VLCM Valcom (MM)

Volcom, Inc. (NASDAQ: VLCM) today announced financial results for the first quarter ended March 31, 2011.

For the 2011 first quarter, total consolidated revenues increased 13% to $87.1 million, compared with $77.4 million in the first quarter of 2010. Total revenues in the company’s U.S. segment were $50.3 million, compared with $48.2 million in the prior-year period. Total revenues in the company’s Europe segment were $24.8 million, compared with $23.6 million in the same period in 2010. Total revenues in the company’s Electric segment were $6.9 million, compared with $5.6 million in 2010. Total revenues in the company’s Australia segment were $5.2 million.

Consolidated gross profit for the 2011 first quarter was $43.6 million, equal to 50% of total revenues, compared with $42.0 million, equal to 54.2% of total revenues, in the first quarter of 2010.

Selling, general and administrative expenses on a consolidated basis were $36.6 million in the 2011 first quarter versus $31.0 million in the comparable period in 2010.

Net income for the 2011 first quarter was $4.6 million, or $0.19 per diluted share, compared with $7.5 million, or $0.31 per diluted share, in the first quarter of 2010.

At March 31, 2011 the company had cash, cash equivalents and short-term investments totaling $91.4 million, and no long-term debt. Total stockholders’ equity was $225.0 million at year-end.

Financial Outlook and Conference Call Information

Yesterday, Volcom announced it has entered into a definitive merger agreement with PPR. Terms of this agreement may be found in the news release that was issued on May 2, 2011 at www.volcom.com/investorrelations. Given this announcement, the company has suspended its practice of providing quarterly and annual financial guidance, and will not host a conference call today to review the results as previously announced.

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 and Electric 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 2011 Second Quarter Financial Outlook 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, 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

March 31,

2011   2010 Revenues: Product revenues $ 86,838 $ 76,834 Licensing revenues   299   586   Total revenues 87,137 77,420 Cost of goods sold   43,561   35,425   Gross profit 43,576 41,995 Selling, general and administrative expenses   36,596   31,008   Operating income 6,980 10,987 Other income: Interest income, net 55 109 Foreign currency gain (loss)   180   (10 ) Total other income   235   99   Income before provision for income taxes 7,215 11,086 Provision for income taxes   2,605   3,552   Net income $ 4,610 $ 7,534     Net income per share: Basic $ 0.19 $ 0.31 Diluted $ 0.19 $ 0.31 Weighted average shares outstanding: Basic 24,405,753 24,356,857 Diluted 24,466,757 24,376,971   VOLCOM, INC. AND SUBSIDIARIES   CONSOLIDATED BALANCE SHEETS (UNAUDITED) (in thousands)     March 31, 2011 December 31, 2010 Assets Current assets: Cash and cash equivalents $ 81,453 $ 80,300 Short-term investments 9,987 9,987 Accounts receivable — net of allowances 73,165 66,542 Inventories 29,971 41,449 Prepaid expenses and other current assets 6,628 5,997 Income taxes receivable 136 1,170 Deferred income taxes   9,460   9,326 Total current assets   210,800   214,771 Property and equipment — net 27,244 26,652 Deferred income taxes 2,651 2,651 Intangible assets — net 11,889 10,872 Goodwill 1,635 1,610 Other assets   1,065   1,003 Total assets $ 255,284 $ 257,559   Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 15,217 $ 22,902 Accrued expenses and other current liabilities 13,611 16,162 Current portion of capital lease obligations   19   19 Total current liabilities   28,847   39,083 Long-term capital lease obligations 20 23 Other long-term liabilities 1,259 1,261 Income taxes payable – non-current 94 131 Deferred income taxes – non-current 101 103 Stockholders’ equity: Common stock 24 24 Additional paid-in capital 95,110 94,733 Retained earnings 126,164 121,555 Accumulated other comprehensive income   3,665   646 Total stockholders’ equity   224,963   216,958 Total liabilities and stockholders’ equity $ 255,284 $ 257,559   VOLCOM, INC. AND SUBSIDIARIES   CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (in thousands)  

 

Three Months Ended

March 31,

2011   2010 Cash flows from operating activities: Net income $ 4,610 $ 7,534 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 1,660 1,517 Provision for doubtful accounts 586 (217 ) Loss on disposal of property and equipment 23 3 Stock-based compensation 387 550 Deferred income taxes (136 ) (201 ) Changes in operating assets and liabilities: Accounts receivable (6,129 ) (8,010 ) Inventories 12,011 6,532 Prepaid expenses and other current assets (523 ) (904 ) Income taxes receivable/payable 831 3,488 Other assets (54 ) (69 ) Accounts payable (8,362 ) (11,608 ) Accrued expenses (3,252 ) 140 Other long-term liabilities   (10 )   14   Net cash provided by (used in) operating activities   1,642     (1,231 )   Cash flows from investing activities: Purchase of property and equipment (1,142 ) (1,005 ) Intangible assets acquired (1,150 ) — Proceeds from sale of property and equipment 10 — Purchase of short-term investments — (20,000 ) Sale of short-term investments   —     10,000   Net cash used in investing activities   (2,282 )   (11,005 )   Cash flows from financing activities: Principal payments on capital lease obligations   (4 )   (4 ) Net cash used in financing activities   (4 )   (4 )   Effect of exchange rate changes on cash   1,797     52     Net increase (decrease) in cash and cash equivalents 1,153 (12,188 ) Cash and cash equivalents — Beginning of period   80,300     76,180   Cash and cash equivalents — End of period $ 81,453   $ 63,992     VOLCOM, INC. AND SUBSIDIARIES   OPERATING SEGMENT INFORMATION (UNAUDITED) (in thousands)   Three Months Ended

March 31,

2011   2010 Total revenues: United States $ 50,303 $ 48,179 Europe 24,763 23,626 Electric 6,916 5,615 Australia   5,155     -- Consolidated $ 87,137   $ 77,420   Gross profit: United States $ 23,751 $ 24,224 Europe 13,594 14,277 Electric 4,017 3,494 Australia   2,214     -- Consolidated $ 43,576   $ 41,995   Operating income (loss): United States $ 897 $ 2,744 Europe 5,990 7,977 Electric 119 266 Australia   (26 )   -- Consolidated $ 6,980   $ 10,987