Black Diamond, Inc. Message Board

Gems, why do you say backlog increased $5 million over last year? In fact, it went DOWN by $750k. This is taken directly from the 10-K:

"As of November 30, 2012, we had backlog of $27,900,000 compared to $28,650,000 as of November 30, 2011."

I'm sticking by my call. Q1 revenue will be less than backlog. They don't have enough turnaround time to manufacture and deliver goods for Q1 that was ordered after the fiscal cliff deadline late in December.

Eatrisk writes: "Q1 in April has potential for record quarter in revenue"

What is your basis for saying this? I happen to have the oppopsitie opinion. I think Q1 will be terrible in terms of revenue. I think the market will be shocked, and the selloff will be huge.

Consider the current average analyst estimate for Q1 revenue: $31.6 million. Where did they get this number from? Probably the same baseless pie-in-the-sky hopes that you have.

Here's what I think about the upcoming Q1 earnings report. Take a look at page 8 of the recent 10-K, and look at the actual backlog: "As of November 30, 2012, we had backlog of $27,900,000 compared to $28,650,000 as of November 30, 2011."

Now, you may hope that an extra $3.7 million magically dropped into their lap by the time Q1 closed so as to meet analyst estimates, but I doubt it. Especially now since we know that Macy's pulled the plug on ELSE expansion for 2013.

And if you think backlog at year-end is not a good predictor of maximum Q1 revenue, I went back and looked at SEC filings for the past 6 years to show you what happened:

Backlog at 11/25/06 = $16,600,000
Actual revenue for Q1 ending 2/24/07 = $13,814,000

Backlog at 11/30/07 = $18,400,000
Actual revenue for Q1 ending 2/29/08 = $15,210,000

Backlog at 11/30/08 = $19,800,000
Actual revenue for Q1 ending 2/28/09 = $16,482,000

Backlog at 11/30/09 = $23,500,000
Actual revenue for Q1 ending 2/28/10 = $23,184,000

Backlog at 11/30/10 = $22,540,000
Actual revenue for Q1 ending 2/28/11 = $21,180,000

Backlog at 11/30/11 = $28,650,000
Actual revenue for Q1 ending 2/28/12 = $25,962,000

So that's what the record shows. For 6 out of the past 6 years, their backlog at year-end proved to be the upper bound for Q1 revenue. So nevermind what the analysts predict; they obviously haven't looked closely at the 10-K.

Backlog at 11/30/2012 = $27,900,000
Actual revenue for Q1 = ???

My prediction for Q1 revenue is less than $27.5 million (vs. $31m analyst estimate)

Hi bigtex, my only beef with this stock is Crossman's credibility, which, after seven years of blundering, is basically zero. I know he talks a good game, but the history of JOEZ is a history of disappointment after disappointment. As bright as things look today, I assure you things were just as bright at various ponts in the past, only to come to naught. So you'll have to indulge my skepticism.

Consider the current average analyst estimate for Q1 revenue: $31.6 million. Where did they get this number from?

Here's what I think about the upcoming Q1 earnings report. Take a look at page 8 of the recent 10-K, and look at the actual backlog: "As of November 30, 2012, we had backlog of $27,900,000 compared to $28,650,000 as of November 30, 2011."

Now, you may hope that an extra $3.7 million magically dropped into their lap by the time Q1 closed so as to meet analyst estimates, but I doubt it. Especially now since we know that Macy's pulled the plug on ELSE expansion for 2013.

And if you think backlog at year-end is not a good predictor of maximum Q1 revenue, I went back and looked at SEC filings for the past 6 years to show you what happened:

Backlog at 11/25/06 = $16,600,000
Actual revenue for Q1 ending 2/24/07 = $13,814,000

Backlog at 11/30/07 = $18,400,000
Actual revenue for Q1 ending 2/29/08 = $15,210,000

Backlog at 11/30/08 = $19,800,000
Actual revenue for Q1 ending 2/28/09 = $16,482,000

Backlog at 11/30/09 = $23,500,000
Actual revenue for Q1 ending 2/28/10 = $23,184,000

Backlog at 11/30/10 = $22,540,000
Actual revenue for Q1 ending 2/28/11 = $21,180,000

Backlog at 11/30/11 = $28,650,000
Actual revenue for Q1 ending 2/28/12 = $25,962,000

So that's what the numbers show. For 6 out of the past 6 years, their backlog at year-end proved to be the upper bound for Q1 revenue. So nevermind what the analysts predict; they obviously haven't looked closely at the 10-K.

