COSTA MESA, Calif.--(BUSINESS WIRE)--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 | ||||||