Volcom, Inc. (NASDAQ: VLCM) today announced financial results
for the third quarter ended September 30, 2010.
For the 2010 third quarter, total consolidated revenues were
$104.7 million, compared with $93.9 million in the third 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 $64.5 million, compared with $56.8 million in
the prior-year period. Total revenues in the company’s Europe
segment were $28.7 million, compared with $30.2 million in the same
period in 2009. Total revenues in the company’s Electric segment
were $8.9 million, compared with $6.9 million in 2009. Total
revenues in the company’s Australia segment were $2.6 million.
“Our results for the third quarter are in line with our plan and
reinforce our strategy to gain market share on a global level,”
said Richard Woolcott, Volcom’s chairman and chief executive
officer. “During the first nine-months of this year, we have
experienced solid revenue growth in our mens and boys categories,
and our business with our core retailers remains very healthy. In
other activities, we have launched major branding initiatives,
acquired our Australian licensee, acquired distribution operations
in Spain, and launched our e-commerce business. We are encouraged
by the momentum thus far and I am proud of our team’s focus and
dedication to building Volcom into a world brand.”
Woolcott also noted that given the company’s continued cash flow
from operations, strong balance sheet and no long-term debt,
Volcom’s Board of Directors has determined that a special cash
dividend was appropriate and supports the company’s commitment to
providing shareholder value.
Consolidated gross profit for the 2010 third quarter was $51.9
million, equal to 49.6% of total revenues, compared with $48.5
million, equal to 51.6% of total revenues, in the third quarter of
2009.
Selling, general and administrative expenses on a consolidated
basis were $33.9 million in the 2010 third quarter versus $28.8
million in the comparable period in 2009.
Net income for the 2010 third quarter was $13.1 million, or
$0.53 per diluted share, compared with $13.3 million, or $0.54 per
diluted share, in the third quarter of 2009.
At September 30, 2010 the company had cash, cash equivalents and
short-term investments totaling $105 million, and no long-term
debt.
Special Dividend
The company also announced that on October 27, the Board of
Directors approved a special cash dividend of $1.00 per share
payable on each share of the company’s outstanding common stock,
including any unvested shares of restricted common stock. The
special dividend will be payable on November 19, 2010 to
stockholders of record at the close of business on November 8,
2010. In accordance with NASDAQ rules, the company’s common stock
will start trading on an ex-dividend basis beginning November 4,
2010. The aggregate amount of payments to be made in connection
with the special dividend will be approximately $24.4 million.
2010 Fourth Quarter Financial Outlook
For the 2010 fourth quarter, the company currently expects total
consolidated revenues of approximately $76 million to $79 million,
and fully diluted earnings per share amounts in the range of $0.04
to $0.07.
Giving effect to the company’s current outlook for the 2010
fourth quarter, Volcom’s full year consolidated revenue expectation
is between $321 million and $324 million. This translates to
diluted earnings per share for 2010 in the range of $0.89 to
$0.92.
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, Friday, November 5. Listeners should call
(800) 642-1687 (domestic) or (706) 645-9291 (international) and use
reservation number 15128955.
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 Fourth Quarter Financial
Outlook are 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, 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.
(tables follow)
VOLCOM, INC. AND SUBSIDIARIES CONSOLIDATED
STATEMENTS OF OPERATIONS (UNAUDITED) (in thousands, except
share and per share data) Three Months
Ended Nine Months Ended September 30,
September 30, 2010
2009 2010
2009 Revenues: Product revenues $ 104,213 $
93,356 $ 243,196 $ 215,103 Licensing revenues
445 560 1,426
1,348 Total revenues 104,658 93,916 244,622
216,451 Cost of goods sold
52,797
45,433 120,933
107,232 Gross profit 51,861 48,483 123,689 109,219
Selling, general and administrative expenses
33,884 28,825
94,657 82,710 Operating income
17,977 19,658 29,032 26,509 Other income: Interest income, net 66
127 272 229 Gain on investment in unconsolidated investee 39 — 39 —
Foreign currency gain
1,256
222 1,179 991
