Corporate Presentation. January 2019 NASDAQ: CLAR

Transcription

1 Corporate Presentation January 2019 NASDAQ: CLAR

2 Important Cautions Regarding Forward Looking Statements Please note that in this presentation we may use words such as appears, anticipates, believes, plans, expects, intends, future, and similar expressions which constitute forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of Forward-looking statements are made based on our expectations and beliefs concerning future events impacting the Company and therefore involve a number of risks and uncertainties. We caution that forward-looking statements are not guarantees and that actual results could differ materially from those expressed or implied in the forward-looking statements. 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 release 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 by our Sierra segment, 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; stability of the Company's manufacturing facilities and suppliers; the Company's ability to protect patents, trademarks and other intellectual property rights; any breaches of, or interruptions in, our information systems; fluctuations in the price, availability and quality of raw materials and contracted products as well as foreign currency fluctuations; our ability to utilize our net operating loss carryforwards; changes in tax laws and liabilities, tariffs, legal, regulatory, political and economic risks; and the Company s ability to declare a dividend. More information on potential factors that could affect the Company's financial results is included from time to time in the Company's public reports filed with the Securities and Exchange Commission, including the Company's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K. All forward-looking statements included in this presentation are based upon information available to the Company as of the date of this presentation, and speak only as of the date hereof. We assume no obligation to update any forward-looking statements to reflect events or circumstances after the date of this presentation. NASDAQ: CLAR 2

3 Who We Are Global company focused on the outdoor & consumer industries CURRENT BRAND PORTFOLIO We own four leading global outdoor brands focused on climb, ski, mountain, sport & skincare categories Product innovation is central pillar to our growth we are not a me-too brand in anything we do Growth, margin expansion, return on invested capital & cash flow generation the key financial metrics we seek to maximize Clean balance sheet & NOL s enable us to enhance shareholder value via selected acquisitions & return of capital (e.g. recent dividend initiation, Dutch tender) NASDAQ: CLAR 3

4 Our Goals Established 2016 Accelerate brand growth via product innovation, excellent execution & disruptive marketing Improve profitability via gross margin expansion & operating expense leverage Deploy capital in ways that accelerate our growth & drive shareholder returns NASDAQ: CLAR 4

5 Execution To Date Revenue growth: 40% from 16-18E Gross margin expansion: 460 basis points from 16-TTM Q3-18 Capital deployed since 2016: $15.6M in share repurchases ($30M repurchase program) ~$79M in M&A Initiated $0.025 quarterly cash dividend August 18 NASDAQ: CLAR 5

6 Diversified Business Model CATEGORY¹ GEOGRAPHY¹ SEASON¹ Sport Ski ROW Mountain Climb North America Europe Fall / Winter Spring / Summer 30 product categories Lighting & bullets are only categories accounting for >15% of annual pro forma sales Apparel ~8% of sales 1) Based 1) on Based Black Diamond on Black Diamond Equipment, Equipment, PIEPS & Sierra PIEPS Bullets and Sierra pro forma Bullets December pro forma 31, sales. sales. Significant global presence 50+ countries 46% of sales outside U.S. Strong growth in U.S. & Europe Seasonal diversification of business Front & center with retailer & customer year round NASDAQ: CLAR 6

7 Large & Growing Market $38.8B $4B $6B 40% U.S. outdoor, hunting & shooting sports market¹ Outdoor specialty store market 2 E-commerce sales - $2.3B, up 8% 2 Outdoor apparel sales - ~$2.5B 3 Equipment is ~$1B 3 Footwear is ~$498M 3 Climbing is a $200M market, growing 10% 3 Global markets 2-3x the size of domestic market 4 Consumer market for rifles, handguns & ammunition 5 Strong crossparticipation by firearms hunters in camping (40%) & hiking (40%) 6 1) NPD POS Sales Tracking The Outdoor Industry View 12 Months Ending October 2016 & Vista Outdoor Inc. August 2017 investor presentation. 2) NPD POS Sales Tracking The Outdoor Retailer Summer Market 12 Months Ending May ) The NPD Group/Consumer Tracking Service Total U.S. 12 Months Ending May ) Company estimates. 5) NSSF Report Industry Reference Guide. 6) Realtree Business Blog, August, 1, NASDAQ: CLAR 7

8 HERITAGE: 1957 TARGET CUSTOMER: Climbers Backcountry Skiers Alpinists Trail Runners Snow Safety Pros Outdoor Enthusiasts Unleashing the Black Diamond Brand Iconic lifestyle & sport-defining brand Rich history of technical innovation & sales growing at a 12% CAGR since 1989 Accelerating industry-leading product innovation & development capabilities Investing in new product categories footwear & apparel Differentiated product performance elements rainwear, ultra lightweight apparel 70+ product awards received in 2018 and growing Significant opportunities to revitalize sales channels NASDAQ: CLAR 8

9 500+ AWARDS in the past 10 YEARS AWARDS INDUSTRY-LEADING PRODUCT INNOVATION Latest Products Stretch Rainwear Packs Beacons Trekking Poles Climbing Shoes Skis Headlamps Gaiters NASDAQ: CLAR 9

