Black Diamond Reports Fourth Quarter And Full Year 2013 Results


The following excerpt is from the company's SEC filing.

SALT LAKE CITY, Utah – March 3, 2014 – Black Diamond, Inc. (NASDAQ: BDE) (the “Company” or “Black Diamond”), a leading global supplier of innovative active outdoor performance equipment and apparel, reported financial results for the fourth quarter and full year ended December 31, 2013.

·Adjusted net income before non-cash items increased to $3.6 million, or $0.11 per diluted share, compared to $1.6 million, or $0.05 per diluted share.

Total sales in the fourth quarter of 2013 increased 24% to $60.4 million compared to $48.8 million in the fourth quarter of 2012. The increase was attributed to strong growth across all Black Diamond brands and major geographies, as well as the launch of Black Diamond apparel and an increase in Gregory’s sales in Japan due to the transition of the distribution assets from Kabushiki Kaisha A&F.

Gross margin was 38.0% in the fourth quarter of 2013 compared to 36.3% in the year-ago quarter. Although gross margin increased compared to the same period last year, there are several offsetting factors to consider. For comparative purposes, gross profit in the fourth quarter of 2012 included $1.2 million for inventory fair value of purchase accounting adjustments related to the acquisitions of POC and PIEPS. Gross profit in the fourth quarter of 2013 included unfavorable production and shipping variances, discontinued merchandise and inventory adjustments associated with older, discontinued winter season product.

Net income in the fourth quarter of 2013 was $0.7 million, or $0.02 per diluted share, compared to net income of $0.5 million, or $0.02 per diluted share, in the year-ago quarter.

Net income in the fourth quarter of 2013 included $2.7 million of non-cash items and $0.2 million of merger and integration costs compared to $0.4 million of non-cash items, $0.4 million in transaction-related costs, $0.1 million in restructuring costs and $0.2 million in merger and integration costs in the year-ago quarter. Excluding these items, adjusted net income before non-cash items in the fourth quarter of 2013 was $3.6 million, or $0.11 per diluted share, compared to $1.6 million, or $0.05 per diluted share, in the fourth quarter of 2012.

At December 31, 2013, cash totaled $4.5 million compared to $5.1 million at December 31, 2012. Non-cash working capital was $72.6 million at December 31, 2013 compared to $73.2 million at the same time last year. Total debt was $38.0 million at December 31, 2013, which included $10.3 million outstanding on the Company’s $30.0 million line of credit, leaving $19.7 million available. This compares to total debt of $40.5 million at December 31, 2012.

Total sales in 2013 increased 15% to $203.0 million compared to $175.9 million in 2012. The growth in sales was attributed to the full year of sales of POC and PIEPS, the launch of Black Diamond apparel, as well as an increase in Gregory’s sales in Japan due to the transition of the distribution assets from Kabushiki Kaisha A&F.

Gross margin in 2013 was unchanged compared to 2012 at 38.2%. Gross profit in 2013 included a $1.5 million charge for a PIEPS product recall, of which $1.1 million was non-cash and includes 100% of existing inventory. Excluding this amount, adjusted gross margin in 2013 was 38.9% compared to adjusted gross margin of 39.5% in 2012.

Net loss in 2013 was $5.9 million, or $(0.18) per diluted share, compared to net income of $2.0 million, or $0.06 per diluted share, in 2012.

Net loss in 2013 included $11.7 million of non-cash items, $0.1 million in transaction-related costs, $0.2 million in restructuring costs and $0.6 million in merger and integration costs. Excluding these items, adjusted net income before non-cash items in 2013 was $6.6 million, or $0.20 per diluted share, compared to income of $12.5 million, or $0.42 per diluted share, in 2012.

“In addition to record sales, 2013 was an investment year and a year of significant strategic accomplishments,” said Peter Metcalf, president and CEO of Black Diamond. “We launched Black Diamond apparel, established our own distribution business in Japan, and finalized the integration of POC and PIEPS. We expect 2014 to be a year highlighted by continuing growth and a strategic shift towards our fastest growing businesses.”

