Black Diamond Reports Record Fourth Quarter and Full Year 2014 Results
(Thomson Reuters ONE) -
Black Diamond Reports Record Fourth Quarter and Full Year 2014 Results
- Company Engages Rothschild and Baird to Explore Strategic Alternatives -
- 2015 Sales Expected to Increase 8% to $208 Million With 40% Gross Margin -
SALT LAKE CITY, March 16, 2015 (GLOBE NEWSWIRE) -- Black Diamond, Inc.
(Nasdaq:BDE) (the "Company" or "Black Diamond"), a global leader of innovative
active outdoor performance equipment and apparel, reported financial results for
the fourth quarter and full year ended December 31, 2014.
Fourth Quarter 2014 Financial Highlights vs. Same Year-Ago Quarter
* Sales up 10% to $59.4 million (up 13% in constant currency)
* Gross margin increased 160 basis points to 39.0% (up 335 basis points
constant currency)
* Adjusted EBITDA increased 37% to $3.4 million
* Adjusted net income from continuing operations before non-cash items
increased 36% to $3.1 million or $0.09 per diluted share
Fourth Quarter 2014 Financial Results
Sales in the fourth quarter of 2014 increased 10% to $59.4 million compared to
$54.1 million in the same year-ago quarter. The increase was primarily due to
the continued growth of Black Diamond Apparel and an increase in POC's preseason
bookings, as well as restocking orders for winter seasonal product. Excluding
the impact of foreign exchange, sales grew by 13%.
Gross margin in the fourth quarter of 2014 was 39.0% compared to 37.4% in the
year-ago quarter. The 160 basis point increase was primarily due to both a
favorable mix of higher margin products and higher margin channel mix, partially
offset by a 175 basis point impact from foreign exchange.
Selling, general and administrative expenses in the fourth quarter of 2014
increased 8% to $21.9 million compared to $20.2 million in the year-ago quarter.
The increase was driven by investments in strategic initiatives such as the
transition of certain POC distributors into the Company's in-house operations
and the continued roll-out of POC's new road cycling collection.
Adjusted EBITDA in the fourth quarter of 2014 increased 37% to $3.4 million
compared to $2.5 million in the year-ago quarter.
Net loss from continuing operations in the fourth quarter of 2014 was $0.9
million or $(0.03) per diluted share, compared to net income from continuing
operations of $0.5 million or $0.02 per diluted share in the year-ago quarter.
Net loss from continuing operations in the fourth quarter of 2014 included $3.1
million of non-cash items and $1.0 million in restructuring costs, compared to
$1.6 million of non-cash items and $0.1 million in merger and integration costs
in the year-ago quarter.
Adjusted net income from continuing operations, which excludes these non-cash
items, increased 36% to $3.1 million or $0.09 per diluted share in the fourth
quarter of 2014, compared to adjusted net income from continuing operations of
$2.3 million or $0.07 per diluted share in the fourth quarter of 2013.
At December 31, 2014, cash and available-for-sale marketable securities totaled
$40.9 million compared to $4.5 million at December 31, 2013. Total debt was
$22.4 million at December 31, 2014, which includes $18.5 million of 5%
subordinated notes due in 2017 and $3.9 million in a foreign seasonal working
capital credit facility for POC, compared to $38.0 million at December
31, 2013. The decrease in debt was due to the pay down of outstanding amounts
under the Company's line of credit and the full pay off of its $9.0 million term
note.
Full Year 2014 Financial Results
Sales in 2014 increased 15% to $193.1 million compared to $168.1 million in
2013. Excluding the impact of foreign exchange, sales grew by 16%.
Gross margin in 2014 increased 250 basis points to 38.8% compared to 36.3% in
2013. Gross margin in 2014 included a 50 basis point negative impact from
foreign exchange. Gross margin in 2013 included a $1.5 million charge for a
PIEPS product recall. Excluding this amount, adjusted gross margin in 2013 was
37.2%.
Selling, general and administrative expenses in 2014 increased 9% to $81.1
million compared to $74.5 million in 2013.
Adjusted EBITDA in 2014 increased to $2.9 million compared to a loss of $1.6
million in 2013.
Net loss from continuing operations in 2014 was $9.2 million or $(0.28) per
diluted share, compared to a net loss from continuing operations of $11.1
million or $(0.35) per diluted share in 2013. Net loss in 2014 included $6.6
million of non-cash items and $3.6 million in restructuring costs, compared to
$7.6 million of non-cash items, $0.2 million in restructuring costs, $0.6
million in merger and integration costs, and $0.1 million in transaction costs.
Adjusted net income from continuing operations, which excludes these non-cash
items, was $0.8 million or $0.03 per diluted share, compared to a loss of $2.8
million or $(0.09) per diluted share in 2013.
