Clarus Q2 2026 Earnings Call Transcript

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August 6, 2026

Key Takeaways

  • Positive Sentiment: Outdoor delivered strong growth, with revenue up 9.1% and growth across Mountain, Climb, and Apparel. Apparel inline sales rose 22.9%, while clearance sales fell 61%, indicating healthier full-price selling and less discounting.
  • Positive Sentiment: Clarus raised its 2026 adjusted EBITDA guidance to $12 million-$13 million, from $3 million-$5 million previously, primarily due to a $6.1 million tariff refund and the expected elimination of approximately $2 million in second-half legal expenses. Full-year revenue guidance remains $245 million-$255 million.
  • Negative Sentiment: Adventure sales fell 11.9% year over year, pressured by weak North American and Australian wholesale demand. Management expects only moderate sales for the remainder of the year, although cost reductions and pricing actions lifted gross margin to 41.5% and reduced the cost base.
  • Positive Sentiment: The company ended the quarter with no debt, $28.9 million in cash, and generated $0.6 million of free cash flow. It also repurchased approximately $448,000 of stock and has about $42.4 million remaining under its buyback authorization.
  • Neutral Sentiment: Clarus continues to review strategic alternatives with Jefferies, including a potential sale of all or part of the business or other strategic transactions. Management declined to provide further details until additional disclosure is appropriate or required.
AI Generated. May Contain Errors.
Earnings Conference Call
Clarus Q2 2026
00:00 / 00:00

Transcript Sections

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Operator

Good afternoon, everyone, and thank you for participating in today's conference call to discuss Clarus Corporation's financial results for the second quarter ended June 30th, 2026. Joining us today are Clarus Corporation's Executive Chairman, Warren Kanders, CFO, Mike Yates, President of Black Diamond Equipment, Neil Fiske, and the company's External Director of Investor Relations, Matt Berkowitz. Following the remarks, we'll open the call for your questions. Before we go further, I would like to turn the call over to Mr. Berkowitz as he reads the company's Safe Harbor statement within the meaning of the Private Securities Litigation Reform Act of 1995, that provides important cautions regarding forward-looking statements. Matt, please go ahead.

Matt Berkowitz
External Director of Investor Relations at The IGB Group

Thank you. Before we begin, I'd like to remind everyone that during today's call, we will be making several forward-looking statements, and we will make these statements under the Safe Harbor provisions of the Private Securities Litigation Reform Act. These forward-looking statements reflect our best estimates and assumptions based on our understanding of information known to us today. These forward-looking statements are subject to potential risks and uncertainties that could cause the actual results of operations or financial condition of Clarus Corporation to differ materially from those expressed or implied by the forward-looking statements. More information on potential factors that could affect the company's operating and financial results is included from time to time in the company's public reports filed with the SEC. I'd like to remind everyone this call will be available for replay starting at 7:00 P.M. Eastern Time tonight.

Matt Berkowitz
External Director of Investor Relations at The IGB Group

A webcast replay will also be available via the link provided in today's press release, as well as on the company's website at claruscorp.com. Now I'd like to turn the call over to Clarus's Executive Chairman, Warren Kanders.

Warren Kanders
Warren Kanders
Executive Chairman at Clarus

Good afternoon, and thank you for joining Clarus' earnings call to review our results for the second quarter. I am joined today by our CFO, Michael Yates, who will provide a financial update, including Adventure segment performance, as well as Neil Fiske, who will discuss our Outdoor segment. Overall, our second quarter performance reflected continued operational execution and simplification. Mike will discuss the IEEPA tariff refund, which we recognized during the quarter, which lifted earnings and gross margin. Excluding that benefit, our underlying results across both Outdoor and Adventure were solid and reflect progress across our overall earnings profile. At Outdoor, second quarter revenue, margin, and EBITDA all increased year-over-year, evidence of the team's hard work concentrating inventory on our highest volume, highest margin products. Our big three Outdoor categories of Mountain, Climb, and Apparel drove 95% of total segment revenues.

Warren Kanders
Warren Kanders
Executive Chairman at Clarus

Apparel is a key pillar of our long-term strategy. Our product continues to resonate with the consumer as we delivered Apparel sales growth for the fifth consecutive quarter. With cleaner inventory, less discounting, and a shift toward a full price model, we are well positioned to drive improved profitability at Outdoor. At Adventure, we've improved the organizational shape to capture more margin as the business rescales. While second quarter sales did not meet our expectations, ongoing pricing actions and cost controls have paid off. Second quarter gross margin improved 420 basis points year-over-year. We continue to balance rigorous cost discipline with targeted investments. During the second quarter, we completed the bolt-on acquisition of certain assets and liabilities of ONWRD Supply Co., enhancing our portfolio mix with complementary high margin in-vehicle accessories.

