As we have stated in the past, we have entered the age of acquisitions in the hunting/shooting community. Announced recently, was the news that Sierra Bullets has been purchased by Clarus Corporation for $79 million dollars. Clarus is a holding corporation, who purchases companies to grow them and help their bottom-line. We at Varminter are huge fans of Sierra Bullets and use them frequently while hunting. Because of this, we hope this does not change the innovation, quality and accuracy of Sierra Bullets, in the future.
Press Release from Clarus Corporation:
SALT LAKE CITY, Aug. 22, 2017 (GLOBE NEWSWIRE) — Clarus Corporation (NASDAQ:CLAR) (“Clarus” or the “Company”), a diversified holding company which seeks opportunities to acquire and grow businesses that can generate attractive shareholder returns, has completed the acquisition of Sierra Bullets, L.L.C. (“Sierra”) for $79 million, subject to a post-closing working capital adjustment. The transaction is expected to be immediately accretive to Clarus’ earnings per share.
Since 1947, Sierra has been dedicated to manufacturing the highest-quality, most accurate bullets in the world. From local and international shooting competitions to sport and hunting, Sierra offers best-in-class accuracy and precision that hunting and sport shooting enthusiasts have come to depend on. This performance is born from a proprietary manufacturing process that enables the achievement of the tightest tolerances in the industry.
Sierra’s products have cultivated a significant consumer following recognized by its iconic “green box” packaging and include globally recognized brands such as Sierra MatchKing, Sierra GameKing, and Sierra BlitzKing.
In addition to a wide base of retailers, Sierra’s customers include distributors, law enforcement agencies and industry OEMs. This diversification is further enhanced by an approximate 400 SKU offering, which has historically mitigated customer and product concentration risk. As a manufacturer of premium products targeting outdoor sportsmen, Sierra believes it has been relatively insulated from exogenous demand volatility. Its premium sales channels have also historically been less susceptible to discounting, driving higher margins for Sierra’s retail and OEM customer base.
For the unaudited 12 months ended June 30, 2017, Sierra’s total revenues were approximately $32 million with EBITDA of approximately $12.5 million, representing a purchase price multiple of approximately 6.3x EBITDA. Sierra has a strong cash flow profile, generating free cash flow conversion of approximately 95% with limited ongoing capex requirements.
“The team at Sierra has continued building on a 70-year legacy dedicated to the highest-level of precision in design, world-class manufacturing and quality control,” said Warren B. Kanders, executive chairman of Clarus. “These attributes have cultivated a diverse customer base of enthusiasts and industry OEMs that drive high recurring revenue and strong cash flow, which we expect to maximize through the utilization of our net operating loss carryforwards.”
Clarus expects to leverage its various strategic and financial resources to accelerate Sierra’s growth. This includes investments to enhance marketing and digital capabilities, improve distribution, forge new customer accounts, and develop new products.
Sierra is led by a seasoned senior management team with decades of combined manufacturing and industry expertise that is dedicated to the long-term growth of the brand. All senior management are expected to remain with Sierra under Clarus’ ownership.
Sierra’s President Pat Daly commented: “Our team takes great pride in developing and manufacturing the most precise and accurate bullets in the world. This is supported by our deep institutional knowledge of highly-specialized manufacturing processes that have produced leading products and created a significant competitive advantage. As the only pure-play bullet brand, it was important for us to partner with a team that shares our values and commitment to excellence, and we are excited to join the Clarus family. I look forward to staying on to continue driving our brand growth.”
In connection with the transaction, Clarus increased the size of its senior credit facility from $20.0 million to $40.0 million.
An updated financial outlook and further discussion on Sierra is expected to be provided during Clarus’ third quarter 2017 earnings report.
Kanders concluded: “We remain committed to seeking to acquire additional companies in industries potentially unrelated to outdoor that satisfy our investment criteria as we found in Sierra. In addition, the minimal leverage incorporated in this transaction and Sierra’s free cash flow dynamics are expected to provide capacity for future acquisitions utilizing our structure.”
About Sierra Bullets
Founded in 1947 in California, Sierra Bullets is an American manufacturer of bullets intended for firearms. Based in Sedalia, Missouri since 1990, Sierra manufactures a wide range of bullets for both rifles and pistols. Sierra bullets are used for precision target shooting, hunting and defense purposes. For more information, please visit www.sierrabullets.com.
About Clarus Corporation
Clarus Corporation (NASDAQ:CLAR) is a holding company which seeks opportunities to acquire and grow businesses that can generate attractive shareholder returns. The Company has substantial net operating tax loss carryforwards which it is seeking to redeploy to maximize shareholder value in a diverse array of businesses. In addition to Sierra, Black Diamond Equipment, Ltd. and PIEPS GmbH are its other operating subsidiaries. Black Diamond Equipment is a manufacturer of active outdoor equipment and clothing for the climbing, skiing and mountain sports markets. PIEPS is a leading designer and marketer of avalanche beacons and snow safety products. For additional information, please visit www.claruscorp.com or the operating subsidiary websites at www.blackdiamondequipment.com or www.pieps.com.
This is the statement released by the Sierra Bullets President, Patrick Daly, to their wholesale and retail partners:
As a valued partner, I am pleased to let you know that 2017 will be remembered not only as Sierra Bullet’s 70th anniversary, but also another milestone. Sierra Bullets has been acquired by the Clarus Corporation (NASDAQ: CLAR), a diversified holding company with other interests in the outdoor industry. I am excited to tell you about what this means for the future of our company, for you, and for your customers.
With this strategic investment by Clarus, we envision enriching our brand with the introduction of innovative new products and a greatly enhanced marketing initiative designed to support your sales goals. Sierra Bullet’s and Clarus Corporation’s matching organizational values and intense focus on quality will continue our “Tradition of Precision” for another 70 years.
We are working hard to make this transition as seamless as possible for you. From our home in Sedalia, Missouri, you can count on working with the same dedicated staff members you have trusted for years and will receive the same great service and top quality products you have come to expect. Please look for great things ahead from Sierra and feel free to pass this information along to your employees, customers and friends. If you have any questions, please contact Vice-President of Sales, matt Reams at email@example.com. I want to take this opportunity to thank you for your business and promise you that we will do everything we can to ensure our mutual success. Long live the King!
Patrick Daly – President Sierra Bullets