Attached files
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| 8-K - CURRENT REPORT - Clarus Corp | v221463_8k.htm |
Black Diamond Reports First Quarter 2011 Results
Sales Up 18% to $39.1 Million with Global Growth in All Categories
SALT LAKE CITY, Utah – (May 9, 2011) – Black Diamond, Inc. (NASDAQ: BDE) (the “Company”), a leading provider of outdoor recreation equipment and active lifestyle products, reported financial results for the first quarter ended March 31, 2011.
First Quarter 2011 Highlights
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Sales of $39.1 million, an increase of 18% from pro forma prior year quarter.
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Net income totaled $1.2 million or $0.05 per diluted share.
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Adjusted net income before non-cash items totaled $4.4 million or $0.20 per diluted share.
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Adjusted EBITDA totaled $4.6 million.
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Successfully completed the integration of Black Diamond Equipment and Gregory Mountain Products.
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First Quarter 2011 Financial Results
Total sales in the first quarter of 2011 increased 18% to $39.1 million, compared to pro forma sales of $33.1 million in the first quarter of 2010. The pro forma prior year sales include the results of Black Diamond Equipment and Gregory Mountain Products prior to their acquisitions by the Company in May 2010. The growth was attributable to increased sales of the Company’s highly recognized products globally.
Gross margin in the first quarter was 38.6%, compared to pro forma gross margin of 39.6% in the prior year quarter. The decline in gross margin was primarily attributed to unfavorable foreign exchange rates related to the Company’s European sales, despite sales growth on a constant currency basis.
Net income in the first quarter was $1.2 million or $0.05 per diluted share. The Company noted this income included $2.5 million of non-cash items as well as $0.8 million in restructuring charges related to the relocation of Gregory Mountain Products’ office and warehouse, and the Company’s U.S. distribution facilities to a new location in Salt Lake City. Excluding these items, the Company had adjusted net income before non-cash items of $4.4 million or $0.20 per diluted share.
Adjusted EBITDA (earnings before interest, taxes, other income, depreciation, amortization, non-cash equity compensation and restructuring charges) in the first quarter of 2011 was $4.6 million, which excludes $0.9 million of non-cash equity compensation and $0.8 million of restructuring charges (as described above) from EBITDA.
At March 31, 2011, cash and cash equivalents totaled $5.2 million, compared to $2.8 million at December 31, 2010. The increase is primarily due to net borrowings on the Company’s line of credit. Total long-term debt including the current portion of long-term debt was $33.5 million at March 31, 2011, which included $18.3 million outstanding on the Company’s $35.0 million line of credit, and a discounted value of $14.3 million on the Company’s 5% subordinated notes, as well as $0.9 million in other debt. The face value of the 5% subordinated notes is $22.6 million.
Page 1 of 10
Stockholders’ equity was $165.2 million or approximately $7.60 per share based on 21.7 million shares of common stock outstanding as of March 31, 2011.
Management Commentary
Peter Metcalf, Chief Executive Officer, commented: “Though we are pleased to have begun 2011 with such a robust first quarter of growth, we are most proud of the style in which we achieved these results, which was through a combination of truly innovative and award winning products, further cultivating our strong relationships with key retailers, and our nationally-recognized leadership with public policy issues of great importance to our customers. Together these actions are resulting in the continued rise of our brands as the quintessence of the sports themselves. Our sales growth is affirmation that our strategy is on track. For that matter, within the online core summer categories at REI and Eastern Mountains Sports, our Gregory and Black Diamond brands were the top performing brands in six and seven of 13 categories, respectively.”
“With the integration of Gregory Mountain Products and Black Diamond Equipment now complete,” continued Metcalf, “our new 77,000 square-foot Salt Lake City, UT Distribution Center is now fully operational and meeting the demands of accelerating sales at retail and on-line. In addition, over half a dozen director-level management and designer positions were created and have been filled, and we have made solid progress on interviewing for another handful of new manager and director level positions. We are enthusiastically moving forward on our compelling strategy to leverage our global operational platform, and grow our business both organically and acquisitively into one of the world’s most respected and leading active outdoor equipment and lifestyle corporations. This past quarter’s results exceeded our internal expectations and positions us strongly for what we believe to be continued solid growth through continued innovative product launches, sport intimacy, insightful marketing and retail partnering.”
Net Operating Loss
The Company estimates that it has available net operating loss carryforwards for U.S. federal income tax purposes of approximately $225.8 million, after application of the limitation under Section 382 of the Internal Revenue Code. The Company’s common stock is subject to a Rights Agreement dated February 7, 2008, designed 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 Internal Revenue Code of 1986. 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 host a conference call today at 4:30 p.m. Eastern Time to discuss its first quarter 2011 results. Black Diamond’s President and CEO Peter Metcalf and CFO Robert Peay will host the conference call, followed by a question and answer period.
