Black Diamond outlines acquisition, internal growth strategy in secondary stock offering

Black Diamond Inc., parent to its namesake brand and Gregory Mountain Products, told investors it’s prepping for significant growth to reach $500 million in annual revenue by 2015. The strategy includes planned acquisitions.
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Black Diamond Inc., parent to its namesake brand and Gregory Mountain Products, told investors it’s prepping for significant growth — internally and through acquisitions — in an announcement of a secondary stock offering.

The company is looking to raise roughly $58.1 million through the sale of 7.75 million shares of its common stock.

The investor presentation documents, released Wednesday, outline a strategy for Black Diamond (NYSE:BDE) to grow revenue from an estimated $145 million in 2011 to $500 million by 2015. The plan includes about $125 million of internal growth — a large chunk coming from the brand’s previously announced intentions to enter the apparel market in 2013 — and $250 million in additional sales from acquisitions.

“We will target acquisitions that will enable us to gain access to new product categories, geographies and channels and increase our penetration of existing markets, officials stated. “We have identified a number of potential targets that include tuck-ins, brand acquisitions and strategic targets that we believe represent a sales growth opportunity of approximately $250 million by 2015.”

The documents identified Black Diamond’s ideal acquisition parameters to include companies with annual revenues between $25-$50 million, highly technical, quality products, concentrated geographic strength, ability to protect intellectual property and strong brand equity/heritage.

“The fragmented active outdoor industry is in part comprised of numerous, small-scale entrepreneurial brands presenting a significant opportunity for consolidation,” officials said. “We believe we are viewed as an acquiror of choice in the space due to our brand heritage as well as the benefits we can provide to potential targets through our global operating platform.”

Black Diamond officials also identified Europe and Asia as key areas for the company to expand.

“We believe that the European Alpine market is currently significantly larger than the U.S. market and is highly fragmented by country, with no clear leader across Europe,” officials said. “Furthermore, we plan to bring some of our international distributors in-house, increase the number of doors we sell through and drive higher sales through our existing and new doors with our new visual merchandising initiative that showcases our products more prominently.”

Black Diamond officials told investors the outdoor industry is one of growing importance to a wider audience.

“Our business and brands are benefiting from the convergence of function and fashion in the outdoor and athletic apparel, footwear, and equipment space. We believe consumer purchase decisions are driven by both a need for functional products and a desire to create a particular lifestyle perception. Primary growth drivers in our business include an increased awareness in health and wellness, the desire to own functional products that are aesthetically pleasing, and the continued success and exposure of our key retail partners including REI, Eastern Mountain Sports, Mountain Equipment Co-op and Backcountry.com.”

-- David Clucas

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