Black Diamond Parent Sees Margins Surge in Q4 But Charges Wreck Bottom Line | SGB Media Online

Clarus Corporation, parent of Black Diamond, RockyMounts, MaxTrax and Rhino-Rack, reported that consolidated sales in the fourth quarter were $71.4 million compared to $76.5 million in the year‐ago fourth quarter. The decrease was said to be primarily driven by isolated challenges with two large accounts in the OEM and Australian wholesale channels in the company’s Adventure segment. This decline was partly offset by growth in the North American wholesale and international distribution channels at the Outdoor segment.

Gross margin in the fourth quarter was 33.4 percent of sales, compared to 28.9 percent in the year‐ago quarter. The increase in gross margin was said to be primarily due to lower PFAs inventory reserves related movements compared to the prior year at the Outdoor segment. This was reportedly further improved by favorable product mix due to continued product simplification and SKU rationalization efforts at the Outdoor segment, as well as a favorable channel mix at the Adventure segment due to lower OEM sales. This was reportedly partially offset by a $2.3 million increase in the inventory reserve at the Adventure segment to address slow-moving and obsolete inventory.

Selling, general and administrative (SG&A) expenses were $27.8 million in the fourth quarter compared to $30.0 million in the year‐ago quarter. The decrease was said to be primarily a result of lower marketing, research and development, and retail expenses due to store closures at the Outdoor segment as well as lower corporate costs. These reductions were partially offset by investments in marketing, research and development, and e-commerce initiatives, primarily at Rhino-Rack USA in the Adventure segment.

During the fourth quarter, the company incurred non-cash expense for goodwill and indefinite-lived assets impairments of $44.8 million as well as an increase in tax expense of $21.0 million for a valuation allowance to fully reserve all deferred tax assets associated with U.S. federal income taxes.

The loss from continuing operations in the fourth quarter was $73.3 million, or a loss of $1.92 per diluted share, compared to loss from continuing operations of $7.2 million, or a loss of 19 cents per diluted share in the year-ago quarter.

Adjusted EBITDA from continuing operations in the fourth quarter was $4.4 million, or an adjusted EBITDA margin of 6.1 percent of sales, compared to adjusted EBITDA from continuing operations of $1.6 million, or an adjusted EBITDA margin of 2.1 percent, in the year‐ago quarter.

Balance Sheet and Cash Management

Full Year 2024 Financial Results(full-year 2024 versus full-year 2023)

Acquisition of RockyMountsIn December, Rhino-Rack USA completed the acquisition of certain assets and liabilities constituting the RockyMounts business, a Colorado-based brand specializing in bicycle transport products, that we expect to deepen Rhino-Rack’s product expertise in a key growth vertical.

For over 30 years, RockyMounts has designed innovative roof and hitch rack solutions, attracting a dedicated following of customers thanks to the products’ distinct style and exceptional durability.

Founded in Boulder, Colorado in 1993, RockyMounts is known for making well designed and dependable premium bicycle racks and other accessories compatible with vehicles of all sizes, including SUVs, vans and trucks. Its award-winning products can be found in local and national retailers across North America.

2025 OutlookThe company expects fiscal year 2025 sales to range between $250 million to $260 million and adjusted EBITDA of approximately $14 million to $16 million, or an adjusted EBITDA margin of 5.9 percent at the mid-point of revenue and adjusted EBITDA.

Capital expenditures (CapEx) are expected to range between $4 million to $5 million and free cash flow is expected to range between $8 million to $10 million for the full year 2025.

Clarus has not provided net income guidance due to the inherent difficulty of forecasting certain types of expenses and gains, which affect net income but not Adjusted EBITDA and/or Adjusted EBITDA Margin.

Net Operating Loss (NOL) and Deferred Tax Asset Valuation AllowanceThe company has historically had net operating loss carry-forwards (“NOLs”) for U.S. federal income tax purposes. During 2024 the remaining NOLs have been utilized. Additionally, during the fourth quarter of 2024 the Company established a full valuation allowance through a charge to income tax expense for $21.0 million.

Image courtesy Black Diamond/Clarus Corporation