Is Black Diamond struggling to find buyers for all its brands? Or maybe, it’s ready to go back to its core.
Black Diamond Inc. (Nasdaq:BDE), parent to its namesake brand and Poc Sports, reported its second-quarter 2015 results on Aug. 10, including higher revenue but a wider net loss. At the conclusion of the earnings report, CEO Peter Metcalf hinted that a possible outcome of the company’s previously announced strategic alternatives might be the sale of just “some of the company’s assets.”
Already, the consensus among investors was that Black Diamond Inc. would likely sell in two parts — Black Diamond and Pieps in one transaction and Poc Sports in the other, but Metcalf’s latest comments suggest the public company might hang onto one of those entities while selling the other.
The news, plus lower than expected revenue sent Black Diamond’s stock down more than 12 percent to below $8 a share on Tuesday.
“I'm not convinced a complete buyout is coming,” investor Mark Kusnir said in a column on SeekingAlpha.com. “It's possible the company may just sell the POC brand. POC is their fastest growing brand but I don't think the POC cycling segment complements the original climbing/mountain image of Black Diamond.”
If that were the case, Black Diamond would be more or less back where it started five years ago, focusing on climbing and snowsports, albeit with the addition of apparel. It sold off its former sister brand Gregory in June 2014.
Elsewhere during the call, Metcalf talked about Black Diamond’s recent changes to bring itself back to its core, including the re-launch of its ski category with a focus on backcountry skiing and snow safety, plus moves that will return the manufacturing or assembly of its complete 2016 climbing equipment lineup to the United States at it’s Salt Lake City facility.
All that being said, when you’re up for sale, there’s a lot of posturing. (Eg."This brand is so valuable, maybe we won't sell it.") While Black Diamond is redoubling its efforts on branding, it still reported a wider net loss of $5.4 million during the second-quarter 2015 versus a net loss of $5 million a year ago. Organic revenue for the second quarter was up 2 percent to $35.1 million versus $34.4 million a year ago, excluding Gregory’s sold-off assets.