N@N

Quiksilver, Inc. Reports Fiscal 2011 First Quarter Financial Results

^{Published on 2011-03-10 13:11:00 - Market Wire}
 

HUNTINGTON BEACH, Calif.--([ BUSINESS WIRE ])--Quiksilver, Inc. (NYSE:ZQK) today announced operating results for the first fiscal quarter ended January 31, 2011. Revenues were $426.5 million as compared to $432.7 million in the first quarter of fiscal 2010 but were up compared to the same period last year in constant currency. Consolidated gross profit of $223.5 million exceeded that of the first quarter of fiscal 2010 as gross margin expanded 110 basis points to 52.4% of revenues. As previously communicated, the company invested in several new business initiatives in the first quarter ahead of revenue generation. Therefore, pro-forma Adjusted EBITDA of $28.2 million was down $10.6 million, as planned, compared to the same quarter a year ago. This result was in line with the companya™s expectations for the first quarter, in which revenues are historically lower than for the remaining three quarters of the year. The pro-forma loss from continuing operations was $7.7 million or $0.05 per share compared to a loss of $2.5 million or $0.02 per share in the first quarter of fiscal 2010. The pro-forma loss for the first quarter of fiscal 2011 excludes $8.6 million of net after-tax charges, primarily comprised of a non-cash write-off of deferred debt issuance costs associated with previous financings. Including this amount, the loss from continuing operations was $16.3 million, or $0.10 per share, compared to $5.4 million, or $0.04 per share, for the first quarter of fiscal 2010. A reconciliation of GAAP results to pro-forma results is provided in the accompanying tables.

Robert B. McKnight, Jr., Chairman of the Board, Chief Executive Officer and President of Quiksilver, Inc., commented, aWea™re very pleased with our results for the first quarter. Our top line and operating performance continue to improve with revenues up in constant currency for the first time in 9 quarters and gross profit margins expanding to 52.4% as the level of discounting in our business continues to decline. We also feel very good about new growth initiatives presently underway. As wea™ve indicated in the past, now that our financial restructuring is complete, we have shifted our focus toward investing in our brands and their long-term potential. Looking forward, we expect fiscal 2011 as a whole to be a transition year with growth accelerating in the second half of the year and beyond as these initiatives gain traction.a

Net revenues in the Americas increased 4% during the first quarter of fiscal 2011 to $193.8 million from $187.0 million in the first quarter of fiscal 2010. In constant currency, European segment net revenues increased 1% in the first quarter of fiscal 2011 compared to the prior year. As measured in U.S. dollars and reported in the financial statements, European net revenues decreased 7% to $165.2 million from $177.9 million in the first quarter of fiscal 2010. In constant currency, Asia/Pacific segment net revenues decreased 8% in the first quarter of fiscal 2011 compared to the prior year. As measured in U.S. dollars and reported in the financial statements, Asia/Pacific net revenues remained unchanged at $67.0 million as compared to $67.1 million in the first quarter of fiscal 2010. Please refer to the accompanying tables in order to better understand the impact of foreign currency exchange rates on revenue trends in the European and Asia/Pacific segments.

In December, the company completed its previously-announced sale of a'200 million aggregate principal amount of 8.875% Senior Notes due 2017 by its wholly-owned European subsidiary, Boardriders S.A. Quiksilver used the proceeds of the offering to repay approximately a'190 million of existing secured European term loans and to pay related fees and expenses. As a result, the company eliminated certain collateral obligations, extended its debt maturities and eliminated certain restrictions on the transfer of cash between its subsidiaries.

