Black Diamond Reports Fourth Quarter And Full Year 2013 Results

- Q4 Sales up 24% to a Record $60.4 Million with Adjusted Net Income Before Non-Cash Items of $0.11 per Diluted Share -

- Expects Full Year 2014 Sales to Range Between $235 Million and $240 Million, up 16% to 18% -

SALT LAKE CITY, March 3, 2014 (GLOBE NEWSWIRE) -- 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.

Fourth Quarter 2013 Financial Highlights vs. Same Year-Ago Quarter
  • Sales up 24% to $60.4 million.
  • Net income increased to $0.7 million, or $0.02 per diluted share, compared to $0.5 million, or $0.02 per diluted share.
  • 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.

Fourth Quarter 2013 Financial Results

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.

Full Year 2013 Financial Results

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.

Management Commentary

"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."

2014 Outlook

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%.

Net Operating Loss (NOL)

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.

Conference Call

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.
Date: Monday, March 3, 2014
Time: 5:00 p.m. Eastern time (2:00 p.m. Pacific time)
Dial-in number: 1-877-941-2068
International number: 1-480-629-9712
Conference ID: 4670780

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.

The conference call will be broadcast live and available for replay at http://public.viavid.com/index.php?id=108041 and via the investor relations section at www.blackdiamond-inc.com.

A replay of the conference call will be available after 8:00 p.m. Eastern time on the same day through March 17, 2014.
Toll-free replay number: 1-877-870-5176
International replay number: 1-858-384-5517
Replay ID: 4670780

About Black Diamond, Inc.

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.

Use of Non-GAAP Measures

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.

Forward-Looking Statements

Please note that in this press release we may use words such as "appears," "anticipates," "believes," "plans," "expects," "intends," "future," and similar expressions which constitute forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are made based on our expectations and beliefs concerning future events impacting the Company and therefore involve a number of risks and uncertainties. We caution that forward-looking statements are not guarantees and that actual results could differ materially from those expressed or implied in the forward-looking statements. Potential risks and uncertainties that could cause the actual results of operations or financial condition of the Company to differ materially from those expressed or implied by forward-looking statements in this release include, but are not limited to, the overall level of consumer spending on our products; general economic conditions and other factors affecting consumer confidence; disruption and volatility in the global capital and credit markets; the financial strength of the Company's customers; the Company's ability to implement its growth strategy, including its ability to organically grow each of its historical product lines, its new apparel line and its recently acquired businesses; the Company's ability to successfully integrate and grow acquisitions; the timing and results of the Company's exploration of strategic alternatives to monetize its Gregory Mountain Products business; the Company's exposure to product liability or product warranty claims and other loss contingencies; stability of the Company's manufacturing facilities and foreign suppliers; the Company's ability to protect trademarks and other intellectual property rights; fluctuations in the price, availability and quality of raw materials and contracted products; foreign currency fluctuations; our ability to utilize our net operating loss carryforwards; and legal, regulatory, political and economic risks in international markets. More information on potential factors that could affect the Company's financial results is included from time to time in the Company's public reports filed with the Securities and Exchange Commission, including the Company's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K. All forward-looking statements included in this press release are based upon information available to the Company as of the date of this press release, and speak only as of the date hereof. We assume no obligation to update any forward-looking statements to reflect events or circumstances after the date of this press release.
BLACK DIAMOND, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
     
  December 31,
  2013 2012
  (Unaudited)  
Assets    
Current assets    
Cash  $ 4,478  $ 5,111
Accounts receivable, less allowance for doubtful accounts of $641 and $499, respectively  40,316  30,925
Inventories  54,054  60,664
Prepaid and other current assets  4,797  4,846
Income tax receivable  49  659
Deferred income taxes  2,687  2,337
 Total current assets  106,381  104,542
     
Property and equipment, net  17,401  17,508
Definite lived intangible assets, net  35,530  38,100
Indefinite lived intangible assets  51,679  51,462
Goodwill  57,703  57,481
Deferred income taxes  50,666  49,631
Other long-term assets  2,063  2,062
Total assets  $ 321,423  $ 320,786
     
Liabilities and Stockholders' Equity    
Current liabilities    
 Accounts payable and accrued liabilities  $ 27,349  $ 22,178
 Current portion of long-term debt   1,910  4,059
 Total current liabilities  29,259  26,237
     
Long-term debt   36,131  36,429
Deferred income taxes  6,786  8,114
Other long-term liabilities  1,997  2,000
 Total liabilities  74,173  72,780
     
