Exhibit 99.1
Deckers Outdoor Corporation Reports Third Quarter Financial Results
GOLETA, Calif.--(BUSINESS WIRE)--Oct. 21, 2004--Deckers Outdoor
Corporation (NASDAQ: DECK)
-- Exceeds First Call Earnings Per Share Consensus Estimate
-- Sales Increase 124% to a Record $55.8 million
-- Raises Guidance for Fiscal 2004; Introduces Guidance for 2005
Deckers Outdoor Corporation (NASDAQ: DECK) today announced
financial results for the third quarter and nine months ended
September 30, 2004.
For the third quarter, net sales increased 124% to a record $55.8
million compared to $24.9 million in the same period last year. Net
earnings for the quarter increased to $5.8 million or $0.46 per
diluted share, compared to net earnings of $481,000, or $0.04 per
diluted share for the third quarter of last year.
For the nine months ended September 30, 2004, net sales increased
65% to $140.6 million compared to $85.3 million in the same period
last year. Net earnings for the first nine months of fiscal 2004
increased to $16.3 million or $1.37 per diluted share, compared to net
earnings of $6.7 million, or $0.57 per diluted share last year.
Mr. Douglas Otto, Chairman and CEO stated, "Our ability to once
again deliver record results underscores the strength of our brands
and reflects the disciplined execution of our key strategies. Strong
sales for all three brands, coupled with continued operating margin
expansion, allowed us to exceed expectations. We are excited as the
strong momentum continues, giving us the ability to raise our outlook
for the remainder of the year."
Including sales from both the wholesale divisions and the Internet
and catalog retailing business, Teva sales for the third quarter
increased 32% to $11.9 million from $9.0 million in the same period a
year ago, while UGG sales were up dramatically to $39.2 million versus
$14.1 million last year. Simple sales increased 165% to $4.6 million
compared to $1.8 million a year ago. Sales for the Internet and
catalog retailing business, which are included in the brand sales
numbers above, aggregated approximately $5.4 million for the third
quarter of 2004, up 241% from $1.6 million for the third quarter of
2003.
"After a record spring season, Teva's robust performance continued
into the fall, primarily driven by strong demand for our core sandal
category as well as our expanded closed-toe offering," continued Mr.
Otto. "Our UGG business remains very strong as sales of all styles,
including our classic boots, slippers and fall collection, continue to
perform well. In addition, we recently signed a licensing agreement
with Fownes Brothers, Inc. for UGG cold weather accessories, including
hats, scarves and gloves and believe this represents a tremendous
opportunity to enhance the brand's presence in the luxury goods
market. We are also encouraged by the results of Simple, in particular
the strong retail performance of our new clog and Sugar sneaker, as
well as the positive reaction to the brand's spring 2005 sneaker
collection."
Gross margin for the third quarter increased to 39.8% from 38.2%
for the third quarter last year due to a combination of factors,
including the strong increase in the higher gross margin Internet and
catalog sales, the addition of $0.4 million of net license revenues
from UGG handbags and outerwear, a reduced impact of inventory
write-downs and lower overhead costs per pair. Selling, general and
administrative expenses decreased to 23.1% of net sales for the
current quarter compared to 31.0% for the third quarter last year,
largely due to the continued leverage of operating costs on the higher
sales volume. The resulting operating earnings improved to 16.7% of
net sales for the quarter compared to 7.2% for the third quarter last
year.
Deckers updated its guidance for the fourth quarter ending
December 31, 2004. The Company currently expects net sales for the
fourth quarter to range between $55 million and $60 million and
diluted earnings per share to range from $0.47 to $0.51.
The Company also raised its guidance for the fiscal year ending
December 31, 2004. The Company now expects 2004 net sales to range
between $196 million and $201 million, up from the previous guidance
of $182 million to $190 million, and diluted earnings per share to
range from $1.84 to $1.88, up from the previous guidance of $1.70 to
$1.75 per diluted share. The Company expects its sales from Teva to be
approximately $89 million to $90 million, Simple to be approximately
$10 million to $11 million and UGG to be approximately $97 million to
$100 million.
The Company is introducing guidance for fiscal 2005. Deckers
currently anticipates its fiscal 2005 net sales to be in the range of
$220 million to $230 million, including sales of $97 million to $100
million for Teva, $13 million to $15 million for Simple and $110
million to $115 million for UGG. Deckers currently expects its diluted
earnings per share for fiscal 2005 to range from $2.15 to $2.25.
Mr. Otto concluded, "Looking ahead, we remain focused on expanding
our reach and further building on our leadership positions in the
market. We have a well developed infrastructure to support our growth,
both domestically and overseas, and remain dedicated to successfully
executing our long-term strategy and capitalizing on the many
opportunities that lie ahead."
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. The Company's products
are offered under the Teva, Simple and UGG brand names.
