Good afternoon, everyone. And thank you for participating in today's Conference Call to discuss Black Diamond Inc's Financial Results for the First Quarter ended March 31, 2016. Joining us today are Black Diamond Inc's CFO, Aaron Kuehne, Black Diamond's Equipment President, Mark Ritchie; and the Company's Director of Investor Relations, Cody Slach. Following the remarks, we will open the call for your questions. As a reminder, today’s call is being recorded. Before we go further, I would like to turn the call over to Mr. Slach, as he reads the Company's Safe Harbor statements within the meaning of the Private Securities Litigation Reform Act of 1995 that provides important cautions regarding forward-looking statements. Cody, please go ahead.

Thanks, Shannon. 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 result 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 reformation and growth strategy, including its ability to organically grow each of its historical product lines, the ability of the Company to identify potential acquisition or investment opportunities as part of its redeployment and diversification strategy; the Company's ability to successfully redeploy its capital into diversifying assets or that any such redeployment will result in the Company's future profitability; 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 as well as foreign currency fluctuations; the Company's ability to utilize…

Thank you, Cody, and good afternoon everyone. At the close of business today, Black Diamond, Inc. released its earnings for the first quarter ended March 31, 2016. Following my opening remarks, our CFO, Aaron Kuehne will review the Company's first quarter 2016 financial performance and our outlook for the remainder of 2016. Following Aaron’s remarks, I will provide some additional commentary and we will leave time for a question-and-answer period. During the first quarter, sales in our North American business remained strong particularly in our core climb and mountain categories. On a consolidated basis, however, we continue to confront foreign exchange challenges, particularly with the Euro, which impacted both revenue and gross margin in the quarter by 510 basis points and 380 basis points respectively. In addition, the manufacturing operations that we repatriated from China back to Salt Lake City are currently operating at higher costs comparatively and impacting our gross margin while these activities ramp up. In the long run, we believe the strategic relocation of these activities will result in higher currency-neutral gross margin, lower overhead, and reduced response time to our customers as we progress through 2016. Excluding the impacts of foreign exchange, gross margin in the first quarter would have been approximately 32.5%. We continued to make steady progress on our reformation initiatives during the first quarter, including the transition of Black Diamond Europe from Basel, Switzerland to the more affordable Euro-based economy of Innsbruck, Austria. This new headquarters and its surroundings is also an attractive recruiting tool for our employees who will have immediate access to the mountains in the summer and winter. We expect to be fully operational in Innsbruck by June 30. Before going any further at this time, I would like to turn the call over to our CFO, Aaron Kuehne. Aaron?

Thank you, Mark, and good afternoon everyone. For clarity, any comparisons made to prior periods are from continuing operations and exclude the results of POC. Sales in the first quarter of 2016 decreased 9% to $38.2 million compared to $41.9 million in the same year-ago quarter. The decrease was primarily driven by the weakening of foreign currencies against the U.S. dollar and a decrease in ski product sold in Europe which was largely the result of practically non-existent winter in most parts of the region. Due to the recent volatile foreign exchange markets, first quarter sales were negatively impacted by $2.1 million or 510 basis points. So on the constant currency basis, Q1 sales were down 4% to $40.4 million. Consolidated gross margin in the first quarter was 28.7% compared to 35.4% in the same period last year. As Mark mentioned earlier, this decrease was due in part to a 380 basis point headwind from foreign currency as well as from higher short-term costs incurred in the ramping up of our recently repatriated manufacturing activities which we estimate impacted margins by approximately 270 basis points and a 90 basis point impact is associated with the write-off of inventory shipped to certain North American accounts during the first quarter of 2016 that filed for bankruptcy reorganization in April 2016. It is worth noting that our account receivable balances with these debtors was fully repaid at 12/31/2015. Said differently the receivable status for these clients in no way led us to believe, reorganization was eminent. This expense is a rare credit event for our Company and the rest of our key retail accounts appear to be healthy. A final note on the subject, we expect either the Chapter 11 filing of these retailers, nor their anticipated loss sales to have the significant…

