Volcom, Inc. (NASDAQ:VLCM) today announced financial results for
the fourth quarter and full year ended December 31, 2010. The
company also said it has signed a definitive agreement to purchase
the assets related to the operation of the 10 existing Volcom
outlet stores from a licensee.
For the 2010 fourth quarter, total consolidated revenues
increased 22.4% to $78.6 million, compared with $64.2 million in
the fourth quarter of 2009. Total revenues in the company’s U.S.
segment were $54.3 million, compared with $46.0 million in the
prior-year period. Total revenues in the company’s Europe segment
were $12.8 million, compared with $12.9 million in the same period
in 2009. Total revenues in the company’s Electric segment were $6.4
million, compared with $5.3 million in 2009. Total revenues in the
company’s Australia segment were $5.1 million.
“Our results for the fourth quarter and full year were on target
and reflect a commendable year for the Volcom and Electric teams,”
said Richard Woolcott, Volcom’s chairman and chief executive
officer. “We made significant gains throughout 2010 driving revenue
growth and capturing market share for our brands on a global basis
as we further positioned ourselves to compete in the years ahead.
Volcom and Electric have solid growth opportunities that are
achievable and centered on our abilities to develop innovative,
quality products rooted in our heritage sports and lifestyle. As we
attack 2011, I am confident in our plan and very proud of our
dedicated and growing team.”
Consolidated gross profit for the 2010 fourth quarter was $35.3
million, equal to 45.0% of total revenues, compared with $31.6
million, equal to 49.2% of total revenues, in the fourth quarter of
2009. The decrease in consolidated gross margin reflected lower
gross margin in the U.S. segment, offset somewhat by higher gross
margin in the company’s Electric segment.
Selling, general and administrative expenses on a consolidated
basis were $34.0 million in the 2010 fourth quarter versus $28.1
million in the comparable period in 2009.
Net income for the 2010 fourth quarter was $1.6 million, or
$0.07 per diluted share, compared with $3.4 million, or $0.14 per
diluted share, in the fourth quarter of 2009.
At December 31, 2010 the company had cash, cash equivalents and
short-term investments totaling $90.3 million, and no long-term
debt. Total stockholders’ equity was $217.0 million at
year-end.
Volcom to Purchase Outlet Stores
As part of the company’s direct to consumer strategy, Volcom has
signed a definitive agreement to terminate the current Volcom
outlet license agreement and purchase the assets related to the
operation of the 10 existing Volcom outlet stores, which are
located in California (4), Nevada (3), Washington (2) and Utah (1).
The company anticipates completing the transaction by mid-2011.
Terms of the transaction were not disclosed.
2011 First Quarter and Full Year Financial Outlook
For the 2011 first quarter, the company currently expects total
consolidated revenue of approximately $83 million to $86 million
(representing year-over-year growth of between 7% to 11%), and
fully diluted earnings per share amounts in the range of $0.16 to
$0.19.
In casting its financial outlook for the full year, Volcom noted
it expects total consolidated revenue of approximately $366 million
to $371 million (representing year-over-year growth of between 13%
to 15%), and fully diluted earnings per share in the range of $1.08
to $1.14.
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, March 4. Listeners should call (800)
642-1687 (domestic) or (706) 645-9291 (international) and use
reservation number 39610702.
