial year, Clarus is anticipating sales to grow by around 62 percent to $362.5 million in 2021, up from a previous forecast of $350 million. By brand, the company expects Black Diamond’s sales to increase by 27 percent to $217.5 million instead of $215 million. Sierra and Barnes combined should grow by 99 percent to $105 million. The company continues to expect Rhino-Rack to generate revenues of $40 million for the second half of 2021.
Like other companies in the sector, Clarus sees supply chain issues being likely to affect its performance well into 2022. In view of the situation, it has decided to prioritize its wholesale partners for the delivery of core products under each of its own brands. Inventories were up by 74 percent year-on-year at the end of the third quarter, including $5 million in extra inventories for Black Diamond’s clients.
The company is projecting an increase of around 155 percent in adjusted Ebitda to $57 million, compared with a previously budgeted level of $52 million. Included in this assumption is the continued expectation that Rhino-Rack will contribute around $6 million in adjusted Ebitda for the second half of 2021.
Capital expenditures are expected to reach around $8.5 million in 2021. The company’s net debt rose to $190.0 million as of Sept. 30 from $34.6 million at the end of 2020, and it had $34.6 million still available on its revolving credit line by that date.
A public offering of 2.75 million shares closed on Oct. 29 at a price of $27.00 per share provided gross proceeds of $74.3 million for the group. In addition, on Nov. 2, the company closed an option exercised by the underwriters in the offering to purchase an additional 412,500 shares, leading to total gross proceeds before underwriting fees and estimated expenses of about $85.4 million.
