Cody Slach - Investor Relations, Liolios Group, Inc. Peter Metcalf - President and CEO Aaron Kuehne - CFO

David King - ROTH Capital Partners Andrew Burns - D.A. Davidson Camilo Lyon - Canaccord Genuity Jim Duffy - Stifel Sean McGowan - Needham & Company John O'Neil - Imperial Capital Mark Smith - Feltl & Co.

Thanks, Whitney. Please note that during this conference call, the company may use words such as appears, anticipates, believes, plans, expects, intends, future and similar expressions, which constitute forward-looking statements within the meaning of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.

Forward-looking statements are made based on the company's expectations and beliefs concerning future events impacting the company, and therefore, involve a number of risks and uncertainties. The company cautions you that forward-looking statements are not guarantees and that actual results could differ materially from those expressed or implied in the forward-looking statements.

Potential risks and uncertainties that could cause the actual results of operations or financial condition of the company to differ materially from those expressed or implied by forward-looking statements used in this conference call include, but are not limited to, the overall level of consumer spending on the company's products; general economic conditions and other factors affecting consumer confidence; disruption and volatility in the global capital and credit markets; the financial strength of the company's customers. The company's ability to implement its growth strategy, including its ability to organically grow each of its historical product lines, its new apparel line and its recently acquired businesses; the company's ability to successfully integrate and grow acquisitions; the company's exposure to product liability or product warranty claims and other loss contingencies; the stability of the company's manufacturing facilities and foreign suppliers; the company's ability to protect patents, trademarks and other intellectual property rights; fluctuations in the price, availability and quality of raw materials and contracted products; foreign currency fluctuations; the company's ability to utilize its net operating loss carry-forwards; and legal, regulatory, political and economic risks in international markets.

More information on potential factors that could affect the company's financial results is included from time-to-time in the company's public reports filed with the SEC, including the company's Annual Report on 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. All forward-looking statements included in this call are based upon information available to the company as of the date of this call and speak only as the date hereof.

The company assumes no obligation to update any forward-looking statements to reflect events or circumstances after the date of this conference call. I would like to remind everyone that this call will be available for replay through November 17th, 2014, starting at 8 P.M.

Eastern tonight. A webcast replay will also be available via the link provided in today's release as well as on the company's website, at blackdiamond-inc.com.

Any redistribution, retransmission or rebroadcast of this call in any way without the express written consent of Black Diamond, Inc. is strictly prohibited.

Now, I would like to turn the call over to the Chief Executive Officer of Black Diamond, Inc., Mr. Peter Metcalf.

Peter?

Thank you Cody and good afternoon everyone. At the close of market today, we issued a press release announcing our financial results for the third quarter ended September 30th, 2014.

Consolidated third quarter sales increased 24%, driven by our POC and Black Diamond brands, as well as strong fulfillment rates of both preseason fall bookings and ASAP or restocking orders. This efficiency and process improvement within our supply chain, along with a higher margin product mix also drove a positive increase in consolidated gross margin to 41.4%.

During the third quarter, POC continued to deliver its road bike line, and Black Diamond Apparel expanded its men's apparel collection with GORE-TEX, WINDSTOPPER and Dawn, as well as launched its women's apparel offering. Midway through the third quarter, we have appointed Zeena Freeman as President.

And in the first half of 2015, we expect Zeena to replace me as CEO of the consolidated enterprise, Black Diamond, Inc. Zeena's appointment is the culmination of a three-part strategic pivot that we announced at this time last year and is the result of a comprehensive search announced last fall for new senior leadership that would augment our strategic leadership capabilities in brand management.

Zeena brings to Black Diamond, Inc. a wonderful combination of long-term tactical and strategic thinking, merchandising and consumer facing global brand expertise.

She is precisely the kind of strategic merchant and dynamic brand leader that we have been seeking. And we see her perfectly positioned to lead the company through the next 10 years of global expansion.

Zeena has been immersed into the business during her first 75 days. She has traveled extensively to meet with customers and stakeholders globally, spending time with all of our brands and dividing her time between long-term strategic development and day-to-day operations.

We expect to formally introduce Zeena to our investors during our fourth quarter earnings call in early March, at which time we expect Zeena to provide a glimpse into her vision for the future and the opportunities in front of all of our brands. Before I comment further, Aaron Kuehne, our CFO, will discuss our financial results for the third quarter.

Following Aaron's remarks, I will make some additional remarks and then open the call for questions. Aaron?

Thanks Peter and good afternoon everyone. The reported results we issued in today's press release are from continuing operations excluding the results of Gregory Mountain Products both for the three months and nine-month periods ended September 30th.