Stockholders' Equity    
 Preferred stock, $.0001 par value; 5,000 shares authorized; none issued  --   -- 
 Common stock, $.0001 par value; 100,000 shares authorized; 32,526 and 31,838 issued and 32,451 and 31,763 outstanding  3  3
 Additional paid in capital  477,890  473,628
 Accumulated deficit  (237,204)  (231,334)
 Treasury stock, at cost  (2)  (2)
 Accumulated other comprehensive income  6,563  5,711
 Total stockholders' equity  247,250  248,006
Total liabilities and stockholders' equity  $ 321,423  $ 320,786
     
     
BLACK DIAMOND, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands, except per share amounts)
     
   Three Months Ended 
  December 31, 2013 December 31, 2012
     
Sales    
Domestic sales  $ 23,449  $ 21,031
International sales  36,956  27,770
Total sales  60,405  48,801
     
Cost of goods sold  37,460  31,078
Gross profit  22,945  17,723
     
Operating expenses    
Selling, general and administrative  21,480  19,149
Restructuring charge  --   139
Merger and integration  149  168
Transaction costs  --   364
     
Total operating expenses  21,629  19,820
     
Operating income (loss)  1,316  (2,097)
     
Other (expense) income    
Interest expense, net  (984)  (933)
Other, net  113  254
     
Total other expense, net  (871)  (679)
     
Income (loss) before income tax  445  (2,776)
Income tax benefit  (291)  (3,320)
Net income  $ 736  $ 544
     
Earnings per share:    
Basic  $ 0.02  $ 0.02
Diluted  0.02  0.02
     
Weighted average shares outstanding:    
Basic 32,397 31,431
Diluted 33,133 31,615
     
     
BLACK DIAMOND, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share amounts)
     
   Year Ended December 31, 
  2013 2012
     
Sales    
Domestic sales  $ 78,855  $ 74,600
International sales  124,181  101,277
Total sales  203,036  175,877
     
Cost of goods sold  125,551  108,613
Gross profit  77,485  67,264
     
Operating expenses    
Selling, general and administrative  81,381  62,590
Restructuring charge  175  225
Merger and integration  565  244
Transaction costs  54  2,029
     
Total operating expenses  82,175  65,088
     
Operating (loss) income  (4,690)  2,176
     
Other (expense) income    
Interest expense, net  (3,583)  (2,958)
Other, net  330  870
     
Total other expense, net  (3,253)  (2,088)
     
(Loss) income before income tax  (7,943)  88
Income tax benefit  (2,073)  (1,864)
Net (loss) income  $ (5,870)  $ 1,952
     
(Loss) earnings per share:    
Basic $ (0.18)  $ 0.07
Diluted  (0.18)  0.06
     
Weighted average shares outstanding:    
Basic 32,007 29,817
Diluted 32,007 30,126
     
     
BLACK DIAMOND, INC.
RECONCILIATION FROM GROSS PROFIT TO ADJUSTED GROSS PROFIT
AND ADJUSTED GROSS MARGIN
       
THREE MONTHS ENDED
       
  December 31, 2013   December 31, 2012
       
Gross profit as reported $ 22,945 Gross profit as reported $ 17,723
Plus impact of product recall  --  Plus inventory fair value of purchase accounting  1,163
Adjusted gross profit $ 22,945 Adjusted gross profit $ 18,886
       
Gross margin 38.0% Gross margin 36.3%
       
Adjusted gross margin 38.0% Adjusted gross margin 38.7%
       
YEAR ENDED
       
  December 31, 2013   December 31, 2012
       
Gross profit as reported $ 77,485 Gross profit as reported $ 67,264
Plus impact of product recall  1,541 Plus inventory fair value of purchase accounting  2,257
Adjusted gross profit $ 79,026 Adjusted gross profit $ 69,521
       
Gross margin 38.2% Gross margin 38.2%
       
Adjusted gross margin 38.9% Adjusted gross margin 39.5%
       
       
BLACK DIAMOND, INC.
RECONCILIATION FROM NET INCOME TO NET INCOME BEFORE NON-CASH ITEMS, ADJUSTED
NET INCOME BEFORE NON-CASH ITEMS AND RELATED EARNINGS PER DILUTED SHARE
(In thousands, except per share amounts)
         
   Three Months Ended 
     Per Diluted     Per Diluted 
  December 31, 2013 Share December 31, 2012 Share
         
         
Net income  $ 736  $ 0.02  $ 544  $ 0.02
         
Amortization of intangibles  899  0.03  871  0.03
Depreciation   1,077  0.03  990  0.03
Accretion of note discount  307  0.01  267  0.01
Stock-based compensation  649  0.02  452  0.01
Inventory fair value of purchase accounting  --   --   1,163  0.04
Income tax benefit  (291)  (0.01)  (3,320)  (0.11)
Cash paid for income taxes  59  0.00  (38)  (0.00)
         
