VLCM Valcom (MM)

Volcom, Inc. (NASDAQ:VLCM) today announced financial results for the first quarter ended March 31, 2010.

For the 2010 first quarter, total consolidated revenues were $77.4 million, compared with $68.3 million in the first quarter of 2009. Total revenues in the company’s U.S. segment, which includes revenues from the U.S., Canada, Japan and most other international territories outside of Europe, as well as the company’s branded retail stores, were $48.2 million, compared with $42.4 million in the prior-year period. Total revenues in the company’s Europe segment were $23.6 million, compared with $21.7 million in the same period in 2009. Total revenues in the company’s Electric segment were $5.6 million, compared with $4.2 million in 2009.

“Our results for the quarter were stronger than we had anticipated, representing a solid start to the year and continued strength for both the Volcom and Electric brands,” said Richard Woolcott, Volcom’s chairman and chief executive officer. “Combined with great product, focused marketing and solid distribution, we believe we are well positioned to capitalize on the many opportunities before us and pave the way for continued growth and success.”

Consolidated gross profit for the 2010 first quarter was $42.0 million, equal to 54.2% of total revenues, compared with $34.4 million, equal to 50.3% of total revenues, in the first quarter of 2009.

Selling, general and administrative expenses on a consolidated basis were $31.0 million in the 2010 first quarter versus $28.0 million in the comparable period in 2009.

Net income for the 2010 first quarter was $7.5 million, equal to $0.31 per diluted share, compared with $4.2 million, or $0.17 per diluted share, in the first quarter of 2009

At March 31, 2010 the company had cash, cash equivalents and short-term investments totaling $109 million, and no long-term debt.

2010 Second Quarter Financial Outlook

For the 2010 second quarter, the company currently expects total consolidated revenues of approximately $59 million to $62 million and per share amounts to range from a loss of $0.02 to earnings of $0.02.

Conference Call Information

The company will host a conference call today at approximately 4:30 p.m. ET 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. A telephone playback of the conference call also will be available through 11:59 p.m. ET, Thursday, May 6. Listeners should call (877) 941-6009 (domestic) or (480) 629-9770 (international) and use reservation number 4282599.

About Volcom, Inc.

Volcom is an innovative designer, marketer and distributor of premium quality young mens and womens 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 Volcom’s future operations, opportunities or financial performance. In particular, statements regarding the company’s guidance and future financial performance contained under the section entitled 2010 Second Quarter Financial Outlook and Mr. Woolcott’s comments regarding the company being “well positioned to capitalize on the many opportunities before us” and his comments regarding “continued growth and success.” 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, changes in fashion trends and consumer preferences, general economic conditions, the impact of sourcing costs, 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 EndedMarch 31,

 

2010           2009 Revenues: Product revenues $ 76,834 $ 67,944 Licensing revenues   586     375 Total revenues 77,420 68,319 Cost of goods sold   35,425     33,937 Gross profit 41,995 34,382 Selling, general and administrative expenses   31,008     28,034 Operating income 10,987 6,348 Other income: Interest income, net 109 33 Foreign currency (loss) gain   (10 )   118 Total other income   99     151 Income before provision for income taxes 11,086 6,499 Provision for income taxes   3,552     2,279 Net income $ 7,534   $ 4,220   Net income per share: Basic $ 0.31 $ 0.17 Diluted $ 0.31 $ 0.17 Weighted average shares outstanding: Basic 24,356,857 24,347,857 Diluted 24,376,971 24,357,044    

VOLCOM, INC. AND SUBSIDIARIES

 

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(in thousands)

              March 31, 2010             December 31, 2009

Assets

Current assets: Cash and cash equivalents $ 63,992 $ 76,180 Short-term investments 45,000 35,000 Accounts receivable — net of allowances 59,679 53,792 Inventories 26,233 33,250 Prepaid expenses and other current assets 5,204 4,353 Income taxes receivable -- 725 Deferred income taxes   7,915   7,700 Total current assets   208,023   211,000 Property and equipment — net 25,640 26,348 Investments in unconsolidated investees 330 330 Deferred income taxes 3,541 3,545 Intangible assets — net 9,562 9,784 Goodwill 1,254 1,291 Other assets   792   735 Total assets $ 249,142 $ 253,033   Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 10,627 $ 22,788 Accrued expenses and other current liabilities 10,123 9,957 Income taxes payable 2,691 -- Current portion of capital lease obligations   20   50 Total current liabilities   23,461   32,795 Other long-term liabilities 1,200 1,203 Income taxes payable – non-current 68 68 Stockholders’ equity: Common stock 24 24 Additional paid-in capital 92,731 92,192 Retained earnings 131,213 123,679 Accumulated other comprehensive income   445   3,072 Total stockholders’ equity   224,413   218,967 Total liabilities and stockholders’ equity $ 249,142 $ 253,033  

VOLCOM, INC. AND SUBSIDIARIES

 

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(in thousands)

 

 

         

Three Months EndedMarch 31,

 

2010           2009 Cash flows from operating activities: Net income $ 7,534 $ 4,220 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 1,517 1,765 Provision for doubtful accounts (217 ) 1,113 Loss on disposal of property and equipment 3 4 Stock-based compensation 550 246 Deferred income taxes (201 ) (78 ) Changes in operating assets and liabilities: Accounts receivable (8,010 ) (473 ) Inventories 6,532 4,135 Prepaid expenses and other current assets (904 ) 392 Income taxes receivable/payable 3,488 2,273 Other assets (69 ) 37 Accounts payable (11,608 ) (4,802 ) Accrued expenses 140 (2,792 ) Other long-term liabilities   14     (30 ) Net cash (used in) provided by operating activities   (1,231 )   6,010     Cash flows from investing activities: Purchase of property and equipment (1,005 ) (734 ) Business acquisitions, net of cash acquired — (794 ) Purchase of short-term investments (20,000 ) (24,944 ) Sale of short-term investments   10,000     —   Net cash used in investing activities   (11,005 )   (26,472 )   Cash flows from financing activities: Principal payments on capital lease obligations   (4 )   (18 ) Net cash used in financing activities   (4 )   (18 )   Effect of exchange rate changes on cash   52     814     Net decrease in cash and cash equivalents (12,188 ) (19,666 ) Cash and cash equivalents — Beginning of period   76,180     79,613   Cash and cash equivalents — End of period $ 63,992   $ 59,947      

VOLCOM, INC. AND SUBSIDIARIES

 

OPERATING SEGMENT INFORMATION (UNAUDITED)

(in thousands)

                 

Three Months EndedMarch 31,

 

2010                   2009 Total revenues: United States $ 48,179 $ 42,420 Europe 23,626 21,678 Electric   5,615   4,221   Consolidated $ 77,420 $ 68,319     Gross profit: United States $ 24,224 $ 20,275 Europe 14,277 11,807 Electric   3,494   2,300   Consolidated $ 41,995 $ 34,382    

Operating income (loss):

 

 

United States

$

2,744

$

1,471

Europe

7,977

5,792

Electric

 

266

 

(915

)

Consolidated

$

10,987

$

6,348