10 HERITAGE: 1972 PIEPS Avalanche Transceiver Technology Founder & Market Leader Premium avalanche safety products transceivers & probes, shovels, packs & safety equipment Run as semi-autonomous, discrete brand but closely-linked to Black Diamond IP, specifically avalanche technology, supports Black Diamond s focus on developing electronic technology & applications portfolio Played key role in development of new JetForce avalanche airbag technology Expect to grow PIEPS sales in markets & geographies covered by Black Diamond s global distribution platform Historically generated higher gross margin than typical hard goods brands NASDAQ: CLAR 10

11 HERITAGE: 1947 Diverse Customer Base Green Box Opportunistic M&A SIERRA is an iconic American manufacturer of bullets, 70-year operating history Acquired Aug 2017, attractive allocation of capital Strong recurring revenue & ~95% free cash flow conversion Adjacent outdoor brand benefiting from our outdoor platform OEM Significant opportunities to accelerate growth via product innovation, new category expansion, distribution, sales & marketing NASDAQ: CLAR 11

12 Strategic Products Strategic focus & newly targeted high-growth potential categories: Skincare & sport supplements Characteristics: Super Fan brands Purpose-driven High-quality ingredients Large addressable markets Accretive/high gross margin Synergies: Commitment to innovation Go-to-market process Global ambassador team Distribution footprint Operational structure/scalability NASDAQ: CLAR 12

13 Brand Re-Awakening Sales Adjusted EBITDA² $205- $210M $19.7M ³ Our strategy to re-invigorate our brands in 2016 is working $155.3M $148.2M $170.7M $1.1M $6.1M E¹ -$2.7M E¹ 1) Outlook updated & only effective as of November 5, Company expects to be at the higher end of its sales range. 2) See appendix for a reconciliation to this non-gaap measure. 3) Derived from midpoint of 2018 sales guidance multiplied by the 9.5% adjusted EBITDA margin guidance. NASDAQ: CLAR 13

14 Financial Strength & Capital Allocation Modest net debt of $19.7M New $75M credit facility & $75M accordion feature up to $150M in dry powder for opportunistic M&A ~$157M in NOLs do not expire until 2021 & beyond¹ Initiated quarterly cash dividend of $0.025 per share in August 2018 Completed tender offer for ~417,000 shares at a price of $8.00 per share in August 2018 ~$14.4M remaining on $30M share repurchase program 1) As of September 30, Subject to compliance with Section 382 of the Internal Revenue Code of 1986, as amended. NASDAQ: CLAR 14

15 2018 Outlook Sales $ M $ M - YOY Growth 17-20% 20-23% - Black Diamond Contribution (%) High single/low double-digits High single/low double-digits - Sierra Contribution (%) Low single-digits Mid single-digits - YOY Growth (pro forma 3 ) 5-7% 7-10% Adj. EBITDA Margin ~8% ~9.5% - YOY Growth ~440 bps ~590 bps - Includes ~$5M of cash corporate overhead expense Free Cash Flow $5-10M $5-10M - Includes $3M in capital expenditures - Negative free cash flow of $11.8M in 2017 Prior 1 Updated 2 1) Outlook issued on May 7, ) Outlook updated & only effective as of November 5, Company expects to be at the higher end of its sales range. 3) Assumes Clarus owned Sierra for the full year NASDAQ: CLAR 15

16 Key Takeaways Our brands are beginning to benefit from targeted investments & management execution Our growth opportunities are expected to be significant thanks to an expanding addressable market, authentic brands & commitment to innovation Key financial metrics showing strong improvement Financial strength allows for various value-enhancing actions M&A, buybacks, dividends NASDAQ: CLAR 16

17 Contact Us Clarus Corporation 2084 East 3900 South Salt Lake City, UT Tel Company Contact Warren Kanders, Executive Chairman John Walbrecht, President Aaron Kuehne, CAO and CFO Investor Relations Cody Slach, Liolios Tel

18 Appendix

19 Adjusted EBITDA Reconciliation CLARUS CORPORATION RECONCILIATION FROM NET LOSS TO EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION, AND AMORTIZATION (EBITDA), AND ADJUSTED EBITDA (In thousands) Year Ended December 31, Net loss $ (673) $ (8,978) Income tax (benefit) expense (5,087) 665 Other, net (343) (533) Interest expense, net 1,288 2,876 Operating loss (4,815) (5,970) Depreciation 2,883 2,264 Amortization of intangibles 2,376 1,075 EBITDA $ 444 $ (2,631) Restructuring charge 160 1,395 Merger and integration 82 - Transaction costs 2, Arbitration award - (1,967) Inventory fair value of purchase accounting 2,098 - Stock-based compensation 1, Adjusted EBITDA $ 6,053 $ (2,686) NASDAQ: CLAR 19

20 Adjusted EBITDA Reconciliation (cont d) CLARUS CORPORATION RECONCILIATION FROM NET LOSS FROM CONTINUING OPERATIONS TO EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION, AND AMORTIZATION (In thousands) Year Ended December 31, 2015 Net loss from continuing operations $ (88,106) Income tax expense 47,692 Other, net (434) Interest expense, net 2,767 Operating loss (38,081) Depreciation 3,039 Amortization of intangibles 1,245 EBITDA $ (33,797) Restructuring charge 3,375 Transaction costs 946 Arbitration award - Impairment of goodwill 29,507 Stock-based compensation 1,094 Adjusted EBITDA $ 1,125 NASDAQ: CLAR 20