We divested Gregory on July 23rd, 2014. Sales in the third quarter of 2014 increased 24% to $54.9 million compared to the same year ago quarter.

The increase was across all brands and geographies benefiting from an increased fulfillment of preseason fall bookings. The third quarter was also highlighted by the continued delivery of POC's road cycling collection and the launch of Black Diamond Apparel women's collection.

Due to net weakening of foreign currencies against the U.S. dollar, on a consolidated level, third quarter sales were negatively impacted by approximately 20 basis points or $110,000 on a constant currency basis.

However, Q3 sales still increased 24%. Consolidated gross margin in the third quarter increased to 41.4% compared to adjusted gross margin of 38.5% in the same period last year, which excluded $1.5 million for PIEPS 2013 product recall.

Actual gross margin in the third quarter of 2013 was 35%. The 2014 improvement is primarily due to both a favorable mix of higher margin products and higher margin channel mix.

Foreign currency had an approximate 10 basis point drag on gross margin. So on a constant currency basis, gross margin would have been 41.5%.

Third quarter SG&A which excludes restructuring, merger and integration and transaction costs was $20.4 million compared to $19.3 million in the year ago quarter. The increase reflects continuing investments in our strategic initiatives such as Black Diamond Apparel, the transition of certain POC distributors into our in-house operations and the launch of POC's new growth cycling collection.

With the sale of Gregory complete, during the third quarter of 2014, we immediately began the process of realigning redundant operating platform resources that did not transfer to Samsonite in the sale. We have eliminated overhead and rationalized the business support, our remaining core brands of POC, Black Diamond and PIEPS.

During Q3, we incurred restructuring charges of $2.1 million related to fixed asset write-offs and facility exit costs and approximately $70,000 related to benefits provided to employees who were terminated due to a reduction in force. We estimate that we will incur approximately $4 million to $4.5 million of total cash and non-cash restructuring costs related to fixed asset write-offs, employee related costs and facility exit costs associated with our strategic pivot.

With approximately 500,000 of these restructuring charges can go over into 2015. Adjusted net income from continuing operations before non-cash items and non-GAAP term increased to $4 million or $0.12 per diluted share in the third quarter of 2014 compared to adjusted net income of $1.1 million or $0.03 per diluted share in the third quarter of 2013.

At the September 30th, we had zero borrowings outstanding on our $30 million revolving line of credit with Zions Bank. Total debt stood at $25.6 million which includes $18.1 million of 5% subordinated notes due in 2017 and $7.3 million in a foreign seasonal working capital credit facility for POC.

As a reminder, on July 23rd, we completed the sale of Gregory to Samsonite for approximately $84.1 million, recognizing a pretax gain on the sale of $39.5 million. We used a portion of these proceeds to fully paydown our Zions line of credit and paid-off our $9 million Zions term note in fall.

The Gregory sale is expected to monetize approximately $31.4 million of our NOL balance shielding approximately $11 million of cash taxes leaving a balance of approximately $179 million. In December, we expect to pay approximately $11 million to $13 million in income tax associated with built in gains that could not be offset by our NOL.

Now to reiterate our expeditions for the second half of 2014, we expect sales to range between $113 million to $118 million, which implies year-over-year organic revenue growth of 15% to 20%. Please note our expectations for sales and gross margin assume that the U.S.

dollar and other -- and our other key currencies remained at the levels they were at during our second quarter call. Foreign currency markets have moved significantly since that time.

More specifically, fluctuations of 6% to 8% in key foreign currencies have had a negative impact of approximately $1.6 million on our second half sales expeditions. We expect currency neutral gross margin to range between 39.5% to 40.5%, which reflects a 1.6% to 2.6% increase compared to last year's pro forma gross margins.

We expect to spend between $40 million to $45 million in SG&A, an increase of up to $5.5 million over the same period last year. For the full year 2014, we expect sales to range between $192 million to $197 million which implies year-over-year growth of 14% to 17%.

We expect gross margins to range between 38.5% to 39% or a 1.3% to 1.8% year-over-year pro forma improvement. We are still planning our 2015 budget cycle around year-over-year sales increases of approximately 10% to 13%, which is after the 25% SKU reduction which we discussed last quarter.

The impact of the 25% SKU reduction on sales is estimated to be approximately $6 million. We are helpful to transition a portion of this reduction in sales to already existing SKUs.

I would remind listeners that our budget cycle is just beginning and that our fourth quarter results are always weather-dependent. Ultimately, 2015 will be constructed on top of 2014 actual performance.

