Black Diamond Inc. 1Q sales up on acquisitions, but income swings to loss on spring delay

Recent acquisitions of Poc Sports and Pieps helps boost sales, but total margins drop on spring order delays and Japan distribution reorganization.
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Black Diamond Inc.’s (NYSE:BDE) recent acquisitions of Poc Sports and Pieps helped it increase sales for the first quarter 2013, but delayed spring orders (in the face of late winter weather) and a reorganization of its Japanese distribution weighed on margins and led to a quarterly loss.

The Salt Lake City-based parent to Black Diamond Equipment, Gregory Mountain Products, Poc and Pieps brands reported sales up 10 percent to $51 million in the first quarter, compared to a year ago, largely reflecting those recent acquisitions. Officials did not release, organic revenue growth — minus Poc and Pieps — making for a tough year-over-year comparison. And despite the higher revenue, quarterly, net income swung to a loss of $3 million, versus a profit of $2.6 million a year ago.

Black Diamond CEO Peter Metcalf said while this year’s late winter weather helped move winter equipment inventory, such as Black Diamond’s skis, it also delayed spring/summer equipment orders, such as the brand’s climbing gear. First-quarter sales also took a hit for Gregory in Japan, where the company is transitioning from a third-party distributor to direct distribution.

Metcalf said he expects the negative effects of the spring delay and Japanese reorganization to be short-lived. The company maintained its full-year 2013 projections for sales to rise 23-26 percent to between $216 million and $221 million, with second half growth fueled by Black Diamond’s apparel launch.

“What is especially gratifying is that fall '13 is now sold out and spring '14, which represents our entrance into the outdoor-inspired lifestyle sports wear, is being well-received by the trade,” Metcalf said during the company’s conference call with investors. “The tight spring '14 collection consists of approximately 40 styles and 150 SKUs with a primary focus on summer alpinism and modern cragware. We are employing both high-tech synthetic, cotton and merino blend fabrics for a line of sportswear that will look as sharp on the deck of the brew pub as it will perform on a mountain crag or summer peak bag.”

The company also will launch a new website to further boost direct-to-consumer sales, which grew by double-digit percentage points in the first quarter, officials said.

But investors showed less confidence following Black Diamond’s earnings report, sending the stock down more than 8 percent as of midday Tuesday. The company is down to $4.1 million in cash with $41.5 million in debt and $16.6 million remaining in a line of credit.

Click here for Black Diamond Inc.’s full first-quarter 2013 report, issued May 6, 2013.

-David Clucas

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