Black Diamond Sales Climb 24 Percent in Third Quarter

Gross margins increased 70 basis points to 38.1 percent due primarily to a shift in mix toward higher margin products.

Net income in the third quarter of 2011 was $1.0 million, or 5 cents per diluted share, compared to a net loss of $3.3 million or 15 cents per diluted share in the year-ago quarter. Net income in the third quarter of 2011 included $2.8 million of non-cash items and a $200,000 restructuring charge related to termination costs of a leased facility formerly occupied by Gregory Mountain Products. Excluding these items, adjusted net income before non-cash items in the third quarter of 2011 was $4.0 million or 18 cents per diluted share.

Adjusted EBITDA (earnings before interest, taxes, other income, depreciation, amortization, non-cash equity compensation and restructuring charges) in the third quarter of 2011 was $5.2 million, compared to $3.8 million in the same year-ago quarter. Adjusted EBITDA in the third quarter of 2011 excluded $600,000 of non-cash equity compensation and $200,000 of restructuring charges from EBITDA.

As of Sept. 30, cash and cash equivalents totaled $1.7 million, compared to $2.8 million at Dec. 31, 2010. Total long-term debt including the current portion of long-term debt was $40.5 million at Sept. 30, 2011, which included $24.9 million outstanding on the company's $35 million line of credit, a carrying value of $14.8 million on the company's 5% subordinated notes, as well as $800,000 in other debt. The face value of the 5% subordinated notes is $22.6 million.

 

“We believe that the global appeal of our Black Diamond brands continued to broaden in the third quarter, as reflected in our healthy double-digit sales growth,” said Peter Metcalf, president and CEO of Black Diamond. “In fact, we achieved growth throughout nearly all of our primary categories, and met or exceeded our sales goals in all parts of the world. We attribute these results not only to the ascension of our brand in the eyes of the consumer, but also to the proactive steps we've taken to invest in our operational platform and our disciplined focus on product development. One of these more recent steps includes bringing on some fantastic talent to support our expected entry into technical apparel.”

“Looking towards the remainder of 2011 and beyond,” continued Metcalf, “we expect to remain steadfast in our plans to invest in the people and products that are driving this momentum in the Black Diamond brands. We'll also remain mindful of the importance of investing in our key growth initiatives and being thoughtfully opportunistic with our acquisition strategy. We believe that we remain well on track for the anticipated fall 2013 launch of our new technical apparel line, which we expect to advance Black Diamond as one of the world's most respected and leading active outdoor equipment and lifestyle companies.”

BLACK DIAMOND, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(in thousands, except per share amounts)
	THREE MONTHS ENDED
	September 30, 2011	September 30, 2010
Sales
Domestic sales	$ 15,868	$ 14,056
International sales	26,172	19,890
Total sales	42,040	33,946
Cost of goods sold	26,043	24,411
Gross profit	15,997	9,535
Operating expenses
Selling, general and administrative	12,824	10,764
Restructuring charge	219	772
Merger and integration	—	88
Transaction costs	—	313
Total operating expenses	13,043	11,937
Operating income (loss)	2,954	(2,402)
Other (expense) income
Interest expense	(720)	(644)
Interest income	5	6
Other, net	(702)	(1,586)
Total other expense, net	(1,417)	(2,224)
Income (loss) before income tax	1,537	(4,626)
Income tax provision (benefit)	530	(1,332)
Net income (loss)	$ 1,007	$ (3,294)
Earnings (loss) per share:
Basic	$ 0.05	$ (0.15)
Diluted	0.05	(0.15)