Quiksilver shares jumped 13.4% to $5.23 in after hours trading after the company announced improved profit and stronger outlook, according to a story in the Wall Street Journal.
For the quarter ended April 30, Quiksilver posted a profit of $9.4 million, or 6 cents a share, up from $2.8 million, or 2 cents a share, a year earlier. Excluding restructuring costs and other items, earnings from continuing operations rose to 11 cents from 5 cents. Revenue slid 5.2% to $249.3 million. . . In March, the company projected earnings in the low-single-digit range and expected revenue to fall in the high single-digits on a percentage basis, a generally downbeat view from Wall Street’s then estimates.
The most unsettling part for us was that sales revenue in the Americas dropped 13 percent. Higher profits and lower sales is a nice pony to ride. . . for a short while. Follow the jump for the entire press release or click here for the entire call transcript from The Street.
[Link: Wall Street Journal]
Quiksilver, Inc. Reports Fiscal 2010 Second Quarter Financial Results
Net Revenues of $468 million versus $494 million in prior year
HUNTINGTON BEACH, Calif., Jun 03, 2010 (BUSINESS WIRE) — –Pro-Forma Income from Continuing Operations of $0.11 per share versus $0.05 per share in prior year
–Income from Continuing Operations of $0.06 per share versus $0.04 per share in prior year
Quiksilver, Inc. (ZQK 5.16, +0.53, +11.45%) today announced operating results for the second fiscal quarter ended April 30, 2010. Consolidated net revenues from continuing operations for the second quarter of fiscal 2010 decreased 5% to $468.3 million from $494.2 million in the second quarter of fiscal 2009. Pro-forma consolidated income from continuing operations for the second quarter of fiscal 2010 was $15.7 million, or $0.11 per share, compared to $6.6 million, or $0.05 per share, for the second quarter of fiscal 2009. Pro-forma income for the second quarter of fiscal 2010 excludes $2.9 million in restructuring charges, consisting primarily of severance pay, as well as a non-cash charge of $5.2 million for incremental stock compensation expense related to the appreciation in value of shares of company stock granted to Kelly Slater during the quarter following stockholder approval. These charges were partially offset by a gain of $1.3 million on the sale of the Raisins swimwear trademarks. Including these amounts, income from continuing operations was $8.8 million, or $0.06 per share, compared to $4.9 million, or $0.04 per share, for the second quarter of fiscal 2009. A reconciliation of GAAP results to pro-forma results is included in the accompanying tables. Net revenues and the income from continuing operations for all periods exclude the results of the Rossignol wintersports business, which was sold in November 2008 and is reported as discontinued operations.
Robert B. McKnight, Jr., Chairman of the Board, Chief Executive Officer and President of Quiksilver, Inc., commented, “We’re very pleased to again deliver financial results that exceeded our prior expectations. Even as the global economies exhibit inconsistent signs of recovery, it’s clear that the bold steps we’ve taken over the past several quarters to improve our operations and to stabilize our financial structure have made us a much stronger company. With inventories well-managed and great products in the market, we are well positioned to deliver improved financial performance in the future.”
Second Quarter Financial Highlights:
— Pro-forma Adjusted EBITDA was $62.4 million compared to $45.4 million in the second quarter of fiscal 2009 despite a 5% revenue decline.
— Gross margin improved 600 basis points to 53.2% compared to 47.2% in the second quarter of fiscal 2009 led by a 970 basis point improvement in the Americas.
— Operating income in Europe, the company’s most profitable region, was 18.8% of revenues as gross margin improved 320 basis points to 59.9% from 56.7% in the second quarter of fiscal 2009.
— Net debt at April 30, 2010, was $733 million, reduced by $201 million compared to $934 million at April 30, 2009.