Thanks Aaron. I think it’s important to reiterate our mission at Black Diamond Equipment. Our mission is to be the number one climbing brand in the world while selling more of our core products deeper into existing channels, growing our e-commerce business globally, and returning the brand to its 2011 cost structure or roughly a 10% EBITDA margin as Aaron mentioned. As we track towards this goal, I’d like to provide performance breakdown by region as well as our progress right sizing and reforming Black Diamond Equipment’s cost structure. Before, doing so I would like to make some parallel comments on our recently and repatriated manufacturing activities from Asia to the U.S. As mentioned this repatriation, which was completed in 2015 almost part of the strategic pivot we announced in 2013 was designed to drive competitive benefits via enhanced product speed to market, as well as improve working capital. Stronger than anticipated demand for certain new products combined with the ramp up of the supply chain resulted in slower than anticipated output and rising cost during the quarter. Our North American business continues to perform well and was up mid single-digit in the quarter driven by growth in our foundational climb and mountain categories, as well as higher than – higher at [indiscernible] new spring 2016 product line including cams, harnesses, and carabiners. REI, Backcountry.com, and Amazon continued to drive strong sell through of our product. As mentioned in my opening remarks, Europe continues to be impacted by foreign exchange. This region also experienced an unseasonably dry winter which impacted our ski category sales as well as some back orders related to the repatriation I just described. In our independent global distributor business, which covers our rest of world regions including large markets in Asia, we are still dealing with…

Thank you, sir. [Operator Instructions] And we’ll take our first question from David King of ROTH Capital Partners.

Thanks. Good afternoon, guys. I guess first off, can you talk a little bit about the repatriated manufacturing, how close you are to having it, where you can meet the demand or I guess just better yet getting to a level where you are not having sort of the outsized cost overhang. And how should we be thinking about that in terms of the impact to gross margin for the remainder of the year. And I guess as a follow-up to that I’m curious the 35.8% to 36.8% gross margin guidance, just to be clear does that include or exclude some of those costs? Thanks.

So let me talk a little bit about the transitional manufacturing and the impact on variances and then Aaron can answer this specific question on what those percentages would be? We talked a lot about Greenwood over the course of the last couple of years and certainly it’s been a major, major project for this organization. I think just to backup a little bit, the maximum transition activity that we have seen during this project happened in late summer of 2015 and ends in the fall of 2015. And as noted, things have not gone totally smoothly. We had delays in getting equipment over here from China. We had an anodization supply chain that had agreed to work with us, that we had worked with it for many years in the past that [renewed] after we started the project and got it going. We had some delays in getting other various material supply chains up and going. And then we had some labor issues, unemployment consolidated cost near to 6% when we initiated this project a few years ago and it’s that 3% now. So very challenging for us in a lot of ways. And then as we discussed previously, demand for product in Spring 2016 for the core hardware that Black Diamond is known for and that we manufactured was up a bit. So we pushed really hard on a lot of this stuff, in fact, it’s arguable that we pushed a bit too hard and we ended up with some quality problems has been noted with a couple of recalls that we had to endure. It’s arguable just touching on the recalls for a moment. It’s arguable with very, very, very low number of our non-confirming products that actually made it out into the market that we could…

So, Dave, the constant currency margins guidance that we provided of 35.08% or 36.8% did contemplate a portion of these additional costs that we have discussed. However, it did not contemplate all of it, primarily those associated with the most recent recall. However, as Mark has articulated, we do believe that we will see the facility or the manufacturing activities continue to ramp up in Q2 and so. As of right now, we are still sticking with our guidance or our outlook for 2016 and believe we can achieve these targets so long as we get the throughput that Mark just mentioned.

Okay. That helps. And then maybe the follow-up to both comments in terms of magnitude or I guess how should we be thinking about the incremental cost associated with the most recent recall. And then just more broadly on that what's the response been from retail customers to the recall you know what you guys did and then just from CPSC, and do you anticipate any reduction in revenue as a result? Thanks.

I don't believe that the direct cost of these recalls is not significant, because it’s a recall for inspections so what we're basically asking people to do is to see if the product that they have is within a specific set of date ranges that we have provided. And for them to look at the product to assure that it meets our standards and in all of these instances the inspection process is very, very simple. And given the [indiscernible] small non-conforming rate that we have found, we will not seen any sort of significant amount of product come back to us. So that will not be a big cost, where we have seen costs and simply the amount of time that management has had to focus on working on these recalls and then the variance is generated through the manufacturing process of shutting down to work on manufacturing process and in the additional quality assurance that has been layered into assure we do not ship any – some optimal product going forward. So the majority of the costs of the recall are as being seen through the manufacturing variances and the diminished margins.

Got it. That helpful. And any potential revenue impacts, retail response?

At this point we're not prepared to speak to that. The majority of – a lot of the product that we sell for example the camming devices that we have. Black Diamond is the camming devices, in this area we are the provider of them in the market. And it is our hope that as we ramp up production without a lot of viable substitutes that we can hold demand. Now how much that holding and how long it holds it certainly dependent on how quickly we can wrap up, but we're not calling for anything at this point.

Okay. That's great color. Thanks very much for that and good luck.

And we’ll take our next question from Andrew Burns with D.A. Davidson.

