Volcom Reports 2009 Third Quarter Financial Results

COSTA MESA, Calif., Oct 29, 2009 (BUSINESS WIRE) -- Volcom, Inc. (NASDAQ: VLCM) today announced financial results for the third quarter ended September 30, 2009.

For the 2009 third quarter, total consolidated revenues were $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.

Conference Call Information The company will host a conference call today at approximately 4:30 p.m. ET to discuss its financial results and outlook in further detail. The conference call will be available to interested parties through a live audio Internet broadcast at www.volcom.com. A telephone playback of the conference call will also be available until 11:59 p.m. ET, Thursday, November 5, 2009. Listeners should call [phone] (domestic) or [phone] (international) and use reservation: 19614002.

About Volcom, Inc.

Volcom is an innovative designer, marketer and distributor of premium quality young mens and womens clothing, accessories and related products. The Volcom brand, symbolized by The Stone, is athlete-driven, creative and forward thinking. Volcom has consistently followed its motto of "youth against establishment," and the brand is inspired by the energy of youth culture. Volcom branded products are sold throughout the United States and internationally.

Volcom's news announcements and SEC filings are available through the company's website at www.volcom.com.

Safe Harbor Statement Certain statements in this press release and oral statements made from time to time by representatives of the company are forward-looking statements for purposes of the safe harbor provisions of The Private Securities Litigation Reform Act of 1995, including statements in connection with or related to any discussion of or reference to Volcom's future operations, opportunities or financial performance. In particular, statements regarding the company's guidance and future financial performance contained under the section entitled 2009 Fourth Quarter Financial Outlook and Mr. Woolcott's comments regarding being "ready to compete and maintain our leadership position whatever pace or shape the economic recovery takes" are forward-looking statements. These forward-looking statements are based on management's current expectations but they involve a number of risks and uncertainties. Volcom's actual results and the timing of events could differ materially from those anticipated in the forward-looking statements as a result of risks and uncertainties, including, without limitation, further softening of the retail environment, sales of our products by key retailers, including Pacific Sunwear and Zumiez, changes in fashion trends and consumer preferences, general economic conditions, the impact of sourcing costs, and additional factors which are detailed in our filings with the Securities and Exchange Commission, including the Risk Factors contained in the company's Annual Report on Form 10-K, filed with the Securities and Exchange Commission (the "SEC") and the subsequently filed Quarterly Reports on Form 10-Q, all of which are available at www.sec.gov. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. Volcom is under no obligation, and expressly disclaims any obligation, to update or alter any forward-looking statements, whether as a result of new information, future events or otherwise.