Q1 Brand Highlights

• Quiksilver and the Association of Surfing Professionals (ASP) announced the Quiksilver Pro New York surf competition, set to take place on Long Islanda™s Long Beach from September 4-15. The Quiksilver Pro New York will be the 6th stop on the ASP 2011 World Tour and the first-ever World Championship Tour stop on the east coast of the United States. The surf contest will coincide with a series of events for enthusiasts of surf, skate, art and music who are expected to gather in New York as summer comes to a close. The Quiksilver Pro New York will expand the Quiksilver Pro Global Series, which also includes the Quiksilver Pro Gold Coast in Australia (February 26-March 9) and the Quiksilver Pro France (October 4-15).
• Quiksilver announced the signing of 4-time defending ASP Womena™s World Champion surfer Stephanie Gilmore to a 5-year endorsement agreement. Gilmore joined the Quiksilver surf team and has become a brand ambassador representing Quiksilvera™s lines for women. The addition of Gilmore coincides with the recent debut of Quiksilvera™s new global girls line, targeting 18-24-year-old females.
• DC Shoes announced the signing of Chris Cole, one of the best and most influential skaters of his generation. Cole, who has now joined the DC skate team, is only the second skater to become Thrasher Magazinea™s aSkater of the Yeara twice - after DCa™s Danny Way - and he has also been honored with TransWorld SKATEboarding Magazinea™s aReaders Choice Award.a

Company Outlook

Addressing its outlook, the company confirmed that it continues to expect full-year revenues to be slightly above those of fiscal 2010 and pro-forma Adjusted EBITDA to be roughly in line with last year.

About Quiksilver:

Quiksilver, Inc. (NYSE:ZQK) is the worlda™s leading outdoor sports lifestyle company, which designs, produces and distributes a diversified mix of branded apparel, footwear, accessories, snowboards and related products. The companya™s apparel and footwear brands represent a casual lifestyle for young-minded people that connect with its boardriding culture and heritage.

The reputation of Quiksilvera™s brands is based on outdoor action sports. The companya™s Quiksilver, Roxy, DC, Lib Tech and Hawk brands are synonymous with the heritage and culture of surfing, skateboarding and snowboarding.

The companya™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. Quiksilvera™s corporate and Americasa™ 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 companya™s revenue guidance, pro-forma Adjusted EBITDA guidance, seasonality, new growth initiatives and other future activities.These forward-looking statements are subject to risks and uncertainties, and actual results may differ materially.Please refer to Quiksilvera™s SEC filings for more information on the risk factors that could cause actual results to differ materially from expectations, specifically the sections titled aRisk Factorsa and aForward-Looking Statementsa in Quiksilvera™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 ].

Definition of Adjusted EBITDA:

Adjusted EBITDA is defined as income from continuing operations attributable to Quiksilver, Inc. before (i) interest expense, (ii) income tax expense, (iii) depreciation and amortization, (iv) non-cash stock-based compensation expense and (v) asset impairments. Adjusted EBITDA is not defined under generally accepted accounting principles (aGAAPa), and it may not be comparable to similarly titled measures reported by other companies. We use Adjusted EBITDA, along with other GAAP measures, as a measure of profitability because Adjusted EBITDA helps us to compare our performance on a consistent basis by removing from our operating results the impact of our capital structure, the effect of operating in different tax jurisdictions, the impact of our asset base, which can differ depending on the book value of assets, the accounting methods used to compute depreciation and amortization, the existence or timing of asset impairments and the effect of non-cash stock-based compensation expense. We believe EBITDA is useful to investors as it is a widely used measure of performance and the adjustments we make to EBITDA provide further clarity on our profitability. We remove the effect of non-cash stock-based compensation from our earnings which can vary based on share price, share price volatility and expected life of the equity instruments we grant. In addition, this stock-based compensation expense does not result in cash payments by us. We remove the effect of asset impairments from Adjusted EBITDA for the same reason that we remove depreciation and amortization as it is part of the impact of our asset base. Adjusted EBITDA has limitations as a profitability measure in that it does not include the interest expense on our debts, our provisions for income taxes, the effect of our expenditures for capital assets and certain intangible assets, the effect of non-cash stock-based compensation expense and the effect of asset impairments.