Cody Slach - Director of Investor Relations Aaron Kuehne - Chief Financial Officer Mark Ritchie - Chief Operating Officer.

David King - ROTH Capital Partners Andrew Burns - D.A. Davidson & Co. Mark Smith - Feltl and Company.

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 its net operating loss carryforwards; 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 Securities and Exchange Commission, including the Company's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K.

All forward-looking statements included in this conference call are based upon information available to the Company as of the date of this call, and speak only as of the date hereof. The Company assumes no obligation to update any forward-looking statements to reflect events or circumstances after the date of this call.

I would like to remind everyone that the call will be available for replay through May 16, 2016, starting at 8:00 PM tonight. A webcast replay will also be available via the link provided in today's press 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 expressed written consent of Black Diamond Inc., is strictly prohibited. Now, I would like to turn the call over to the President of Black Diamond Equipment, Mark Ritchie.

Mark?.

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 impact on our fiscal 2016 sales outlook.

Excluding the impact of foreign exchange, gross margin was 32.5% and excluding both foreign currency, the repatriation, and the inventory write-off gross margin would have been approximately 36.1%. As a reminder, our overall sales and gross margin are impacted by unfavorable foreign currency changes on a transactional basis.

The primary cost of our inventories denominated in U.S. dollars, while approximately 40% of our global sales are denominated in foreign currencies primarily the Euro, Canadian dollar, Swiss franc, British pound, and Norwegian krone.

We attempt to manage our foreign currency risk on a continuous basis through natural hedges and foreign currency hedge contracts.

Although, we have hedges in place for the different cash flows, denominated in foreign currencies, these hedges will never be a perfect offset to the actual currency moments especially with the currency volatility we've experienced in recent quarters.

These hedges also do not protect our financial statements from the translation impact we experienced from these weaker currencies. First quarter SG&A, which excludes restructuring, merger, and integration and transaction costs was down to $14.2 million due to the realization of savings from our restructuring plan implemented during 2015.

A portion of that cost savings were offset by $300,000 of transitional and integration costs associated with the reformation which we view has been one-time costs, but that they are not qualified for classification as restructuring expenses.

Excluding the one-time transition expenses, our SG&A would have been down $1.2 million or 8% from the first quarter of 2015 and more represented above the cost rationalization strategy we have undertaken. During Q1, we incurred restructuring charges of $462,000 related to severance and other restructuring related costs.

We also incurred a $136,000 transaction cost to retain Rothschild Incorporated for systems with our capital redeployment and diversification strategy.

Adjusted net loss from continuing operations, which excludes these non-cash charges as well as restructuring and transaction costs was $2.2 million or a loss of $0.07 per diluted share in the first quarter of 2016 compared to an adjusted net income from continuing operations of $100,000 or $0.00 per diluted share in the first quarter of 2015.

Adjusted EBITDA was a loss of $2.4 million compared to earnings of $1.2 million in the first quarter of 2015 primarily driven by the aforementioned reduction in sales and gross margin.

Net loss from continuing operations in the first quarter of 2016 was $4 million, while loss of $0.13 per diluted share compared to a loss of $1.7 million or a loss of $0.05 per diluted share in the year ago quarter.

Net loss from continuing operations in the first quarter of 2016 included $1.2 million of non-cash items, $500,000 in restructuring costs and $100,000 in transaction costs. Moving on to the balance sheet.

Cash and available for sale marketable securities at March 31, 2016 totaled $96.2 million or approximately $3 per share compared to $98.2 million at December 31, 2015.

Total debt was $20.6 million which includes $20.4 million or 5% subordinated notes during 2017 and $110,000 in foreign term notes compared to total debt of $20.1 million at December 31, 2015. For flexibility, we continue to maintain a $20 million revolving credit facility, which matures on April 1, 2017.

On March 11, we entered into an amendment to the credit facility, which reduced our minimum net worth covenant required to be maintained for the year ending December 31, 2015 to $140 million with an annual increase of $2 million for each fiscal year thereafter.

Our inventory balance decreased 10% to $46.2 million compared to the end of 2015 which enabled us to generate approximately $400,000 free cash flow in the quarter.

During the first quarter, we repurchased approximately 360,000 shares of our outstanding common stock for a total cost of approximately $1.5 million at an average price of $4.21 per share, as of to date approximately $21.3 million remains on our $30 million stock repurchase program and we expect to be opportunistic accumulating additional shares.

As a reminder, our common stock continues to be subject to a rights agreement that is intended to limit the number of 5% or more owners, and therefore, reduce the risk of possible change of ownership in order to maximize the value of our NOLs.

Any such change of ownership under these rules would impair our existing and significant NOLs for federal income tax purposes. As of March 31, 2016, our NOL balance remained at approximately $166 million. Our outlook for 2016 remains unchanged.

To reiterate some of the main components of our guidance we expect sales on a reported basis to be approximately $145 million to $150 million compared to $155.3 million in 2015. On a constant currency basis, however, we expect sales to increase slightly to approximately $155 million to $160 million or flat to up 3% compared to 2015.

