Deckers Outdoor Corporation Reports Record Fourth Quarter Financial Results
Company Reports Fourth Quarter Sales Increased 56.2% to a Record of $194.2 Million Fourth Quarter Diluted EPS Increased to a Record of $2.69 Company Reports Fiscal 2007 Sales Increased 47.5% to a Record of $448.9 Million Fiscal 2007 Diluted EPS Increased to a Record $5.06 Company Outlines Fiscal 2008 Revenue Growth Target of 25% and Diluted EPS Growth Target of 20%
GOLETA, Calif.--(BUSINESS WIRE)--
Deckers Outdoor Corporation (NASDAQGS: DECK) today announced financial results for the fourth quarter and fiscal year ended December 31, 2007.
Fourth Quarter Highlights
-- Net sales increased 56.2% to $194.2 million versus $124.4
million last year.
-- Diluted EPS increased to $2.69 versus $0.95 on a GAAP basis.
On a non-GAAP basis excluding the restatement adjustments of
$0.3 million, or $0.02 per diluted share, and the impairment
charge of $11.0 million, or $0.85 per diluted share, both
incurred in the fourth quarter of fiscal 2006, fourth quarter
2007 diluted EPS increased 47.8% over last year.
-- UGG(R) Brand sales increased 61.8% to $177.7 million compared
to $109.9 million a year ago.
-- Total domestic sales increased 54.9% to $177.7 million
compared to $114.7 million in the prior year.
-- Total international sales increased 71.1% to $16.5 million
compared to $9.7 million last year.
Fiscal 2007 Highlights
-- Net sales increased 47.5% to $448.9 million versus $304.4
million in 2006.
-- Diluted EPS increased to $5.06 versus $2.38 in 2006 on a GAAP
basis. On a non-GAAP basis excluding the restatement
adjustments of $0.9 million, or $0.07 per diluted share, and
the impairment charge of $11.0 million, or $0.85 per diluted
share, both incurred in fiscal 2006, fiscal 2007 diluted EPS
increased 53.3% over fiscal 2006.
-- UGG Brand sales increased 64.4% to $347.6 million compared to
$211.5 million in fiscal 2006.
-- Total domestic sales increased 45.3% to $386.6 million versus
$266.1 million a year ago.
-- Total international sales increased 62.6% to $62.3 million
compared to $38.3 million last year.
-- Cash, cash equivalents and short-term investments increased to
$168.1 million compared to $98.9 million a year ago.
Angel Martinez, President and Chief Executive Officer, stated, "Our record fourth quarter results, which underscore the growing popularity of the UGG Brand worldwide, represent a great way to end another strong year for Deckers. During fiscal 2007 we significantly increased sales and diluted earnings per share, consistently exceeded internal and external expectations, and ended the year with more than $168 million in cash, cash equivalents and short-term investments on our balance sheet. From a strategic standpoint, we further diversified the UGG Brand and expanded its selling season year round, repositioned the Teva(R) Brand as an outdoor, performance-oriented brand, and leveraged the Simple(R) Brand's position as the leader in sustainable footwear into broader market opportunities. In addition, we expanded our international presence and grew our Consumer Direct business by opening two new retail stores and enhancing our websites. Looking ahead, we believe our growth prospects have never been more compelling, and we are confident that we will continue to take the right approach toward achieving our long-term objectives and creating value for our shareholders."
Division Summary
UGG(R)
UGG Brand net sales for the fourth quarter increased 61.8% to $177.7 million versus $109.9 million for the same period a year ago. Consumer demand for the entire women's fall line, including boots, slippers, casuals and the fashion collection, contributed to the UGG Brand's better than expected performance. In addition, the expanded men's and kids' offerings performed very well. For the full year, UGG Brand sales increased 64.4% to a record $347.6 million versus $211.5 million in 2006.
Teva(R)
Teva Brand net sales for the fourth quarter increased 6.8% to $13.9 million compared to $13.0 million for the same period last year. This increase was primarily driven by solid sell-through of fall product. For the full year, Teva product sales increased 9.2% to $87.9 million compared to $80.5 million in the prior year.
Simple(R)
Simple Brand net sales increased 76.2% to $2.6 million for the fourth quarter compared to $1.5 million for the same period last year. Simple product sales were fueled by strong sell-through of ecoSNEAKS(TM) throughout the fourth quarter. For the full year, the Simple Brand's sales increased 8.2% to $13.5 million compared to $12.5 million a year ago.
Consumer Direct
Sales for the Consumer Direct business, which are included in the brand sales numbers above, increased 84.5% to $36.0 million for the fourth quarter compared to $19.5 million for the same period a year ago. This includes sales of $23.9 million from the Company's eCommerce division and sales of $12.1 million from the Company's seven retail stores. For the full year, sales for the Consumer Direct business increased 78.0% to $63.9 million compared to $35.9 million a year ago. This includes sales of $45.5 million from the Company's eCommerce division and sales of $18.4 million from the Company's seven retail stores.
Full-Year 2008 Outlook
-- The Company introduced a full year revenue growth target of
approximately 25% over 2007.
-- The Company also introduced its full year diluted earnings per
share target of approximately 20% over 2007, based on a gross
margin of approximately 45.0% versus 46.2% in 2007.
-- Fiscal 2008 guidance includes approximately $8.8 million of
stock compensation expense.
First Quarter Outlook
-- The Company currently expects first quarter 2008 revenue to
increase approximately 25% over 2007, and expects first
quarter 2008 diluted earnings per share to be the same as or
modestly higher than 2007. It is important to note that a
significant portion of the Company's operating expenses are
fixed and spread evenly, on an absolute dollar basis,
throughout each quarter. Therefore, the Company expects
earnings to grow at a slower rate during the first half of the
year, which historically has included its lowest volume sales
quarters.