Net revenues in the Americas decreased 13% during the second quarter of fiscal 2010 to $199.7 million from $230.0 million in the second quarter of fiscal 2009. As measured in U.S. dollars and reported in the financial statements, European net revenues decreased 1% during the second quarter of fiscal 2010 to $208.7 million from $210.5 million in the second quarter of fiscal 2009. In constant currency, European segment net revenues decreased 5% compared to the prior year. As measured in U.S. dollars and reported in the financial statements, Asia/Pacific net revenues increased 12% to $58.6 million in the second quarter of fiscal 2010 from $52.3 million in the second quarter of fiscal 2009. In constant currency, Asia/Pacific segment net revenues decreased 17% compared to the prior year. Please refer to the accompanying tables in order to better understand the impact of foreign currency on revenue trends in our Europe and Asia/Pacific segments.
Consolidated inventories decreased 26% to $226.4 million at April 30, 2010 from $307.7 million at April 30, 2009. Consolidated trade accounts receivable decreased 19% to $333.3 million at April 30, 2010 from $411.0 million at April 30, 2009.
The company reduced its total debt to approximately $878 million and had approximately $155 million of availability under its credit lines in addition to approximately $145 million of unrestricted cash at the end of the second quarter.
Addressing its outlook for continuing operations, the company stated that based on current trends, third quarter revenues are expected to be down in the low teens on a percentage basis compared to the same quarter a year ago and that it expects to generate earnings per share on a diluted basis in the low-single-digit cents range. The company also indicated that it now expects Pro-forma Adjusted EBITDA for the full-year fiscal 2010 to be at the high-end of its previously stated range of 20 to 25% above fiscal 2009.
About Quiksilver:
Quiksilver, Inc. (ZQK 5.16, +0.53, +11.45%) is the world’s leading outdoor sports lifestyle company, which designs, produces and distributes a diversified mix of branded apparel, footwear, accessories, snowboards and related products. The company’s apparel and footwear brands represent a casual lifestyle for young-minded people that connect with its boardriding culture and heritage.
The reputation of Quiksilver’s brands is based on outdoor action sports. The company’s Quiksilver, Roxy, DC, Lib Tech and Hawk brands are synonymous with the heritage and culture of surfing, skateboarding and snowboarding.
The company’s products are sold in over 90 countries in a wide range of distribution, including surf shops, skate shops, snow shops, its proprietary Boardriders Club shops and other company-owned retail stores, other specialty stores and select department stores. Quiksilver’s corporate and Americas’ headquarters are in Huntington Beach, California, while its European headquarters are in St. Jean de Luz, France, and its Asia/Pacific headquarters are in Torquay, Australia.
Forward looking statements:
This press release contains forward-looking statements including but not limited to statements regarding the company’s revenue guidance, diluted earnings per share guidance, pro-forma adjusted EBITDA guidance and other future activities. These forward-looking statements are subject to risks and uncertainties, and actual results may differ materially. Please refer to Quiksilver’s SEC filings for more information on the risk factors that could cause actual results to differ materially from expectations, specifically the sections titled “Risk Factors” and “Forward-Looking Statements” in Quiksilver’s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q.
NOTE: For further information about Quiksilver, Inc., you are invited to take a look at our world at www.quiksilver.com, www.roxy.com, www.dcshoes.com, www.lib-tech.com and www.hawkclothing.com.
C
ONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended April 30,
--------------------------------------
In thousands, except per share amounts 2 2
010 009
--------------- ---------------
Revenues, net $ 468,289 $ 494,173
Cost of goods sold 219,002 261,055
------- -------
Gross profit 249,287 233,118
Selling, general and administrative expense 213,416 202,589
------- -------
Operating income 35,871 30,529
Interest expense 21,039 13,552
Foreign currency (gain) loss (4,614 ) 1,926
Other (income) expense (5 ) 172
------- ---- -------
Income before provision for income taxes 19,451 14,879
Provision for income taxes 9,419 9,528
------- -------
Income from continuing operations 10,032 5,351
Income (loss) from discontinued operations 602 (2,132 )
------- ------- ----
Net income 10,634 3,219
Less: net income attributable to non-controlling interest (1,210 ) (406 )
------- ---- ------- ----
Net income attributable to Quiksilver, Inc. $ 9,424 $ 2,813
==== ======= ==== =======
I $ 0.07 $ 0.04
ncome per share from continuing operations attributable to
Quiksilver, Inc.