Management Commentary
"Since initiating our strategic pivot in late 2013, we have executed against
nearly all of its objectives, including the sale of Gregory, the focus on our
core and fastest growing brands, and the development of a series of initiatives
to improve margins and profitability," said Peter Metcalf, CEO of Black Diamond.
"Our strong fourth quarter results reflect this execution, with 13% constant
currency sales growth, a 160 basis point improvement in gross margin and a 37%
increase in adjusted EBITDA.
"Black Diamond Apparel and POC continued to drive our growth as we benefited
from a more complete fall 2014 apparel collection, including the fall launch of
our women's line, and a significant increase in sales from POC, driven by strong
preseason bookings and re-orders of winter seasonal product."
Exploration of Strategic Alternatives
Black Diamond has engaged the financial advisory firms Rothschild Inc. and
Robert W. Baird & Co. ("Baird") to lead the exploration of a full range of
strategic alternatives for each of the Company's brands, Black Diamond, POC and
PIEPS.
Warren Kanders, executive chairman of Black Diamond, commented: "Over the last
15 months, we have undertaken a series of actions to leverage the significant
growth in our brands, optimize our platform, drive significant cost reductions,
and position the Company for stronger financial and brand performance. We
believe the growth in sales and margin in the fourth quarter is an early
indication of the benefits of these actions, which we expect to realize
increasingly over time.
"At a time when premium active lifestyle and outdoor brands are selling at
historically high levels, and there is a scarcity of authentic branded assets
available to strategic acquirers, the board's decision to investigate its
strategic alternatives results from its belief that the Company is likely to
utilize 100% of its NOL balances in connection with this process and represents
the logical next step in our ongoing efforts to unlock value for Black Diamond
shareholders."
Black Diamond has not set a timetable for completion of this strategic review
process, and does not intend to comment further regarding the review process
unless or until a specific transaction is approved by its board of directors or
shareholders, the review process is concluded, or it is otherwise determined
that further disclosure is appropriate or required by law. The Company provides
no assurance that the strategic review process will result in any transaction.
2015 Outlook
Black Diamond anticipates fiscal year 2015 sales of approximately $208 million,
which would represent an increase of approximately 8% from 2014 sales (an
increase of 11% on a constant currency basis). The Company also expects gross
margin in fiscal year 2015 to be approximately 40%.
Net Operating Loss (NOL)
The Company estimates that it has available NOL carryforwards for U.S. federal
income tax purposes of approximately $167 million. The Company's common stock is
subject to a rights agreement dated February 7, 2008 that is intended to limit
the number of 5% or more owners and therefore 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. However, there is no guaranty
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 2014 results.
Date: Monday, March 16, 2015
Time: 5:00 p.m. Eastern time (3:00 p.m. Mountain time)
Toll-free dial-in number: 1-800-401-3551
International dial-in number: 1-913-312-0844
Conference ID: 1218735
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=113279 and via the investor relations
section of the Company's website 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 30, 2015.
Toll-free replay number: 1-877-870-5176
International replay number: 1-858-384-5517
Replay ID: 1218735
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®, POC(TM) and PIEPS(TM), 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.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) net income (loss) from continuing operations before non-cash
items and related income (loss) per diluted share, and adjusted net income
(loss) from continuing operations before non-cash items and related income
(loss) per diluted share, (ii) earnings before interest, taxes, other income,
depreciation and amortization ("EBITDA"), and adjusted EBITDA, and (iii)
adjusted gross profit and adjusted gross margin. The Company also believes that
the presentation of certain non-GAAP measures, i.e.: (i) net income (loss) from
continuing operations before non-cash items and related income (loss) per
diluted share, and adjusted net income (loss) from continuing operations before
non-cash items and related income (loss) per diluted share, (ii) EBITDA and
adjusted EBITDA, and (iii) adjusted gross profit and adjusted gross margin,
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, along with the
nearest GAAP measures, a 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 results of the Company's review of
strategic alternatives; the Company's ability to successfully integrate and grow
acquisitions; 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 patents,
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
(Unaudited)
(In thousands, except per share amounts)
December 31,
2014 2013
Assets
Current assets
Cash $31,034 $4,478
Marketable securities 9,902 --