Warren Kanders
Warren Kanders
Executive Chairman at Clarus

I would also like to highlight that we executed share repurchases during the second quarter under our $50 million buyback program. We bought back 153,331 shares for approximately $400,000, or $2.92 per share. We believe these repurchases represented an attractive use of capital. We maintain approximately $42.4 million under our program and will continue to assess buyback opportunities while preserving financial strength and flexibility to make strategic investments. Turning to guidance, despite continued geopolitical and macro uncertainty across the global outdoor market, we still expect Clarus' full-year revenue to fall within our previously provided guidance range. Including the IEEPA refund and certain other factors Mike will detail shortly, we now expect 2026 adjusted EBITDA to range between $12 million and $13 million. Before passing it over to Neil, I will briefly touch on the review of strategic alternatives we announced in May.

Warren Kanders
Warren Kanders
Executive Chairman at Clarus

We continue to explore a range of potential actions aimed at unlocking value more effectively than the market is currently recognizing today. We have retained Jefferies as our financial advisor to assist in this process. Potential alternatives could include the sale of all or part of the business or other strategic or financial transactions involving the company. Please note that we will not be answering any questions or commenting further on our strategic review process until additional disclosure is appropriate or required. With that, thank you for being with us today. I will turn the call over to Neil Fiske.

Neil Fiske
Neil Fiske
President of Black Diamond Equipment at Clarus

Thanks, Warren. Turning to slide six, I will review the Outdoor segment's second quarter performance and our expectations heading into the remainder of 2026. Overall, Black Diamond had a strong Q2 with revenue margin and EBITDA all well ahead of prior year as our strategy of simplification, focus, and business reshaping continues to pay off. Note, my remarks exclude our divested PIEPS business from the prior year to provide more comparable results. Total revenues for the quarter were up 9.1%, reflecting growth in all regions and across our major categories. Our big three segments of Mountain, Climb, and Apparel drove 95% of total revenues and grew 9.5%. The takeaway is clear. The core of our business is healthy and growing. For the quarter, Mountain was ahead 7.4% versus prior year. The Climb segment posted a very strong 13.5% growth rate. Apparel was up 7.4% for the quarter.

Neil Fiske
Neil Fiske
President of Black Diamond Equipment at Clarus

Notably for Apparel, inline sales were ahead a robust 22.9%, while clearance and discontinued merchandise was down 61%, showing a much healthier full price business and fewer markdowns. We're seeing excellent response and building momentum for our revamped Apparel offering. Gross margin is also a good story for the quarter, although a more complicated one with the ever-changing situation on tariffs. We received $6.1 million in tariff refunds in Q2, which lifted our gross margins to 52.0% versus 34.9% in the prior year. Even without the tariff refund, however, gross margins improved 160 basis points to 36.5% compared to the prior year period. The improvement reflects the progress we've made in the quality of our inventory, our focus on our most profitable categories, less discounting, and a more full price premium business model.

Neil Fiske
Neil Fiske
President of Black Diamond Equipment at Clarus

Second quarter selling general and administrative expenses were $13.8 million compared to $13.7 million in the same year ago quarter. Second quarter 2026 expenses reflect higher marketing costs. Other operating expenses for the quarter included a benefit of $1.4 million for CPSC legal adjustments, which Mike will address shortly. Adjusted EBITDA for the second quarter came in at $9.0 million. Putting aside the tariff refund and the CPSC legal adjustment, adjusted EBITDA for the quarter would have been $1.5 million compared to $0.3 million in the prior year period. Inventory ended the quarter at $72.2 million, up 12% versus the prior year period. The increase reflects the growth of the business and the build for what we expect to be a strong second half. Turning to results by region and channel. North America wholesale grew 0.5% on top of 4.8% growth in Q1.

Neil Fiske
Neil Fiske
President of Black Diamond Equipment at Clarus

North America digital direct-to-consumer, which represents 17.7% of the region's revenue, was up 5.7% on the top line, with much healthier margins and less discounting. EU wholesale was up 25.3% in dollars and 16.7% in constant currency. EU digital D2C, which represents 5.3% of the region's revenue, was down 10.6% in constant currency as we pulled back on promotional activity and less profitable transactions. Our international distributor channel was up 10.6% for the quarter. In sum, we are pleased with our results in Q2 and for the first half. Our strategy is paying off. Execution continues to improve. Product and marketing are resonating with the consumer. Our relationships in the wholesale channel have never been stronger. Our big three categories have real momentum. We feel confident going into the second half, mindful that the conflict in the Middle East remains a major geopolitical and business risk.