Thanks, good afternoon. Two questions for you. First on the commentary around international distributors Korea and Japan, you talked about them getting to a point where they potentially are going to replenish. Is that factored into guidance and how should we think about that. It sounded like they can be fairly material orders when they do indeed start to replenish?

So it is included in our guidance those expectations. Now if we start to see some more material type downloads from these ski regions and obviously that would act as a tailwind for us, but a lot of the impact that we experience in terms of the negative impact was really manifested itself in 2015 whereas we came into 2015, we were hoping and planning on the business starting to stabilize.

Great, thanks. And just a big picture question on the ski category, it sounds like climbing mountain are healthy and your ski is gone through I think the hardest hit in terms of the a broader category, in terms of the SKU rationalization outsource manufacturing there and just wondering as you enter the upcoming season the ability to grow not only this season, but the next several what’s we thought on reinvigorating that?

Yes, it's a good question and certainly it's a challenging marketplace for a lot of reasons. As you pointed out, I think we’ve done a good job on refining the supply side of the business. Really good designs, really capable manufacturing, and the ability to respond faster because of the outsourcing in the ski piece. So the supply side as well-positioned for ski’s in particular. But we're challenged by and when everybody's been challenged by for the last couple of years is just absolutely inconsistent winter weather patterns and with as far as the weather was in Europe this past winter is super challenging. So do we return to some an era of sort of consistent winter weather so that we have an opportunity as do others ski players that’s to be seen. So it certainly an issue we are being cautious with our forecasts and buys so that we do not end up in over inventory situations to the best of our abilities that on the pure ski side of the business. We have an opportunity and have shed a lot of cost over the course of the last couple of years. I think where we do have quite a bit of opportunity between both Black Diamond and PIEPS is in the snow safety end of the business. With the jet force with the beacons with new beacons from PIEPS, with avalanche probes and those sorts of snow safety devices, ski packs and the like. We do have a really strong foothold and we do have the opportunity to move that business forward obviously weather impacts a lot, but in that snow safety side of the business and includes things like skins and poles, we do see opportunity and will push hard there.

Okay. Thanks and good luck.

Thanks.

[Operator Instructions] And we will take our next question from Mark Smith with Feltl and Company.

Hi, guys. Sorry if I missed this, but have you guys quantified the cost savings potential in Europe by moving headquarters?

We have markets $2.2 million.

Okay. Perfect, confirm. And then any update that you can give us you just talked a little bit about speed safety and the backcountry. Any update on PIEPS how the winter season just went for that business in Europe. And if you’re getting some traction and more traction in North America and can we all look for that business?

Yes. I think the PIEPS business. PIEPS did a good job in Europe even on a winter with such poor snow conditions. And certainly we got a good start to the season early on with just a little bit of snow and then a big lull in the middle. And then some good snow going on again towards the end of the season and so PIEPS was able to drive forward and achieve some pretty good – achieve good numbers. In North America as we have grown PIEPS distribution through Black Diamond PIEPS has moved up from the numbers that I understand from the number four brand in North America to the number two brand in North America as we have built the Black Diamond and PIEPS sales efforts together. We do intend to push hard on PIEPS and saw 2016 because we do see opportunity to try to drive towards being number one that's a good distance away. We do have a higher end product with DSP Pro and DSP Sport but we do expect the micro to be able to take market share because it has got some exciting new technology and we really anticipate driving that business forward, particularly we think there is opportunity and things like this snow won't be a market where we’ll bring a concerted effort to push sales. So we do see opportunity with PIEPS moving forward, couple years of stabilization after purchasing the brand, but now a good opportunity to leverage it into the future.

Okay. And then last question from me. As we look at your SG&A guidance for the remainder of the year. Is there anything to call out and kind of cadence of that will we see that kick lower kind of quarter-to-quarter or are you able to drop that down through $11.5 million of run rates here pretty quickly?

Yes, good question. So we're currently expecting our overall guidance to be split 50/50 in H1 versus H2. So I'll give you a sense as to how we thinking about Q2, and then also please keep in mind you know the additional $300 dollars of traditional or integration type expenses that we incurred in Q1 that did not classify as restructuring charges. And so you know we are still transitioning or making our way through this transitional period and we do expect that the realization of these savings that we’ve outlined will continue to manifest themselves as the quarter's progress. However hopefully, the breakout in terms of 50/50 will help you think about it from a modeling perspective.

Okay. Great, thank you. End of Q&A

At this time, this concludes our question-and-answer session. I'd now like to turn the call back over to Mr. Ritchie for closing remarks.

Thank you, Shannon. We'd like to thank everyone for listening to today's call and we look forward to speaking with you when we report our second quarter results, which we’d expect in early August of 2016. Thanks again for joining us.

Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation.