Black Diamond will part ways with its founder and CEO Peter Metcalf by the end of 2015, but ironically, it now aims to look more like the brand Metcalf started 26 years ago.
It’s been a roller-coaster ride for the company, which five years ago merged with Gregory Mountain Products and went public on Wall Street under Black Diamond Inc.(Nasdaq:BDE). The corporate face then acquired Poc Sports and Pieps, and debuted Black Diamond Apparel – all with visions for a $500 million outdoor business by 2015.
It didn’t work.
On Monday, in announcing Metcalf ’s planned retirement, Black Diamond Executive Chairman Warren Kanders said the company “struggled to execute its plan as evidenced by eight consecutive quarters of disappointing results.”
The latest third-quarter results continued that trend, with continuing operations revenues (minus recent asset sales) down 11 percent versus a year ago.
Black Diamond Inc. sold off Gregory in July 2014, then Poc Sports in October 2015, leaving it with the original Black Diamond Equipment and the smaller fold-in acquisition of Pieps.
The brand will be going back to its climbing roots, Kanders said. He introduced Mark Ritchie as Black Diamond Equipment’s new president, who most recently served as chief operating officer with the company and has been with Black Diamond for 21 years.
“We have challenged Mark and the team to be the number one climbing brand in the world, to sell more of our core products more deeply into existing channels, to grow our e-commerce globally, and seek to return the brand to its 2011 cost structure, or roughly a 10-percent EBITDA margin run rate excluding corporate costs sometime during 2016.”
The plan involves a scaling back in apparel “to a naturally organic rate of growth,” and residing the brand’s “center of gravity within hard goods,” Ritchie said. Unclear and unmentioned on the call is how significant the wintersports category will be for Black Diamond, which Metcalf previously said would scale back to concentrate more on the backcountry market. Officials did say they plan to keep the Pieps brand, which primarily manufacturers winter safety equipment.
At the Grassroots Connect show in Knoxville, TN, Black Diamond’s North American Sales Director Heath Christensen said the company will introduce a new carbon fiber ski and ski pole for Fall/Winter 2016 under the name Helio. Western Regional Sales Manager Jerry Hicks explained the pole features a monolithic design with a built in the grip and provides a stronger weight to strength ratio than what the brand offers today.
Company officials took no questions during Monday's conference call, and Metcalf, who was not on the call, was unavailable Tuesday while traveling for business in Europe, a spokesman said.
Moving ahead, Kanders said the corporate entity (Black Diamond Inc.) will cut overhead it no longer needs. It also may consider changing its name to reflect a more diversified group of future assets, which may not necessarily be in the outdoor realm. Kanders said the company has nearly $100 million for possible acquisitions.
“Given the state of M&A markets today, the availability of capital in the financing market, and the liquidity of our pro-forma balance sheet, we believe we can acquire high-quality, durable, cash-flow producing assets with enterprise values in the range of between $250 million and $500 million.”
Investors, however, weren’t so confident, sending Black Diamond Inc.’s stock down more than 22 percent to $3.99 a share at Tuesday’s market close following the news. The stock is at an all-time low and stands at more than half of what it was worth when Black Diamond and Gregory first came together in 2010.
–David Clucas
