Quiksilver, Inc. reported revenues inched up 2.1 percent in the second quarter, to $478.1 million, but lost $83.3 million due largely to a major goodwill impairment charge and valuation allowances related to its Asia Pacific business. Pro-forma Adjusted EBITDA of $62.1 million was higher than the company’s expectations and was roughly the same as a year ago.
Consolidated gross profit reached $262.2 million, up 5 percent from the second quarter of fiscal 2010 as gross margin expanded 160 basis points to a second quarter record of 54.8 percent of revenues.
Pro-forma income from continuing operations was $17.3 million, or 9 cents a share, compared to $15.7 million in the second quarter of fiscal 2010. Pro-forma income for the second quarter of fiscal 2011 primarily excludes a $74.1 million non-cash goodwill impairment charge and valuation allowances provided against tax assets totaling $26.0 million related to the Asia Pacific region.
Including the impairment charges and valuation allowances, the loss was $83.3 million, or 51 cents per share, compared to income from continuing operations of $8.8 million, or 6 cents per share, for the second quarter of fiscal 2010.
The company’s net debt at April 30 reduced 19 percent from a year ago to $594 million.
Robert B. McKnight, Jr., chairman, chief executive officer and president of Quiksilver, Inc., commented, “We are pleased with our operating results for the quarter, and in particular with our return to overall revenue growth and our record gross margins. Our Americas and European businesses delivered strong performances, although our business in Asia Pacific was affected by the natural disasters occurring in several of our markets. While global markets remain uneven, we are seeing some really encouraging signs for the future. For example, this was our second consecutive quarter of strong double digit comp store sales in the U.S., and, for the first time in a while, we are seeing growth in our fall/winter order books for Roxy, which remains the world’s largest and most respected girls action sports brand. So the initiatives weve set into motion are gaining traction and we remain on track to successfully transition to stronger growth in the future.”
Net revenues in the Americas increased 5 percent during the second quarter of fiscal 2011 to $210.7 million from $199.7 million in the second quarter of fiscal 2010. As measured in U.S. dollars and reported in the financial statements, European net revenues decreased 1 percent during the second quarter of fiscal 2011 to $206.9 million from $208.7 million in the second quarter of fiscal 2010. In constant currency, European segment net revenues decreased 4 percent compared to the prior year. As measured in U.S. dollars and reported in the financial statements,
Asia/Pacific net revenues decreased 1 percent during the second quarter of fiscal 2011 to $58.1 million from $58.6 million in the second quarter of fiscal 2010. In constant currency, Asia/Pacific segment net revenues decreased 12 percent compared to the prior year.
The company reduced its net debt by 19 percent to $594 million compared to $733 million a year ago.
Q2 Brand Highlights
- Quiksilver announced the re-signing of 25-year-old surfer Dane Reynolds to a 6-year deal to continue riding for the Quiksilver surf team and to contribute to the design and development of a new signature line of products. Dane is thought by many to be the most influential surfer in the world today.
- Quiksilver also announced the re-signing of 23-year old French surfer Jeremy Flores to a new endorsement contract. Sponsored by Quiksilver since the age of 9, Jeremy was the youngest surfer ever to qualify for the ASP (Association of Surfing Professionals) World Tour in 2007. In December, Jeremy became the first European surfer to win the prestigious Pipe Masters contest in Hawaii, which helped him to finish 9th in the ASP World Tour rankings last year.
- Australian Roxy surfer Sally Fitzgibbons has won two of the first five events in the 2011 ASP Women’s World Tour and is currently ranked #2 in the world. Sally’s next opportunity to improve upon her current standing will be in July at the Roxy Pro in Biarritz, France.
- The Street League DC Pro Tour had a very successful kick-off in Seattle to its second season of skateboarding competitions. The finals were carried live on ESPN and the next event is slated for June 11-12 in Kansas City.
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CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
|
|||||||
| Three Months Ended April 30, | |||||||
| In thousands, except per share amounts |
2011
|
2010
|
|||||
| Revenues, net | $ | 478,093 | $ | 468,289 | |||
| Cost of goods sold | 215,924 | 219,002 | |||||
| Gross profit | 262,169 | 249,287 | |||||
| Selling, general and administrative expense | 216,748 | 213,416 | |||||
| Asset impairments | 74,610 |
|
|||||
| Operating (loss) income | (29,189 | ) | 35,871 | ||||
| Interest expense | 15,096 | 21,039 | |||||
| Foreign currency gain | (2,321 | ) | (4,614 | ) | |||
| Other income |
|
(5 | ) | ||||
| (Loss) income before provision for income taxes | (41,964 | ) | 19,451 | ||||
| Provision for income taxes | 39,690 | 9,419 | |||||
| (Loss) income from continuing operations | (81,654 | ) | 10,032 | ||||
| Income from discontinued operations |
|
602 | |||||
| Net (loss) income | (81,654 | ) | 10,634 | ||||
| Less: net income attributable to non-controlling interest | (1,671 | ) | (1,210 | ) | |||
| Net (loss) income attributable to Quiksilver, Inc. | $ | (83,325 | ) | $ | 9,424 | ||
| (Loss) income per share from continuing operations attributable to Quiksilver, Inc. | $ | (0.51 | ) | $ | 0.07 | ||
| Income per share from discontinued operations attributable to Quiksilver, Inc. | $ |
|
$ | 0.00 | |||
| Net (loss) income per share attributable to
Quiksilver, Inc.
|
$ | (0.51 | ) | $ | 0.07 | ||
| (Loss) income per share from continuing operations attributable to Quiksilver, Inc., assuming dilution | $ | (0.51 | ) | $ | 0.06 | ||
| Income per share from discontinued operations attributable to Quiksilver, Inc., assuming dilution | $ |
|
$ | 0.00 | |||
| Net (loss) income per share attributable to
Quiksilver, Inc., assuming dilution
|
$ | (0.51 | ) | $ | 0.06 | ||
| Weighted average common shares outstanding | 162,268 | 128,090 | |||||
| Weighted average common shares outstanding,
assuming dilution
|
162,268 | 145,376 | |||||
| Amounts attributable to Quiksilver, Inc.: | |||||||
| (Loss) income from continuing operations | $ | (83,325 | ) | $ | 8,822 | ||
| Income from discontinued operations | 602 | ||||||
| Net (loss) income | $ | (83,325 | ) | $ | 9,424 | ||
