Black Diamond Inc. said its founder and CEO Peter Metcalf will retire at the end of 2015 after 26 years at the helm. It also promoted COO Mark Ritchie to president of the brand.

Third-quarter sales for the Salt Lake City-based outdoor brand fell 11 percent to $39.3 million,  or down 5 percent in currency-neutral (c-n) terms. Reported sales are from continuing operations, excluding results from its recently sold Poc Sports brand. The decrease was driven by the weakening of foreign currencies against
the U.S. dollar and lower product volume in parts of Europe and Japan.

Black Diamond's stock (Nasdaq:BDE) tumbled more than 22 percent to about $4 per share early Tuesday after the Monday afternoon release.

Gross margin in the third quarter of 2015 was 36 percent compared to 39.4 percent in the year-ago quarter due to a 375 basis point headwind from foreign currency. Excluding the impact of foreign exchange, gross margin increased 40 basis points. The increase was due to a favorable mix of higher margin products and higher margin channel mix, reflecting the company’s continued focus on margin-enhancing activities.

Selling, general and administrative expenses in the third quarter of 2015 decreased 11 percent to $14.2 million compared to $15.9 million in the year-ago quarter. The decline was due to the realization of savings from the restructuring plan Black Diamond Equipment implemented in 2014 to realign resources within the organization.

Loss from continuing operations in the third quarter of 2015 was $49.2 million or $(1.50) per diluted share, compared to a loss of $1.2 million or $(0.04) per diluted share in the year-ago quarter. Net loss from continuing operations in the third quarter of 2015 included $51.1 million of non-cash items and $0.7 million in restructuring costs. The $51.1 million of non-cash items included a discrete charge to income tax expense of $48.3 million related to an increase in the Company’s valuation allowance on deferred tax assets.

Adjusted net income from continuing operations, which excludes these non-cash items, increased 10% to $2.6 million or $0.08 per diluted share in the third quarter of 2015, compared to adjusted net income from continuing operations of $2.3 million or $0.07 per diluted share in the third quarter of 2014.

At September 30, 2015, cash and available-for-sale marketable securities totaled $35.5 million compared to $39.7 million at December 31, 2014. Total debt was $19.7 million at September 30, 2015 compared to $18.6 million at December 31, 2014.

Management Commentary
“While third quarter sales were impacted by continued headwinds in parts of Europe and Asia, as well as unfavorable foreign exchange, we continued to execute upon our initiatives to increase gross margin while controlling expenses,” said Warren B. Kanders, the Company’s executive chairman. “In fact, currency-neutral gross margin was up 40 basis points to nearly 40 percent, reflecting the margin-enhancing activities of our strategic pivot following the sale of Gregory Mountain Products. Despite the weakness in some of our international markets, our core North American business remains strong, with 12 percent sales growth year-to-date.

“After a robust seven-month global process, in October 2015 we closed the sale of POC, a business that we had acquired in July 2012 for approximately $44.9 million. We sold it for $64.6 million, or 1.9x 2014 sales, and realized net proceeds of approximately $60 million. We believe the sale, which completed our strategic review process, realized a strong result for POC on a revenue-multiple basis. Led by our board, we now plan to maximize shareholder value by focusing our attention on the profitability of both Black Diamond Equipment and PIEPS, while redeploying the proceeds of the sale to potentially unrelated and diversifying investments.

“In connection with driving value in our Company, our board of directors has amended our 10 percent stock repurchase program, replacing it with a $30.0 million plan. While we strongly prefer to invest our capital in diversifying assets, we are prepared to be opportunistic in our own shares if appropriate.

“Over the past five years, Black Diamond Equipment has slowly built what are now redundant operating platform costs to support POC, Gregory and future development. We have already begun to right size and reform Black Diamond Equipment to its historical levels of profitability. To help lead this reformation, we have appointed Mark Ritchie as the president of Black Diamond Equipment. With over 20 years at the Company in a variety of operational management functions, and most recently serving as our COO, we are confident in his ability to lead Black Diamond Equipment during its next phase of growth. The founder of Black Diamond Equipment and our current CEO, Peter Metcalf, will be retiring from the Company at the end of 2015.

“We have challenged Mark and his team to build the number one climbing brand in the world and to return Black Diamond Equipment to its 2011 cost structure, or roughly a 10 percent EBITDA margin run-rate excluding corporate costs, during 2016. With the reformation in progress and the sale of POC complete, we believe we are well positioned to redeploy our approximately $100 million in pro forma cash. We expect to invest in assets unrelated to outdoor equipment and have retained Rothschild to assist us in our search.

“In closing, on behalf of our board of directors, shareholders and employees, I would like to thank Peter Metcalf personally for his decades of service and leadership to Black Diamond Equipment, both as its founder and chief executive officer. Peter tirelessly led Black Diamond Equipment from its creation to where it is today and we wish him great success in his future endeavors. We expect that Peter will continue as an advocate for the Black Diamond Equipment brand, and serve as a beacon for issues of great importance to our customers, end users and the sports we serve.”

2015 Outlook
The Company’s guidance for fiscal 2015 has been revised to reflect the sale of POC in October 2015. The Company now expects constant currency sales in 2015 to be approximately $160.0 million compared to $158.3 million in 2014. Also, on a constant currency basis, the Company expects gross margin in fiscal 2015 to increase 160 basis points to approximately 38.0% compared to 36.4 percent in 2014.