We expect gross margin on a reported basis to be between 32.5% and 33.5% compared to 34.9% in 2015. On a constant currency basis, we expect gross margin to increase 90 and 190 basis points to 35.8% to 36.8%. We expect SG&A in 2016 to be around $49 million, which is a decrease of $9.5 million or 16% from 2015.

Please recall the $49 million includes approximately $4 million of cash corporate overhead expenditures. Finally, our guidance assumes that Euro will trade around 108 for the remainder of the year and we have a locked in Euro hedges worth $13.7 million representing approximately 50% of our remaining net exposures for 2016.

During 2016, we expect to generate free cash flows of around $5 million before corporate cost and related activities. We expect the combined EBITDA margins for Black Diamond Equipment and PIEPS to be approaching our target of 10% by 2017.

However, this excludes transitional gross margin variances related to one, the continued ramp-up and optimization of our in-house manufacturing activities, which have a direct impact on the gross margins of our internally manufactured goods; and two, better foreign exchange stability.

We are confident that our cost structure will be appropriately aligned and supporting this target. At this point in time, it continues to be too early to provide any specific guidance or details around the redeployment of our capital.

Since we’ve last spoke to you, financial markets appear to be improving and it remains our intention to at the appropriate time acquire high quality, durable, cash flow producing assets with expected enterprise values in the range of $250 million and $500 million.

At this time, we expect to invest in assets unrelated to outdoor equipment in order to diversify our business and as noted earlier, we have retained a global investment bank Rothschild to assist us in our search. This concludes my prepared remarks. Now, I'll turn the call back over to Mark.

Mark?.

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 the market experiencing year-over-year decline due to similar foreign currency headwinds that we faced in Europe.

Specifically in Japan, the country is experiencing both consolidation and stabilization after a three-year growth spurt. A weaker yen and an increased consumption tax are also hampering consumer spending. However, we view these headwinds as transitory and we will remain steadfast in our approach to these markets.

In fact, we have begun to see signs of stabilization in our distributor business particularly Japan and Korea, unlike other areas in which we do business. These markets typically buy our product in large orders. Due to market headwinds I have just described it’s taking longer for these distributors to burn through their inventory.

However, we believe they reached a point where the replenishment of inventory is now needed. Now turning to some overall product highlights. As I mentioned, spring 2016 was highlighted by our core products including mountain and climb.

Climbing was particularly strong, up solid double digits and driven by the ever increasing number of new climbers introduced to the sport through climbing gyms.

Some of the climb products that sold particularly well include the Solution, Momentum, Primrose and Couloir harnesses, Half Dome helmet, climbing accessories especially the Mojo chalk bags, creek climbing packs, and rock climbing sportswear like the Credo and Notion Pants.

Lighting and Trekking also continued to gain additional share as the market leader. Looking to fall 2016, our ski category were focused on backcountry ski and snow safety. Highlights of the line include our Helio carbon skis which have received a great response to the limited early launch.

Our Cirque backcountry ski packs, new GlideLite skins, helio carbon ski pole, and switch release ski strap, which is an essential in the easy to use feature for Black Diamond gears in Avalanche terrain.

In our snow safety business, we will continue to convert airbag consumers to our JetForce technology and we look forward to introducing our PIEPS Micro beacon and updated iProbe. An early look into spring 2017 will continue to show our core climbing focus with a continued effort on the climbing gym consumer.

Some highlights of the line include the ATC Pilot Belay Device, which we believe is the future passive belay devices for single pitch indoor and outdoor climbing.

Kids full-body harnesses which rounds out the harness assortment for the growing number of family getting into indoor climbing and the introduction of some special new BD products which are expected to be limited initially to the North American launch for the retail partners.

In our lighting business, we believe that our Iota headlamp will be a super light and compact rechargeable headlamp. We also have updated Icon, ReVolt, and Ion headlamps with increased limits and functionality. We also continue to make progress on the marketing front.

From a retail marketing in-store perspective, our strategic goal of building brand presence and increasing product software with a retail level is now in a development phase in North America and Europe.

We introduced our spring 2016 brand initiative of Gym-to-Crag apparel and equipment with seasonal in-store communication updates in most of our independent retail locations. We installed Black Diamonds first brand in climb gym shop in shop in the [indiscernible].

This branded environment highlights Black Diamonds climbing equipment and apparel in a key climbing location and what served as a blueprint for future shop and shop development to be rolled operated this year.

We also released a new in-store fixtures year program to enhance the visual merchandising of apparel and equipment, branded furniture such as tables and fixtures highlight apparel that will be deployed to 27 key partner retail locations in 2016.

In addition, key equipment like headlamps and harnesses are now merchandised a newly designed in-store displays. These successions are being mired in Europe, where we continue to grow our retail presence with key independent and change specialty partners like Addnature, Stockholm, factory in Switzerland and UK based GO Outdoors just to name a few.

As soon as this social media campaign continues to help us boost fans and engagement, which is consistent with our social media strategy. Our Facebook followers have grown 22% year-over-year to 260,000, while our Instagram followers have grow over five fold to 237,000.

We continued building and maintaining visibility and core credibility within our key markets. We were a lead sponsor with strong brand presence at six key grassroots rock and ice climbing events throughout the U.S. in Q1.