To participate on the call, investors should dial the appropriate number 5-10 minutes prior to the start time.
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Date: Monday, May 9, 2011
Time: 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time)
Dial-In Number: 1-877-407-0789
International: 1-201-689-8562
Conference ID#: 371520
The conference call will be also broadcast live and available for replay here and on the Company's website at www.blackdiamond-inc.com.
Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization and ask you to wait until the call begins. If you have any difficulty connecting with the conference call, please contact Liolios Group at 1-949-574-3860.
A replay of the call will be available after 7:30 p.m. Eastern Time on the same day and until May 23, 2011.
Toll-free replay number: 1-877-870-5176
International replay number: 1-858-384-5517
Replay pin number: 371520
About Black Diamond, Inc.
Black Diamond, Inc. is a leading provider of outdoor recreation equipment and active lifestyle products under the principal brands of Black Diamond® and Gregory®. The company develops, manufactures and globally distributes a broad range of products including: rock-climbing equipment (such as carabiners, protection devices, harnesses, belay and devices, helmets and ice-climbing gear), technical backpacks and high-end day packs, tents, trekking poles, headlamps and lanterns, gloves and mittens, skis, ski bindings, ski boots, ski skins and avalanche safety equipment. Headquartered in Salt Lake City, Utah, the company has more than 475 employees worldwide, with ISO 9001 manufacturing facilities both in Salt Lake City and Southeast China as well as a sewing plant in Calexico, California; distribution centers in Utah and Southeast China; a marketing office in Yokohama, Japan; and a fully owned sales, marketing and distribution operation for Europe, located near Basel, Switzerland. For more information about the company, visit www.blackdiamond-inc.com, www.blackdiamondequipment.com, or www.gregorypacks.com.
Statement Regarding the Presentation of Results
The Company, formerly named Clarus Corporation, closed its acquisitions of Black Diamond Equipment and Gregory Mountain Products on May 28, 2010 (the "Acquisitions"). Black Diamond Equipment is considered the Predecessor Company for financial reporting purposes. The prior year combined financial results for the three-month period ended March 31, 2010 represent the results of the Company and the Predecessor but exclude the results of Gregory Mountain Products. We believe prior year pro forma results, which include the Company, Black Diamond Equipment and Gregory Mountain Products for the full three-month period ending March 31, 2010 are the most useful and instructive comparison, particularly pro forma sales and pro forma gross margin.
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Use of Non-GAAP Measures
The Company reports its financial results in accordance with U.S. generally accepted accounting principles ("GAAP"). The earnings press release contains the non-GAAP measures, combined and pro forma sales and gross profit, net income before non-cash items and adjusted net income before non-cash items and related earnings per share, and earnings before interest, taxes, other income, depreciation and amortization (“EBITDA”) and adjusted EBITDA. The Company also believes that presentation of certain non-GAAP measures, i.e., combined and pro forma sales and gross profit, net income before non-cash items, and EBITDA and adjusted EBITDA, provides 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 by other publicly traded companies.
Forward-Looking Statements
Certain statements included in this release are "forward-looking statements" within the meaning of the federal securities laws. 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 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; the Company's ability to successfully integrate and grow acquisitions; the Company's ability to maintain the strength and security of its information technology systems; 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.
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BLACK DIAMOND, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in thousands, except per share amounts)
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March 31, 2011
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December 31, 2010
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(Unaudited)
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Assets
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Current Assets
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Cash and cash equivalents
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$ | 5,232 | $ | 2,767 | ||||
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Accounts receivable, less allowance for doubtful accounts of $453 and $353, respectively
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24,534 | 20,293 | ||||||
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Inventories
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32,862 | 34,942 | ||||||
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Prepaid and other current assets
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1,581 | 2,527 | ||||||
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Income tax receivable
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265 | 376 | ||||||
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Deferred income taxes
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1,698 | 1,698 | ||||||
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Total Current Assets
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66,172 | 62,603 | ||||||
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Property and equipment, net
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15,393 | 14,740 | ||||||
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Definite lived intangible assets, net
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17,107 | 17,439 | ||||||
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Indefinite lived intangible assets
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32,650 | 32,650 | ||||||
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Goodwill
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40,601 | 40,601 | ||||||
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Deferred income taxes
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43,558 | 43,582 | ||||||
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Other long-term assets
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1,075 | 1,064 | ||||||
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TOTAL ASSETS
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$ | 216,556 | $ | 212,679 | ||||
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Liabilities and Stockholders' Equity
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Current Liabilities
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Accounts payable and accrued liabilities
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$ | 17,009 | $ | 19,208 | ||||
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Current portion of long-term debt
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302 | 308 | ||||||
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Total Current Liabilities
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17,311 | 19,516 | ||||||
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Long-term debt
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33,227 | 29,456 | ||||||
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Other long-term liabilities
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810 | 785 | ||||||
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TOTAL LIABILITIES
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51,348 | 49,757 | ||||||
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Stockholders' Equity
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Preferred stock, $.0001 par value; 5,000 shares authorized; none issued
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- | - | ||||||
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Common stock, $.0001 par value; 100,000 shares authorized; 21,814 shares issued and 21,739 outstanding in 2011
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2 | 2 | ||||||
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Additional paid in capital
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400,374 | 399,475 | ||||||
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Accumulated deficit
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(237,010 | ) | (238,178 | ) | ||||
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Treasury stock, at cost
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(2 | ) | (2 | ) | ||||
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Accumulated other comprehensive income
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1,844 | 1,625 | ||||||
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TOTAL STOCKHOLDERS' EQUITY
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165,208 | 162,922 | ||||||
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TOTAL LIABILITIES AND EQUITY
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$ | 216,556 | $ | 212,679 | ||||
Page 5 of 10
BLACK DIAMOND, INC.