My prediction for Q1 revenue is less than $28 million (vs. $31m analyst estimate).

Hey Gems, if you think Crossman's objectification of women is creepy, you should check out the CEO of American Apparel. Dov Charney takes the cake. He's got a binder full of sexual harassment law suits. I bet he has a closet full of kiddie porn too. Very weird dude. Go to their website and click on the interactive map of their factory in LA. Put your mouse pointer on the roof, click on it, and see what goes on there with Dov's approval. I'm pretty sure he's the one who filmed it too.

I was impressed with the last earnings call and guidance. Jacobs has built up some credibility since his slow start after taking over. Positive EBITDA by Q4 '13 is a big deal. Accomplishing $1B revenue run-rate by year end will add more crediiblity to Jacobs strategy. I wouldn't sell all at this level, as I think the downside is minimized from here. Their continuing progress in scaling both cold starts and acquisitions could justify a $16+ fair value assuming dilution is off the table until they hit $1.5B revenue run-rate sometime in 2014. There is technical risk, as the stock broke below the 50-dma this week, but long term investors would see this as technical weakness and probably add to their positions if volume remains low.

The 200 dma and 52-week low are friends as well.

gems, here is the recent trend in retail same-store sales:

FY 2012
Q1 +22%
Q2 +10%
Q3 +7%
Q4 +6%

These are mostly new stores, and as such they should be doing better than 6% just by virtue of advertising, word of mouth, and repeat business. It's not like they are mature stores. Not even close.

Mpo, thanks for the thoughtful reply. I went to the 7 for All Mankind facebook page. I found one post about a rip in the jeans. I didn't see anyone complaining specifically about a decline in their overall denim quality. Even the guy who had the hole in the jeans thought it was a fluke. He was just looking for some compensation, like a coupon on future purchase. But over at Joe's it seems like a hate fest is going on, the way they are bashing the decline in quality. It's not so much the comments about quality per se that scares me (as that is subjective), but rather the perceived *decline* in quality over time, which is a more objective measure based on empirical user experience. It's hard to argue against that.

At any rate, it's good to know that you've had good experience with Joe's products. Hopefully there are a lot more happy customers like you. I just don't get their facebook page comments. Being a premium brand, I thought Joe's would have very few, if any, negative commentary about basic quality. I was literally shocked. Oh well. It is good to see their number of likes going up at least.

How's that breakout working out for you, Horseshack?

"...I stick with 22 to 30 this is a poweful move"

Yeah, you can stick with it alright. Hope you got a 55-gallon drum of vaseline. hahahhahaha!!!!

Good idea, let's talk ratios. Going back one year, I count exactly zero posts that specifically say the quality of Joe's products has gone up. But I do count four posts that specifically say the quality has gone DOWN. The ratio is 4 - 0 to the negative.

@asazel, Furrow filed his form 4 with the SEC on Thursday evening at 7:38 PM. The next day, the stock was up 7% on large volume. If it were a big deal, the stock would have tanked on Friday. That contrarian movement says something.

Ethan Reynolds
I miss the days of QUALITY Joes Jeans. Every pair I buy now rip/wear so quickly :(
June 28, 2012 at 11:26pm

Ethan Reynolds
As everyone can see I posted this in June, it is now September. Joe's finally did get back to me (earlier this week) - saying that I need to discuss any issues with the original point of purchase. Joe's Jeans "customer service" is pointless and a bit insulting to the customer.
September 6, 2012 at 12:05pm

Angela Stramel
Really disappointed in your jeans. Poor quality denim. Poor customer service. No repeat customer here....
June 20, 2012 at 11:36pm