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 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 2011 First Quarter and Full
Year 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, 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 Ended
December 31,
Year Ended
December 31,
2010
2009 2010
2009 Revenues: Product revenues $ 78,218
$ 63,495 $ 321,414 $ 278,598 Licensing revenues
340 693 1,767
2,041 Total revenues 78,558 64,188 323,181
280,639 Cost of goods sold
43,227
32,612 164,161
139,844 Gross profit 35,331 31,576 159,020 140,795
Selling, general and administrative expenses
34,010 28,137
128,667 110,847 Operating income
1,321 3,439 30,353 29,948 Other income: Interest income, net 42 129
314 358 Gain on investment in unconsolidated investee 59 — 98 —
Foreign currency gain
885
543 2,065
1,534 Total other income
986
672 2,477
1,892 Income before provision for income taxes 2,307
4,111 32,830 31,840 Provision for income taxes
672 714 10,540
10,096 Net income
$
1,635 $ 3,397 $
22,290 $ 21,744 Net
income per share: Basic $ 0.07 $ 0.14 $ 0.91 $ 0.89 Diluted $ 0.07
$ 0.14 $ 0.91 $ 0.89 Weighted average shares outstanding: Basic
24,401,368 24,356,362 24,390,705 24,352,146 Diluted 24,475,529
24,369,761 24,442,807 24,363,544
VOLCOM, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in thousands)
December 31, 2010
December 31, 2009 Assets Current assets:
Cash and cash equivalents $ 80,300 $ 76,180 Short-term investments
9,987 35,000 Accounts receivable — net of allowances 66,542 53,792
Inventories 41,449 33,250 Prepaid expenses and other current assets
5,997 4,353 Income taxes receivable 1,170 725 Deferred income taxes
9,326 7,700 Total current
assets
214,771 211,000
Property and equipment — net 26,652 26,348 Investment in
unconsolidated investee --- 330 Deferred income taxes 2,651 3,545
Intangible assets — net 10,872 9,784 Goodwill 1,610 1,291 Other
assets
1,003 735 Total
assets
$ 257,559 $
253,033 Liabilities and Stockholders’
Equity Current liabilities: Accounts payable $ 22,902 $ 22,788
Accrued expenses and other current liabilities 16,162 9,957 Current
portion of capital lease obligations
19
50 Total current liabilities
39,083 32,795 Long-term capital
lease obligations 23 --- Other long-term liabilities 1,261 1,203
Income taxes payable – non-current 131 68 Deferred income taxes –
non-current 103 --- Stockholders’ equity: Common stock 24 24
Additional paid-in capital 94,733 92,192 Retained earnings 121,555
123,679 Accumulated other comprehensive income
646 3,072 Total stockholders’
equity
216,958 218,967
Total liabilities and stockholders’ equity
$
257,559 $ 253,033
VOLCOM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in thousands)
Year Ended
December 31,
2010
2009 Cash flows from operating
activities: Net income $ 22,290 $ 21,744 Adjustments to
reconcile net income to net cash provided by operating activities:
Depreciation and amortization 6,336 6,360 Gain on investment in
unconsolidated investee (98 ) — Provision for doubtful accounts 703
2,490 Excess tax benefits related to exercise of stock options (54
) — Loss on disposal of property and equipment 26 77 Asset
impairments 41 134 Stock-based compensation 1,940 1,795 Deferred
income taxes (609 ) (2,277 ) Changes in operating assets and
liabilities, net of effects of acquisition: Accounts receivable
(9,691 ) 5,241 Inventories (6,414 ) (5,838 ) Prepaid expenses and
other current assets (732 ) (1,759 ) Income taxes
receivable/payable (312 ) 2,485 Other assets (208 ) 103 Accounts
payable (318 ) 7,126 Accrued expenses and other current liabilities
4,857 (1,623 ) Other long-term liabilities
80
151 Net cash provided by
operating activities
17,837
36,209 Cash flows from investing
activities: Purchase of property and equipment (5,882 ) (4,798
) Business acquisitions, net of cash acquired (3,322 ) (890 )
Purchase of short-term investments (29,987 ) (74,932 ) Sale of
short-term investments 55,000 39,932 Proceeds from sale of property
and equipment
125 18
Net cash provided by (used in) investing activities
15,934 (40,670
) Cash flows from financing activities:
Principal payments on capital lease obligations (16 ) (83 ) Payment
of dividends to stockholders (24,414 ) — Proceeds from exercise of
stock options 548 — Excess tax benefits related to exercise of
stock options
54 —
Net cash used in financing activities
(23,828 ) (83
) Effect of exchange rate changes on cash
(5,823 ) 1,111
Net increase (decrease) in cash and cash
equivalents 4,120 (3,433 )
Cash and cash equivalents —
Beginning of period
76,180
79,613 Cash and cash equivalents — End
of period
$ 80,300 $
76,180
VOLCOM, INC. AND SUBSIDIARIES
OPERATING SEGMENT INFORMATION
(UNAUDITED)
(in thousands)
Three Months Ended
December 31,
Year Ended
December 31,
2010
2009 2010
2009 Total revenues:
United States $ 54,297 $ 46,017 $ 217,811 $ 188,856 Europe 12,809
12,872 70,229 70,686 Electric 6,387 5,299 27,488 21,097 Australia
5,065 ---
7,653 ---
Consolidated
$ 78,558
$ 64,188 $
323,181 $ 280,639
Gross profit: United States $ 23,028 $ 22,482 $ 100,437 $
92,356 Europe 6,437 6,309 39,048 36,766 Electric 3,678 2,785 16,184
11,673 Australia
2,188
--- 3,351
--- Consolidated
$
35,331 $ 31,576
$ 159,020 $
140,795 Operating income (loss): United States
$ 1,713 $ 4,030 $ 13,337 $ 17,831 Europe (502 ) 223 14,223 13,529
Electric (201 ) (814 ) 2,397 (1,412 ) Australia
311 ---
396 --- Consolidated
$ 1,321 $
3,439 $ 30,353
$ 29,948
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