The Black Diamond Inc. group's sales inflated by 13 percent to $50.3 million in the first quarter of 2015, and they were up by 18 percent in local currencies. In dollars, revenues increased by 22 percent in the U.S. to $20.9 million, and by 8 percent in the rest of the world to $29.4 million.
Sales grew in every region and in every product category, including Black Diamond hardware, in spite of challenges in Russia and Japan. They were fueled in particular by the extension of the Black Diamond apparel collection, especially in the women's segment, the roll-out of Poc's new range of cycling products and its expanded eyewear collection.
Black Diamond apparel enjoyed triple-digit growth in Europe, driven by women's products for indoor and outdoor climbing. Benefiting from pre-shipments of key styles, it performed particularly well in Central Europe. Poc' new “Race Day” cycling clothing and Pieps' new anti-avalanche systems sold well in Europe, too. The group also experienced strong double-digit growth in Australia.
Poc was the fastest-growing brand within the group. Favorable weather conditions in the northeastern part of the U.S. boosted its momentum. Its sales of bike products, most of which ended up being sold out, doubled as compared to their launch a year earlier.
A favorable mix of higher-margin products and higher-margin sales channels helped to raise the group's gross margin by 2.9 percentage points in terms of local currencies, but the strong dollar reduced the gain to 0.3 percentage points. The group had a gross margin of 37.8 percent for the quarter, but the management sees it rising to around 40 percent for the full financial year.
General cost optimization efforts and a re-alignment of redundant operations following the sale of Gregory Mountain Products to Samsonite contributed to reduce operating costs by 8 percent in the quarter.
As a result, operating losses declined to $928,000 from $4,171,000. The company came close to the breakeven point as the loss in the first quarter came after one-time charges of $767,000, including restructuring costs of $468,000. Adjusted operating earnings before amortization (Ebitda) turned around to a profit of $1,878,000 from a loss of $2,166,000
The net loss from continuing operations fell to $1,675,000 from $3,402,000. Last year's loss came before a profit of $2,075,000 for its discontinued operations, meaning essentially Gregory.
The restructuring charges were mainly related to the move of some manufacturing operations from China to Salt Lake City, where the group has its head office. Additional charges of between $500,000 and $1 million are expected before the transition is completed, probably in July. The move is expected to generate annual savings of around $10 million and to produce indirect benefits in terms of service and speed to market.
Black Diamond is projecting sales increases of 8 percent in dollars and 11 percent in terms of constant currencies for the full financial year.
As previously reported, the company has engaged a process for the sale of its three brands in two separate transactions, one involving Black Diamond Equipment and Pieps, and the other covering only Poc.
The company said it has received a number of non-binding expressions of interest with regard to all its brands. The results of this strategic review are expected to be known during the third quarter of 2015, but there is no certainty that it will lead to any disposals. Because of the situation, the management told financial analysts that it would not make any further comments on this subject or on its latest results.