Quiksilver Reports Fiscal 2012 Full-Year, Fourth Quarter Financial Results

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Quiksilver Reports Fiscal 2012 Full-Year, Fourth Quarter Financial Results

--Full-year Revenues Increase to $2.0 Billion, Up 7% in Constant Currency--

HUNTINGTON BEACH, Calif.--(BUSINESS WIRE)-- Quiksilver, Inc. (NYS: ZQK) today announced operating results for the fiscal 2012 full year and fourth quarter ended October 31, 2012.


"We are pleased, despite economic headwinds in certain markets, especially Europe and Australia, that revenues for fiscal 2012 increased across all three regions, all three major brands and all three distribution channels, in constant currency," said Robert B. McKnight, Jr., Chairman of the Board, Chief Executive Officer and President of Quiksilver, Inc.

"We remain focused on our three core long-term initiatives, which are strengthening our brands, increasing global sales and driving operational efficiencies. Our brands received excellent exposure this year due to the success of our key athletes, who continue to dominate in our core sports. Our focus on sales resulted in continued growth for the Quiksilver and Roxy brands, as well as strong growth in our DC brand, our e-commerce business and our emerging markets. And, we made measurable progress in operating efficiency by controlling expenses, as seen in the reduction in fourth quarter SG&A as a percentage of sales."

Please refer to the accompanying tables for a reconciliation of GAAP results to certain non-GAAP results for the full year and fourth quarter, net revenues in historical and constant currency, and a definition of our emerging markets.

Fiscal 2012 Full Year Review:

The following comparisons refer to fiscal 2012 versus fiscal 2011.

Net revenues grew 3% to $2.01 billion compared with $1.95 billion, and grew 7%, or $125 million, in constant currency.

  • Americas net revenues increased 8% to $992 million from $914 million, and were up 10% in constant currency.
  • Europe net revenues decreased 7% to $711 million from $761 million, and were up 1% in constant currency.
  • Asia Pacific net revenues increased 13% to $307 million from $272 million, and were up 12% in constant currency.

Gross margin was 49% of net revenues compared with 52%, primarily driven by increased clearance sales within our wholesale channel, higher levels of discounting in our retail channel, changes in the geographical composition of net revenues, higher input costs, and unfavorable foreign exchange rate comparisons.

SG&A expense increased 2% to $916 million compared with $896 million, primarily due to increased e-commerce expenses and higher non-cash stock compensation expenses, partially offset by reduced marketing expenses and other expense reductions implemented during fiscal 2012. SG&A expenses decreased as a percentage of net revenues by 40 basis points to 46% of net revenues.

Net loss attributable to Quiksilver, Inc. was $11 million, or $0.07 per share, compared with $21 million, or $0.13 per share.

Pro-forma income, which excludes $18 million and $47 million of net after-tax charges, was $7 million and $25 million, or $0.04 and $0.14 per diluted share, respectively.

Pro-forma Adjusted EBITDA was $153 million compared with $192 million.

Fiscal 2012 Net Revenue Highlights:

Net revenues increased (in constant currency) across all three major brands, all three regions, and all three distribution channels compared with fiscal 2011. In addition, emerging markets generated net revenue growth of 28%.

Brands (constant currency):

  • Quiksilver increased 3% to $794 million;
  • Roxy increased 4% to $524 million; and,
  • DC increased 12% to $594 million.

Distribution channels (constant currency):

  • Wholesale increased 3% to $1.5 billion;
  • Retail increased 7% to $454 million. Full-year same store sales in company-owned retail stores grew 4% on a global basis; and,
  • E-commerce increased 155% to $87 million.

Fiscal 2012 Fourth Quarter Review:

The following comparisons are between the fourth quarters of fiscal 2012 and fiscal 2011.

Net revenues grew 3% to $559 million compared with $545 million, and grew 6%, or $34 million, in constant currency.

  • Americas net revenues increased 12% to $279 million from $250 million, and were up 13% in constant currency.
  • Europe net revenues decreased 9% to $192 million from $213 million, and were down 2% in constant currency.
  • Asia Pacific net revenues increased 6% to $87 million from $82 million, and were up 7% in constant currency.

Gross margin was 46% of net revenues compared with 52%, primarily driven by increased clearance sales within our wholesale channel, lower margins on those sales, increased discounting within our retail channel, unfavorable foreign exchange rate comparisons, and changes in the geographical composition of net revenues.

SG&A expense decreased 5% to $236 million compared with $248 million, primarily driven by reductions in marketing expenses and other expense reductions implemented during fiscal 2012. These reductions were partially offset by increased e-commerce expenses associated with the growth of our online business. SG&A expenses decreased as a percentage of net revenues by 320 basis points to 42% of net revenues.

Net income attributable to Quiksilver, Inc. was $4 million, or $0.02 per diluted share, compared with $68 million, or $0.38 per diluted share.

Pro-forma income, which excludes $8 million of net after-tax charges and $59 million of net after-tax income, respectively, was $13 million compared with $8 million, or $0.07 and $0.05 per diluted share, respectively.

Pro-forma Adjusted EBITDA was $40 million compared with $54 million.