CONDENSED CONSOLIDATED COMBINED STATEMENTS OF OPERATIONS
(UNAUDITED)
(in thousands, except per share amounts)
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THREE MONTHS
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THREE MONTHS
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ENDED
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ENDED
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Predecessor
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Consolidated
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Company
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Combined
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March 31, 2011
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March 31, 2010
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March 31, 2010
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March 31, 2010
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Sales
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Domestic sales
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$ | 15,830 | $ | - | $ | 9,819 | $ | 9,819 | ||||||||
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International sales
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23,228 | - | 13,838 | 13,838 | ||||||||||||
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Total sales
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39,058 | - | 23,657 | 23,657 | ||||||||||||
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Cost of goods sold
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23,987 | - | 14,537 | 14,537 | ||||||||||||
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Gross profit
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15,071 | - | 9,120 | 9,120 | ||||||||||||
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Operating expenses
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Selling, general and administrative
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12,329 | 868 | 7,315 | 8,183 | ||||||||||||
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Restructuring charge
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774 | - | - | - | ||||||||||||
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Transaction costs
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- | 1,509 | - | 1,509 | ||||||||||||
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Total operating expenses
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13,103 | 2,377 | 7,315 | 9,692 | ||||||||||||
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Operating income (loss)
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1,968 | (2,377 | ) | 1,805 | (572 | ) | ||||||||||
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Other (expense) income
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Interest expense
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(728 | ) | - | (106 | ) | (106 | ) | |||||||||
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Interest income
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10 | 22 | (7 | ) | 15 | |||||||||||
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Other, net
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418 | - | 292 | 292 | ||||||||||||
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Total other (expense) income, net
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(300 | ) | 22 | 179 | 201 | |||||||||||
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Income (loss) before income tax
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1,668 | (2,355 | ) | 1,984 | (371 | ) | ||||||||||
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Income tax provision
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500 | - | 584 | 584 | ||||||||||||
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Net income (loss)
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$ | 1,168 | $ | (2,355 | ) | $ | 1,400 | $ | (955 | ) | ||||||
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Earnings (loss) per share:
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Basic
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$ | 0.05 | $ | (0.14 | ) | |||||||||||
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Diluted
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0.05 | (0.14 | ) | |||||||||||||
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Weighted average shares oustanding:
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Basic
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21,831 | 16,867 | ||||||||||||||
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Diluted
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21,951 | 16,867 | ||||||||||||||
Page 6 of 10
RECONCILIATION FROM SALES AND GROSS PROFIT TO PRO FORMA SALES
AND PRO FORMA GROSS PROFIT AND PRO FORMA GROSS MARGIN
THREE MONTHS ENDED
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March 31, 2011
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March 31, 2010
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Sales as reported
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$ | - | ||||||||
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Sales for Predecessor Company three months ended 3/31/10
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23,657 | |||||||||
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Combined sales
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23,657 | |||||||||
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Sales for Gregory three months ended 3/31/10
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9,456 | |||||||||
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Sales as reported
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$ | 39,058 |
Pro forma sales
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$ | 33,113 | |||||
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Sales growth
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18.0 | % | ||||||||
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March 31, 2011
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March 31, 2010
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Gross profit as reported
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$ | - | ||||||||
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Gross profit for Predecessor Company three months ended 3/31/10
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9,120 | |||||||||
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Combined gross profit
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9,120 | |||||||||
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Gross profit for Gregory three months ended 3/31/10
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3,991 | |||||||||
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Gross profit as reported
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$ | 15,071 |
Pro forma gross profit
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$ | 13,111 | |||||
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Combined gross margin
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38.6 | % | ||||||||
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Gross margin as reported
