The increase was primarily the result of the additions of POC Sweden AB (POC) and PIEPS Holding GmbH (PIEPS), which were acquired in the second half of 2012. First quarter 2013 sales were negatively impacted by an extended late winter season, which delayed typically higher margin spring/summer orders, as well as the expected decline in Gregory's Japanese business due to the transition from Kabushiki Kaisha A&F (A&F) to Gregory in the beginning of 2013.
Gross margin in the first quarter of 2013 was 37.7 percent compared to 40.1 percent in the year-ago quarter. The 240 basis point decline was primarily due to product mix and a higher level of close-out and promotional activity on winter seasonal inventory as a result of the slow start to the 2012/2013 winter season. The strengthening of the US dollar compared to the Japanese yen also had a negative impact on both sales and gross margin.
Net loss in the first quarter of 2013 was $3.0 million or $(0.10) per diluted share compared to net income of $2.6 million or $0.10 per diluted share in the year-ago quarter. The first quarter of 2013 reflected approximately 8.9 million more shares of common stock outstanding when compared to the year-ago quarter due to the company's public offering in February 2012.
At March 31, 2013, cash totaled $4.1 million compared to $5.1 million at Dec. 31, 2012. Total debt was $41.5 million at March 31, 2013, which included $13.4 million outstanding on the company's $30.0 million line of credit, leaving $16.6 million available. This compares to total debt of $40.5 million at Dec. 31, 2012.
"Black Diamond grew sales 10 percent to $51.0 million in the first quarter of 2013, which is in-line with our expectations for the first quarter of 2013," said Peter Metcalf, president and CEO of Black Diamond. "This double-digit sales growth is in spite of a colder, snowier late winter that delayed some higher margin spring and summer product sales, which we realized in the same quarter last year as the result of a much earlier start to the spring 2012 season."
First quarter 2013 sales comparisons were also impacted by the anticipated transition of Gregory's business in Japan from A&F, the company's former Japanese distributor, to its own distribution business. Metcalf said the BDE expects the real benefit of this transition to begin in the second half of 2013 with significantly better comparable sales growth.
"In large part, we attribute our double-digit sales growth to the quality of Black Diamond's strengthening global distribution platform, its variety and its seasonal diversity," Metcalf said. "In 2013, we anticipate healthy organic growth from our active outdoor brands, and we expect POC and Black Diamond apparel to be our highest growth drivers with the most positive impact on margins.
"As discussed," Metcalf continued, "we also expect 2013 to be another year of significant investment in operational initiatives, such as apparel and completing the integration of POC and PIEPS. We remain enthusiastic about our 2013 apparel launch, which will be in stores this fall, and look forward to 2014 as the year we expect continued organic sales growth and the benefit of scale, integration and operating leverage in our business."
Confirming sales estimates for 2013 and 2014The company's first half and full year sales expectations remain unchanged, with first half sales expected to be between $90 million and $95 million and full year 2013 sales expected to be between $216 million and $221 million. These ranges imply year-over-year sales growth of between 22 percent and 38 percent for the second quarter and between 23 percent and 26 percent for the full year 2013. In 2014, the company is continuing to manage toward an expected 20 percent sales increase with accelerating profitability.
BLACK DIAMOND, INC.
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
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(Unaudited)
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(In thousands, except per share amounts)
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| THREE MONTHS ENDED | ||
| March 31, 2013 | March 31, 2012 | |
| Sales | ||
| Domestic sales | $ 20,110 | $ 18,815 |
| International sales | 30,890 | 27,604 |
| Total sales | 51,000 | 46,419 |
| Cost of goods sold | 31,784 | 27,803 |
| Gross profit | 19,216 | 18,616 |
| Operating expenses | ||
| Selling, general and administrative | 20,878 | 13,775 |
| Restructuring charge | 175 | -- |
| Merger and integration | 143 | -- |
| Transaction costs | 54 | 112 |
| Total operating expenses | 21,250 | 13,887 |
| Operating (loss) income | (2,034) | 4,729 |
| Other (expense) income | ||
| Interest expense, net | (826) | (730) |
| Other, net | (395) | 290 |
| Total other expense, net | (1,221) | (440) |
| (Loss) income before income tax | (3,255) | 4,289 |
| Income tax (benefit) expense | (223) | 1,699 |
| Net (loss) income | $ (3,032) | $ 2,590 |
| (Loss) earnings per share: | ||
| Basic | $ (0.10) | $ 0.10 |
| Diluted | (0.10) | 0.10 |
Source Black diamond through SportsOneSource
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