Neil Fiske
Neil Fiske
President of Black Diamond Equipment at Clarus

I'd like to congratulate and thank our teams around the world for all their hard work, passion, and skill in driving these results. With that, I'll turn it over to CFO, Mike Yates.

Michael Yates
Michael Yates
CFO at Clarus

Thank you, Neil, and good afternoon, everyone. On today's call, I'll provide an update on the Adventure segment and then conclude with a summary of our Q2 financial results, followed by the question and answer session. Starting with Adventure. As expected, our top-line results in Q2 were pressured by a challenging market in both North America and Australia. In North America, initiatives to reach new customers have not met expectations. The one positive in the North American market remains the RockyMounts business, where we continue to see solid demand. With a new product introduction, we expect RockyMounts to remain on a growth trajectory. In Australia, where we had previously noted a difficult outlook, sales were better than forecast, despite consumers dealing with higher fuel prices and elevated interest rates. RockyMounts continues to be a bright spot in Australia, showing increased traction.

Michael Yates
Michael Yates
CFO at Clarus

In Europe and Asia, brand penetration is also improving as we delivered double-digit growth in France, Germany, the U.K., and Japan. Although that strength was not sufficient to offset weaknesses in our larger markets, an important point to make about the softer sales is that we believe that the decline has been market-driven rather than share-driven. Against this backdrop, we continue to focus on what we can control, driving margin expansion, maintaining cost discipline, and improving operational efficiency. Gross margin hit 41.5% in Q2, up 420 basis points compared to the prior period. Our SG&A continues to be managed tightly and was down $0.6 million compared to the prior period. Specifically, headcount is down 20% and the cost base is 11% lighter. The business is above break even on materially lower revenue.

Michael Yates
Michael Yates
CFO at Clarus

As Warren mentioned, we acquired certain assets and liabilities of ONWRD Supply Co., a small in-vehicle accessory business that enhances our portfolio mix. These are high margin products and immediately add new exciting product SKUs to our offering. We are committed to investing with discipline and building for the next cycle. The first of a new series of Rhino-Rack legs launches in September, alongside ONWRD in Australia in time for spring summer season. Our recently launched MAXTRAX integrated shovel has outsold forecasts in every market. We will be presenting at Automechanika and SEMA this fall, and we are bringing an exciting assortment of new products across all four brands for the Northern Hemisphere spring 2027 season. We expect the double digit growth in Europe and Asia to accelerate further with OEM interest from multiple European car makers.

Michael Yates
Michael Yates
CFO at Clarus

We continue to take decisive actions on the cost side while we rebase our product initiatives to drive newness and growth. We have expanded RockyMounts via new U.S. and Australian accounts, increased Rhino-Rack and MAXTRAX brand penetration across Asia, Europe, and the U.K., and begun to introduce ONWRD to the broader market. We see a path to maintaining the margin improvement realized in Q2 moving forward, despite moderate sales expectations for the remainder of the year at Adventure. With that, let me now turn to the consolidated and segment financial review on slide eight. Consolidated Clarus second quarter sales were $56.2 million, compared to $55.2 million in the second quarter of the prior year. Sales were up 1.6% compared to the prior year. On a reported basis from a segment perspective, Outdoor was up 8.5% and Adventure was down 11.9%.

Michael Yates
Michael Yates
CFO at Clarus

As Neil mentioned, sales were up in nearly every market, the weakness at Adventure was primarily in the North American and Australian wholesale markets for Rhino-Rack. The consolidated reported gross margin rate in the second quarter was 48.9%, compared to 35.6% in the prior year quarter. We received that tariff refunds associated with the Outdoor segment during the quarter. Specifically, Outdoor received a total of $6.4 million, which represented $6.1 million of refunds of tariffs previously paid and $3 million of interest income. The $6.1 million of tariff refunds were recorded as a reduction in cost of goods sold, and the interest income is recorded in other income and expense in our income statement. From a segment perspective, gross margin was 52% at Outdoor and 41.5% at Adventure. Excluding the tariff refunds, Outdoor's gross margin would have been 36.5%, while the consolidated Clarus gross margin would have been 38%.