Accounts receivable, less allowance for doubtful accounts 38,734 40,316
of $724 and $641, respectively
Inventories 64,481 54,054
Prepaid and other current assets 6,111 4,797
Income tax receivable 5,333 49
Deferred income taxes 2,965 2,687
Total current assets 158,560 106,381
Property and equipment, net 13,760 17,401
Other intangible assets, net 24,912 35,530
Indefinite lived intangible assets 35,600 51,679
Goodwill 41,983 57,703
Deferred income taxes 37,877 50,666
Other long-term assets 2,821 2,063
Total assets $315,513 $321,423
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable and accrued liabilities $28,639 $27,349
Deferred income taxes 26 --
Current portion of long-term debt 3,875 1,910
Total current liabilities 32,540 29,259
Long-term debt 18,562 36,131
Deferred income taxes 5,076 6,786
Other long-term liabilities 2,142 1,997
Total liabilities 58,320 74,173
Stockholders' Equity
Preferred stock, $.0001 par value; 5,000 shares -- --
authorized; none issued
Common stock, $.0001 par value; 100,000 shares authorized; 3 3
32,801 and 32,526 issued and 32,704 and 32,451 outstanding
Additional paid in capital 482,985 477,890
Accumulated deficit (223,197) (237,204)
Treasury stock, at cost (186) (2)
Accumulated other comprehensive (loss) income (2,412) 6,563
Total stockholders' equity 257,193 247,250
Total liabilities and stockholders' equity $315,513 $321,423
BLACK DIAMOND, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share amounts)
Three Months Ended
December 31, 2014 December 31, 2013
Sales
Domestic sales $24,611 $22,006
International sales 34,814 32,143
Total sales 59,425 54,149
Cost of goods sold 36,234 33,886
Gross profit 23,191 20,263
Operating expenses
Selling, general and administrative 21,887 20,189
Restructuring charge 993 --
Merger and integration -- 149
Total operating expenses 22,880 20,338
Operating income (loss) 311 (75)
Other (expense) income
Interest expense, net (731) (675)
Other, net 128 117
Total other expense, net (603) (558)
Loss before income tax (292) (633)
Income tax expense (benefit) 635 (1,179)
(Loss) income from continuing operations (927) 546
Discontinued operations, net of tax 841 190
Net (loss) income $(86) $736
(Loss) income from continuing operations per
share:
Basic $(0.03) $0.02
Diluted (0.03) 0.02
Net (loss) income per share:
Basic $(0.00) $0.02
Diluted (0.00) 0.02
Weighted average shares outstanding:
Basic 32,690 32,397
Diluted 32,690 33,133
BLACK DIAMOND, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share amounts)
Year Ended December 31,
2014 2013
Sales
Domestic sales $77,403 $68,227
International sales 115,737 99,882
Total sales 193,140 168,109
Cost of goods sold 118,242 107,052
Gross profit 74,898 61,057
Operating expenses
Selling, general and administrative 81,077 74,537
Restructuring charge 3,583 175
Merger and integration -- 565
Transaction costs -- 54
Total operating expenses 84,660 75,331
Operating loss (9,762) (14,274)
Other (expense) income
Interest expense, net (2,684) (2,577)
Other, net (296) 350
Total other expense, net (2,980) (2,227)
Loss before income tax (12,742) (16,501)
Income tax benefit (3,551) (5,369)
Loss from continuing operations (9,191) (11,132)
Discontinued operations, net of tax 23,198 5,262
Net income (loss) $14,007 $(5,870)
Loss from continuing operations per share:
Basic $(0.28) $(0.35)
Diluted (0.28) (0.35)
Net income (loss) per share:
Basic $0.43 $(0.18)
Diluted 0.43 (0.18)
Weighted average shares outstanding:
Basic 32,567 32,007
Diluted 32,567 32,007
BLACK DIAMOND, INC.
RECONCILIATION FROM GROSS PROFIT TO ADJUSTED GROSS PROFIT
AND ADJUSTED GROSS MARGIN
YEAR ENDED
December 31, 2014 December 31, 2013
Gross profit as $61,057
reported
Plus impact of 1,541
product recall
Gross profit as $74,898 Adjusted gross profit $62,598
reported
Gross margin 36.3%
Gross margin as 38.8% Adjusted gross margin 37.2%
reported
BLACK DIAMOND, INC.
RECONCILIATION FROM NET (LOSS) INCOME FROM CONTINUING OPERATIONS TO NET INCOME
FROM CONTINUING OPERATIONS BEFORE NON-CASH
ITEMS, ADJUSTED NET INCOME FROM CONTINUING OPERATIONS BEFORE NON-CASH ITEMS AND
RELATED EARNINGS PER DILUTED SHARE
(In thousands, except per share amounts)
Three Months Ended
Per Diluted Per Diluted
December Share December Share
31, 2014 31, 2013
Net (loss) income
from continuing $(927) $(0.03) $546 $0.02
operations
Amortization of 707 0.02 769 0.02
intangibles
Depreciation 936 0.03 1,044 0.03
Accretion of note 352 0.01 307 0.01
discount
Stock-based 466 0.01 598 0.02
compensation
Income tax expense 635 0.02 (1,179) (0.04)
(benefit)
Cash (paid) received (5) (0.00) 59 0.00
for income taxes(1)
Net income from
continuing operations $2,164 $0.07 $2,144 $0.06
before non-cash items
Restructuring charge 993 0.03 -- --
Merger and -- -- 149 0.00
integration
State cash taxes on (35) (0.00) (4) (0.00)
adjustments
AMT cash taxes on (19) (0.00) (3) (0.00)
adjustments
Adjusted net income
from continuing $3,103 $0.09 $2,286 $0.07
operations before
non-cash items
(1)Cash (paid) received for income taxes excludes payments of $9.9 million in
tax associated with the built in gains that could not be offset by the Company's
NOL during the three months ended December 31, 2014. The Gregory sale monetized
approximately $48.3 million of the Company's NOL balance, providing cash tax
savings of $16.9 million, leaving an NOL balance of $167.0 million.