Net income before non-cash items  $ 3,436  $ 0.10  $ 929  $ 0.03
         
Restructuring charge  --   --   139  0.00
Merger and integration  149  0.00  168  0.01
Transaction costs  --   --   364  0.01
State cash taxes on adjustments  (4)  (0.00)  (34)  (0.00)
AMT cash taxes on adjustments  (3)  (0.00)  (13)  (0.00)
         
Adjusted net income before non-cash items  $ 3,578  $ 0.11  $ 1,553  $ 0.05
         
 
BLACK DIAMOND, INC.
RECONCILIATION FROM NET (LOSS) INCOME TO NET INCOME BEFORE NON-CASH ITEMS, ADJUSTED
NET INCOME BEFORE NON-CASH ITEMS AND RELATED EARNINGS PER DILUTED SHARE
(In thousands, except per share amounts)
         
   Year Ended 
     Per Diluted     Per Diluted 
   December 31, 2013 Share December 31, 2012 Share
         
         
Net (loss) income $ (5,870) $ (0.18)  $ 1,952  $ 0.06
         
Amortization of intangibles  3,583  0.11  2,268  0.08
Depreciation   4,696  0.15  3,685  0.12
Accretion of note discount  1,162  0.04  1,025  0.03
Stock-based compensation  3,010  0.09  1,766  0.06
Inventory fair value of purchase accounting  --   --   2,257  0.07
Product recall  990  0.03  --   -- 
Income tax (benefit) expense  (2,073)  (0.06)  (1,864)  (0.06)
Cash received (paid) for income taxes  301  0.01  (881)  (0.03)
         
Net income before non-cash items  $ 5,799  $ 0.18  $ 10,208  $ 0.34
         
Restructuring charge  175  0.01  225  0.01
Merger and integration  565  0.02  244  0.01
Transaction costs  54  0.00  2,029  0.07
State cash taxes on adjustments  (24)  (0.00)  (125)  (0.00)
AMT cash taxes on adjustments  (15)  (0.00)  (47)  (0.00)
         
Adjusted net income before non-cash items  $ 6,554  $ 0.20  $ 12,534  $ 0.42
         
 
BLACK DIAMOND, INC.
RECONCILIATION FROM NET INCOME TO EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION, AND AMORTIZATION 
(EBITDA), AND ADJUSTED EBITDA
(In thousands)
     
   Three Months Ended 
  December 31, 2013 December 31, 2012
     
     
Net income  $ 736  $ 544
     
Income tax benefit  (291)  (3,320)
Other, net  (113)  (254)
Interest expense, net  984  933
     
Operating income (loss)  1,316  (2,097)
     
Depreciation   1,077  990
Amortization of intangibles  899  871
     
EBITDA  $ 3,292 $ (236)
     
Restructuring charge  --   139
Merger and integration  149  168
Transaction costs  --   364
Inventory fair value of purchase accounting  --   1,163
Stock-based compensation  649  452
     
Adjusted EBITDA  $ 4,090  $ 2,050
     
     
BLACK DIAMOND, INC.
RECONCILIATION FROM NET (LOSS) INCOME TO EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION, AND
 AMORTIZATION (EBITDA), AND ADJUSTED EBITDA
(In thousands)
     
   Year Ended December 31,
  2013 2012
     
     
Net (loss) income $ (5,870)  $ 1,952
     
Income tax benefit  (2,073)  (1,864)
Other, net  (330)  (870)
Interest expense, net  3,583  2,958
     
Operating (loss) income  (4,690)  2,176
     
Depreciation   4,696  3,685
Amortization of intangibles  3,583  2,268
     
EBITDA  $ 3,589  $ 8,129
     
Restructuring charge  175  225
Merger and integration  565  244
Transaction costs  54  2,029
Inventory fair value of purchase accounting  --   2,257
Product recall  1,374  -- 
Stock-based compensation  3,010  1,766
     
Adjusted EBITDA  $ 8,767  $ 14,650
     
     
CONTACT: Company Contact:         Warren B. Kanders         Executive Chairman         Tel 1-203-428-2000         warren.kanders@bdel.com         or         Peter Metcalf         President & CEO         Tel 1-801-278-5552         peter.metcalf@bdel.com                  Investor Relations:         Liolios Group, Inc.         Scott Liolios or Cody Slach         Tel 1-949-574-3860         BDE@liolios.com

Black Diamond, Inc. Logo