Michael Yates
Michael Yates
CFO at Clarus

Gross margin improvements, excluding the tariffs, were attributable to price capture and favorable product mix at both the Outdoor and Adventure segments. Second quarter selling general and administrative expenses were $24.3 million, compared to $26.9 million in the same year ago quarter. Second quarter 2026 expenses reflect lower marketing costs and other expense reduction initiatives at Adventure to manage cost and the removal of PIEPS due to its sale last year, partially offset by higher marketing spend at Outdoor. Adjusted EBITDA in the second quarter was $7.6 million, or an Adjusted EBITDA margin of 13.6%. The second quarter Adjusted EBITDA by segment was $0.5 million at Adventure and $9 million at Outdoor. Adjusted corporate costs were $1.9 million in the second quarter. Let me shift over to liquidity and the balance sheet.

Michael Yates
Michael Yates
CFO at Clarus

Free cash flow, defined as net cash provided by operating activities less capital expenditures for the second quarter 2026, was $0.6 million, compared to a $11.3 million outflow for the three months ended June 30, 2025. At June 30, 2026, total debt was zero. At June 30, 2026, cash and cash equivalents were $28.9 million, compared to $36.7 million at December 31, 2025. As Warren mentioned, we repurchased 153,331 shares of common stock during the quarter for approximately $448,000, or $2.92 per share. With that, let me move on to our 2026 outlook. I'm on slide nine. We continue to expect fiscal year 2026 sales to be between $245 million and $255 million. We now expect full year revenue at Adventure to be approximately $68 million, and full year Outdoor revenue to be approximately $182 million.

Michael Yates
Michael Yates
CFO at Clarus

We have revised our full year 2026 Adjusted EBITDA to be in the range of $12 million-$13 million, or an Adjusted EBITDA margin of 5% at the midpoints of our revenue and Adjusted EBITDA ranges. The revision to our full-year Adjusted EBITDA guidance compared to our prior guidance of $3 million-$5 million is as follows. Assuming the midpoint of the two guides, the primary difference between the $4 million and the $12.5 million is the benefit of the $6 million of tariff-free funds and the elimination of $2 million of estimated legal expenses that will not be incurred during the remainder of the year. As a reminder, last quarter, we assumed $1 million a quarter for each quarter for the remainder of the year.

Michael Yates
Michael Yates
CFO at Clarus

We incurred $1.2 million of legal expenses in the second quarter, slightly higher than expected, but we now expect to avoid these types of legal expenses in the back half of the year. I will explain further in a moment. Turning to the third quarter, sales are expected to range between $66 million-$68 million, and adjusted EBITDA is expected to be approximately $3 million in the third quarter 2026. I'd like to discuss our legal update. Specifically, I will cover updates with regards to the company's Section 16(b) litigation and the CPSC and DOJ matters involving Black Diamond Equipment, Ltd. In the company's action against HAP Trading, LLC and Mr. Harsh A. Padia for disgorgement of short-swing profits under Section 16(b), the district court granted summary judgment to the defendants on March 14th, 2025, based on the market-making exemption under Section 16(d).

Michael Yates
Michael Yates
CFO at Clarus

The company timely appealed. The appeal was argued before the Second Circuit on February 12th, 2026. The SEC has declined the court's invitation to submit an amicus brief. The company is awaiting the Second Circuit Court's decision. The company's Section 16(b) action against Caption Management, LLC and its related entities and controlling person was resolved under a February 24, 2026 settlement agreement, pursuant to which Caption paid the company an undisclosed sum in exchange for, among other things, mutual releases and dismissal of the claims with prejudice, without any admission or liability of wrongdoing. The related stockholder action was dismissed without prejudice on February 10th, 2026, as duplicative of the company's direct action. On April 11th, 2026, the stockholder's attorney filed an action against the company in the New York State Supreme Court seeking legal fees.

Michael Yates
Michael Yates
CFO at Clarus

The company intends to defend that action and argue that any recoverable fees are limited to services performed before the company filed its direct action. With respect to the CPSC and DOJ matters, the CPSC previously referred to the DOJ the unresolved matters concerning Black Diamond's reporting obligations relating to certain avalanche transceivers. On June 4th, 2026, the DOJ advised the company and Black Diamond that it had closed its criminal investigation as to them. On the same date, the United States Department of Justice separately advised John Walbrecht and Rick Vance that it had also closed the investigation as to each of them. The company has heard nothing further from the CPSC or the DOJ regarding these matters. On January 28th, 2026, the CPSC closed without further action its separate investigation into whether Black Diamond sold products subject to a recall.

Michael Yates
Michael Yates
CFO at Clarus

We expect to save on legal expenses in the back half of the year, per my comments around the 2026 guidance. We are focused on unlocking the intrinsic value of our Outdoor and Adventure segments and maximizing long-term value for our shareholders. With a more focused business, a simplified operating structure, and a debt-free balance sheet, we believe we are well-positioned to execute the next phase of our transformation. At this point, operator, we're ready to take questions.

