Volcom Q3 Revenues Increase 23% Despite Economic Downturn

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• October 30 2008
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Under the current economic conditions, retail reports have been growing increasingly bleak. That isn’t the case, however, with Volcom’s latest numbers, released Thursday, October 30. The company experienced a total revenue increase of 23% to $111.7 million.

The jump in Q3 revenue comes after the Costa Mesa-based company lowered its earning outlook for the year in late July due to Q2 profits plummeting 22.6% to $4.8 million. Read the full story HERE.

Volcom’s entire report is discussed in the press release below:

For the 2008 third quarter ended Sept. 30, 2008, Volcom, Inc. had total consolidated revenue increase 23% to $111.7 million, compared with $91.0 million in the third quarter of 2007.

Total revenue in the company’s U.S. segment, which includes revenue from the U.S., Canada, Japan and most other international territories outside of Europe, as well as the company’s branded retail stores, increased 12% to $72.8 million, compared with $65.2 million in the prior year period. Total revenue in the company’s Europe segment grew 20% to $31.0 million compared with $25.8 million in the same period in 2007. Total revenue in the company’s Electric segment, which Volcom acquired in January 2008, was $7.9 million.

“Our solid third-quarter performance is testament to the strength of the Volcom brand and our team amid a challenging retail environment,” said Richard Woolcott, Volcom’s chairman and CEO. “Managing our business with discipline, commitment and focus is essential during these times of economic uncertainty, and we strongly believe that our current position as an industry leader and our healthy balance sheet will empower Volcom over the long term.”

Consolidated gross profit for the third quarter was $55.2 million, representing 49.4% of consolidated revenue, compared with $45.9 million, or 50.4% of consolidated revenue, in the third quarter of 2007.

Selling, general and administrative (SG&A) expenses in the third quarter of 2008 on a consolidated basis were $30.3 million, or 27.1% of consolidated revenue, compared with $22.8 million, or 25.1% of consolidated revenue, in the 2007 third quarter.

Consolidated operating income for the 2008 third quarter was $24.9 million, or 22.3% of consolidated revenue, compared with $23.0 million, or 25.3% of consolidated revenue, for the same period in 2007.

The company’s consolidated effective tax rate for the 2008 third quarter was 35.5% compared with 39.4% for the third quarter of 2007.

Consolidated net income for the third quarter of 2008 was $16.3 million, or 67 cents per diluted share, compared with $14.5 million, or 59 cents per diluted share for the third quarter of 2007.

At Sept. 30, 2008, the company had approximately $73.3 million in cash, no significant debt and stockholders’ equity of approximately $202.8 million.

For the nine-month period ended Sept. 30, 2008, net cash provided by operating activities was $13.8 million compared with $3.7 million for the same nine-month period a year ago.

2008 Fourth Quarter and Full Year Outlook

In putting forth its financial outlook for the 2008 fourth quarter and full year, Volcom noted recent, significant changes in the weakening U.S. retail environment as well as the overall global economy. As such, the company now expects total consolidated revenues for the fourth quarter of approximately $69 million to $71 million, representing an increase of approximately 0% to 3% when compared with the 2007 fourth quarter. Fully diluted earnings per share are expected to be in the range of 17 cents to 19 cents.

As a result of the company’s current outlook for the 2008 fourth quarter, Volcom is changing its 2008 full year consolidated revenue guidance to between $333 million to $335 million. This translates to diluted earnings per share for 2008 in the range of $1.42 to $1.44. In July the company expected consolidated revenue of between $344 million to $347 million, and fully diluted earnings per share of $1.50 to $1.53.