Adrianna Lublin
I have Joe's legging jeans and the super dark wash is rubbing off on everything! I have been washing them in cold with Woolite but they're still bleeding (and ruining my leather handbags!) Do you recommend soaking them in a vinegar and salt solution like online suggests to seal the color in?
April 16, 2012 at 12:16am near Smithfield, RI

Rebecca Friedberg
Bought a pair at Nordstroms at the end of January. Washed them once. Wore them twice. Tried for three, but this morning they ripped like rotten old fabric when I was getting in the car. Old Navy makes a better quality jean!
March 30, 2012 at 10:21pm

Natalie Rocha
Wearing my Joes for the first time today, and a thread ran like they were a pair of tights causing a huge line down the thigh!! I have never had this happen with jeans before...poor quality?
January 14 at 6:25pm near Los Angeles, CA

Cydni Schaeffler
I love Joes Jeans but after my two favorite pairs ripped in the same spot I refuse to buy another pair so have switched brands. Too bad because I love the jeans.
November 10, 2012 at 10:10pm

June #$%$
I've owned several pairs of Joe's and never even thought of having a quality issue until recent purchase of sweat pants. I bought this a few months ago at Nordstrom and the front and back started peeling a lot just after several weeks of wear. For the price I paid (which I believe it was 145) I definitely expected more so I emailed the customer service and only was told to bring it to the place where it was originally purchased from. I do not have a receipt for 4-month-old pants and this is something I look forward to hearing resolution from Joe's.
August 14, 2012 at 9:04pm near Atlanta, GA

Monique Franklin Murray
I called Joes Jeans this morning explaining that I made a purchase of their $145.00 jeans maybe 5 months ago at their website. there is a hole in the side of the leg and the leather on the pocket has stained the pocket!! I have worn these jeans maybe a dozen times!! I am hoping to have a resolution to this issue!! Will certainly keep this web site updated to their customer service.
August 15, 2012 at 10:25am

Mike Ryan
Dear joe jeans, I have a pair of rebel relaxed fit jeans in black. They have worn though just under the right rear pocket, its about a 3x2 inch spot and completely worn through. I've only had them since April of this year and have worn them about four times. This seem a little suspect of some serious quality issues. I tried e mailing and calling you quality department......no answer. This is my last chance. These were expensive jeans! How about you PM me.
July 3, 2012 at 12:38 AM

Well, I don't know if the switch in manufacturing has anything to do with the complaints, but it seems to be a very recent phenomenon. The latest such complaint came in just Friday. I have compiled a list of all the similar complaints taken from Joe's Facebook page, and will post them in reverse chronolgical order in several posts:

Coralie Caron-Telders
So disappointed! I bought a pair of Stephanie Cigarette jeans (in Paris, France - Bon Marché) in late December, have worn them a few times since January, washed them maybe 3 times and they broke on the knee area!!! Certainly did not expected that to happen on such an expensive pair of jeans!
Friday at 2:59pm near Paris, Ile-de-France

Jessie Berkowitz
Been hearing a lot of similar complaints lately. What's up with the quality assurance system at Joe's?
Yesterday at 6:06am

Michelina Matarrese
I just bought what I thought was the perfect pair of jeans from my new favorite brand, Joe's. Visionaire Skinny in Bordeaux. Damn they looked great. But after the very first washing, the thread disintegrated and they are literally falling apart at the seams. No luck with two calls to Joe's customer service/product issue line, so I'm trying here. What gives, Joe's? Did I get a bad pair, or is this a known issue with these jeans? Service would be appreciated.
February 2 at 11:42pm

Lou Bopp
Is there a Customer Service Dept. at Joe's Jeans? Left VM's & emailed over a week, no response.
My daughters blue denim jeans bleed all over, even after multiple washings. Furniture turns blue, skin turns blue, car seats etc....can't wear them.
January 29 at 10:31am

Diana Horowitz
what happened to the quality of your denim?? you used to be a great product.
i can get better stuff at target. (for much less) seriously LAME. #joesjeansfail
January 23 at 1:50pm near Los Angeles, CA

(part 4)
An original list of 1,000 possible acquisition targets has now been whittled down to about 100, from which the next acquisitions will come. “We won’t buy all of them – we just don’t have the time to do that, but that’s the list we are focused on.”