Total other income
1,361
349 1,490
1,220 Income before provision for income taxes 19,338
20,007 30,522 27,729 Provision for income taxes
6,285 6,750
9,868 9,381 Net income
$ 13,053 $
13,257 $ 20,654
$ 18,348 Net income per share:
Basic $ 0.54 $ 0.54 $ 0.85 $ 0.75 Diluted $ 0.53 $ 0.54 $ 0.85 $
0.75 Weighted average shares outstanding: Basic 24,396,899
24,354,208 24,377,222 24,350,725 Diluted 24,431,095 24,367,464
24,421,970 24,361,034
VOLCOM, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED) (in
thousands) September 30, 2010
December 31, 2009 Assets Current
assets: Cash and cash equivalents $ 104,950 $ 76,180 Short-term
investments --- 35,000 Accounts receivable — net of allowances
81,821 53,792 Inventories 37,024 33,250 Prepaid expenses and other
current assets 9,404 4,353 Income taxes receivable --- 725 Deferred
income taxes
8,212 7,700
Total current assets
241,411
211,000 Property and equipment — net 26,543 26,348
Investment in unconsolidated investee --- 330 Deferred income taxes
3,535 3,545 Intangible assets — net 10,235 9,784 Goodwill 1,341
1,291 Other assets
1,134
735 Total assets
$ 284,199
$ 253,033 Liabilities and
Stockholders’ Equity Current liabilities: Accounts payable $
24,328 $ 22,788 Accrued expenses and other current liabilities
15,168 9,957 Income taxes payable 3,422 --- Current portion of
capital lease obligations
17
50 Total current liabilities
42,935 32,795 Long-term capital
lease obligations 27 --- Other long-term liabilities 1,257 1,203
Income taxes payable – non-current 23 68 Stockholders’ equity:
Common stock 24 24 Additional paid-in capital 94,279 92,192
Retained earnings 144,334 123,679 Accumulated other comprehensive
income
1,320 3,072 Total
stockholders’ equity
239,957
218,967 Total liabilities and stockholders’ equity
$ 284,199 $
253,033 VOLCOM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands) Nine Months Ended
September 30, 2010
2009 Cash flows from operating
activities: Net income $ 20,654 $ 18,348 Adjustments to
reconcile net income to net cash provided by operating activities:
Depreciation and amortization 4,645 5,034 Gain on investment in
unconsolidated investee (39 ) — Provision for doubtful accounts 173
2,434 Excess tax benefits related to exercise of stock options (51
) — Loss on disposal of property and equipment 35 3 Stock-based
compensation 1,514 1,246 Deferred income taxes (487 ) (963 )
Changes in operating assets and liabilities, net of effects of
acquisition: Accounts receivable (24,562 ) (13,574 ) Inventories
376 5,032 Prepaid expenses and other current assets (4,149 ) (407 )
Income taxes receivable/payable 4,182 6,683 Other assets (351 ) 31
Accounts payable 800 (5,445 ) Accrued expenses and other current
liabilities 4,035 1,040 Other long-term liabilities
72 (96 ) Net
cash provided by operating activities
6,847
19,366 Cash flows from
investing activities: Purchase of property and equipment (4,286
) (3,406 ) Business acquisitions, net of cash acquired (2,304 )
(897 ) Purchase of short-term investments (20,000 ) (64,933 ) Sale
of short-term investments 55,000 24,944 Proceeds from sale of
property and equipment
38
6 Net cash provided by (used in) investing
activities
28,448
(44,286 ) Cash flows from
financing activities: Principal payments capital lease
obligations (12 ) (65 ) Proceeds from exercise of stock options 523
— Excess tax benefits related to exercise of stock options
51 — Net cash
provided by (used in) financing activities
562
(65 ) Effect of
exchange rate changes on cash
(7,087
) 4,701 Net
increase (decrease) in cash and cash equivalents 28,770 (20,284
)
Cash and cash equivalents — Beginning of period
76,180 79,613
Cash and cash equivalents — End of period
$
104,950 $ 59,329
VOLCOM, INC. AND SUBSIDIARIES
OPERATING SEGMENT INFORMATION (UNAUDITED) (in
thousands) Three Months Ended
Nine Months Ended September 30, September 30,
2010 2009
2010 2009
Total revenues: United States $ 64,487 $ 56,769 $ 163,513 $
142,839 Europe 28,672 30,250 57,420 57,814 Electric 8,911 6,897
21,101 15,798 Australia
2,588
--- 2,588 ---
Consolidated
$ 104,658
$ 93,916 $
244,622 $ 216,451
Gross profit: United States $ 29,261 $ 28,350 $ 77,409 $
69,874 Europe 15,971 16,016 32,611 30,457 Electric 5,466 4,117
12,506 8,888 Australia
1,163
--- 1,163 ---
Consolidated
$ 51,861
$ 48,483 $
123,689 $ 109,219
Operating income (loss): United States $ 6,354 $ 9,017 $
11,624 $ 13,801 Europe 9,653 9,730 14,725 13,306 Electric 1,885 911
2,598 (598 ) Australia
85
--- 85 ---
Consolidated
$ 17,977
$ 19,658 $
29,032 $ 26,509
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