Quiksilver, Inc. saw consolidated net revenues for the first quarter of fiscal 2006 increase 58% to $541.1 from $342.9 million during the same period last year. Consolidated net income for the quarter increased 31% to $18.6 million from $14.2 million the year before. Consolidated net income for the first quarter of fiscal 2006 includes $4.1 million in stock compensation expense required by current accounting standards. No stock compensation expense was recorded in the first quarter of fiscal 2005. First quarter fully diluted earnings per share were 15 cents, up from 12 cents for the first quarter of fiscal 2005, as adjusted for the two-for-one stock split that took effect in May 2005. Earnings per share on a fully diluted basis, excluding stock compensation expense, was 18 cents for the first quarter of fiscal 2006, in line with the company's previous guidance. The 3 cents difference between 18 cents per share excluding stock compensation expense and actual earnings per share of 15 cents per share is determined by dividing $4.1 million, which is the tax-effected stock compensation expense, by 127.2 million weighted average common shares outstanding, assuming dilution.
Net revenues from the company's newly acquired Rossignol and Cleveland Golf businesses totaled $192 million during the first quarter ended January 31, 2006.
Robert B. McKnight, Jr., Chairman of the Board and Chief Executive Officer of Quiksilver, Inc., commented, “This was an exciting quarter for our organization. Our core business, including Quiksilver, Roxy and DC shoes, was strong in both the US and Europe, and we were pleased that the Rossignol integration continues to track according to plan. We recently had the tremendous opportunity to be involved with the Olympic Games. We are also incredibly proud that Kelly Slater and Chelsea Georgeson won the men's and women's world titles for surfing on the World Championship Tours in 2005. This is Chelsea's first and Kelly's seventh, a new record. We believe that our company has the dominant position in the outdoor sports market, and we are looking forward to leveraging that position across the full spectrum of our product and marketing capabilities.”
Net revenues in the Americas increased 39% during the first quarter of fiscal 2006 to $220.7 million from $159.3 million in the first quarter of fiscal 2005. As measured in U.S. dollars and reported in the financial statements, European net revenues increased 97% during the first quarter of fiscal 2006 to $261.2 million from $132.6 million in the first quarter of fiscal 2005. As measured in euros, European net revenues increased 118% for those same periods. Asia/Pacific net revenues increased 16% to $58.3 million in the first quarter of fiscal 2006 from $50.5 million in the first quarter of fiscal 2005.
Inventories totaled $406.5 million at January 31, 2006, which includes $159.1 million from the newly acquired Rossignol and Cleveland Golf businesses. Inventories related to the company's other businesses grew 5% to $247.5 million at January 31, 2006 from $236.8 million at January 31, 2005. Accounts receivable totaled $533.5 million at January 31, 2006, which includes $241.8 million from the newly acquired Rossignol and Cleveland Golf businesses. Accounts receivable related to the company's other businesses increased 16% to $291.7 million at January 31, 2006 from $252.1 million at January 31, 2005.
Bernard Mariette, President of Quiksilver, Inc., commented, “We were pleased with our first quarter results, highlighted by significant gains in both sales and earnings per share and continued margin expansion. During the quarter we executed well, achieved our financial plan and further extended our reach around the world. Importantly, the integration program of Rossignol is progressing on all fronts, and we are broadening our initiatives to enhance our gross profitability and improve our competitive position.”
Mr. Mariette continued, “We would like to congratulate all of our athletes who participated in the 2006 Winter Olympic Games in Torino. Rossignol has a legacy of involvement with the Winter Olympics and, along with the riders for the Quiksilver brands, we sponsored 165 athletes from 26 countries who won 36 medals at the games. Their passion, dedication and commitment to excellence inspires us all. We believe that a big part of the appeal of our brands is their association with athletes and the lifestyle and global culture of outdoor sports. We will continue to push ourselves as we build our business, streamline Rossignol's operations, develop new products, and leverage our respective expertise.”
The company reiterated its fiscal 2006 annual revenue guidance of $2.25 to $2.27 billion and its fiscal 2006 annual diluted earnings per share guidance of 87 cents to 88 cents, before stock compensation expense.
The company further noted that it was adjusting its quarterly guidance to primarily reflect improved visibility on the timing of revenues and expenses for its newly acquired Rossignol and Cleveland Golf businesses. In addition, this new guidance incorporates the effects of a challenging environment in the Asia/Pacific region. The company believes that its second quarter sales will now range between $525 to $530 million, a 2% reduction from prior guidance. The company expects second quarter diluted earnings per share of approximately 6 cents, before stock compensation expense, versus its prior guidance of 17 cents per share. Offsetting this reduction, the company believes that the third quarter and fourth quarter are likely to show stronger revenues and diluted earnings per share than previously forecasted. The company increased its third quarter revenue guidance by 1% to between $485 and $490 million. It expects third quarter diluted earnings per share of approximately 7 cents, before stock compensation expense, versus its prior guidance of 3 cents per share. In the fourth quarter, the company now expects to generate revenues in the range of $710 to $715 million, 1% higher than previous guidance. It expects fourth quarter diluted earnings per share in the range of approximately 56 cents to 57 cents, before stock compensation expense, versus its prior guidance of 49 cents to 50 cents per share. Stock compensation expense is expected to amount to 3 cents per share in each of the second and third quarters and 2 cents per share in the fourth quarter of fiscal 2006.
Mr. McKnight concluded, “Passion for sport and the support and sponsorship of athletes are key components of who we are and what we do. We intend to take our love for the outdoors, and the lifestyles associated with a whole range of outdoor sports, and create a message and a vehicle for consumers to share in that spirit. In doing so, we believe that we will heighten our growth prospects and add increased value to our customers, business partners and shareholders around the world.”
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
Three Months Ended
January 31,
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In thousands, except per share amounts 2006 2005
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Revenues, net $541,142 $342,860
Cost of goods sold 292,581 189,954
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Gross profit 248,561 152,906
Selling, general and administrative expense 211,305 129,483
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Operating income 37,256 23,423
Interest expense 12,591 1,789
Foreign currency (gain) loss (497) 463
Minority interest and other (income) expense (1,226) 206
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Income before provision for income taxes 26,388 20,965
Provision for income taxes 7,785 6,751
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Net income $ 18,603 $ 14,214
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Net income per share $ 0.15 $ 0.12
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Net income per share, assuming dilution $ 0.15 $ 0.12
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Weighted average common shares outstanding 121,434 117,592
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Weighted average common shares outstanding,
assuming dilution 127,240 123,154
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