==== ======= ==== ==== ======= ====
I $ 0.00 $ (0.02 )
ncome (loss) per share from discontinued operations attributable
to Quiksilver, Inc.
==== ======= ==== ==== ======= ====
Net income per share attributable to Quiksilver, Inc. $ 0.07 $ 0.02
==== ======= ==== =======
I $ 0.06 $ 0.04
ncome per share from continuing operations attributable to
Quiksilver, Inc., assuming dilution
==== ======= ==== ==== ======= ====
I $ 0.00 $ (0.02 )
ncome (loss) per share from discontinued operations attributable
to Quiksilver, Inc., assuming dilution
==== ======= ==== ==== ======= ====
N $ 0.06 $ 0.02
et income per share attributable to Quiksilver, Inc., assuming
dilution
==== ======= ==== ==== ======= ====
Weighted average common shares outstanding 128,090 127,324
======= =======
W 145,376 128,091
eighted average common shares outstanding, assuming dilution
==== ======= ==== ==== ======= ====
Amounts attributable to Quiksilver, Inc.:
Income from continuing operations $ 8,822 $ 4,945
Income (loss) from discontinued operations 602 (2,132 )
------- ------- ----
Net income $ 9,424 $ 2,813
==== ======= ==== =======
C
ONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Six Months Ended April 30,
---------------------------------------
In thousands, except per share amounts 2 2
010 009
--------------- ----------------
Revenues, net $ 901,026 $ 937,451
Cost of goods sold 429,590 497,170
------- --------
Gross profit 471,436 440,281
Selling, general and administrative expense 416,576 409,407
------- --------
Operating income 54,860 30,874
Interest expense 42,912 27,706
Foreign currency (gain) loss (6,593 ) 3,356
Other expense (income) -- (402 )
------------------ -------- ----
Income before provision for income taxes 18,541 214
Provision for income taxes 13,093 60,109
------- --------
Income (loss) from continuing operations $ 5,448 $ (59,895 )
Income (loss) from discontinued operations 678 (130,696 )
------- -------- ----
Net income (loss) 6,126 (190,591 )
Less: net income attributable to non-controlling interest (2,056 ) (1,022 )
------- ---- -------- ----
Net income (loss) attributable to Quiksilver, Inc. $ 4,070 $ (191,613 )
==== ======= ==== ======== ====
I $ 0.03 $ (0.48 )
ncome (loss) per share from continuing operations attributable to
Quiksilver, Inc.
==== ======= ==== ==== ======== ====
I $ 0.01 $ (1.03 )
ncome (loss) per share from discontinued operations attributable
to Quiksilver, Inc.
==== ======= ==== ==== ======== ====
N $ 0.03 $ (1.51 )
et income (loss) per share attributable to Quiksilver, Inc.
