Outdoor lifestyle and equipment company Clarus (NASDAQ:CLAR) reported Q1 CY2024 results exceeding Wall Street analysts' expectations, with revenue down 1.4% year on year to $69.31 million. The company expects the full year's revenue to be around $275 million, in line with analysts' estimates. It made a non-GAAP loss of $0 per share, down from its profit of $0.01 per share in the same quarter last year.
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Clarus (CLAR) Q1 CY2024 Highlights:
- Revenue: $69.31 million vs analyst estimates of $64.53 million (7.4% beat)
- Adjusted EBITDA: $2.0 million vs analyst estimates of $2.4 million (miss)
- EPS (non-GAAP): $0 vs analyst estimates of $0.02 (-$0.02 miss)
- The company reconfirmed its revenue guidance for the full year of $275 million at the midpoint (also reaffirmed its adjusted EBITDA guidance for the full year)
- Gross Margin (GAAP): 35.9%, up from 12.7% in the same quarter last year
- Market Capitalization: $243.2 million
Initially a financial services business, Clarus (NASDAQ:CLAR) designs, manufactures, and distributes outdoor equipment and lifestyle products.
Leisure ProductsLeisure products cover a wide range of goods in the consumer discretionary sector. Maintaining a strong brand is key to success, and those who differentiate themselves will enjoy customer loyalty and pricing power while those who don’t may find themselves in precarious positions due to the non-essential nature of their offerings.
Sales GrowthA company's long-term performance can indicate its business quality. Any business can enjoy short-lived success, but best-in-class ones sustain growth over many years. Clarus's annualized revenue growth rate of 5.3% over the last five years was weak for a consumer discretionary business. Within consumer discretionary, a long-term historical view may miss a company riding a successful new product or emerging trend. That's why we also follow short-term performance. Clarus's recent history shows a reversal from its already weak five-year trend as its revenue has shown annualized declines of 17% over the last two years.
This quarter, Clarus's revenue fell 1.4% year on year to $69.31 million but beat Wall Street's estimates by 7.4%. Looking ahead, Wall Street expects sales to grow 1.4% over the next 12 months, an acceleration from this quarter.
Operating MarginOperating margin is a key measure of profitability. Think of it as net income–the bottom line–excluding the impact of taxes and interest on debt, which are less connected to business fundamentals.
Given the consumer discretionary industry's volatile demand characteristics, unprofitable companies should be scrutinized. Over the last two years, Clarus's high expenses have contributed to an average operating margin of negative 14.6%. This quarter, Clarus generated an operating profit margin of negative 9.8%, down 16.5 percentage points year on year.
Over the next 12 months, Wall Street expects Clarus to become profitable. Analysts are expecting the company’s LTM operating margin of negative 7.2% to rise to positive 2.6%.Key Takeaways from Clarus's Q1 Results We were impressed by how significantly Clarus blew past analysts' revenue expectations this quarter. On the other hand, its operating margin missed and its EPS fell short of Wall Street's estimates. Overall, this was a mixed quarter for Clarus. The stock is flat after reporting and currently trades at $6.1 per share.