Black Diamond Sales Growth Slowed in Fourth Quarter

For the year ended Dec. 31, 2011, Black Diamond expects to report consolidated sales of more than $145 million, increasing at least 16 percent from pro forma sales of $125 million for the year ended Dec. 31, 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 on May 28, 2010.

The growth in sales for both the fourth quarter and full year were supported by the introduction of new and innovative products, as well as consistent execution in sales and marketing of existing products.
Gross margin in the fourth quarter of 2011 is expected to exceed 39.0 percent, compared to an adjusted gross margin of 38.2 percent in the year-ago quarter, with the improvement primarily attributed to the shift in mix toward higher margin products. Gross margin for the full year of 2011 is expected to be in line with the pro forma adjusted gross margin of 38.6 percent reported in 2010.

Due to higher gross margins, the company anticipates a modest increase in its previously reported earnings. As a result of the higher earnings, the company expects to utilize the net operating loss carryforwards (“NOL”) set to expire in 2011 that were previously reserved, which the company believes will result in cash tax savings of more than $3.0 million of federal income taxes. Although the company does not expect this will impact cash flow in 2011, by releasing the reserve, the company believes its GAAP earnings per share may increase over and above what it would have normally reported for the fiscal year ended Dec. 31, 2011 by approximately 12 to 15 cents.

“These preliminary record results are a true testament to Black Diamond's innovative and diversified collection of outdoor performance products, especially considering what has been a very challenging 2011/2012 winter season,” said Peter Metcalf, president and CEO of Black Diamond. “The proactive investments we made in our infrastructure and professional talent two years ago have also helped pave the way for this year's double-digit sales growth. We have maintained these levels of investments throughout 2011, as we believe this will continue to play a critical role in the advancement of our Black Diamond brands.

“As we begin 2012, we look forward to sustained organic growth which we believe will be driven by product innovation and expansion. This will coincide with continued investments in the Black Diamond operational platform, including the ramp up for our expected fall 2013 apparel launch. We also remain committed to our acquisition strategy, and believe the company we are building will make us the 'acquirer of choice' in the outdoor performance product market.”

2012 Outlook
Black Diamond expects fiscal year 2012 sales to range between $160-$165 million, which does not include new category launches or the impact from possible strategic acquisitions. The company also expects gross margins for fiscal year 2012 to be consistent with fiscal year 2011.