==== ======= ==== ==== ======== ====
I $ 0.02 $ (0.48 )
ncome (loss) per share from continuing operations attributable to
Quiksilver, Inc., assuming dilution
==== ======= ==== ==== ======== ====
I $ 0.00 $ (1.03 )
ncome (loss) per share from discontinued operations attributable
to Quiksilver, Inc., assuming dilution
==== ======= ==== ==== ======== ====
N $ 0.03 $ (1.51 )
et income (loss) per share attributable to Quiksilver, Inc.,
assuming dilution
==== ======= ==== ==== ======== ====
Weighted average common shares outstanding 127,875 127,157
======= ========
W 1 1
eighted average common shares outstanding, assuming dilution 39,622 27,157
==== ======= ==== ==== ======== ====
A
mounts attributable to Quiksilver, Inc.:
Income (loss) from continuing operations $ 3,392 $ (60,917 )
Income (loss) from discontinued operations 678 (130,696 )
------- -------- ----
Net income (loss) $ 4,070 $ (191,613 )
==== ======= ==== ======== ====
C
ONSOLIDATED BALANCE SHEETS (Unaudited)
I A A
n thousands pril 30, pril 30,
2010 2009
------------- -------------
ASSETS
Current assets:
Cash and cash equivalents $ 145,329 $ 74,052
Restricted cash -- 47,236
3 4
Trade accounts receivable, less allowance for doubtful accounts of 33,267 10,971
$52,177 (2010) and $36,719 (2009)
Other receivables 30,253 32,260
Inventories 226,419 307,735
Deferred income taxes - short-term 45,569 92,482
Prepaid expenses and other current assets 41,912 33,757
Current assets held for sale 178 9,122
--------- ---------
Total current assets 822,927 1,007,615
Fixed assets, net 220,586 228,918
Intangibles, net 141,397 142,792
Goodwill 322,096 304,991
Other assets 71,334 42,059
Deferred income taxes - long-term 54,259 13,803
--------- ---------
Total assets $ 1,632,599 $ 1,740,178
==== ========= ==== =========
L
IABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Lines of credit $ 14,886 $ 224,451
Accounts payable 137,354 169,075
Accrued liabilities 84,456 69,455
Current portion of long-term debt 45,198 225,936
Income taxes payable 5,739 20,396
Current liabilities of assets held for sale 260 1,415
--------- ---------
Total current liabilities 287,893 710,728
Long-term debt 817,896 604,412
Other long-term liabilities 41,563 32,895
--------- ---------
Total liabilities 1,147,352 1,348,035
Stockholders' equity:
Common stock 1,355 1,310
Additional paid-in capital 381,267 339,686
Treasury stock (6,778 ) (6,778 )
Retained earnings (accumulated deficit) 2,447 (1,194 )
Accumulated other comprehensive income 97,462 53,585
--------- ---------
Total Quiksilver, Inc. stockholders' equity 475,753 386,609
Non-controlling interest 9,494 5,534
--------- ---------
Total stockholders' equity 485,247 392,143
--------- ---------
Total liabilities & stockholders' equity $ 1,632,599 $ 1,740,178
=== ========= === =========
I
nformation related to operating segments is as follows
(unaudited):
T
hree Months Ended April 30,
------------------------------
In thousands 2 2
010 009
--------------- ---------------
Revenues, net:
Americas $ 199,733 $ 229,990
Europe 208,708 210,498
Asia/Pacific 58,645 52,299
Corporate operations 1,203 1,386
------- -------
$ 468,289 $ 494,173
==== ======= ==== =======
Gross Profit:
Americas $ 92,997 $ 84,895
Europe 125,108 119,447
Asia/Pacific 31,400 28,838
Corporate operations (218 ) (62 )
------- ---- ------- ----
$ 249,287 $ 233,118
==== ======= ==== =======
SG&A Expense:
Americas $ 81,191 $ 89,021
Europe 85,960 79,060
Asia/Pacific 32,259 26,317
Corporate operations 14,006 8,191
------- -------
$ 213,416 $ 202,589
==== ======= ==== =======
Operating Income (Loss):
Americas $ 11,806 $ (4,126 )
Europe 39,148 40,387
Asia/Pacific (859 ) 2,521
Corporate operations (14,224 ) (8,253 )
------- ---- ------- ----
$ 35,871 $ 30,529
==== ======= ==== =======
S
ix Months Ended April 30,
--------------------------
In thousands 2 2
010 009
------------- -------------
Revenues, net:
Americas $ 386,694 $ 433,403
Europe 386,585 392,196
Asia/Pacific 125,697 109,889
Corporate operations 2,050 1,963
------- -------
$ 901,026 $ 937,451
============================================ === =======
Gross Profit:
Americas $ 174,012 $ 160,561
Europe 229,361 220,213
Asia/Pacific 68,443 59,539
Corporate operations (380 ) (32 )
------- --- ------- ---
$ 471,436 $ 440,281
============================================ === =======
SG&A Expense:
Americas $ 157,552 $ 181,027
Europe 171,764 157,825
Asia/Pacific 63,636 53,233
Corporate operations 23,624 17,322
------- -------
$ 416,576 $ 409,407
============================================ === =======
Operating Income (Loss):
Americas $ 16,460 $ (20,466 )
Europe 57,597 62,388
Asia/Pacific 4,807 6,306
Corporate operations (24,004 ) (17,354 )
------- --- ------- ---
$ 54,860 $ 30,874
============================================ === =======
G
AAP TO PRO-FORMA RECONCILIATION
(
Unaudited)
T
hree Months Ended
April 30,
-----------------------
In thousands, except per share amounts 2 2
010 009
------------- ----------
I $ 8,822 $ 4,945
ncome from continuing operations attributable to Quiksilver, Inc.