This concludes my prepared remarks. Now, I will turn the call back over to Peter.

Thank you, Aaron. I would characterize Q3 as a well-balanced sales growth quarter accented by demand for innovative products and efficient delivery of preorder season goods.

Consolidated third quarter results also reflect to continued implementation of the company's strategic pivot, the impact of the sale of Gregory and the longer term investment in POC, PIEPS and Black Diamond Apparel which taken as a whole has elevated the growth and margin profile potential of our business. These results were achieved against a global retail market and showed signs of strength and pockets of weakness during the quarter.

In North America, we saw strong ASAP orders POC's new road bike collection, while our more mature Black Diamond Gear Equipment categories experienced slower than anticipated ASAP orders. Central Europe, specifically some of our largest markets of Germany, Austria and Switzerland is facing a combination of economic headwinds and unusual weather patterns which made conditions at retail challenging.

The reason under went in unseasonably dry winter last year followed by an extremely wet summer this year. Northern and Eastern European markets witnessed more seasonable weather patterns and healthy double-digit growth in the third quarter.

Conversely, although, small percentage of total go-forward revenues because of the sale Gregory, another example of regional challenges is that of Japan. The Japanese market was negatively impacted by the spillover effect from the tragic eruption of Mount Ontake which killed more than 50 hikers.

Hiking in Japan, conic volcanoes has become one of the country's most popular outdoor activity in one way the Black Diamond Equipment brand has strong presence. Other headwinds in this market include the weaker yen, a new consumer excise tax, and a stabilization of a three-year growth spurt in that marketplace.

Seasonally speaking, our second half is always very weather-dependent. It is still too early to know when or how much snow will fall and what kind of ASAP order volumes we will actually realize.

But in spite of this normal seasonal uncertainty, we remain committed to our outlook for the second half of 2014 largely due to the diversity of our brands, product lines and geographies. Before diving into our second half growth drivers, led by POC and Black Diamond Apparel, I’d like to mention that our JetForce product, which we’re planning to make available across each of the Black Diamond POC and PIEPS brands is in the final preparation stages before shipping.

We believe that JetForce represents a breakthrough technology with real performance benefits that we’re proud to have designed, developed and engineered by our colleagues within Black Diamond Equipment and PIEPS. We are seeing unique synergies and strong capabilities, resources and IT between our brands.

JetForce continues to pass the necessary certification requirements. And while we do not expect it will have the financial impact that Apparel does, we expect it to solidify both Black Diamond Equipment and PIEPS's competitive position in this core equipment category.

In the third quarter, the buzz and brand awareness for POC continued to grow. The brand continues to be well-positioned in the market, and a survey from key specialty retailers exiting last winter voted POC as a number one performing brand.

As expected, POC continues to take market share. Our strong sales growth this quarter, which was a continuation of solid results last year, was driven probably by on-time shipments of their ski helmet product in part due to the strong brand exposure POC received at the Sochi Winter Olympics where the product was so prominently displayed by various athletes.

While Q2 marked the shipment of the majority of POC's in the overall road of ski product and was sold out on bookings basis, Q3 was also helped for the continued delivery of the line. We believe the product has great momentum and should carry into spring 2015 booking season.

POC is also recently won or been nominated for a couple of prestigious design awards. At Eurobike in Friedrichshafen, POC received the Eurobike award for their Cerebel helmet.

The Eurobike award is one of the most prestigious design awards in the bicycle industry and this year has 500 entries. The AVIP concept is nominated for Design S and is one of the three finalists for this prestigious design award.

Winners will be announced in mid-November. Design S is Sweden's national design award and it singles out creative and innovative solutions in every imaginable area of products, services and environments regardless of the design field.

The award has been presented every second year since 2006. During 2014, we successfully converted POC independent distribution structure in Canada, France, Holland and Belgium to an independent sales agency structure.

This commission based comp structure put us in-charge of building these important markets by allowing POC to control own sales and marketing efforts, while providing higher wholesale margins that we can use to fund this investment. Fall 2014 was the first season that completely benefited from these conversions, and we saw a modest jump in our sales because of it.

In spring 2015, we expect to grow POC cycling revenue by increasing the number of SKUs and production quantities at Zions line as well as increased number of global doors securing the line. We expect to introduce 14 new styles and 43 new SKUs and approximately double our door count in 2015.

In addition, we expect to launch our second collection of cycling apparel in gear for spring 2015, which we have labeled an approximately positioned as Race Day. Race Day has approximately 34 new styles including helmets and 135 new SKUs.

