Clarus Predict Black Diamond Sales To Increase 17% In 2021

Clarus Corporation, owners of Black Diamond, have released their full 2020 financial results. Looking specifically at Black Diamond, full year sales have taken a dip, which has been attributed to the COVID-forced retail closures in the first half of the year. In the 4th quarter, Clarus reports that Black Diamond sales have seen a recovery and continue to increase; and will continue to do so as Clarus predicts sales to increase 17% to $200 million, in 2021.

Press Release:
Clarus Reports Strong Fourth Quarter and Full Year 2020 Results

Clarus Corporation (NASDAQ: CLAR) (“Clarus” and/or the “Company”), a company focused on the outdoor and consumer industries, reported financial results for the fourth quarter and full year ended December 31, 2020.

Fourth Quarter 2020 Financial Summary vs. Same Year‐Ago Quarter

Sales increased 24% to $75.9 million.
Gross margin was unchanged at 35.5%; adjusted gross margin up 50 basis points to 36.0%.
Net income was $7.1 million, or $0.22 per diluted share, compared to $12.4 million, or $0.40 per diluted share. The fourth quarter of 2019 included a $10.4 million net benefit associated with the partial release of the Company’s valuation allowance on its deferred tax assets.
Adjusted net income before non‐cash items increased 64% to $11.2 million, or $0.34 per diluted share, compared to $6.8 million, or $0.22 per diluted share.
Adjusted EBITDA increased 56% to $11.0 million.
Free cash flow (net cash provided by operating activities less capital expenditures) increased significantly to $6.5 million compared to $2.6 million.
At December 31, 2020, cash and cash equivalents totaled $17.8 million compared to $1.7 million at December 31, 2019, and debt was $34.6 million compared to $22.7 million at December 31, 2019.

2020 Financial Summary vs. 2019

Sales were $224.0 million compared to $229.4 million.
Gross margin was 34.7% compared to 35.0%; adjusted gross margin of 34.9%.
Net income was $5.5 million, or $0.18 per diluted share, compared to $19.0 million, or $0.61 per diluted share. 2019 included the aforementioned $10.4 million net tax benefit.
Adjusted net income before non‐cash items increased 3% to $21.9 million, or $0.70 per diluted share, compared to $21.3 million, or $0.69 per diluted share.
Adjusted EBITDA was $22.4 million compared to $22.7 million.
Free cash flow increased significantly to $24.0 million compared to $5.4 million.

Management Commentary

Full Year 2020 Financial Results

Sales in 2020 were $224.0 million compared to $229.4 million in 2019. The decrease was driven by a 14% decline in Black Diamond sales due to the impacts of the COVID-19-related retail demand freeze in the first half of the year, partially offset by a 57% increase in Sierra sales due to strong demand tailwinds throughout the year. On a constant currency basis, total sales were down 3%.

Gross margin in 2020 was 34.7% compared to 35.0% in 2019. The decrease was primarily due to the unfavorable impacts on the Company’s supply chain and logistics due to the COVID-19 pandemic, partially offset by improved product and channel mix. Excluding a fair value inventory step-up associated with the Barnes acquisition, adjusted gross margin in 2020 was 34.9%.

Selling, general and administrative expenses in 2020 were $71.4 million compared to $68.7 million in 2019. The increase was primarily due to higher levels of stock-based compensation in line with the Company’s stock price appreciation along with the inclusion of Barnes, which contributed $1.7 million, partially offset by the cost-saving initiatives implemented during the first half of the year in response to the COVID-19 pandemic.

Net income in 2020 was $5.5 million, or $0.18 per diluted share, compared to $19.0 million, or $0.61 per diluted share, in 2019. Net income in 2020 included $14.0 million of non-cash charges and $2.4 million of transaction costs, compared to net income in 2019 that included $2.1 million of non‐cash charges and $0.2 million in transaction and restructuring costs.

Adjusted net income in 2020, which excludes the non‐cash items and transaction costs, increased 3% to $21.9 million, or $0.70 per diluted share, compared to $21.3 million, or $0.69 per diluted share, in 2019.

Adjusted EBITDA in 2020 was $22.4 million compared to $22.7 million in 2019.

Net cash provided by operating activities for the year ended December 31, 2020 increased significantly to $29.4 million compared to $9.5 million in the prior year. Capital expenditures for 2020 were $5.4 million compared to $4.1 million in the same year‐ago period. Free cash flow, defined as net cash provided by operating activities less capital expenditures, for the year ended December 31, 2020 increased significantly to $24.0 million compared to $5.4 million in the same year‐ago period.

2021 Outlook

Clarus anticipates fiscal year 2021 sales to grow approximately 25% to $280 million compared to 2020. By brand, the Company expects sales for Black Diamond to increase 17% to $200 million and Sierra and Barnes combined to increase 52% to $80 million compared to 2020.

The Company expects adjusted EBITDA in 2021 to increase approximately 56% to $35 million compared to 2020 with capital expenditures of approximately $7.5 million and free cash flow of approximately $15 million