Clarus (NASDAQ:CLAR) raised its 2026 adjusted earnings outlook after third-quarter revenue growth and margin gains at its Black Diamond outdoor business offset a sales decline in its Adventure segment.
The company reported third-quarter sales of $71.2 million, up from $69.3 million a year earlier. Consolidated gross margin rose to 41.0% from 35.1%, helped in part by approximately $600,000 in recovered IEEPA tariffs. Adjusted earnings before interest, taxes, depreciation and amortization, or EBITDA, were $6.8 million, representing a 9.6% margin.
Executive Chairman Warren Kanders said the company’s efforts to simplify operations, focus on products and improve cost efficiency were contributing to the financial improvements. Excluding the tariff benefit, he said, underlying progress across both segments remained substantial.
Black Diamond growth drives Outdoor results
Outdoor segment revenue rose 12.4% in the quarter. Neil Fiske, president of Black Diamond Equipment, said the mountain, climb and apparel categories accounted for 92% of segment revenue and collectively grew 13.1%.
Mountain sales increased 15.2%, aided by a collaboration with Norda Footwear, while climb sales rose 15.1%. Apparel revenue grew 3.3%, marking its sixth consecutive quarter of growth.
Outdoor gross margin, excluding about $70,000 in tariff refunds, improved 440 basis points to 40.4%. Fiske attributed the increase to healthier inventory, a focus on more profitable categories and less discounting. Segment adjusted EBITDA rose 80.7% to $8 million.
Growth extended across several markets and channels. North American wholesale sales rose 10.7%, while digital direct-to-consumer revenue in the region increased 15.7%. European wholesale sales grew 13.1% in dollars, and the international distributor channel increased 31.9%.
Fiske said the company invested in inventory to meet demand for key products and immediate orders. Outdoor inventory ended the quarter at $73.8 million, compared with $62.8 million a year earlier, and is expected to decline to about $67 million by year-end.
Adventure sales fall as margins improve
Adventure revenue declined 20.2%, primarily reflecting weaker demand in Australia for Rhino-Rack and MAXTRAX products, CFO Mike Yates said. Excluding a roughly $495,000 tariff refund, the segment’s gross margin rose 640 basis points to 39.6%, supported by pricing, customer and product mix, and reduced promotions.
Adventure reported adjusted EBITDA of $800,000. Yates said that, excluding the tariff refund, the segment’s adjusted EBITDA was in line with the year-earlier quarter despite approximately 20% lower revenue.
Yates pointed to improving sales trends in the Americas and said the business had added more than 120 dealers during the year, generating approximately $1 million in incremental year-to-date revenue. Adventure revenue in Europe, the Middle East and Africa rose 27% year to date, he said.
Asked when Adventure could return to growth, Yates said he expected the business to grow in 2027, citing cost controls, margin improvements and planned product introductions, including the next-generation P7 platform rack.
Higher outlook and strategic review
Clarus raised the low end of its full-year revenue forecast and now expects sales of $251 million to $255 million. It also lifted its adjusted EBITDA outlook to $15 million to $17 million from $12 million to $13 million previously. At the midpoint, the new EBITDA forecast is 28% above the prior midpoint.
The company expects full-year Outdoor revenue of approximately $188 million and Adventure revenue of approximately $65 million. For the fourth quarter, it projected sales of $62 million to $66 million and adjusted EBITDA of about $3 million at the midpoint of its full-year forecast.
Kanders said Clarus continues to review strategic alternatives announced in May and has retained Jefferies as financial adviser. Potential actions include a sale of all or part of the business or other strategic or financial transactions. He said the company would not comment further on the review until additional disclosure is appropriate or required.
Clarus reported a $7.4 million free cash flow outflow for the quarter, compared with a $7 million outflow a year earlier. Yates attributed the outflow to working-capital needs, including higher Outdoor inventory and receivables, and said the company expects positive free cash flow in the fourth quarter. It had no debt and held $20.8 million in cash and cash equivalents at Sept. 30.
Looking ahead, Fiske said there had been no change in the Outdoor order book or pace of immediate orders related to potential El Niño weather effects, though it was too early to assess the winter. He also said raw-material and freight inflation could pressure costs in 2027, but improvements in product margins and tariff-related favorability could offset those headwinds.
About Clarus (NASDAQ:CLAR)
Clarus Corporation (NASDAQ: CLAR) is an outdoor equipment and lifestyle products company headquartered in Salt Lake City, Utah. The company develops, manufactures and markets products for climbing, mountaineering, skiing, camping, overlanding and other outdoor activities.
Clarus’s portfolio includes Black Diamond Equipment, which offers climbing and mountaineering gear, skis, ski equipment, apparel and accessories. The company also owns Rhino-Rack, a provider of vehicle-based storage and transportation systems, and MAXTRAX, which makes vehicle recovery boards and related off-road products.