BLACK DIAMOND, INC.
RECONCILIATION FROM NET LOSS FROM CONTINUING OPERATIONS TO NET LOSS FROM
CONTINUING OPERATIONS BEFORE NON-CASH ITEMS,
ADJUSTED NET INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE NON-CASH ITEMS AND
RELATED EARNINGS PER DILUTED SHARE
(In thousands, except per share amounts)
Year Ended
Per Diluted Per Diluted
December Share December Share
31, 2014 31, 2013
Net loss from
continuing $(9,191) $(0.28) $(11,132) $(0.35)
operations
Amortization of 2,985 0.09 3,063 0.10
intangibles
Depreciation 4,253 0.13 4,558 0.14
Accretion of note 1,337 0.04 1,162 0.04
discount
Stock-based 1,791 0.05 2,878 0.09
compensation
Product recall -- -- 990 0.03
Income tax benefit (3,551) (0.11) (5,369) (0.17)
Cash (paid) received (191) (0.01) 319 0.01
for income taxes(1)
Net loss from
continuing $(2,567) $(0.08) $(3,531) $(0.11)
operations before
non-cash items
Restructuring charge 3,583 0.11 175 0.01
Merger and -- -- 565 0.02
integration
Transaction costs -- -- 54 0.00
State cash taxes on (125) (0.00) (24) (0.00)
adjustments
AMT cash taxes on (69) (0.00) (15) (0.00)
adjustments
Adjusted net income
(loss) from
continuing $822 $0.03 $(2,776) $(0.09)
operations before
non-cash items
(1)Cash (paid) received for income taxes excludes payments of $9.9 million in
tax associated with the built in gains that could not be offset by the Company's
NOL during the three months ended December 31, 2014. The Gregory sale monetized
approximately $48.3 million of the Company's NOL balance, providing cash tax
savings of $16.9 million, leaving an NOL balance of $167.0 million.
BLACK DIAMOND, INC.
RECONCILIATION FROM NET (LOSS) INCOME FROM CONTINUING OPERATIONS TO EARNINGS
BEFORE
INTEREST, TAXES, DEPRECIATION, AND AMORTIZATION (EBITDA), AND ADJUSTED EBITDA
(In thousands)
Three Months Ended
December 31, 2014 December 31, 2013
Net (loss) income from continuing operations $(927) $546
Income tax expense (benefit) 635 (1,179)
Other, net (128) (117)
Interest expense, net 731 675
Operating income (loss) 311 (75)
Depreciation 936 1,044
Amortization of intangibles 707 769
EBITDA $1,954 $1,738
Restructuring charge 993 --
Merger and integration -- 149
Stock-based compensation 466 598
Adjusted EBITDA $3,413 $2,485
BLACK DIAMOND, INC.
RECONCILIATION FROM NET LOSS FROM CONTINUING OPERATIONS TO EARNINGS BEFORE
INTEREST, TAXES, DEPRECIATION, AND AMORTIZATION (EBITDA), AND ADJUSTED EBITDA
(In thousands)
Year Ended December 31,
2014 2013
Net loss from continuing operations $(9,191) $(11,132)
Income tax benefit (3,551) (5,369)
Other, net 296 (350)
Interest expense, net 2,684 2,577
Operating loss $(9,762) $(14,274)
Depreciation 4,253 4,558
Amortization of intangibles 2,985 3,063
EBITDA (2,524) (6,653)
Restructuring charge 3,583 175
Merger and integration -- 565
Transaction costs -- 54
Product recall -- 1,374
Stock-based compensation 1,791 2,878
Adjusted EBITDA $2,850 $(1,607)
CONTACT: Company Contact:
Warren B. Kanders
Executive Chairman
Tel 1-203-428-2000
warren.kanders(at)bdel.com
or
Peter Metcalf
CEO
Tel 1-801-278-5552
peter.metcalf(at)bdel.com
Investor Relations:
Liolios Group, Inc.
Scott Liolios or Cody Slach
Tel 1-949-574-3860
BDE(at)liolios.com
--------------------------------------------------------------------------------
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Source: Black Diamond, Inc. via GlobeNewswire
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Datum: 16.03.2015 - 21:28 Uhr
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News-ID 378886
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