Volcom, Inc. fourth quarter revenues increased 37.2% to $56.6 million, compared with $41.2 million in the fourth quarter of 2005. Net income for the fourth quarter of 2006, which includes a provision for income taxes using a 39.4% tax rate, increased to $7.6 million, or 31 cents per diluted share.
“Im very proud of our results for 2006,” said Richard Woolcott, Volcoms president and chief executive officer. “This success is a direct reflection of the strength of our team and the power of the Volcom brand.”
In the 2006 fourth quarter, gross profit as a percentage of total revenues was 47.2% compared with 48.8% in the fourth quarter of 2005.
Operating income for the fourth quarter of 2006 increased 26.1% to $11.7 million, compared with $9.3 million for the fourth quarter of 2005. Operating margin for the fourth quarter of 2006 was 20.6% compared with 22.5% in the fourth quarter of 2005.
Total revenues for the full year 2006 increased 28.3% to $205.3 million from $160.0 million in 2005. For the year, gross profit as a percentage of total revenues was 49.7% compared with 50.8% in 2005. Operating income for 2006 increased 13.6% to $43.6 million, compared with $38.4 million for 2005. Operating margin was 21.2% for 2006, compared with 24.0% in 2005.
Net income for the full year 2006, which includes a provision for income taxes using a 39.7% tax rate, totaled $28.8 million, or $1.18 per diluted share.
In connection with the completion of its initial public offering, during 2005 the company changed its tax status from an S corporation to a C corporation. As a result, the company recorded a provision for income taxes for the fourth quarter of 2005 using a 27.2% tax rate, which reflected the rate necessary to bring the provision for income taxes in line with the companys 2005 annual tax rate of 26.5%. The company recorded a provision for income taxes using a 39.4% tax rate for the fourth quarter of 2006 and a 39.7% tax rate for the full year 2006.
For 2007, the company expects total revenues to grow approximately 34% to 36% over last year, resulting in sales of $275 to $280 million. Earnings per diluted share is expected to be in the range of $1.44 to $1.47. This guidance assumes that a greater than historical percentage of earnings will occur in the second half of the year when the companys European operations begin to recognize product revenues. For the first half of 2007, the company will continue to receive royalty revenue based on sales by the companys current European licensee.
For the 2007 first quarter, the company anticipates revenues will be approximately $48 to $49 million, an increase of 15% to 18% over revenues for the first quarter of 2006. Earnings per diluted share is expected to be in the range of $0.15 to $0.16, which earnings per diluted share amount includes an anticipated loss in Europe for the first quarter of approximately $0.06.