We expect these initiatives to position POC slightly more than double sales related to its road product in just one year. Fall 2014 initiated just a second fall retail selling season of our men's Black Diamond Apparel line and the inaugural selling season of our women's apparel collection which focuses on outerwear.

Fall 2014 will be introduced in 800 retail doors worldwide and marks the introduction of more significant commercial categories. Such categories include a complete down collection, featuring innovative new down blended installation from PrimaLoft.

A complete waterproof outwear collection featuring GORE-TEX and Cohaesive embedded hardware and a comprehensive collection of technical women's product. Black Diamond Shell (ph) categories have been our best sellers.

In both categories, we brought meaningful insight to the product and unique new technologies to the user, consistent with our commitment to innovation in comfort and protection. Given that our apparel line has just embarked on its second fall season and season number three of a full six season rollout, we recognize the sell-through rates need to improve to level some of our largest partners like REI will continue distributing our apparel throughout all or most of their stores.

Our two key marketing initiatives for Fall 2014 are to build brand, equity, awareness, and apparel sell-through. Let me explain each in a more detail.

We are positioning Black Diamond Equipment as the leader in snow safety. We have a digital broadcast partnership with POWDER Magazine highlighted by a project called The Human Factor, which is a series of five stories co-created by POWDER and Black Diamond Equipment.

They will be broadcast in powdermagazine.com and Black Diamond owned media. We estimate this will generate 5.8 million impressions.

We are prominently broadcasting the Black Diamond brand story use, design, engineer, build, repeat. We have a digital broadcast partnership with Outside Magazine highlighted by a series of three stories created by their team and broadcast through outsideonline.com., 4.7 million impressions are estimated.

To draw a sell-through, in-store marketing for Fall 2014 line encompasses apparel windows and a few key retailers as well as things like brand kits, apparel banners, apparel tech kits, apparel body forms, apparel hangers and a significant quantity of products that we see to the key shop staff. Outside Magazine and POWDER Magazine by advertising the line along with our Black Diamond Mountain project mobile application.

Altogether, we estimate 11 million impressions. We've created five digital catalogs featuring apparel on our website and promoted thorough social media.

We have retail co-ups with REI.com, Zappos.com, Localview.com and other select specialty retailers. Finally, Black Diamond had and will continue to have a presence at the two biggest climbing events in North America Yosemite Facelift and Bozeman Ice Festival.

Looking towards spring 2015, North American and Europe is planning to be 60-40 men's women's and average shop per door is booked substantially over spring 2014. In both geographies, we are seeing solid double-digit growth in bookings for spring 2015.

At this time, Aaron and I would like to open the call for a 30-minute question-and-answer session. Operator?

I guess, first off, the gross margin improvement you had this quarter I thought was very strong, so congratulations there. I guess, Aaron, how much of that was product mix versus channel mix, versus supply chain initiatives et cetera?

And then as we think about the outlook for those margin into the fourth quarter, I would've thought that some of that would have continued, but -- till you kind of maintain guidance for the year. Can you just talk about the puts and takes there and what might be driving that?

Yeah, so to answer your first question regarding the puts and takes related to Q3, about 360 basis points of gross margin improvement came from the higher channel mix and also product mix. We also saw some favorable impacts of lower DM, impacts in also promotional activities which were offset then by some other takes within gross margin, primarily related to production branches and also the FX impact communicated.

As we think about Q4, good question, and the reason for that is that we are -- in Q3, we benefited from -- as communicated the higher gross margin -- sorry -- the higher margin product and channel mix. And in Q4 we are expecting to see some of the larger dollar items such as ski category that don't have as high of gross margins that may potentially bring about down.

For that reason, we’re sticking with the guidance previously communicated.

Okay. That helps.

Thanks. And then, Peter, I guess maybe just on apparel as we now move into the third season or second fall line, I guess, do you have any initial color in terms of some of the new items that you got for this fall and how the selling has gone for those, I guess particularly what it would be asking about would be the women's line, how that’s proceeding, and then Hartselle jackets stuff like that, and conversation with retailer selling et cetera?

Thanks.

Sure. David thanks for the question.

And let me begin by saying it's very early as you know in the fall to really draw conclusions. We just saw this weekend literally in North America the first cold weekend here in the Rockies, in the Northeast, et cetera.

So, we’re just beginning the season. That said, I'll share with you some vignettes and antidotes that we find encouraging.

First off, as far as bookings go, we did just about sell-out on a pre-booking basis of our down and cortex shell items. They were the more in demand product.

Secondly, though, it has just gotten cold in Europe, in the last couple of weeks, we have seen a very significant increase in ASAPs over the previous season, though admittedly we have a much more significant line this fall than we did last year. We start to seeing pickup in our own direct-to-consumer business especially among pros and we're gratified to see such an increase among the pro community for BD apparel.