While truck brokerage remains the largest contributor to revenues, XPO also has freight forwarding and express transport arms, which are expected to grow faster though cold starts and organic means rather than by acquisitions, and Mr Jacobs flatly ruled out buying into the trucking business itself, despite voicing concerns that the US haulage industry is heading for a major capacity crunch in the next few years.

“When I was looking for a new industry to consolidate, I began looking at trucking. I met lots of companies and thought I would buy a bunch of them and create a company in the trucking business worth tens of billions of dollars. But the amount of capital expenditure required was huge. Then I stumbled on truck brokerage and it reminded me of the first company I had in the oil trading business, which was non-asset based, and the returns were far better. It’s best for us to stay non-asset based.

“We don’t need to own the trucks. We have 22,000-plus carriers that we are always talking to and they need our freight. Say a guy has 15 trucks – he certainly doesn’t have a few hundred sales staff going out looking for freight. There is a reason for him to outsource that freight finding capability to us.”

And despite the relative maturity of the US economy Mr Jacobs has ruled out investing abroad, for the time being. “Our freight forwarding arm does international business in ocean and airfreight, but for now the majority of our business will stay in North America because there is such a long runway in front of us. There are so many opportunities to do things here; there are so many people we can hire; and there are so many good companies to buy. Why take the additional risk and uncertainty...

(part 3)
A further three new cold starts are likely to open this year, although he declined to reveal locations, and he forecast that end-of-year revenues would hit $1bn, with another $300m in revenue from further acquisitions and the remainder from growing existing operations and the cold starts. He denied that there was shareholder pressure to deliver profits immediately.

“Our investors have taken the time to study our business plan. They are long-term investors looking for a big kill; they aren’t playing on a short-term momentum,” he said, illustrating why an industry, in which there is considerable scope for consolidation – there are 10,000 licensed truck brokers in the US – has yet to see widescale M&A activity.

“There’s been M&A in this industry, but typically it’s been private equity that buys one or two companies; takes out a bunch of cost; buys it with leverage; plays the cycle and then sells it at the top. There are several successful examples of that, but no one has done it on a large scale because it takes a certain skill set, it takes a certain management team… it takes a certain amount of guts, basically.

“I’m perfectly happy doing that, but it’s not the typical business plan – people typically don’t want to absorb losses before they hit a profit. But we are looking for the big kill, the massive profit that is going to take place over several years,” he said.

In addition, he argued, the nature of the business has meant that few small-to-medium operators have been able grow organically into larger concerns.

“They have been limited by a funny quirk in the way this business works. As you’re growing, your working capital increases because you have to pay the truckers fairly promptly, but you don’t get paid by the shippers until a month after that, so the difference between accounts paid and accounts receivable keeps growing. Prior to the crisis any small company could hold a beauty contest with the banks and get credit: that’s not the case now."

(part 2)
“We are going to grow it. It’s now approaching $30m in revenue and we aim to get that up to $100m in revenue, and that is what is exciting. It has great relationships with manufacturers and distributors and the United States Postal Service, and with over 4,000 carriers,” he said.

“We are focused on growth and what can we do over the next three-to-five years in terms of growing the multiples. If you look at the six companies we have bought, each one of them has a plan in place to scale up dramatically over time. The most attractive aspect is how they can scale up.”

However, he also explained that there was a strategic aspect to the purchase. “When we do an acquisition like Covered, we give it access to our IT and our staff development, but what we get in return is a lot of data – its intelligence on all its carriers and trade lanes.”

And he said that acquisitions had also mitigated the losses incurred by XPO’s investment in organic growth and cold starts. “The acquisitions actually help with profitability because they bring in profits from day one. What dings profitability is organic growth – when we hire people. Unlike my previous job, which was equipment rental where our main use of capital was to buy equipment which you capitalise over five or six years, here you use capital to hire people, which goes onto SG&A [selling, general and administrative] expense and hurts profitability.”

But, he added, that type of investment in people is great for long-term growth. “For the first year and a half of a cold start you lose money while it’s growing, but after that you start showing a really nice return on capital. Ironically, the faster we invest in growth, even though it’s great for the long-term, it hits the short-term profitability.”