Exhibit 99.1
Deckers Outdoor Corporation Reports Record First Quarter Financial
Results; First Quarter Revenue Increases 45% to a First Quarter Record
of $64.3 Million; First Quarter Diluted EPS Increases 41% to a First
Quarter Record of $0.69
GOLETA, Calif.--(BUSINESS WIRE)--April 21, 2005--
-- Company Reaffirms Fiscal 2005 EPS Guidance Range of $2.45 to
$2.55
Deckers Outdoor Corporation (NASDAQ: DECK) today announced record
financial results for the first quarter ended March 31, 2005.
For the first quarter, net sales increased 45.2% to $64.3 million
versus $44.3 million in the same period last year. Net earnings for
the quarter increased 65.1% to a record $8.9 million compared to
earnings of $5.4 million last year and income per diluted share
increased 40.8% to $0.69, versus income per diluted share of $0.49 in
the first quarter of 2004.
During the first quarter, Deckers' bad debt expense increased
approximately $500,000 versus the same period a year ago, primarily as
a result of non-payment by the Company's U.K. distributor for UGG,
which it terminated in March 2005. This unanticipated bad debt expense
equated to approximately $0.02 of income per diluted share in the
first quarter of fiscal 2005.
Chairman of the Board, Doug Otto, stated, "Once again, we were
pleased to report record first quarter sales and earnings. Our strong
top line performance was primarily fueled by continued growth in all
three brands. Although our results were impacted by a higher than
expected bad debt expense, we were still able to grow our net income
by 65% to a record level for the first quarter. We remain optimistic
about our future prospects, as our Fall bookings are coming in higher
than previously estimated and this is reflected in our heightened
outlook for the second half of the year."
Including sales from both the wholesale divisions and the Internet
and catalog retailing business, Teva net sales for the first quarter
increased 5% to $39.4 million compared to $37.4 million last year, UGG
net sales for the quarter increased 337% to $22.5 million from $5.1
million, and Simple net sales increased 41% to $2.4 million for the
quarter compared to $1.7 million for the same period last year. Sales
for the Internet and catalog retailing business, which are included in
the brand sales numbers above, aggregated approximately $5.0 million
for the first quarter of 2005, up 38% from $3.6 million for the first
quarter of 2004.
Mr. Otto further stated, "During the first quarter, Teva achieved
its highest quarterly net sales in the Company's history, despite
unseasonable weather and lower than anticipated sales overseas. UGG
experienced significant growth during the quarter, primarily as a
result of carryover shipments of our 2004 Fall and Holiday product as
well as the initial deliveries of our first Spring line. For Simple,
sales were driven by strength in sneakers, sandals and clogs, as we
benefited from expanded distribution and increased shelf space for the
brand."
The gross margin for the quarter was 46.0%, compared to 46.1% for
the first quarter of 2004. Selling, general and administrative
expenses were $15.2 million or 23.6% of sales for the first quarter of
2005 compared to $10.8 million or 24.3% of sales in the first quarter
of 2004. This $4.4 million increase resulted primarily from $2.3
million of costs associated with the increased revenue, $0.8 of
increased marketing costs, $0.5 million of increased bad debt expenses
and $0.4 million related to the initial compliance with Section 404 of
the Sarbanes-Oxley Act of 2002. The continued leverage of our selling,
general and administrative expenses resulted in a 70 basis point
improvement in our operating margin to 22.4% of sales for the first
quarter of 2005 compared to 21.7% for the same period last year.
In order to better meet demand and ensure more timely deliveries
to its retail partners in the second half of fiscal 2005 and to
support the anticipated growth for the UGG Fall and Winter season this
year, the Company made the strategic decision to receive Fall and
Winter UGG products earlier than it did a year ago. As a result,
inventories as of March 31, 2005 were up by $27.8 million as compared
to March 31, 2004. The Company is comfortable with its current
inventory position and expects inventories to return to normalized
levels by year-end.
Deckers updated its 2005 sales and earnings guidance. For the
fiscal year 2005, the Company remains comfortable with its previously
issued guidance of net sales between $250 million and $260 million and
income per diluted share between $2.45 and $2.55. Due to the
unseasonable weather and lower international expectations, the Company
currently expects second quarter net sales to range from $40 million
to $41 million and income per diluted share to range from $0.28 to
$0.30. However, as a result of the better than expected Fall bookings
for UGG, the Company expects to make up the sales and earnings
shortfall in the second half of fiscal 2005, primarily in the third
quarter. For fiscal 2005, the Company now expects annual net sales to
be approximately $92 million to $95 million for Teva, $10 million to
$12 million for Simple and $148 million to $153 million for UGG.
