Black Diamond Inc. reported total sales in the third quarter ended Sept. 30 increased 8 percent to $52.8 million compared to $48.7 million in the third quarter of 2012. The increase was primarily attributed to the retail launch of Black Diamond apparel as well as the increase in Gregory's sales in Japan due to the transition of the distribution assets from Kabushiki Kaisha A&F.
Gross margin was 37.3 percent in the third quarter of 2013 compared to 37.9 percent in the year-ago quarter. Gross profit in the third quarter of 2013 included a $1.5 million charge for a PIEPS product recall, of which $1.1 million was non-cash and includes 100 percent of existing inventory. Excluding this amount, adjusted gross margin improved 10 basis points to 40.2 percent compared to adjusted gross margin of 40.1 percent in the year-ago quarter.
At Sept. 30, 2013, cash totaled $4.4 million compared to $5.1 million at Dec. 31, 2012. Non-cash working capital was $74.6 million at Sept. 31, 2013 compared to $73.2 million at Dec. 31, 2012. Total debt was $46.0 million at Sept. 31, 2013, which included $14.4 million outstanding on the company's $30.0 million line of credit, leaving $15.6 million available. This compares to total debt of $40.5 million at Dec. 31, 2012.
Consistent with recent industry trends, in some product categories, third quarter sales were limited by both the timing of certain product shipments which occurred in early October, as well as general early season softness for hard goods in the marketplace, Metcalf said.
Search for new, senior level executive begins
“We are acknowledging the Black Diamond and POC brands as our fastest growing assets and worthy of investment to accelerate our organic growth. More specifically, we believe that our Black Diamond apparel and POC lifestyle businesses display extraordinary growth potential and that over time they are likely our most efficient and cost-effective use of capital.”
“To help us achieve this strategic pivot, we've retained an executive search firm to find a senior executive leadership candidate that would augment our strategic capabilities in lifestyle brand management and general management, specifically in the areas of apparel, retail and e-commerce.
“As we look out into the future-into 2015 and beyond-we understand and believe that retail and e-commerce will likely drive additional investment. We continue to believe that we can fund these initiatives from our existing balance sheet and from our existing operations. At this time, we have no plans to access the capital markets and we will continue to explore the waterfront of strategic alternatives to facilitate the acceleration of our investment for the future. Ultimately, we expect this rationalization process and product mix shift to manifest itself into healthy, organic growth and improved margins in the out years.”
BLACK DIAMOND, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
|Three Months Ended|
|September 30, 2013||September 30, 2012|
|Domestic sales||$ 19,811||$ 19,128|
|Cost of goods sold||33,106||30,283|
|Selling, general and administrative||20,970||16,347|
|Merger and integration||190||76|
|Total operating expenses||21,160||16,924|
|Operating (loss) income||(1,490)||1,535|
|Other (expense) income|
|Interest expense, net||(939)||(713)|
|Total other expense, net||(630)||(192)|
|(Loss) income before income tax||(2,120)||1,343|
|Income tax (benefit) expense||(814)||617|
|Net (loss) income||$ (1,306)||$ 726|