Black Diamond Maintains Momentum in First Quarter

Black Diamond Inc. reported total sales in the first quarter of 2012 increased 19 percent to $46.4 million, which it attributed to a number of innovative products as well as consistent execution in the sale and marketing of existing products. Sales of Black Diamond and Gregory branded products grew in the double digits during the quarter.
 
Gross margin in the first quarter of 2012 increased to 40.1 percent, compared to 38.6 percent in the year-ago quarter. The 150 basis point increase in gross margin was due to a favorable shift in mix toward higher margin products and in part to better operating leverage in the business.
 
Net income in the first quarter of 2012 was $2.6 million or 10 cents per diluted share, compared to net income of $1.2 million or 5 cents per diluted share in the year-ago quarter. Net income in the first quarter of 2012 included $3.2 million of non-cash items and $100,000 in transaction-related costs, compared to $2.5 million of non-cash items and $800,000 in restructuring charges in the year-ago quarter. Excluding these items, adjusted net income before non-cash items in the first quarter of 2012 increased 33 percent to $5.9 million or 23 cents per diluted share, compared to $4.4 million or 20 cents per diluted share in the first quarter of 2011.
 
Adjusted EBITDA (earnings before interest, taxes, other income, depreciation, amortization, non-cash equity compensation, transaction costs and restructuring charges) in the first quarter of 2012 increased 39 percent to $6.3 million, compared to $4.6 million in the year-ago quarter. Adjusted EBITDA in the first quarter of 2012 excluded $400,000 of non-cash equity compensation.
 
At March 31, 2012, cash and cash equivalents totaled $41.6 million, compared to $2.4 million at Dec. 31, 2011. On Feb. 22, 2012, the company closed a public offering for 8.9 million shares of its common stock, realizing net proceeds of $63.4 million before expenses. Total long-term debt, including the current portion of long-term debt, was $15.9 million at March 31, 2012. A portion of the proceeds from the company's public offering were used to pay off the outstanding balance on its revolving credit facility with Zions Bank, leaving $35.0 million of available capacity less outstanding letters of credit.
 
Management commentary
 
“The solid momentum we built throughout 2011 clearly continued into the first quarter of 2012,” said Peter Metcalf, President and CEO of Black Diamond. “In fact, we grew across nearly every primary category, driving double-digit sales growth for our Black Diamond Equipment and Gregory brands. This was accomplished despite soft big ticket ski product and glove and mitten sales, which we believe demonstrates the resilience and multi-season balance of our product line.
 
“For the remainder of 2012, we expect to continue to strategically invest in Black Diamond's operational platform to ultimately support an anticipated much larger and more mature organization. Among other initiatives, we believe that these investments will prepare us for our expected fall 2013 apparel launch, which remains well on track. The SKUs for the collection have been established and we've already initiated work on our spring and fall 2014 designs.
 
“We also remain committed to our acquisition strategy and are enthusiastic about our growing pipeline of opportunities. Last but not least, we remain confident in our ability to enhance shareholder value further by continuing to build upon the world's most respected brands in the outdoor equipment and lifestyle industry, while seeking to decrease our environmental footprint and increasing our level of leadership on the issues of great importance to our community of outdoor sports enthusiasts.”