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38.6 | % |
Pro forma gross margin
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39.6 | % | |||||
Page 7 of 10
RECONCILIATION FROM NET INCOME TO EARNINGS BEFORE INTEREST, TAXES, OTHER
INCOME, DEPRECIATION, AND AMORTIZATION (EBITDA), AND ADJUSTED EBITDA
(in thousands)
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THREE MONTHS
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THREE MONTHS
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ENDED
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ENDED
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Predecessor
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Company
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Combined
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Consolidated
March 31, 2011 |
March 31,
2010
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March 31,
2010
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March 31,
2010
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Net income (loss)
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$ | 1,168 | $ | (2,355 | ) | $ | 1,400 | $ | (955 | ) | ||||||
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Income tax provision
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500 | - | 584 | 584 | ||||||||||||
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Other, net
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(418 | ) | - | (292 | ) | (292 | ) | |||||||||
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Interest income
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(10 | ) | (22 | ) | 7 | (15 | ) | |||||||||
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Interest expense
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728 | - | 106 | 106 | ||||||||||||
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Operating income
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1,968 | (2,377 | ) | 1,805 | (572 | ) | ||||||||||
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Depreciation
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607 | 79 | 495 | 574 | ||||||||||||
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Amortization of intangibles
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332 | - | 1 | 1 | ||||||||||||
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EBITDA
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$ | 2,907 | $ | (2,298 | ) | $ | 2,301 | $ | 3 | |||||||
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Transaction costs
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- | 1,509 | - | 1,509 | ||||||||||||
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Restructuring charge
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774 | - | - | - | ||||||||||||
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Non-cash equity compensation
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899 | 118 | 270 | 388 | ||||||||||||
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Adjusted EBITDA
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$ | 4,580 | $ | (671 | ) | $ | 2,571 | $ | 1,900 | |||||||
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RECONCILIATION FROM NET INCOME TO NET INCOME BEFORE NON-CASH ITEMS, ADJUSTED NET INCOME BEFORE NON-CASH ITEMS AND RELATED EARNINGS PER SHARE
(in thousands, except per share amounts)
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THREE MONTHS
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THREE MONTHS
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ENDED
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ENDED
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Predecessor
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Consolidated
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Company
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Combined
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March 31,
2011
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Per Diluted
Share
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March 31,
2010
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March 31,
2010
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March 31,
2010
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Per Diluted
Share
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Net income (loss)
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$ | 1,168 | $ | 0.05 | $ | (2,355 | ) | $ | 1,400 | $ | (955 | ) | $ | (0.06 | ) | |||||||||
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Amortization of intangibles
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332 | 0.02 | - | 1 | 1 | 0.00 | ||||||||||||||||||
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Depreciation
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607 | 0.03 | 79 | 495 | 574 | 0.03 | ||||||||||||||||||
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Accretion of note discount
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267 | 0.01 | - | 10 | 10 | 0.00 | ||||||||||||||||||
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Amortization of discount on securities
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- | - | (11 | ) | - | (11 | ) | (0.00 | ) | |||||||||||||||
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Non-cash equity compensation
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899 | 0.04 | 118 | 270 | 388 | 0.02 | ||||||||||||||||||
| Income tax provision | 500 | 0.02 | - | 584 | 584 | 0.03 | ||||||||||||||||||
| Cash paid for income taxes | (96 | ) | (0.00 | ) | - | (562 | ) | (562 | ) | (0.03 | ) | |||||||||||||
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Net income (loss) before non-cash items
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$ | 3,677 | $ | 0.17 | $ | (2,169 | ) | $ | 2,198 | $ | 29 | $ | 0.00 | |||||||||||
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Transaction costs
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- | - | 1,509 | - | 1,509 | 0.09 | ||||||||||||||||||
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Restructuring charge
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774 | 0.04 | - | - | - | - | ||||||||||||||||||
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State cash taxes on adjustments
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(39 | ) | (0.00 | ) | (75 | ) | - | (75 | ) | (0.00 | ) | |||||||||||||
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AMT cash taxes on adjustments
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(15 | ) | (0.00 | ) | (29 | ) | - | (29 | ) | (0.00 | ) | |||||||||||||
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Adjusted net income (loss) before non-cash items
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$ | 4,397 | $ | 0.20 | $ | (764 | ) | $ | 2,198 | $ | 1,434 | $ | 0.09 | |||||||||||
Page 9 of 10
Company Contact:
Warren B. Kanders
Executive Chairman
Tel 203-428-2000
warren.kanders@bdel.com
or
Peter Metcalf
Chief Executive Officer
Tel 801-278-5552
peter.metcalf@bdel.com
Investor Relations:
Liolios Group, Inc.
Scott Liolios or Cody Slach
Tel 949-574-3860
BDE@liolios.com
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