R 2,870 1,669
estructuring charges, net of tax of $20 (2010) and $559 (2009)
Stock compensation expense 5,240 --
Gain from sale of Raisins trademarks (1,252 ) --
------- --- ------------
Pro-forma income from continuing operations $ 15,680 $ 6,614
=== ======= === =======
P $ 0.12 $ 0.05
ro-forma income per share from continuing operations
=== ======= === === =======
P $ 0.11 $ 0.05
ro-forma income per share from continuing operations, assuming
dilution
=== ======= === === =======
Weighted average common shares outstanding 128,090 127,324
======= =======
W 145,376 128,091
eighted average common shares outstanding, assuming dilution
=== ======= === === =======
S
ix Months Ended
April 30,
------------------
In thousands, except per share amounts 2 2
010 009
--------- ---------
I $ 3,392 $ (60,917 )
ncome (loss) from continuing operations attributable to
Quiksilver, Inc.
R 5,847 7,772
estructuring charges, net of tax of $107 (2010) and $559 (2009)
Stock compensation expense 5,240 --
Gain from sale of Raisins trademarks (1,252 ) --
Effect of U.S. tax valuation allowance -- 50,778
------------ -------
P $ 13,227 $ (2,367 )
ro-forma income (loss) from continuing operations
= ======= = = ======= =
P $ 0.10 $ (0.02 )
ro-forma loss per share from continuing operations
= ======= = = ======= =
P $ 0.09 $ (0.02 )
ro-forma loss per share from continuing operations, assuming
dilution
= ======= = = ======= =
Weighted average common shares outstanding 127,875 127,157
======= =======
W 139,622 127,157
eighted average common shares outstanding, assuming dilution
= ======= = = ======= =
A
DJUSTED EBITDA and PRO-FORMA ADJUSTED EBITDA RECONCILIATION
(
Unaudited)
T
hree Months Ended
April 30,
------------------------
In thousands 2 2
010 009
------------ ------------
$ 8,822 $ 4,945
Income from continuing operations attributable to Quiksilver, Inc.
Provision for income taxes 9,419 9,528
Interest expense 21,039 13,552
Depreciation and amortization 13,453 13,435
Non-cash stock-based compensation expense 8,003 1,665
------ ------
Adjusted EBITDA $ 60,736 $ 43,125
Restructuring and other special charges 1,638 2,228
------ ------
Pro-forma Adjusted EBITDA $ 62,374 $ 45,353
====== ====== ====== ======
S
ix Months Ended
April 30,
--------------------
In thousands 2 2
010 009
--------- -----------
$ 3,392 $ (60,917 )
Income (loss) from continuing operations attributable to
Quiksilver, Inc.
Provision for income taxes 13,093 60,109
Interest expense 42,912 27,706
Depreciation and amortization 27,023 26,738
Non-cash stock-based compensation expense 10,135 4,372
------- -------
Adjusted EBITDA $ 96,555 $ 58,008
Restructuring and other special charges 4,702 8,331
------- -------
Pro-forma Adjusted EBITDA $ 101,257 $ 66,339
== ======= == =======