*All statements in this press release that are not historical
facts are forward-looking statements, including the Company's
estimates and guidance regarding sales and earnings per share results
for the fourth quarter of 2004 and for the years ending December 31,
2004 and 2005, and its expectations regarding its performance, and its
short-term and long-term future prospects, among others. These
forward-looking statements are inherently uncertain and are based on
the Company's expectations as of today, October 21, 2004. In addition,
such forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause the actual results to
differ materially from those expressed or implied by such
forward-looking statements. Many of the risks, uncertainties and other
factors are discussed in detail in the Company's Annual Report on Form
10-K/A for the fiscal year ended December 31, 2003. Among the factors
which could affect our financial condition and results of operations
are the following: our ability to anticipate fashion trends; whether
the UGG brand will continue to grow at the rate it has experienced in
the recent past; possible shortages in top grade sheepskin or
interruption in the supply of other materials, which could interrupt
product manufacturing and increase product costs; the risk that our
licensees will perform under their licenses; the risk that we are
unable to accurately forecast consumer demand; the sensitivity of the
footwear industry to changes in general economic conditions; whether
we are successful in continuing to implement our growth strategy; the
success of our customers; our ability to protect our intellectual
property; our ability to develop and patent new technologies as our
existing patents expire; the difficulty of matching inventory to
future customer demand; the risk that counterfeiting can harm our
sales or our brand image; our dependence on independent manufacturers
to supply our products; the availability of products, which can affect
our ability to fulfill our customers' orders; the risk that raw
materials do not meet our specifications or that the prices of raw
materials may increase, which would potentially cause a high return
rate, a loss of sales or a reduction in our gross margins; risks of
international commerce resulting from our reliance on manufacturers
outside the U.S.; the risk that our manufacturers, suppliers or
licensees might fail to conform to labor laws or to our ethical
standards; the need to secure sufficient and affordable sources of raw
materials; our reliance on licensing partners to expand our business;
the challenge of managing our brands for growth; currency risk; delays
and unexpected costs that can result from customs regulations; the
sensitivity of our sales, particularly of the Teva(R) and UGG(R)
brands, to seasonal and weather factors; our reliance on independent
distributors in international markets; legal compliance challenges and
political and economic risk in our international markets; the
potential impact of litigation; the effect of consolidations and
restructurings on our customers in the footwear industry; intense
competition within the footwear industry; and the threat that
terrorism could disrupt commerce in the U.S. and abroad. Given these
uncertainties, prospective investors are cautioned not to place undue
reliance on such forward-looking statements. The Company intends to
continue its practice of not updating projections until its next
quarterly results announcement. The Company disclaims any obligation
to update any such factors or to publicly announce the results of any
revisions to any of the forward-looking statements contained in the
Annual Report on Form 10-K/A for fiscal year 2003, the subsequent
Quarterly Reports on Form 10-Q or this news release.
DECKERS OUTDOOR CORPORATION
AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Unaudited)
September 30, December 31,
Assets 2004 2003
------------- -------------
Current assets:
Cash and cash equivalents $ 15,738,000 6,662,000
Trade accounts receivable, net 34,649,000 18,745,000
Inventories 27,030,000 18,004,000
Prepaid expenses and other current assets 1,287,000 694,000
Deferred tax assets 2,137,000 2,137,000
------------- -------------
Total current assets 80,841,000 46,242,000
Property and equipment, at cost, net 2,972,000 2,969,000
Intangible assets, less applicable
amortization 70,382,000 70,572,000
Other assets 525,000 1,243,000
------------- -------------
$ 154,720,000 121,026,000
============= =============
Liabilities and Stockholders' Equity
Current liabilities:
Notes payable and current installments of
long-term debt $ ----- 3,792,000
Trade accounts payable 11,422,000 11,220,000
Accrued expenses 7,820,000 4,959,000
Income taxes payable 11,625,000 3,468,000
------------- -------------
Total current liabilities 30,867,000 23,439,000
------------- -------------
Long-term debt, less current installments ----- 26,495,000
Deferred tax liabilities-noncurrent 568,000 568,000
Stockholders' equity:
Preferred stock ----- -----
Common stock 117,000 97,000
Additional paid-in capital 63,583,000 27,115,000
Retained earnings 59,343,000 43,052,000
Accumulated other comprehensive income 242,000 260,000
------------- -------------
Total stockholders' equity 123,285,000 70,524,000
------------- -------------
$ 154,720,000 121,026,000
============= =============
DECKERS OUTDOOR CORPORATION
AND SUBSIDIARIES
Condensed Consolidated Statements of Earnings
(Unaudited)
Three-month period ended Nine-month period ended
September 30, September 30,
------------------------ ------------------------
2004 2003 2004 2003
----------- ----------- ------------ -----------
Net sales $55,797,000 24,894,000 140,615,000 85,338,000
Cost of sales 33,562,000 15,392,000 79,068,000 47,764,000
----------- ----------- ------------ -----------
Gross profit 22,235,000 9,502,000 61,547,000 37,574,000
Selling, general and
administrative
expenses 12,877,000 7,720,000 33,287,000 23,527,000
Litigation income ----- ----- ----- (500,000)
----------- ----------- ------------ -----------
Earnings from
operations 9,358,000 1,782,000 28,260,000 14,547,000
Other expense (income):
Interest, net (28,000) 981,000 2,261,000 3,412,000
Other 5,000 (1,000) ----- (15,000)
----------- ----------- ------------ -----------
Earnings before
income tax expense 9,381,000 802,000 25,999,000 11,150,000
Income tax expense 3,559,000 321,000 9,708,000 4,460,000
----------- ----------- ------------ -----------
Net earnings $ 5,822,000 481,000 16,291,000 6,690,000
=========== =========== ============ ===========
Net earnings per
share:
Basic $ 0.50 0.05 1.52 0.70
Diluted 0.46 0.04 1.37 0.57
=========== =========== ============ ===========
Weighted-average
shares:
Basic 11,651,000 9,657,000 10,706,000 9,582,000
Diluted 12,748,000 12,037,000 11,921,000 11,716,000
=========== =========== ============ ===========
CONTACT: Deckers Outdoor Corporation
Scott Ash, 805-967-7611
or
Investor Relations:
Integrated Corporate Relations, Inc.
Chad A. Jacobs or Brendon E. Frey, 203-222-9013