And then I think the last comment it’s worth -- two more comments worth making is that we have this year offered some aggressive pricing to the staff, to our sales people go in and do clinics at retail stores, and the response to that has been phenomenal which I think is a great testament to the strength of the brand and the retail staff’s affinity for BD. And they get offer these kind of deals some other apparel companies, so that's a very gratifying to us as well.

And I think the last two comments I'll make is that yes, we are receiving very nice feedback from the marketplace in the form of emails and just commentaries both on the women's apparel, it's fit, and how people are liking it, and some of the change fit some of the men’s apparel items. So all that said there is a set of observations, antidotes and vignettes that come very early in the season.

So, we are guardedly optimistic, but we recognize that the season really has just begun here in the last week.

I appreciate it. Thanks for all the color and good luck with the rest of the season.

Thanks.

Thank you, David.

Thanks for taking the questions. Peter, in the prepared remarks you talked about sell-through is the opportunity to improve that to really get great attraction across all your customers.

And I was hoping if you could elaborate a little bit on that, perhaps where you’re finding most successful on the marketing front whether the store windows, the point-of-sale, brand messaging, marketing and things of that nature. And also what if anything needs to change on the product side?

Andrew, okay. Thanks.

Good questions as well. And so let me begin by saying, as you know, that this is our third season.

Fall was very much sort of a beta-test season, very narrow line, 24 styles, 120 some SKUs, no women’s apparel, very niched. And then we had spring, which was a continuation of some of those fall products and some sportswear.

And so this season, Fall 2014, it’s truly our first real season relative to a meaningful collection -- product that appeals to a broader demographic. It is our first season with women’s apparel.

So it’s early to be drawing too many conclusions. As far as the marketing assets that we have put out there, we’re excited by all of them.

And if you’ve seen any of the window installations we’ve done and we’ve done them around the world from South America to Europe to Asia to here, they’re very powerful. I’ve had people send me photos of these things that they themselves have snapped.

So we think that is working. As far as which of these initiatives that we have deployed this season is the best and most effective, I think, that’s really too early to draw any conclusions on because the season has just really begun.

But we were very deliberate and rigorous in coming up with the quiver of assets that we’re going to deploy, because we weave all of them in various forms mixed together, are all valuable to us. So, again, a little bit early to see.

But relative to sell-through et cetera, I think it's -- again, it's too early to say. But -- the -- what we did have seen is that our core retailers or core specialty shops that we have had such a long relationship with and it's such a good relationship with, because of a sorts of customers that come to those stores that it’s generalization they have often had stronger sell-through than more of the box stores, but that has also probably been in part, predicated upon the mixture of product.

So, again, we’re very early into this. This is our first real season and we are very, very keen to learn from the marketing assets we've put out there, the broader line that we've put out there, the women's line that we have put out there, and we will tweak, adjust, modify as we get the appropriate feedback and implement those changes in future seasons.

Great. Thank you.

And I had a question on Black Diamond in Europe, and how you think about growing the brand in that region over the next several years in terms of -- is the biggest incremental growth driver apparel? What's there on the equipment side in terms of your either new doors or getting greater assortments out of existing accounts?

I was hoping to think about the drivers there over the next several years.

Sure. I'll begin by saying, I don't have the number in front of me.

I’ve certainly looked at them in the past. We have, for the Black Diamond brand we have no lack of doors.

What we want to do with those doors is focus on those better specialty shops, those better accounts that we believe have the potential to represent a much larger share of Black Diamond’s products across the board both gear and equipment, from climbing a mountain to the apparel and naturally our focus at this point in time is taking the accounts that we believe have got the most potential and spending more time with our salespeople, more time engaged in doing joint marketing, putting in place merchandising tools with them that sort of thing. We do not have the same amount of a market share in Europe and almost any category that we have in North America, but some of the categories we are quite dominant in camps, ice cruise are two in particular.

But when it comes to apparel which is the largest opportunity for the Black Diamond brand globally, it is certainly true in Europe and if you look at our apparel collection, and you look at our brand positioning, it is actually more -- it resonates even more strongly in Europe with its a very strong alpine culture, the juxtaposition of the major urban centers to jagged alpine places where people engage in everything from ski mountaineering and randonnée to Alpine touring. To alpine is a mountaineering be it for riders and this sort of things and right now we're seeing that.