Mr. Otto concluded, "Looking ahead, we remain confident about the
vitality of our brands and the growth opportunities for our Company.
We are committed to leveraging the strength of our assets in order to
further build on our leadership position in the marketplace and
believe we have the right personnel and well-developed infrastructure
in place to successfully execute our strategy. We believe our new
President, Angel Martinez, will make significant contributions to our
business in 2005 and in future years."
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(R), Simple(R) and UGG(R) brand names, which
are also its registered trademarks.
All statements in this press release that are not historical facts
are forward-looking statements, including statements about the
Company's future prospects, the Company's estimates regarding sales
and income per diluted share results for the second quarter of 2005,
expectations for the full year ending December 31, 2005, expectations
regarding increased sales and earnings in the second half of 2005 and
the third quarter of 2005, as well as sales expectations for each of
the brands in 2005, among others. These forward-looking statements are
inherently uncertain and are based on the Company's expectations as of
today, April 21, 2005. 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 for the fiscal year ended
December 31, 2004. 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 risk that retailers could postpone or cancel existing
orders; 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;
the threat that terrorism could disrupt commerce in the U.S. and
abroad; our ability to defend attacks on the validity of our
intellectual property; and our ability to register and protect our
intellectual property in expanding product and geographic markets.
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 Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 2004, the Company's Quarterly Reports on Form
10-Q, the Company's Current Reports on Form 8-K or this news release.
(Tables to follow)
DECKERS OUTDOOR CORPORATION
AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Unaudited)
March 31, December 31,
Assets 2005 2004
------------ ------------
Current assets:
Cash and cash equivalents $ 17,634,000 10,379,000
Short-term investments ----- 15,475,000
Trade accounts receivable, net 39,206,000 40,226,000
Inventories 45,446,000 30,260,000
Prepaid expenses and other current
assets 1,256,000 1,491,000
Deferred tax assets 3,240,000 3,240,000
------------ ------------
Total current assets 106,782,000 101,071,000
Property and equipment, at cost, net 3,787,000 2,838,000
Intangible assets, less applicable
amortization 70,242,000 70,319,000
Other assets 582,000 592,000
------------ ------------
$181,393,000 174,820,000
============ ============
Liabilities and Stockholders' Equity
Current liabilities:
Trade accounts payable $ 13,669,000 16,524,000
Accrued expenses 5,379,000 7,968,000
Income taxes payable 8,533,000 6,725,000
------------ ------------
Total current liabilities 27,581,000 31,217,000
------------ ------------
Deferred tax liabilities-noncurrent 2,607,000 2,607,000
Stockholders' equity:
Preferred stock ----- -----
Common stock 123,000 122,000
Additional paid-in capital 73,317,000 71,959,000
Retained earnings 77,478,000 68,591,000
Accumulated other comprehensive income 287,000 324,000
------------ ------------
Total stockholders' equity 151,205,000 140,996,000
------------ ------------
$181,393,000 174,820,000
============ ============
DECKERS OUTDOOR CORPORATION
AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(Unaudited)
Three-month period ended
March 31,
--------------------------
2005 2004
----------- -----------
Net sales $64,263,000 44,272,000
Cost of sales 34,696,000 23,866,000
----------- -----------
Gross profit 29,567,000 20,406,000
Selling, general and administrative expenses 15,168,000 10,778,000
----------- -----------
Income from operations 14,399,000 9,628,000
Other expense (income):
Interest, net (69,000) 1,118,000
Other 1,000 (6,000)
----------- -----------
Income before income taxes 14,467,000 8,516,000
Income taxes 5,580,000 3,134,000
----------- -----------
Net income $ 8,887,000 5,382,000
=========== ===========
Net income per share:
Basic $ 0.72 0.55
Diluted 0.69 0.49
=========== ===========
Weighted-average shares:
Basic 12,285,000 9,747,000
Diluted 12,922,000 11,051,000
=========== ===========
CONTACT: Deckers Outdoor Corporation
Scott Ash, 805-967-7611
or
Integrated Corporate Relations, Inc.
Chad A. Jacobs or Brendon Frey, 203-682-8200