The Outdoor Industry’s Newest Public Company Grew During the Recession

Together, the two companies generated adjusted EBITDA of $9.48 million on sales of $113.5 in the year ended Dec. 31, 2009, according to unaudited pro forma financial information disclosed last week by Clarus Corporation.

The financial data indicates Clarus, which acquired the two companies for $132.2 million late last month, valued the combined enterprise at a blended valuation rate of 1.2 times 2009 annual sales and roughly 14 times 2009 EBIDTA. On Friday, Clarus renamed its self Black Diamond Equipment and listed its shares on the NASDAQ, where they began trading under the ticker symbol BDE. The shares traded at the $6.50 level most the day, indicating a market value of about $140 million or about 1.2 times sales for the twelve months ending April 30, a week before the deal was announced.

For the first quarter ended March 31, the combined company would have generated adjusted operating income of $2.6 million and adjusted EBITDA of $3.7 million. That would have translated to adjusted cash net income of $2.8 million, or 14 cents per share.

The filing also shows that the top three executives of the new company control 39% of its common outstanding shares. Executive Chairman Warren B. Kanders owns 29.5%, President and CEO Peter Metcalf owns less than 1% and Executive Vice Chairman and Director Robert Schiller owns just under 5%.

Clarus disclosed the information last week in a series of filings with the Securities & Exchange Commission. Below are excerpts from the filings, which include unaudited pro forma results for the new company as well as audited financial statements submitted by BDE and GMP.
Black Diamond Equipment: Net sales reached $88.1 million in the year ended Dec. 31, 2009 with domestic sales accounting for 46% and international the balance.

Gross margin reached $33.0 million, or 37% of total sales, while SG&A reached nearly 29% of sales. BDE generated $8.7 million in EBIDTA on operating income of $6.5 million and net income of $4.0 million.
In the first quarter ending March 31, BDE generated net income of $1.1 million on net sales of $23.7 million.

The data indicates that Clarus, which announced May 7 that it had paid $90 million in cash for BDE, valued the company at roughly 1 times trailing twelve month (TTM) sales. 

Separate unaudited financial statements for BDE show the company’s sales reached $75.8 million in the nine months ended March 31, 2010, up 10% from the same period a year earlier. Gross margins rose 180 basis points to 38.6% of net sales during the quarter. Net income rose to $5.1 million, up 88% from the year earlier period. 

Audited statements show BDE’s sales for the year ended June 30, 2009 reached $84.0 million, up 7.9% from fiscal 2008. Net income rose 11.1% to $2.3 million during fiscal 2009. 

Gregory Mountain Products:  Net sales rose 33.0% to $25.4 million for the year ended Dec. 31, 2009, including 41% from domestic and the balance from international. Gross margins reached 43% of total sales, while SG&A was 24% of sales.

The company generated EBIDTA of $2.9 million on operating income of $2.4 million, producing net income of $1.6 million.

In the first quarter, GMP reported net sales of $9.5 million, up 7.9% from $8.8 million the same quarter a year earlier. Gross profits were 42% of net sales, down from 44% a year earlier. Net income reached $1.1 million, down 25% from $1.5 million a year earlier.

Clarus paid $45 million for GMP. Half the sum will be paid for with the BDE stock and half in the form of a seven-year, subordinated note. While that indicates a 1.65 multiple of TTM sales, the valuation approaches the 1 times TTM sales after adjusting the price to present cash value.