Quarterly report pursuant to Section 13 or 15(d)

Segment Information

Segment Information

9 Months Ended

Sep. 30, 2019

NOTE 13. SEGMENT INFORMATION

As a result of our August 21, 2017 acquisition of Sierra, we operate our business structure within two segments. These segments are defined based on the internal financial reporting used by management. Certain significant selling and general and administrative expenses are not allocated to the segments including non-cash stock compensation expense. Each segment is described below:

Black Diamond segment, which includes Black Diamond Equipment, PIEPS, and SKINourishment, is a global leader in designing, manufacturing, and marketing innovative outdoor engineered equipment and apparel for climbing, mountaineering, trail running, backpacking, skiing, and a wide range of other year-round outdoor recreation activities. Black Diamond segment offers a broad range of products including: high performance activity-based apparel (such as shells, insulation, midlayers, pants and logowear); rock-climbing footwear and equipment (such as carabiners, protection devices, harnesses, belay devices, helmets, and ice-climbing gear); technical backpacks and high-end day packs; trekking poles; headlamps and lanterns; gloves and mittens; and skincare and other sport-enhancing products. We also offer advanced skis, ski poles, ski skins, and snow safety products, including avalanche airbag systems, avalanche transceivers, shovels, and probes.

Sierra segment, which includes Sierra, is an iconic American manufacturer of a wide range of high-performance bullets and ammunition for both rifles and pistols. These bullets and ammunition are used for precision target shooting, hunting and military and law enforcement purposes.

The Company recognizes revenue when a contract exists with a customer that specifies the goods and services to be provided at an agreed upon sales price and when the performance obligation is satisfied by transferring the goods or service to the customer. The performance obligation is considered complete when products are shipped or delivered to the customer depending on the terms of the contract. Sales are made on normal and customary short-term credit terms or upon delivery at point of sale transactions. As noted above, the Company has a wide variety of technical outdoor equipment and lifestyle products focused on the climb, ski, mountain and sport product categories that are sold to a variety of customers in multiple end markets. While there are multiple products sold, the terms and nature of revenue recognition policy is similar for all segments. The sport product category represents the Sierra segment revenue.

We divide our product offerings into four primary categories of climb, mountain, ski and sport. Revenue by category is as follows:


	Three Months Ended				Nine Months Ended
	September 30, 2019		September 30, 2018		September 30, 2019		September 30, 2018

Climb	30	%	30	%	34	%	33	%
Mountain	37	%	38	%	35	%	35	%
Ski	22	%	17	%	17	%	14	%
Sport	11	%	15	%	14	%	18	%

Contract liabilities are recorded as a component of accounts payable and accrued liabilities when customers remit contractual cash payments in advance of us satisfying performance obligations which are satisfied at a future point of time. Contract liabilities were not material at September 30, 2019 and December 31, 2018. Contract liabilities are derecognized when the performance obligation is satisfied. Revenue recognized from satisfaction of performance obligations relating to the advanced payments during the three and nine months ended September 30, 2019 was not material. No other material remaining performance obligations exist at September 30, 2019.

Financial information for our segments is as follows:


	Three Months Ended				Nine Months Ended
	September 30, 2019		September 30, 2018		September 30, 2019		September 30, 2018
Sales to external customers:
Black Diamond
Domestic sales	$	23,634	$	19,840	$	70,315	$	59,434
International sales		30,118		27,410		73,683		67,796
Total Black Diamond		53,752		47,250		143,998		127,230
Sierra
Domestic sales		5,160		6,328		17,490		20,233
International sales		1,291		2,108		6,927		7,371
Total Sierra		6,451		8,436		24,417		27,604
Total sales to external customers		60,203		55,686		168,415		154,834
Segment operating income:
Black Diamond		5,388		4,639		10,096		6,254
Sierra		735		1,532		3,814		4,703
Total segment operating income		6,123		6,171		13,910		10,957
Restructuring charge		-		(22)		(13)		(86)
Transaction costs		(37)		(50)		(124)		(383)
Corporate and other expenses		(2,429)		(1,985)		(6,780)		(6,074)
Interest expense, net		(353)		(303)		(978)		(1,020)
Income before income tax	$	3,304	$	3,811	$	6,015	$	3,394

There were no intercompany sales between the Black Diamond and Sierra segments for the periods presented. Restructuring charges for the periods presented relate to the Black Diamond segment.

Total assets by segment, as of September 30, 2019 and December 31, 2018, were as follows:


	September 30, 2019		December 31, 2018

Black Diamond	$	149,414	$	138,029
Sierra		72,249		72,796
Corporate		3,285		2,303
	$	224,948	$	213,128

Capital expenditures, depreciation and amortization by segment is as follows.


	Three Months Ended				Nine Months Ended
	September 30, 2019		September 30, 2018		September 30, 2019		September 30, 2018
Capital expenditures:
Black Diamond	$	673	$	279	$	1,863	$	1,495
Sierra		171		57		975		359
Total capital expenditures	$	844	$	336	$	2,838	$	1,854
Depreciation:
Black Diamond	$	610	$	617	$	1,852	$	1,837
Sierra		480		489		1,480		1,477
Total depreciation	$	1,090	$	1,106	$	3,332	$	3,314
Amortization:
Black Diamond	$	278	$	272	$	834	$	822
Sierra		610		693		1,831		2,080
Total amortization	$	888	$	965	$	2,665	$	2,902