Black Diamond expects fiscal year 2014 sales to range between $235 million to $240 million, which would represent an increase of approximately 16% to 18% from 2013 sales. The Company also expects gross margin in fiscal year 2014 to range between 39.5% and 40.5%.

The Company estimates that it has available NOL carryforwards for U.S. federal income tax purposes of approximately $210.4 million. The Company’s common stock is subject to a Rights Agreement dated February 7, 2008, intended to assist in limiting the number of 5% or more owners and thus reduce the risk of a possible “change of ownership” under Section 382 of the Code. Any such “change of ownership” under these rules would limit or eliminate the ability of the Company to use its existing NOLs for federal income tax purposes. There is no guaranty, however, that the Rights Agreement will achieve the objective of preserving the value of the NOLs.

Black Diamond will hold a conference call today at 5:00 p.m. Eastern time to discuss its fourth quarter and full year 2013 results.

The Company’s President and CEO Peter Metcalf and CFO Aaron Kuehne will host the conference call, followed by a question and answer period.

Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Liolios Group at 1-949-574-3860.

A replay of the conference call will be available after 8:00 p.m. Eastern time on the same day through March 17, 2014.

Black Diamond, Inc. is a global leader in designing, manufacturing and marketing innovative active outdoor performance equipment and apparel for climbing, mountaineering, backpacking, skiing, cycling and a wide range of other year-round outdoor recreation activities. The Company's principal brands, Black Diamond®, Gregory™, POC™ and PIEPS™, are iconic in the active outdoor, ski and cycling industries and linked intrinsically with the modern history of these sports. Black Diamond is synonymous with performance, innovation, durability and safety that the outdoor and action sport communities rely on and embrace in their active lifestyle. Headquartered in Salt Lake City at the base of the Wasatch Mountains, the Company's products are created and tested on some of the best alpine peaks, slopes, crags, roads and trails in the world. These close connections to the Black Diamond lifestyle enhance the authenticity of the Company's brands, inspire product innovation and strengthen customer loyalty. Black Diamond's products are sold in approximately 50 countries around the world. For additional information, please visit the Company's websites at www.blackdiamond-inc.com, www.blackdiamondequipment.com, www.gregorypacks.com, www.pocsports.com or www.pieps.com.

The Company reports its financial results in accordance with U.S. generally accepted accounting principles (“GAAP”). This press release contains the non-GAAP measures: (i) adjusted gross profit and gross margin, (ii) net (loss) income before non-cash items and related (loss) earnings per diluted share, and adjusted net (loss) income before non-cash items and related (loss) earnings per diluted share, and (iii) earnings before interest, taxes, other income, depreciation and amortization (“EBITDA”), and adjusted EBITDA. The Company also believes that the presentation of certain non-GAAP measures, i.e.: (i) adjusted gross profit and gross margin, (ii) net (loss) income before non-cash items and related (loss) earnings per diluted share, and adjusted net (loss) income before non-cash items and related (loss) earnings per diluted share, and (iii) EBITDA and adjusted EBITDA, provide useful information for the understanding of its ongoing operations and enables investors to focus on period-over-period operating performance, and thereby enhances the user's overall understanding of the Company's current financial performance relative to past performance and provides, to the nearest GAAP measures, a better baseline for modeling future earnings expectations. Non-GAAP measures are reconciled to comparable GAAP financial measures in the financial tables within this press release. The Company cautions that non-GAAP measures should be considered in addition to, but not as a substitute for, the Company's reported GAAP results. Additionally, the Company notes that there can be no assurance that the above referenced non-GAAP financial measures are comparable to similarly titled financial measures used by other publicly traded companies.

The above information was disclosed in a filing to the SEC. To see this filing in its entirety, click here.

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