We are seeing good resonance in Europe and we believe that Europe has the potential to be a larger apparel market more quickly than potentially even North America. Just because of that our designers and our merchants and brand leadership is looking at Europe in that way at this time as they think about styles, fit, SKUs, colors et cetera.

Great. Thank you and good luck.

Thanks, Andrew.

Good afternoon, guys. So let me ask a follow-up to Andrew’s question, see if I can ask it in a little different way.

What prompted the comments about needing to improve sell-through with REI, was there a conversation that was had, was that based on the initial reads on a few of their doors, was there something that worked in some stores that didn’t work in others? If you could just elaborate what prompted that comment, because I think it’s an interesting one to understand a little bit more off, understanding that this is early in the season and more will be to come.

But I’m just curious as to the prompting of that comment?

Sure, Camilo thanks. The prompting of that comment really was just -- I should say -- let me preface it, that is not predicated on fall 2014 sell-through, it's way too early to make any kind of comments on fall 2014 sell-through.

But what the catalyst for this has been a number of inquiries we’ve been getting from the investor community about how many doors we're in, what's our strategy with REI; we appear to be in less stores and -- than previously or with fewer products, that kind of thing. And so we want to communicate is that for a major chain like REI, to want to place a meaningful percentage of the apparel in a meaningful number of their stores they need to see a higher sell-through rate than they had in the first two seasons.

So with REI, we are in 27 stores. But that is with -- in that number of stores a very small number of products.

And we have -- or I think its excuse me, 34 stores, if you include sportswear, but we have focused on a much smaller number of doors to carry a more meaningful amount of the product where we can better support it, where they had a more technical customer base based upon their sales of gearing equipment and BD gearing equipment. We have a good -- a very strong presence at their flagship store in Seattle and of course, online.

Pleased with of that. And we’re working with them to build sell-through there this fall and depending on how that goes, we’ll play a material role in how we grow the business each season with REI.

So, that's -- again, what we wanted to do is communicate to the Street just how we’re working with REI. We do have more dollars with them this fall than last fall, in a smaller number of doors and concentrated, because we believe that's a better strategy to build higher sell-through.

Okay. So, they are still committed to expanding the brand and the apparel category with you.

So, you’re asking two questions. They're committed to the brand.

We’re doing all sorts of great things with them with the gearing equipment, that's very exciting, that we can talk about in future calls. And on the apparel, as I shared with you, they wrote more dollars with us this fall than they did in fall 2013, both together we have structured a -- to deploy it differently with the goal of getting a higher level of sell-through which we both feel we need to continue to build the business with REI.

Got it. Thanks for the color.

That’s helpful. And then as you think about -- this is longer-term question, Peter.

As you think about all the learnings you’ve had in apparel over the last 12 to 18 months, does anything that you’ve learned alter or change the way you view the long-term opportunity? Initially when the goal was set of reaching $250 million by 2020, obviously, that had been without any sort of sell-through data or even product, to speak off.

You now have product. You have a little bit of sell-through data.

Obviously, the thrust of that is coming now. Is it too soon to comment on any sort of alterations to that outlook or can you opine on how that should transpire?

Yeah. That’s a great question, Camilo.

I think probably the way to say it is -- when Andrew was asking about sell-through, I had made the comment, and you’ve followed us very closely to see. You know this season is really the first season of a material collection of men’s more than just niche product, including some really beautiful well-fitted, I think, unique women’s products.

So this is really season one. And I should say that it’s early to make more conclusive statements about that question of what size and scale and what year, beyond saying we do remain cautiously optimistic.

We believe in this marketplace. We believe in our brand.

We have a great brand franchise. But we have a lot of work here to do.

And I think what we really need to see is to get through this winter, see how well the women's apparel sells through, the new men's collection sells through. See how our marketing initiatives -- that we’re excited about, and you've seen some of those, not all of them, resonate with customers.

See how D2C goes. And I think as the season wraps up, as Zeena who has got decades worth of apparel experience, completes her getting up to speed with this or analysis of it, working with global team.

I think then in March we'll be able to make some more definitive comments about the cadence of growth, what size and in what years. But to make more comment at this point in time, other than we believe in what we're doing and we're waiting to see now how the marketplace responds to this and we believe in the beauty of our product, I don't really have more to say on that specific goal other than to say we will certainly comment on it and Zeena will specifically, come March when we've had enough time to digest our first season in the market with our women's line and a meaningful collection of the men's and a more material marketing program that was designed between Tim and our new Global Director, VP of Marketing, Niclas Bornling.

Great. Then just finally a question for Aaron, a clarification question.

So it sounds like a guidance expectation for the back half has remained the same except for a greater impact from FX to the sales line of about $1.5 million, is that correct?