Over the coming year, we expect to bring our Rock project events to Las Vegas, Los Angeles, Raleigh and Washington, DC in addition to partnering with four other climbing related events. We have marketing partnerships signed with multiple climbing gyms across Europe.

We are the key partner of the pan-European climbing event series and we expanded our Rock project initiative to Europe with the first event taking place outside Paris, France at the end of March 2016.

On the media side, we are continuing our advertising push in key endemic digital and print publications like Powder Magazine, Rock and Ice and WildSnow.com to name a few. The BR channel continues to be strong with multiple awards and strong coverage of BDE’s innovative products.

We received eight best in show editor’s choice awards from major print and online publication at the winter 2016 tradeshows in Europe and North America including the prestigious ISPO award for the Razor Carbon Pro Ski Pole.

We have prominent placement of Black Diamond apparel and equipment in mass market publications like the Wall Street Journal and Victoria's Secret Catalog. Now on to our reformation, we seek to achieve the following three primary initiatives. 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, reorganization of our apparel strategy to achieve profitability at substantially lower sales targets.

We are confident that we have made great progress on our European headquarter relocation during the quarter with the continued transition of BD Europe from the high cost to Basel region to the more affordable environment of Innsbruck, Austria.

Our European business began relocating to Innsbruck this past weekend and we expect it to be fully transitioned by June 30 of this year. Tim Bantle, our new Managing Director of our European operations is leading this activity and unifying the team with our corporate headquarters in Salt Lake City.

Tim has already reorganized European sales management around account types, differentiating strategic headcounts from regional key accounts from specialty retail. We have also stop launched ecommerce in Europe to test demand and fulfill from global inventory.

Our apparel business is also an integral part of the reformation given our latest objectives to grow organically and profitably as well as achieve 2011 operating margins. We are reducing our apparel business in order to speak directly to our core consumer while also achieving industry appropriate margins.

To be clear however, we remain absolutely committed to our apparel business as we recalibrate the line and the resources towards more humble objectives. First quarter apparel sales exceeded our plan driven by strong discontinued merchandise primarily in Europe and strong eCommerce growth for both inline and discontinued product.

The strong discontinued merchandise growth reflects our strategy to appropriately scale back on the line. In fact, for all of 2016 we expect to reduce the line to around 200 style and approximately 2,400 SKU’s from around 300 styles and approximately 3,900 SKU’s during 2015.

At the same time, we are also focused on broadening the accessibility of the line. This includes improving the fit and more approachable pricing on selective styles. Outside of the discontinued merchandise some of our best selling styles were both men and women’s sportswear.

As I mentioned, highlights of our fall 2016 line included rock-climbing sportswear as well the First Light Hoody, a lightweight versatile breathable insulated jacket. Our Spring 2017 line is expected to include updated climbing sportswear and the liquid point.

Our best selling GORE-TEX shell as well as the alpine light pants, the lightweight stretch-woven pant design for rock-climbing and summer alpine climbing. With that, I would now like to turn the call back over to the operator for Q&A before my closing remarks.

Operator?.

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 have potentially dealt with them via the warranty process.

However, because we are Black Diamond and because what we do is build safety product to serve our markets and our consumers and many of them being our friends and family. We did that which was right for this brand and for this repatriation activity and we recalled the products.

So we have been dealing with the recall efforts for the last several months. They have certainly taken a lot time and a lot of focus by the senior management team, but now that we are through those activities.

We have put a tremendous amount of focus on ramping up the manufacturing operation, when we were involved in the recalls, when we were involved in the massive amount of re-inspection, we added a lot of costs that was important to assure that nothing was shipped, that was suboptimal, but it absolutely did not help our absorptions and we saw a lot of costing problems.

So basically, we were in a perfect storm sort of situation where we were behind going into the production cycle, we lost production time due to the quality issues, we added a lot of labor in order to mitigate any quality concerns, and we were very involved in these recall processes. Where I feel that we are at this point is the following.

The senior team for Black Diamond in Salt Lake City recognizes that the most important thing that we can engage in at this point is pushing hard to ramp up production, so that's happening and have been pretty diligently for the last two or three weeks with a cross-functional team of senior members.

Not just manufacturing, but category directors, design, development, quality assurance, and supply chain management working with the manufacturing team to redeploy a lot of our engineering group to assist in ramping up the manufacturing activity. So we have folks who are typically involved in R&D down in the manufacturing area.

We are working with the team to push on output. We are also focusing deeply on supply chains so that we can pull cost out of things like anodization and some of the other critical material supply chains that we are working on. We have the entire organizations focused on this and we are pushing very hard to make that happen.

I believe we are clearly not there yet, but I believe that May and June will see much stronger throughput.

In fact, throughput above this sort of levels that we caused for the opportunity to gain back some of what we've lost in the last couple of months and that better absorption will certainly improve the margins that we see for our core climbing equipment that is so, so critical to what this Company and its brand are about.

So the next couple of months will tell this organization is working really hard to make it happen and we will see shortly, but I remain very confident that we can recover. And I will hand it over to Aaron for a discussion of the margins..

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..