Volcom, Inc. saw fourth quarter net revenues jump 22.1% to $69.1 million, compared with $56.6 million in the fourth quarter of 2006. Total revenues for the full year of 2007 increased 30.9% to $268.6 million from $205.3 million in 2006.
“Last year was an important year for Volcom,” said Richard Woolcott, Volcoms president and chief executive officer. “We achieved solid revenue growth of approximately 31%, driven by great product, diversified distribution and the successful launch of our new European operation. We kicked off 2008 with the acquisition of Electric Visual, one of the hottest eyewear brands in action sports, and we are executing our plan for diversification and growth in 2008 and beyond.”
In the 2007 fourth quarter, gross profit as a percentage of total revenues was 43.4%, compared with 47.2% in the fourth quarter of 2006, primarily reflecting greater than expected off-price sales due to a soft retail environment during the quarter. For the year, gross profit as a percentage of total revenues was 48.4%, compared with 49.7% in 2006.
Operating income for the fourth quarter of 2007 decreased 8.3% to $10.7 million, compared with $11.7 million for the fourth quarter of 2006. Operating margin for the fourth quarter of 2007 was 15.5%, compared with 20.6% in the fourth quarter of 2006.
Operating income for 2007 increased 16.1% to $50.6 million, compared with $43.6 million for 2006. Operating margin was 18.8% for 2007, compared with 21.2% in 2006.
Net income for the fourth quarter of 2007 decreased to $7.1 million, or 29 cents per diluted share, compared with $7.6 million, or 31 cents per diluted share for the fourth quarter of 2006. Net income for the full year 2007 increased 16% to $33.3 million, or $1.37 per diluted share. This compares with $28.7 million, or $1.18 per diluted share in 2006.
2008 Financial Outlook
Given the companys current visibility into its business in 2008 amid the present soft retail environment, Volcom expects total consolidated revenue of between $339 million to $344 million. This estimate includes the financial contribution from the acquisition of Electric Visual Evolution in January, as well as a full years contribution from the companys European operation, which was up and running at full capacity in the third quarter of 2007. Earnings per diluted share are expected to be in the range of $1.50 to $1.53. As previously reported, it is anticipated that Electric will be earnings neutral to Volcom in 2008.
For the 2008 first quarter, the company anticipates total consolidated revenues of approximately $69 million to $70 million, representing an increase of approximately 36% to 38%. Fully diluted earnings per share are expected to be in the range of 20 cents to 21 cents.
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, | ||||||||||||
| 2007 | 2006 | 2007 | 2006 | ||||||||||
| Revenues: | |||||||||||||
| Product revenues | $ | 68,352 | $ | 55,476 | $ | 265,193 | $ | 201,186 | |||||
| Licensing revenues | 717 | 1,085 | 3,420 | 4,072 | |||||||||
| Total revenues | 69,069 | 56,561 | 268,613 | 205,258 | |||||||||
| Cost of goods sold | 39,093 | 29,885 | 138,570 | 103,237 | |||||||||
| Gross profit | 29,976 | 26,676 | 130,043 | 102,021 | |||||||||
| Selling, general and administrative expenses | 19,282 | 15,008 | 79,411 | 58,417 | |||||||||
| Operating income | 10,694 | 11,668 | 50,632 | 43,604 | |||||||||
| Other income: | |||||||||||||
| Interest income, net | 830 | 1,071 | 3,973 | 3,833 | |||||||||
| Dividend income from cost method investee | – | – | – | 3 | |||||||||
| Foreign currency gain (loss) | 123 | (152 | ) | 401 | 233 | ||||||||
| Total other income | 953 | 919 | 4,374 | 4,069 | |||||||||
| Income before provision for income taxes | 11,647 | 12,587 | 55,006 | 47,763 | |||||||||
| Provision for income taxes | 4,532 | 4,956 | 21,671 | 18,920 | |||||||||
| Net income | $ | 7,115 | $ | 7,631 | $ | 33,335 | $ | 28,753 | |||||
| Net income per share: | |||||||||||||
| Basic | $ | 0.29 | $ | 0.31 | $ | 1.37 | $ | 1.19 | |||||
| Diluted | $ | 0.29 | $ | 0.31 | $ | 1.37 | $ | 1.18 | |||||
