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Q2 Sales of $35.1 Million with Gross Margin up 80 Basis Points to 36.7% –
Black Diamond, Inc. (NASDAQ:BDE), a global active outdoor performance equipment and apparel firm, reported financial results for the second quarter ended June 30, 2015.
Second Quarter 2015 Financial Highlights vs. Same Year-Ago Quarter
– Record sales of $35.1 million (up 7% in constant currency)
– Gross margin increased 80 basis points to 36.7% (up 360 basis points constant currency)
– Adjusted net income before non-cash items increased to $0.2 million or $0.01 per diluted share, compared to a loss of $3.7 million or $(0.11) per diluted share
Second Quarter 2015 Financial Results
Sales in the second quarter of 2015 increased 2% to $35.1 million compared to $34.4 million in the same year-ago quarter. The increase was driven by growth in Black Diamond apparel and the continued rollout of POC’s cycling products, including its new spring 2015 “Race Day” line and expanded assortment of eyewear. Excluding the impact of foreign exchange, sales grew 7%.
Gross margin in the second quarter of 2015 increased 80 basis points to 36.7% compared to 35.9% in the year-ago quarter, in spite of a 280 basis point headwind from foreign currency. Excluding the impact of foreign exchange, gross margin increased 360 basis points. The increase was due to a favorable mix of higher margin products and higher margin channel mix, reflecting the margin-enhancing activities contained in the Company’s strategic pivot following the sale of Gregory Mountain Products.
Selling, general and administrative expenses in the second quarter of 2015 was essentially unchanged at $18.1 million compared to $18.0 million in the year-ago quarter. These expenses include termination benefits provided to the Company’s former president, Ms. Zeena Freeman, offset by the realization of savings from the restructuring plan implemented during 2014 to realign resources within the organization. The Company anticipates completing the plan during 2015.
Adjusted EBITDA in the second quarter of 2015 was a loss of $3.1 million compared to a loss of $3.5 million in the year-ago quarter.
Net loss from continuing operations in the second quarter of 2015 was $5.4 million or $(0.17) per diluted share, compared to a loss of $4.4 million or $(0.14) per diluted share in the year-ago quarter. Net loss from continuing operations in the second quarter of 2015 included $3.6 million of non-cash items, $1.4 million in restructuring costs and $0.7 million in transaction costs, compared to $0.4 million of non-cash items and $0.4 million in restructuring costs in the year-ago quarter.
Adjusted net income from continuing operations, which excludes these non-cash items, increased significantly to $0.2 million or $0.01 per diluted share in the second quarter of 2015, compared to an adjusted net loss from continuing operations of $3.7 million or $(0.11) per diluted share in the second quarter of 2014.
At June 30, 2015, cash and available-for-sale marketable securities totaled $44.3 million compared to $40.9 million at December 31, 2014. Total debt was $22.0 million at June 30, 2015, which includes $19.2 million of 5% subordinated notes due in 2017 and $2.6 million in a foreign seasonal working capital credit facility for POC, compared to $22.4 million at December 31, 2014.