Yes. So we are sticking with the guidance provided.

But wanted to highlight that we have seen some negative impacts related to FX as you just stated of about $1.6 million.

Okay. So that guidance then is exclusive of that FX impact?

So when we provided the guidance -- right, we provided it without knowing how the currencies would change and so we are not coming off our guidance as of right now, but wanted to highlight that from that point in time that we provided that initial guidance in August, we have seen some declines in the overall forecast related to the impact of FX.

Okay. Could there be at once orders that would absorb some of that FX negative impact?

Yes, I mean, it's, obviously, Q4 is a very dependent on the weather and it's very ASAP driven and so we’ll see how it plays out. But just, once again, wanted to highlight that although we are not coming off our guidance we wanted to let the Street now and let the analytical committee know that FX has had a negative impact on those projections since we communicated them in August.

Okay. And is there any margin impact guidance that you'd like to offer from FX?

This is why we are also staying consistent with our margin guidance previously provided as well.

Understood. Thanks very much, and good luck, guys.

Camilo, I am going to add one more comment, just to what I said earlier. I think I wanted to just add that I was thinking about this is that, at Black Diamond we are absolutely focused first on quality versus quantity.

We want to build this apparel business with a really strong foundation and we want to build it with the same integrity that we built all the DD categories. So that's what we are really focused on doing at this time.

And I think, come March, we’d be able to give some additional insight on the cadence of growth.

Great. Thanks for the color, Peter.

Good luck.

Yeah, thanks.

Thanks. Good afternoon, everyone.

A couple of questions. Can you speak in more detail around the SKU reduction?

To be clear, is spring 2015 the first season where this begins to impacting numbers? And will the reduction in SKUs be concentrated any more in either the spring or the winter season?

Hey, Jim. It’s Peter.

Yes. Spring 2015 is where the first SKU reductions are hitting, and they go through the fall.

In spring, you’ll see the reductions in climb and mountain, and then in the fall it’s mountain and ski. And I don’t think there is a meaningful concentration -- maybe a little bit more to -- yeah, I guess, a little bit more to the fall slightly in the fall than in the spring.

So it would take the 12 months to roll through. And it represents a little over $6 million of revenue, some of which we certainly believe we’ll make up by directing our customers to other products.

Very helpful. Thanks.

And then, Aaron, the inventory and receivables – can you give some numbers for year-to-year comparison?

Yeah, so -- just one second.

Sure.

So year-over-year our inventory increased about $10.7 million, or 19%. Now, the inventory number from the prior year did include Gregory as well.

And so that’s obviously, not a real apple-to-apple comparison. But it is -- as we all know Gregory’s inventory also is fairly modest to the overall pie of the inventory on-hand.

And then also accounts receivable is about flat year-over-year.

Okay. Great.

And then last question, kind of, relates to the implied fourth quarter guidance. To what extent is that dependent on ASAP orders versus orders that you have in-hand or have visibility to at the moment.

Just trying to get a feel for current visibility versus the ASAP dependent?

Yeah. There is a substantial, without giving exact number, we are much more dependent upon ASAP's in the fourth quarter than we are in the third quarter, and we also have second orders with many retailers, which at the end of the day haven't been in this a longtime.

These are really backup orders, meaning. It’s an -- our retail partners believe they will really need that's why they ordered it.

But should there be a dearth of cold and snow and customers coming in to their door, they will cancel. And we would probably allow them, work with them on that rather than have them be stuck with inventory that would be hard for them to pay.

So, yes, we are more dependent in the fourth quarter on ASAP's and some cooperation from the marketplaces.

Thanks for that guys. I leave it at that.

Okay. Thanks, Jim.

Hi, guys. Thank you.

I apologize for asking you to go back over something. I was just middle of getting out of the cab when you made the comment regarding your staying in REI.

Peter, where you saving that you needed to see an increase in sell-through to maintain the presence that you have there or to increase it?

To increase it.

Okay. Thank you for clarifying.

And I just wanted to go back to some comments you made earlier in the year regarding expected growth for POC overall and for POWDER. I think you said at the end of the last call that you're still on track to see a tripling in the POWDER volume this year and that POC was still tracking to the kind of growth that was implied in the ballpark in the -- aggressive earn out provisions that were put in place of the time of that acquisition is that still the case?

So you're asking two questions, let's split them up. The first one is, are we tracking to see roughly the tripling of apparel revenue sales in 2014?

And the answer is yes. To your second question, I do not believe we said that POC was tracking to hit the aggressive -- all the aggressive goals in their LTIP.

