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Volcom revenue up 23 percent in Q3, but lowers outlook for Q4 and full year

By Tiffany Montgomery
October 30, 2008 1:18 PM

Here is Volcom's third quarter results. I'll follow up with more details from the conference call. 

Volcom Reports Financial Results for 2008 Third Quarter

Thursday October 30, 4:05 pm ET

-- Third-quarter Consolidated Revenues Increased 23% to $111.7 Million

-- Net Income is $16.3 million, Equal to $0.67 Per Diluted Share

COSTA MESA, Calif.--(BUSINESS WIRE)--Volcom, Inc. (NASDAQ: VLCM - News) today announced financial results for the third quarter ended September 30, 2008.

For the 2008 third quarter, total consolidated revenue increased 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 chief executive officer.

"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 tiny_mce_marker.67 per diluted share, compared with $14.5 million, or tiny_mce_marker.59 per diluted share for the third quarter of 2007.

At September 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 September 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.


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