Fiscal 2012 Fourth Quarter Net Revenue Highlights:

Net revenues increased (in constant currency) across all three distribution channels, as well as in the DC and Roxy brands, and in the Americas and Asia Pacific regions compared with the fourth quarter of fiscal 2011. In addition, emerging markets generated net revenue growth of 27%.

Brands (constant currency):

  • Quiksilver decreased 5% to $200 million;
  • Roxy increased 2% to $135 million; and,
  • DC increased 18% to $187 million.

Distribution channels (constant currency):

  • Wholesale increased 4% to $430 million;
  • Retail increased 4% to $107 million. Fourth quarter same store sales in company-owned retail stores grew slightly; and,
  • E-commerce increased 148% to $22 million.

About Quiksilver:

Quiksilver, Inc. is one of the world's leading outdoor sports lifestyle companies. Quiksilver designs, produces and distributes a diversified mix of branded apparel, footwear and accessories. The company's apparel and footwear brands, inspired by the passion for outdoor action sports, represent a casual lifestyle for young-minded people who connect with its boardriding culture and heritage. 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, select department stores and through various e-commerce channels. Quiksilver's corporate headquarters are in Huntington Beach, California.

Forward looking statements:

This press release contains forward-looking statements including but not limited to statements regarding the company's three core long-term initiatives 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, and 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., please visit our website atwww.quiksilverinc.com.We also invite you to explore our brand sites,www.quiksilver.com,www.roxy.com,www.dcshoes.com,www.lib-tech.comandwww.hawkclothing.com.

 
QUIKSILVER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
    
 
Three months endedFiscal Year Ended
In thousands, except per share amountsOctober 31,October 31,

2012

2011

2012

2011

 
Revenues, net$558,966$545,201$2,013,239$1,953,061
Cost of goods sold 302,207  262,124  1,032,893  929,227 
 
Gross profit256,759283,077980,3461,023,834
 
Selling, general and administrative expense235,931247,593916,144895,949
Asset impairments 6,678  11,763  7,234  86,373 
 
Operating income14,15023,72156,96841,512
 
Interest expense15,35914,08160,82373,808
Foreign currency loss (gain) 3,032  5,775  (1,669) (111)
 
(Loss) income before provision for income taxes(4,241)3,865(2,186)(32,185)
 
(Benefit) provision for income taxes (7,356) (64,252) 7,557  (14,315)
 
Net income (loss)3,11568,117(9,743)(17,870)
Net loss (income) attributable to non-controlling interest 1,244  (219) (1,013) (3,388)
 
Net income (loss) attributable to Quiksilver, Inc.$4,359 $67,898 $(10,756)$(21,258)
 
Net income (loss) per share attributable to Quiksilver, Inc.:
Basic$0.03$0.42$(0.07)$(0.13)
Diluted$0.02$0.38$(0.07)$(0.13)
 
Weighted average common shares outstanding:
Basic165,227163,117164,245162,430
Diluted178,348179,742164,245162,430
 
QUIKSILVER, INC. AND SUBSIDIARIES
INFORMATION RELATED TO OPERATING SEGMENTS (UNAUDITED)
      
 
Three months endedFiscal Year Ended
In thousandsOctober 31,October 31,

2012

2011

2012

2011

Revenues, net:
Americas$279,106$249,788$991,625$914,406
Europe192,348212,522710,852761,100
Asia/Pacific86,89981,843307,141272,479
Corporate operations 613  1,048  3,621  5,076 
558,966545,2012,013,2391,953,061
 
Gross Profit:
Americas$118,130$117,575$429,868$425,607
Europe95,039121,644393,944453,727
Asia/Pacific43,47242,973156,833144,815
Corporate operations 118  885  (299) (315)
256,759283,077980,3461,023,834
 
SG&A Expense:
Americas$91,653$104,804$362,322$360,921
Europe87,37589,999337,535340,387
Asia/Pacific42,25938,988157,247147,949
Corporate operations 14,644  13,802  59,040  46,692 
235,931247,593916,144895,949
 
Asset Impairments:
Americas$4,711$3,426$5,267$3,891
Europe5601,3315601,331
Asia/Pacific1,4077,0061,40781,151
Corporate operations -  -  -  - 
6,67811,7637,23486,373
 
Operating Income (Loss):
Americas$21,766$9,345$62,279$60,795
Europe7,10430,31455,849112,009
Asia/Pacific(194)(3,021)(1,821)(84,285)
Corporate operations (14,526) (12,917) (59,339) (47,007)
14,15023,72156,96841,512
The Company's references to emerging markets in this press release refer to net revenues generated in Brazil, Mexico, Korea, China, Indonesia, Taiwan and Russia collectively.
 
QUIKSILVER, INC. AND SUBSIDIARIES
GAAP TO NON-GAAP PRO-FORMA INCOME RECONCILIATION (UNAUDITED)
    
 
Three months endedFiscal Year Ended
In thousands, except per share amountsOctober 31,(1)October 31,(1)

2012

2011

2012

2011

 
Net income (loss) attributable to Quiksilver, Inc.$4,359$67,898$(10,756) Read Full Story

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