I think what we said was that POC sales growth was tracking roughly in line with what it had been doing at a time we acquired it which was in the middle modest -- middle double-digit rates.

Okay. Thanks.

All right. Thank you very much.

That's it. Thank you.

Thank you. I thought the quarter was good to go to my expectations, so that you are maintaining guidance just trying to get a better feel for difference between third and fourth quarter here and to follow up on the ASAP order question.

Can you give maybe order of magnitude, how much ASAP orders comprised the fourth quarter and then with respect to the apparel business, does most of that shipped in the third quarter or is there still a large part of the business apparel business that could be ASAP orders? Or I guess another way, if demand is really strong, do you have enough product that you can ship into the fourth quarter to meet that?

Okay. So three questions there.

The first one is, is demand is really strong, do we have enough products to ship in there? Everything is with reason and I guess the question is, what’s reason?

But we would be happy to sell-through in everything and if we left people hungry in certain categories, that's probably good training, right, to give them to like more. So, we’re comfortable with our inventory levels.

Secondly, the third quarter in this industry whether you’re in hard goods or you're in soft goods, is where the majority of your pre-seasons go, because you know the orders you have in the fourth quarter are backup orders that might be canceled and you are more depend on ASAPs. I’m not going to break out the percentages, but the point that we're just trying to make here is that a combination of greater dependence on ASAP and backup orders to retailers, who, as we know, if -- will be anxious to work with one to bring those down if they don't get the traffic, because there's no snow, no cold, that sort of thing.

So, I mean, that's something that’s not unusual to as. We've been at this for many decades.

It's not new to the industry. But all of us who operate here on the vendor’s side in the winter business have more exposure in the fourth quarter.

That's just the way the game is played.

And with respect to sales and marketing, you only have $5 million variance with one quarter left in the year. Can you maybe talk about what your SG&A plans are for this fourth quarter, is some of that targeted toward trying to elevate the brand and move the apparel or have -- not decided how much you’re going to spend yet?

I am missing the question, do we -- have we determine, how much we’re going to spend on marketing and selling apparel in the fourth quarter, is that the question?

Yes, because it looks like in your SG&A you’re still guiding to a $5 million range?

We are -- as I was sharing a moment ago, we are in the first full season. This is the first season of a reasonably full apparel collection and it's our first season with women's and we’re very proud of the product.

We like the feedback we’re receiving on it. And to make the world aware of it, as we learned last fall with our limited launch was that, you know, the season ended and many people didn't even know we had launched apparel.

And so it is really crucial to support the women's launch, the broader launch of a more complete men's collection with an appropriately robust marketing spend to elevate the brand, as a brand that is synonymous with technical innovative, beautifully designed men's and women's apparel. And I think we believe here if we were to take our foot off the modest pedal that it's on, it would not be to the benefit of any of our shareholders, because we would not be firing all cylinders as we need to continue to drive the growth of apparel to make it successful, to have it to truly a leading global business is what we intend to do in the coming years.

So we are not going to back off of what we had intended to do at this point.

Thank you.

Hi, guys. Real quick, now with Zeena on Board and with cash on hand, can you give us an update on your plans for a retail store strategy moving forward?

Hey Mark, this is Peter. And we’ve talked a bit about an omni-channel strategy and in March, after Zeena has had enough time here to really get up to speed in all aspect of the business had time to work with all the players and time to really develop strategy.

We'll talk about that in some kind of detail. What I will say at this moment is that our focus relative to omni-channel is first and foremost -- it's a marketing focus to improve content and we really believe that that's the underpinning of omni-channel.

And it's about really great digital and in-store storytelling that supports customer engagement socially as well as for commerce in any channel with BD, so whether it's store of ours, online or the specialty partners. And so right now what we have focused first and foremost on this winter is working to support our specialty partners to make sure that they know we’re committed to their success with our apparel as they are.

And then come spring March, you’ll hear more from Zeena our multi-channel strategy.

Okay. And then I’m going to see if we can dig a little deep on revenue numbers here the 24% growth, can you give us more insight to quantify the biggest contributors there, or maybe specifically talk about kind of core Black Diamond hard goods and whether that businesses up or down and how you feel about that business currently?

You know we don't break out our sales by brands. But what I will see and reiterate from what we just shared at the beginning of this call is that what has been the really material drivers to the growth in the third quarter, first and foremost, has been a combination of Black Diamond apparel and POC.

Okay. Thank you.

All right. Thanks, Whitney.

And we would like to thank everyone for listening to today's call and we look forward to speaking with you when we report our fourth quarter results, which we should expect to do in early March 2015. Again, thanks for joining us.