Operator

Thank you. At this time, we will conduct the question and answer session. As a reminder, to ask a question, you will need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. Our first question comes from Laurent Vasilescu with BNP Paribas. Please go ahead.

Laurent Vasilescu
Laurent Vasilescu
Research Analyst at BNP Paribas

Good afternoon. Thank you very much for taking my question. I was curious to know about, in the context of a potentially very warm winter, what your conversations are like with your retail partners, if you're having those discussions with potentially trimming any wholesale orders. Is that not in the cards just yet? Thank you so much.

Michael Yates
Michael Yates
CFO at Clarus

Laurent, you're referring to the coming winter, I assume, right? The El Niño effect.

Laurent Vasilescu
Laurent Vasilescu
Research Analyst at BNP Paribas

Correct. That's right.

Michael Yates
Michael Yates
CFO at Clarus

Yeah. Neil, why don't you handle that?

Michael Yates
Michael Yates
CFO at Clarus

Yeah. Neil, why don't you go ahead?

Neil Fiske
Neil Fiske
President of Black Diamond Equipment at Clarus

Sure. I would say overall There may be a little bit of a dampening effect from last year, but not a major concern for us at this time. We feel good about our fall order book and the sales outlook for the second half, and feel good about our product lineup. I'd say to the extent there is an impact, it's been relatively modest and overcome by the strength of our product assortment heading into the back half.

Laurent Vasilescu
Laurent Vasilescu
Research Analyst at BNP Paribas

Very clear. Thank you for that. I would love to hear more about how we should think about modeling potentially 3Q, 4Q gross margins. There's a lot of noise with new tariff rates and so forth, so just curious to know if you guys can maybe unpack that a little bit as we think about this year with the new Section 301. Thank you so much.

Michael Yates
Michael Yates
CFO at Clarus

Yeah, Laurent, I can help you with that. In my prepared remarks around the Adventure, I mentioned that the 41.5% margins that we realized here in the second quarter, we're doing everything we can to maintain those. I think it's reasonable to kind of hold around that 40% margin at Adventure. At Black Diamond, when you back out all the tariffs and the impact that we talked about there, the adjusted margin, not that we published an adjusted margin, but if you back out the tariffs, it was like 36.5%. I think in the back half of the year, you'll see that'll even a little higher. I think you could model 37%, 37.5%.

Laurent Vasilescu
Laurent Vasilescu
Research Analyst at BNP Paribas

Very helpful. Then the last question here is really around inflation in terms of raw materials. Just love to get your take. We've heard some other sporting goods names talk about potential inflation in raw materials. Curious to get your take on how we should think about, I know you're not guiding for fiscal year 2027 yet, but how do we think about the context, your conversations with your upstream suppliers? That would be very helpful. Thank you.

Michael Yates
Michael Yates
CFO at Clarus

Neil, you want to talk about our factor costs and the impact the war's had on-

Neil Fiske
Neil Fiske
President of Black Diamond Equipment at Clarus

Sure

Michael Yates
Michael Yates
CFO at Clarus

driving inflation?

Neil Fiske
Neil Fiske
President of Black Diamond Equipment at Clarus

It's a great question. It's something we're watching very closely and are concerned about. I'd say at this point, we've seen some cost factor inflation coming through for Spring 2027. Frankly, I think a lot of people are still watching to see if this conflict in the Middle East is prolonged or if oil will start flowing again. I don't think we're going to know the picture on 2027 for another couple of months. It all depends, of course, on the situation starting to normalize again. There has been some inflationary impact already. I think the potential that we all feared when this conflict broke out hasn't yet fully materialized. Everybody's watching and waiting.

Laurent Vasilescu
Laurent Vasilescu
Research Analyst at BNP Paribas

Okay. Very helpful. Thank you very much. I'll pass it along.

Operator

Thank you. I'm showing no further questions at this time. I'd now like to turn it back to Michael Yates for closing remarks.

Michael Yates
Michael Yates
CFO at Clarus

Thank you very much. I want to thank everyone for attending the call this afternoon and your continued support and interest in Clarus. We look forward to updating you on our results again next quarter. Thank you again.

Operator

Thank you for your participation in today's conference. This concludes the program. You may now disconnect.

Executives
    • Warren Kanders
      Warren Kanders
      Executive Chairman
    • Neil Fiske
      Neil Fiske
      President of Black Diamond Equipment
    • Michael Yates
      Michael Yates
      CFO
Analysts
    • Matt Berkowitz
      External Director of Investor Relations at The IGB Group
    • Laurent Vasilescu
      Research Analyst at BNP Paribas
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