Volcom’s Q3 Revenues Drop 15.9%

Volcom, Inc. reported sales fell 15.9% to $93.9 million compared with $111.7 million in the third quarter of 2008. Total revenues in the company’s U.S. segment, which includes revenues from the U.S., Canada, Japan and most other international territories outside of Europe, as well as the company’s branded retail stores, were $56.8 million compared with $72.8 million in the prior-year period.

Total revenues in the company’s Europe segment were $30.2 million compared with $31.0 million in the same period in 2008. Total revenues in the company’s Electric segment were $6.9 million compared with $7.9 million last year.

“We have worked diligently to capitalize on our company initiatives to create outstanding product and a cohesive brand message aimed toward capturing more market share,” said Richard Woolcott, Volcom’s chairman and chief executive officer. “We have relied on the strength of the Volcom brand, global marketing programs and sound capital structure to endure the past year and believe we have become a stronger organization. We are ready to compete and maintain our leadership position whatever pace or shape the economic recovery takes.”

Consolidated gross profit for the 2009 third quarter was $48.5 million, equal to 51.6% of total revenues, compared with $55.2 million, or 49.4% of total revenues, in the third quarter of 2008.

Selling, general and administrative expenses on a consolidated basis were $28.8 million in the 2009 third quarter versus $30.3 million in the comparable period in 2008.

Total operating income for the third quarter of 2009 on a consolidated basis was $19.7 million, compared with operating income of $24.9 million in the same period a year ago.

The company’s consolidated effective tax rate for the 2009 third quarter was 34% compared with 35.5% for the third quarter of 2008.

Consolidated net income for the 2009 third quarter was $13.3 million, or $0.54 per diluted share, compared with $16.3 million, or $0.67 per diluted share in the comparable period in 2008.

At September 30, 2009, the company had approximately $99.3 million in cash, cash equivalents and short-term investments, no significant debt and stockholders’ equity of approximately $216.1 million. Net cash provided by operating activities for the nine-month period ended September 30, 2009 was approximately $19.4 million compared with $13.8 million in the prior year period.

2009 Fourth Quarter Financial Outlook

In putting forth its financial guidance for the 2009 fourth quarter, the company noted the myriad complexities in accurately assessing the current state of the global retail environment amid this year’s economic weakness. As such, the company currently expects total consolidated revenues for the 2009 fourth quarter of approximately $59 million to $62 million and earnings per diluted share in the range of $0.01 to $0.04 per share.

As a result of the company’s current outlook for the 2009 fourth quarter, Volcom is summarizing its 2009 full year consolidated revenue expectation of between $275 million to $278 million. This translates to diluted earnings per share for 2009 in the range of $0.76 to $0.79.

About The Author

Thomas J. Ryan

Thomas J. Ryan Senior Business Editor | SGB Media tryan@sgbonline.com | 917.375.4699

Volcom’s Q3 Revenues Drop 15.9%


Volcom, Inc. reported sales fell 15.9% to $93.9 million compared with $111.7 million in the third quarter of 2008. Total revenues in the company’s U.S. segment, which includes revenues from the U.S., Canada, Japan and most other international territories outside of Europe, as well as the company’s branded retail stores, were $56.8 million compared with $72.8 million in the prior-year period.

Total revenues in the company’s Europe segment were $30.2 million compared with $31.0 million in the same period in 2008. Total revenues in the company’s Electric segment were $6.9 million compared with $7.9 million last year.

“We have worked diligently to capitalize on our company initiatives to create outstanding product and a cohesive brand message aimed toward capturing more market share,” said Richard Woolcott, Volcom’s chairman and chief executive officer. “We have relied on the strength of the Volcom brand, global marketing programs and sound capital structure to endure the past year and believe we have become a stronger organization. We are ready to compete and maintain our leadership position whatever pace or shape the economic recovery takes.”

Consolidated gross profit for the 2009 third quarter was $48.5 million, equal to 51.6% of total revenues, compared with $55.2 million, or 49.4% of total revenues, in the third quarter of 2008.

Selling, general and administrative expenses on a consolidated basis were $28.8 million in the 2009 third quarter versus $30.3 million in the comparable period in 2008.

Total operating income for the third quarter of 2009 on a consolidated basis was $19.7 million, compared with operating income of $24.9 million in the same period a year ago.

The company’s consolidated effective tax rate for the 2009 third quarter was 34% compared with 35.5% for the third quarter of 2008.

Consolidated net income for the 2009 third quarter was $13.3 million, or $0.54 per diluted share, compared with $16.3 million, or $0.67 per diluted share in the comparable period in 2008.

At September 30, 2009, the company had approximately $99.3 million in cash, cash equivalents and short-term investments, no significant debt and stockholders’ equity of approximately $216.1 million. Net cash provided by operating activities for the nine-month period ended September 30, 2009 was approximately $19.4 million compared with $13.8 million in the prior year period.

2009 Fourth Quarter Financial Outlook

In putting forth its financial guidance for the 2009 fourth quarter, the company noted the myriad complexities in accurately assessing the current state of the global retail environment amid this year’s economic weakness. As such, the company currently expects total consolidated revenues for the 2009 fourth quarter of approximately $59 million to $62 million and earnings per diluted share in the range of $0.01 to $0.04 per share.

As a result of the company’s current outlook for the 2009 fourth quarter, Volcom is summarizing its 2009 full year consolidated revenue expectation of between $275 million to $278 million. This translates to diluted earnings per share for 2009 in the range of $0.76 to $0.79.

About The Author

Thomas J. Ryan

Thomas J. Ryan Senior Business Editor | SGB Media tryan@sgbonline.com | 917.375.4699

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CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(in thousands, except share and per share data)



 


 

 



Three Months Ended

September 30,



Nine Months Ended

September 30,



2009
 
2008

2009
 
2008

Revenues:










Product revenues


$

93,356


$

111,124




$

215,103


$

263,027


Licensing revenues


 
560

 
545
 



 
1,348

 
1,651
 

Total revenues



93,916



111,669





216,451



264,678


Cost of goods sold


 
45,433

 
56,458
 



 
107,232

 
132,527
 

Gross profit



48,483



55,211





109,219



132,151


Selling, general and administrative expenses


 
28,825

 
30,305
 



 
82,710

 
85,985
 

Operating income



19,658



24,906





26,509



46,166


Other income:










Interest income, net



127



162





229



886


Foreign currency gain (loss)


 
222

 
(70 )


 
991

 
(47 )

Total other income


 
349

 
92
 



 
1,220

 
839
 

Income before provision for income taxes



20,007



24,998





27,729



47,005


Provision for income taxes


 
6,750

 
8,726
 



 
9,381

 
16,547
 

Net income

$ 13,257
$ 16,272
 


$ 18,348
$ 30,458