Black Diamond Near Closing on First Acquisition Since IPO

“In regards to acquisitions I'm pleased to share with you that we are currently in advanced discussions at this time with what we believe would be an ideal acquisition,” Peter Metcalf said in conference call organized to discuss the company’s audited financial results for the fourth quarter and year ended Dec. 31, 2011.

Metcalf also disclosed that Black Diamond expects sales for the first half of 2012 to reach between $76-$79 million in the six months ending June 30, up between 13 and 17 percent from a year ago. The company is forecasting internally that sales of the Gregory brand will more than triple in Europe this year. That augurs well for BDE’s acquisition strategy, which is focusing on outdoor brands with little or no international distribution that it can plug into European distribution network. 

By confirming preliminary figures and guidance issued Feb. 6, (See B.O.S.S. 1207), BDE indicated that events in Europe in intervening weeks had not changed its outlook. The company reported Feb. 6 and affirmed Monday that sales grew a record 17 percent to $145.1 million in 2011, its first full year operating as a publicly traded company.

“While there are limited concerns about the financial health of some retailers and specific European regions due to the lack of weather and financial issues, we will monitor each carefully and not take significant risks,” CEO Peter Metcalf told analysts Monday. “However, we do not believe the situation to be deep or broad enough to be truly meaningful to our spring 2012 business. In addition, it appears to us that both the late — central Europe and the partial resolution of the Greek debt crisis have helped restore a degree of consumer confidence.”

Black Diamond has said it has no plans to provide earnings guidance near term because it wants to have the flexibility to invest in growth opportunities, including acquisitions and launching its first apparel line in fall 2013. It did, however, say it expects gross margins for fiscal 2012 to remain consistent with 2011 despite recent volatility in exchange rates between the euro, the Swiss franc and the U.S. dollar.

Metcalf said the company’s apparel initiative remains on track. BDE hired 80 people in 2011, including many brought on to launch the apparel program. Hiring will resume mid-year, as the company brings on more designers at its Salt Lake City headquarters for additional apparel collections that will be introduced in future seasons. It will also continue this year to add supply chain, IT and sales and marketing positions needed to maintain its growth momentum.

In a move that has come to distinguish Metcalf from other CEOs in the outdoor industry, he used the earnings call to share his concerns about the direction of public policy in BDE’s home state of Utah.

“Currently our governor and state legislators are in favor of transferring all federal lands back to the state, ultimately for development, as well as the right to crisscross our national parks, wilderness, and monuments with new roads,” said Metcalf. “We are mobilizing to take a stand on this topic quickly to bring some additional political and economic pressure to prevent what we believe strongly could be a long-term disaster for Utah, our industry, and potentially the western United States if this kind of action ever serves as the precedent.”

Metcalf said BDE will be able to carry over most of the skis, ski boots, gloves and other winter inventory that remains unsold at the end of this month into next winter and expect to liquidate discontinued winter product by fall. The company won’t have a clear sense of the impact on fall/winter 2012-13 orders until mid-April.

“But looking at the inventory levels and looking at our history of being able to move product through those channels, we remain confident that we'll have pretty clean inventories at the start of the fall '12 season,” said CFO Robert Peay.