VLCM Valcom (MM)

Volcom, Inc. (NASDAQ:VLCM) today announced that total consolidated revenues for the first quarter ended March 31, 2008 increased 58.5% to $80.6 million, compared with $50.8 million in the first quarter of 2007. �It has been an exciting start to the year with our first quarter exceeding our expectations in nearly all aspects of our business,� said Richard Woolcott, Volcom�s president and chief executive officer. �Given the current slow retail environment, we believe these results are a reflection of the power of the brand and our team�s relentless effort to maximize our opportunities in the U.S. and abroad.� In the 2008 first quarter, gross profit as a percentage of total revenues on a consolidated basis was 52.4%, compared with 52.0% in the first quarter of 2007. Operating income for the first quarter of 2008 increased 78.6% to $14.4 million, compared with $8.1 million for the first quarter of 2007. Operating margin for the first quarter of 2008 was 17.9%, compared with 15.9% in the first quarter of 2007. Net income for the first quarter of 2008 increased 70.4% to $9.3�million, or $0.38 per diluted share, compared with $5.5 million, or $0.22 per diluted share for the first quarter of 2007. 2008 Financial Outlook In casting its financial outlook for the second quarter and the full year, Volcom noted a continued overall soft retail environment. Additionally, the company said the strong consolidated results in the first quarter reflected, in part, a shift in planned product shipments from the 2008 second quarter to the first quarter. As such, for the current second quarter, the company anticipates total consolidated revenues of approximately $69 million to $70 million, representing an increase of approximately 20% to 21%. Fully diluted earnings per share are expected to be in the range of $0.16 to $0.17. For the full year of 2008, Volcom has increased its financial outlook and now expects consolidated revenue of between $343 million to $347 million, from previously issued guidance of between $339 million to $344 million. This estimate includes the financial contribution from the acquisition of Electric Visual Evolution in January 2008, as well as a full year�s contribution from the company�s European operation, which was up and running at full capacity in the third quarter of 2007. Earnings per diluted share are expected to be in the range of $1.56 to $1.59, an increase from the previously issued guidance or between $1.50 and $1.53 The company will host a conference call today at approximately 4:30 p.m. EDT to discuss its financial results and outlook in further detail. The conference call will be available to interested parties through a live audio Internet broadcast at www.volcom.com. About Volcom, Inc. Volcom is an innovative designer, marketer and distributor of premium quality young men's and women's clothing, accessories and related products. The Volcom brand, symbolized by The Stone, is athlete-driven, creative and forward thinking. Volcom has consistently followed its motto of �youth against establishment,� and the brand is inspired by the energy of youth culture. Volcom branded products are sold throughout the United States and internationally. Volcom�s news announcements and SEC filings are available through the company�s website at www.volcom.com. Safe Harbor Statement Certain statements in this press release and oral statements made from time to time by representatives of the company are forward-looking statements for purposes of the safe harbor provisions of The Private Securities Litigation Reform Act of 1995, including statements in connection with or related to any discussion of or reference to our future operations, opportunities or financial performance. In particular, statements regarding the company�s guidance and future financial performance contained under the section entitled 2008 Financial Outlook constitute forward-looking statements. These forward-looking statements are based on management�s current expectations but they involve a number of risks and uncertainties. Volcom�s actual results and the timing of events could differ materially from those anticipated in the forward-looking statements as a result of risks and uncertainties, including, without limitation, further softening of the retail environment, sales of our products by key retailers, including Pacific Sunwear and Zumiez, our ability to successfully shift from a licensee model in Europe to a direct control model, changes in fashion trends and consumer preferences, general economic conditions, the impact of trade safeguards with China, and additional factors which are detailed in our filings with the Securities and Exchange Commission, including the Risk Factors contained in the company�s Annual Report on Form 10-K, filed with the Securities and Exchange Commission (the �SEC�) and the subsequently filed Quarterly Reports on Form 10-Q, all of which are available at www.sec.gov. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. Volcom is under no obligation, and expressly disclaims any obligation, to update or alter any forward-looking statements, whether as a result of new information, future events or otherwise. VOLCOM, INC. AND SUBSIDIARIES � CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (in thousands, except share and per share data) � Three Months Ended March 31, � 2008 � � 2007 Revenues: Product revenues $ 79,987 $ 49,425 Licensing revenues � 567 � � 1,393 Total revenues 80,554 50,818 Cost of goods sold � 38,379 � � 24,411 Gross profit 42,175 26,407 Selling, general and administrative expenses � 27,777 � � 18,345 Operating income 14,398 8,062 Other income: Interest income, net 469 1,081 Foreign currency gain (loss) � (156 ) � 39 Total other income � 313 � � 1,120 Income before provision for income taxes 14,711 9,182 Provision for income taxes � 5,371 � � 3,700 Net income $ 9,340 � $ 5,482 � Net income per share: Basic $ 0.38 $ 0.23 Diluted $ 0.38 $ 0.22 Weighted average shares outstanding: Basic 24,326,015 24,273,178 Diluted 24,330,994 24,374,647 VOLCOM, INC. AND SUBSIDIARIES � CONSOLIDATED BALANCE SHEETS (UNAUDITED) (in thousands) � March 31, 2008 � � December 31, 2007 Assets Current assets: Cash and cash equivalents $ 72,031 $ 92,962 Short-term investments 302 � Accounts receivable � net of allowances 66,919 58,270 Inventories 18,958 20,440 Prepaid expenses and other current assets 2,402 1,720 Income taxes receivable � 326 Deferred income taxes � 3,164 � 2,956 Total current assets � 163,776 � 176,674 Property and equipment � net 26,164 24,427 Investments in unconsolidated investees 330 298 Deferred income taxes � 268 Intangible assets � net 23,840 363 Goodwill 2,557 � Other assets � 415 � 464 Total assets $ 217,082 $ 202,494 � Liabilities and Stockholders� Equity Current liabilities: Accounts payable $ 11,175 $ 18,694 Accrued expenses and other current liabilities 13,407 10,561 Income taxes payable 4,429 � Current portion of capital lease obligations � 100 � 72 Total current liabilities � 29,111 � 29,327 Long-term capital lease obligations 92 33 Other long-term liabilities 574 190 Income taxes payable � non-current 91 89 Deferred income taxes 1,249 � Stockholders� equity: Common stock 24 24 Additional paid-in capital 89,422 89,185 Retained earnings 89,566 80,226 Accumulated other comprehensive income � 6,953 � 3,420 Total stockholders� equity � 185,965 � 172,855 Total liabilities and stockholders� equity $ 217,082 $ 202,494 VOLCOM, INC. AND SUBSIDIARIES � CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (in thousands) � Three Months Ended March 31, � 2008 � � � 2007 � Cash flows from operating activities: Net income $ 9,340 $ 5,482 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 1,743 533 Provision for doubtful accounts 163 146 Tax benefits related to exercise of stock options � (173 ) Loss on disposal of property and equipment 16 15 Stock-based compensation 247 210 Deferred income taxes (79 ) (63 ) Changes in operating assets and liabilities, net of effects of acquisition: Accounts receivable (3,138 ) 684 Inventories 5,801 2,032 Prepaid expenses and other current assets (473 ) (986 ) Income taxes receivable/payable 4,632 2,993 Other assets 77 (66 ) Accounts payable (12,810 ) (2,760 ) Accrued expenses 221 1,272 Other long-term liabilities � (112 ) � (4 ) Net cash provided by operating activities � 5,628 � � 9,315 � � Cash flows from investing activities: Purchase of property and equipment (1,026 ) (6,458 ) Business acquisition, net of cash acquired (26,856 ) � Purchase of intangible assets (300 ) � Purchase of short-term investments (281 ) � Purchase of additional shares in cost method investee (32 ) � Proceeds from sale of property and equipment � � � � 15 � Net cash used in investing activities � (28,495 ) � (6,443 ) � Cash flows from financing activities: Principal payments capital lease obligations (46 ) (20 ) Proceeds from government grants 463 � Proceeds from exercise of stock options � 465 Tax benefits related to exercise of stock options � � � � 173 � Net cash provided by financing activities � 417 � � 618 � � Effect of exchange rate changes on cash � 1,519 � � 64 � � Net increase in cash and cash equivalents (20,931 ) 3,554 Cash and cash equivalents � Beginning of period � 92,962 � � 85,414 � Cash and cash equivalents � End of period $ 72,031 � $ 88,968 