By Sarah Very
Despite a one-time charge that stifled its bottom line, Black Diamond Inc. turned in results Monday that bested Wall Street estimates, and unveiled plans for a major corporate restructuring.
The Salt Lake City, UT-based maker and marketer of equipment and apparel for climbing, mountaineering, backpacking and skiing reported a loss of $20.7 million, or 64 cents per diluted share, compared to a loss of $86,000, or less than a penny per share, in the year-earlier period.
Sales in the fourth quarter dipped four percent to $44.1 million, compared to $46 million in the same year ago quarter. This beat analysts’ consensus estimate of $38.9 million.
The company’s adjusted results, excluding certain expenses like restructuring and transaction costs, increased to $0.6 million, or 2 cents per diluted share, up from a loss of $0.5 million, or 2 cents per diluted share, in the fourth quarter of 2014. The latest quarter’s adjusted per-share results beat by three cents the one cent per share loss that analysts from Zacks were expecting.
Black Diamond shares, which have lost half of their value over the past year, moved up ten cents, or 2.1 percent, to trade late in the session Tuesday at $4.77.
Black Diamond’s sluggish top line was mainly due to the “weakening of foreign currencies against the U.S. dollar and a softer product volume in Japan,” said Aaron Kuehne, Black Diamond’s chief financial officer, in a conference call accompanying the earnings release. He added that the unfavorable foreign exchange rate hurt fourth quarter sales by 370 basis points or $1.7 million.
According to the company, fourth quarter sales were unchanged at $45.2 million on a constant currency basis.
The company is also experiencing major restructuring changes.
During the fourth quarter, Black Diamond sold its POC business, a Stockholm-based designer and manufacturer of protective gear for action sports athletes.
It also made the “strategic decision to retain Black Diamond Equipment,” said Mark Ritchie, Black Diamond Equipment’s brand president, during the conference call.
“We are committed to a long-term holding company structure in which Black Diamond Equipment will remain a core holding, while our board of directors looks to redeploy our significant capital resources into diversifying assets,” he added. “To illustrate this commitment, we have initiated a reformation project designed to return the brand to its historical 2011 operating margins, with a long-term commitment to increased operating cash flow.”
Ritchie said that Black Diamond Inc. sold Gregory Mountain products in 2014, POC in 2015 and completed its “transition service commitment.” He explained that the “reformation project” has the following goals: “Number one, significant cost reductions in North America and in Europe; number two, the relocation of our European headquarters from Basel, Switzerland to Innsbruck, Austria; and number three, a reorganization of our apparel strategy to achieve profitability at substantially lower sales target.”
For the year 2015, Black Diamond Inc. saw a net loss of $76 million, or $2.33 per diluted share, compared to a net profit of $14.0 million, or 43 cents per diluteshare, in 2014.
In 2016, the company expects sales to range from $145-$150 million, compared to $155.3 million in 2015. Black Diamond Inc. expects $155-$160 million on a constant currency basis. Sales in 2015 were $155.3 million, down two percent from $158.3 million a year ago.