The Company's conference call to review fourth quarter and fiscal 2007 results will be broadcast live over the internet today, Thursday, February 28, 2008 at 4:30 pm Eastern Time. The broadcast will be hosted at www.deckers.com and www.earnings.com.
Deckers Outdoor Corporation builds niche products into global lifestyle brands by designing and marketing innovative, functional and fashion-oriented footwear developed for both high performance outdoor activities and everyday casual lifestyle use. Teva(R), Simple(R) and UGG(R) are registered trademarks of Deckers Outdoor Corporation.
This news release contains statements regarding our expectations, beliefs and views about our future financial performance which are "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by the use of words such as "believe," "expect," "anticipate," "intend," "plan," "estimate," "project," or future or conditional verbs such as "will," "would," "should," "could," or "may" or by the fact that such statements relate to future, and not just historical, events or circumstances, including statements related to anticipated revenues, expenses, earnings, operating cash flows, the outlook for the Company's markets and the demand for its products. The forward-looking statements in this news release regarding our future financial performance are based on currently available information as of the date of this release, and because our business is subject to a number of risks and uncertainties, actual operating results in the future may differ significantly from the future financial performance expected at the current time. Those risks and uncertainties include, among others: the results of the Company's settlement of the underpayment of certain tax obligations to authorities in China for one of the Company's foreign subsidiaries, Holbrook Limited, a Hong Kong company; our ability to anticipate fashion trends, consumer demand or inventory needs; whether the UGG brand will continue to grow at the same rate it has experienced in the recent past; shortages or price fluctuations of raw materials that could interrupt product manufacturing and increase product costs; our ability to implement our growth strategy; the success of our customers and the risk of losing one or more of our key customers; our ability to develop and protect our brands and intellectual property; the risk that counterfeiting can harm our sales or our brand image; our dependence on independent manufacturers to supply our products; the risk that retailers could postpone or cancel existing orders; unpredictable events and circumstances and currency risks related to our international operations; a downturn in key market economies; volatile credit markets; the risk of losing key personnel; and the sensitivity of our sales to seasonal and weather conditions. Certain of these risks and uncertainties, as well as others, are more fully described under the heading "Risk Factors" in the Company's Annual Report on Form 10-K/A for the fiscal year ended December 31, 2006 which we filed with the Securities and Exchange Commission on October 11, 2007. Readers are cautioned not to place undue reliance on forward-looking statements contained in this news release, which speak only as of the date of this release. The Company undertakes no obligation to publicly release or update the results of any revisions to forward-looking statements, which may be made to reflect new information, events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. The risks and uncertainties highlighted herein should not be assumed to be the only items that could affect the future performance of the Company.
(Tables to follow)
DECKERS OUTDOOR CORPORATION
AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Unaudited)
(Amounts in thousands)
December 31, December 31,
Assets 2007 2006
------------ ------------
Current assets:
Cash and cash equivalents $ 54,525 34,255
Restricted cash 250 ----
Short-term investments 113,567 64,637
Trade accounts receivable, net 72,209 49,571
Inventories 51,776 32,375
Prepaid expenses and other current assets 3,276 2,199
Deferred tax assets 5,964 4,386
------------ ------------
Total current assets 301,567 187,423
Restricted cash 1,000 ----
Property and equipment, at cost, net 10,579 7,770
Intangible assets, less applicable
amortization 54,131 54,399
Deferred tax assets 2,682 327
Other assets 73 54
------------ ------------
$ 370,032 249,973
============ ============
Liabilities and Stockholders' Equity
Current liabilities:
Trade accounts payable $ 36,221 21,053
Accrued expenses 17,629 10,949
Income taxes payable 17,544 7,561
------------ ------------
Total current liabilities 71,394 39,563
------------ ------------
Stockholders' equity:
Common stock 130 126
Additional paid-in capital 103,659 81,761
Retained earnings 194,567 128,130
Accumulated other comprehensive income 282 393
------------ ------------
Total stockholders' equity 298,638 210,410
------------ ------------
$ 370,032 249,973
============ ============
DECKERS OUTDOOR CORPORATION
AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(Unaudited)
(Amounts in thousands, except for per share data)
Three-month
period ended Year ended
December 31, December 31,
---------------- ----------------
2007 2006 2007 2006
------- ------- ------- -------
Net sales $194,243 124,376 $448,929 304,423
Cost of sales 100,593 64,256 241,458 163,692
------- ------- ------- -------
Gross profit 93,650 60,120 207,471 140,731
Selling, general and administrative
expenses 36,693 23,305 101,918 73,989
Impairment loss 15,300 15,300
------- ------- ------- -------
Income from operations 56,957 21,515 105,553 51,442
Other (income) expense, net:
Interest income (1,351) (447) (4,855) (2,432)
Interest expense and other, net (412) 166 369 522
------- ------- ------- -------
Income before income taxes 58,720 21,796 110,039 53,352
Income taxes 23,331 9,565 43,602 22,743
------- ------- ------- -------
Net income $ 35,389 12,231 $ 66,437 30,609
======= ======= ======= =======
Net income per share:
Basic $ 2.72 0.97 $ 5.18 2.45
Diluted 2.69 0.95 5.06 2.38
======= ======= ======= =======
Weighted-average shares:
Basic 12,989 12,565 12,835 12,519
Diluted 13,158 12,922 13,129 12,882
======= ======= ======= =======
Source: Deckers Outdoor Corporation
Released February 28, 2008