Total sales in the fourth quarter of 2012 increased 34 percent to $48.8 million compared to $36.3 million in the fourth quarter of 2012. The increase was primarily attributed to the contribution of POC Sweden AB ("POC") as well as PIEPS Holding GmbH ("PIEPS") and their respective subsidiaries, which were acquired in the second half of 2012.
Total sales were reduced by $400,000 of inventory repurchased and not recognized as revenue from Gregory Mountain Products' ("Gregory") Japanese distributor, Kabushiki Kaisha A&F ("A&F"), as part of the A&F distribution agreement.
Gross margin in the fourth quarter of 2012 was 36.3 percent compared to 39.2 percent in the year-ago quarter. Gross margin in the fourth quarter of 2012 included $1.2 million for inventory fair value of purchase accounting adjustments related to the acquisitions of POC and PIEPS. Excluding this amount, adjusted gross margin in the fourth quarter of 2012 was 38.7 percent, a 50 basis point decline from the year-ago quarter primarily due to a higher level of discount activity in response to a challenging start to the 2012 winter season.
Net income in the fourth quarter of 2012 was $500,000, or $2 cents per diluted share, compared to $3.5 million or 16 cents per diluted share in the year-ago quarter. Net income in the fourth quarter of 2012 included $400,000 of non-cash items, $400,000 in transaction-related costs, $100,000 in restructuring costs, and $200,000 in merger and integration costs.
Excluding these items, adjusted net income before non-cash items in the fourth quarter of 2012 was $1.6 million compared to $2.3 million in the fourth quarter of 2011. On a per share basis, adjusted net income before non-cash items was $0.05 per diluted share compared to $0.10 per diluted share in the year-ago quarter, reflecting the shares issued as a result of the Company's public offering in February 2012.
Adjusted EBITDA (earnings before interest, taxes, other income, depreciation, amortization, stock-based compensation, inventory fair value of purchase accounting, and transaction, merger and integration, and restructuring costs) in the fourth quarter of 2012 was $2.1 million compared to $2.8 million in the year-ago quarter. Adjusted EBITDA in the fourth quarter of 2012 excluded $500,000 of stock-based compensation, $1.2 million of inventory fair value of purchase accounting adjustments, and the aforementioned 400,000 in transaction-related costs, $100,000 in restructuring costs, and $200,000 in merger and integration costs.
At Dec. 31, 2012, cash totaled $5.1 million compared to $2.4 million at Dec. 31, 2011. Total debt was $40.5 million at Dec. 31, 2012, which included $20.0 million outstanding on the company's $35.0 million line of credit, leaving $15.0 million available.
On Oct. 1, 2012, the company completed the acquisition of PIEPS, a leading Austrian designer and marketer of avalanche beacons and snow safety products, for a total consideration valued at approximately $10.3 million in cash.
Full year 2012 financial results
Total sales in 2012 increased 21 percent to $175.9 million compared to $145.8 million in 2011. The growth in sales was supported by the introduction of new and innovative products as well as the addition of POC and PIEPS. Total sales were reduced by $1.0 million of inventory repurchased as part of the previously mentioned A&F distribution agreement.
Gross margin in 2012 was 38.2 percent compared to 38.7 percent in 2011. Gross margin in 2012 included $2.3 million for the previously mentioned inventory fair value of purchase accounting adjustments. Excluding this amount, adjusted gross margin in 2012 was 39.5 percent, an 80 basis point improvement from 2011 due to a shift in mix toward higher margin products as well as the inclusion of both POC and PIEPS.
Net income in 2012 was $2.0 million or 6 cents per diluted share, which included $8.2 million of non-cash items, $2.0 million in transaction-related costs, $200,000 in restructuring costs, and $200,000 in merger and integration costs.
Excluding these items, adjusted net income before non-cash items in 2012 increased to $12.6 million compared to $11.9 million in 2011. On a per share basis, adjusted net income before non-cash items was 42 cents per diluted share compared to 54 cents per diluted share in 2011, reflecting the shares issued in previously mentioned 2012 public offering.
Adjusted EBITDA in 2012 increased 8 percent to $14.7 million compared to $13.6 million in 2011. Adjusted EBITDA in 2012 excluded $1.8 million of stock-based compensation, $2.3 million of inventory fair value of purchase accounting adjustments, and the aforementioned $2.0 million in transaction-related costs, $200,000 in restructuring costs, and $200,000 in merger and integration costs.
Transformational year
"2012 was a transformational year for Black Diamond, filled with a number of significant achievements," said Peter Metcalf, president and CEO of Black Diamond. "Not only did we achieve record revenue and continue to grow organically, but we executed against our strategic objectives. This includes the introduction of our fall 2013 apparel line to the trade and the establishment of our own ski manufacturing operation. We also agreed to acquire the Japanese distribution assets of Gregory, established our own distribution in Japan, and entered one new primary product category and six new product niches with the acquisitions of POC and PIEPS.
"As a result," continued Metcalf, "we entered 2013 as a meaningfully larger, stronger, and more diverse enterprise. With our apparel line expected to be in stores this fall, we believe that we are executing on our vision to become a diversified global brand leader in both hard and soft goods across all four seasons.
"2013 is shaping up to become an equally transformative year as we continue to invest in our organic growth initiatives and aggressively integrate our two strategic acquisitions. In 2014, we expect to begin realizing the benefit of these investments with accelerating profitability."
2013 outlookBlack Diamond expects 2013 sales to range between $216-$221 million, which would represent an increase of approximately 23 percent to 26 percent from the 2012 sales. The Company also expects gross margin in 2013 to range between 40.0 percent and 41.0 percent
BLACK DIAMOND, INC.
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CONDENSED CONSOLIDATED STATEMENTS OF INCOME
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(Unaudited)
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(In thousands, except per share amounts)
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| Year Ended December 31, | ||
| 2012 | 2011 | |
| Sales | ||
| Domestic sales | $ 74,600 | $ 62,813 |
| International sales | 101,277 | 82,962 |
| Total sales | 175,877 | 145,775 |
| Cost of goods sold | 108,613 | 89,423 |
| Gross profit | 67,264 | 56,352 |
| Operating expenses | ||
| Selling, general and administrative | 62,590 | 50,493 |
| Restructuring charge | 225 | 993 |
| Merger and integration | 244 | -- |
| Transaction costs | 2,029 | -- |
| Total operating expenses | 65,088 | 51,486 |
| Operating income | 2,176 | 4,866 |
| Other (expense) income | ||
| Interest expense | (2,993) | (2,921) |
| Interest income | 35 | 32 |
| Other, net | 870 | 227 |
| Total other expense, net | (2,088) | (2,662) |
| Income before income tax | 88 | 2,204 |
| Income tax benefit | (1,864) | (2,688) |
| Net income | $ 1,952 | $ 4,892 |
| Earnings per share: | ||
| Basic | $ 0.07 | $ 0.22 |
| Diluted | 0.06 | 0.22 |
( Source Black Diamond through SportsOneSource )
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