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
Released March 3, 2014