VOLCOM, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (in thousands, except share and per share data) Three Months Ended Nine Months Ended September 30, 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 Net income per share: Basic $ 0.54 $ 0.67 $ 0.75 $ 1.25 Diluted $ 0.54 $ 0.67 $ 0.75 $ 1.25 Weighted average shares outstanding: Basic 24,354,208 24,344,584 24,350,725 24,334,743 Diluted 24,367,464 24,357,539 24,361,034 24,358,762 VOLCOM, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (UNAUDITED) (in thousands) September 30, 2009 December 31, 2008 Assets Current assets: Cash and cash equivalents $ 59,329 $ 79,613 Short-term investments 39,989 -- Accounts receivable -- net of allowances 69,752 60,914 Inventories 22,425 27,086 Prepaid expenses and other current assets 3,021 2,596 Income taxes receivable --- 3,309 Deferred income taxes 5,908 4,947 Total current assets 200,424 178,465 Property and equipment -- net 26,525 26,716 Investments in unconsolidated investees 330 330 Deferred income taxes 4,024 4,028 Intangible assets -- net 10,520 10,578 Goodwill 668 665 Other assets 820 841 Total assets $ 243,311 $ 221,623 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 9,835 $ 15,291 Accrued expenses and other current liabilities 13,436 12,027 Income taxes payable 3,479 --- Current portion of capital lease obligations 35 71 Total current liabilities 26,785 27,389 Long-term capital lease obligations --- 23 Other long-term liabilities 327 414 Income taxes payable - non-current 70 94 Stockholders' equity: Common stock 24 24 Additional paid-in capital 91,641 90,456 Retained earnings 120,283 101,935 Accumulated other comprehensive income 4,181 1,288 Total stockholders' equity 216,129 193,703 Total liabilities and stockholders' equity $ 243,311 $ 221,623 VOLCOM, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (in thousands) Nine Months Ended September 30, 2009 2008 Cash flows from operating activities: Net income $ 18,348 $ 30,458 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 5,034 5,280 Provision for doubtful accounts 2,434 1,056 Excess tax benefits related to exercise of stock options -- (34 ) Loss on disposal of property and equipment 3 18 Stock-based compensation 1,246 739 Deferred income taxes (963 ) (137 ) Changes in operating assets and liabilities, net of effects of acquisition: Accounts receivable (13,574 ) (21,375 ) Inventories 5,032 (1,054 ) Prepaid expenses and other current assets (407 ) (534 ) Income taxes receivable/payable 6,683 3,112 Other assets 31 55 Accounts payable (5,445 ) (4,476 ) Accrued expenses 1,040 887 Other long-term liabilities (96 ) (184 ) Net cash provided by operating activities 19,366 13,811 Cash flows from investing activities: Purchase of property and equipment (3,406 ) (4,498 ) Business acquisitions, net of cash acquired (897 ) (28,892 ) Purchase of intangible assets -- (305 ) Purchase of short-term investments (64,933 ) (284 ) Sale of short-term investments 24,944 284 Purchase of additional shares in cost method investee -- (32 ) Proceeds from sale of property and equipment 6 -- Net cash used in investing activities (44,286 ) (33,727 ) Cash flows from financing activities: Principal payments capital lease obligations (65 ) (108 ) Proceeds from government grants -- 470 Proceeds from exercise of stock options -- 273 Excess tax benefits related to exercise of stock options -- 34 Net cash (used in) provided by financing activities (65 ) 669 Effect of exchange rate changes on cash 4,701 (391 ) Net decrease in cash and cash equivalents (20,284 ) (19,638 ) Cash and cash equivalents -- Beginning of period 79,613 92,962 Cash and cash equivalents -- End of period $ 59,329 $ 73,324 VOLCOM, INC. AND SUBSIDIARIES OPERATING SEGMENT INFORMATION (UNAUDITED) (in thousands) Three Months Ended Nine Months Ended September 30, September 30, 2009 2008 2009 2008 Total revenues: United States $ 56,769 $ 72,797 $ 142,839 $ 182,197 Europe 30,250 31,020 57,814 62,083 Electric 6,897 7,852 15,798 20,398 Consolidated $ 93,916 $ 111,669 $ 216,451 $ 264,678 Gross profit: United States $ 28,350 $ 33,637 $ 69,874 $ 85,290 Europe 16,016 17,156 30,457 35,226 Electric 4,117 4,418 8,888 11,635 Consolidated $ 48,483 $ 55,211 $ 109,219 $ 132,151 Operating income (loss): United States $ 9,017 $ 14,083 $ 13,801 $ 28,261 Europe 9,730 10,439 13,306 17,230 Electric 911 384 (598 ) 675 Consolidated $ 19,658 $ 24,906 $ 26,509 $ 46,166 SOURCE: Volcom, Inc.

CONTACT: Volcom, Inc. Doug Collier, CFO 949-646-2175 or PondelWilkinson Inc. Rob Whetstone 310-279-5963 [e-mail] or Evan Pondel 310-279-5973 [e-mail] Copyright Business Wire 2009 -0- KEYWORD: United States

North America

California INDUSTRY KEYWORD: Retail

Fashion SUBJECT CODE: Earnings

Conference Call

Webcast