Volcom Reports Financial Results for 2009 Fourth Quarter and Full Year

Volcom, Inc. (NASDAQ: VLCM) today announced financial results for the fourth quarter and full year ended December 31, 2009.

For the 2009 fourth quarter, total consolidated revenues were $64.2 million, compared with $69.6 million in the fourth quarter of 2008. Total revenues in the company’s U.S. segment, which includes revenues from the U.S., Canada, Japan and most other international territories outside of Europe, as well as the company’s branded retail stores, were $46.0 million, compared with $54.9 million in the prior-year period. Total revenues in the company’s Europe segment were $12.9 million, compared with $10.9 million in the same period in 2008. Total revenues in the company’s Electric segment were $5.3 million, compared with $3.8 million in 2008.

“I am very proud of the entire Volcom team’s focus, dedication and strategic agility this past year as we navigated through one of the most challenging economic periods in history,” said Richard Woolcott, Volcom’s chairman and chief executive officer. “We rose to the challenge, remained healthy and profitable and planted the seeds that I believe will position the company for growth and success in the years to come.”

Consolidated gross profit for the 2009 fourth quarter was $31.6 million, equal to 49.2% of total revenues, compared with $30.9 million, equal to 44.4% of total revenues, in the fourth quarter of 2008.

Selling, general and administrative expenses on a consolidated basis were $28.1 million in the 2009 fourth quarter versus $26.5 million in the comparable period in 2008.

On a GAAP basis, net income for the 2009 fourth quarter was $3.4 million, equal to $0.14 per diluted share. This compares with net loss for the fourth quarter of 2008 of $8.7 million, or $0.36 per share, which included a pre-tax, non-cash impairment charge on goodwill and intangible assets of $16.2 million, or approximately $0.46 per share, as well as a foreign exchange loss of $1.4 million, or approximately $0.04 per share, related to the strengthened U.S. dollar against the company’s Canadian dollar denominated receivables. Excluding these two items, adjusted net income for the 2008 fourth quarter was $3.3 million, or $0.14 per diluted share.

The company believes that including adjusted net income and adjusted net income per diluted share for the 2008 fourth quarter provides a useful and relevant measure for comparative year-over-year operating performance. Refer to the attached reconciliation table for details regarding the basis for the adjusted net income per diluted share calculation.

At December 31, 2009 the company had cash, cash equivalents and short-term investments totaling $111.2 million, and no long-term debt. Cash flow from operations for the full year was approximately $36.2 million. Total stockholder’s equity was $219.0 million at year-end.

2010 First Quarter Financial Outlook

In casting its financial outlook, Volcom noted it expects increased revenue growth as the year progresses, primarily reflecting the company’s forecast of a generally strengthening global economy throughout 2010. For the 2010 first quarter, the company currently expects total consolidated revenues of approximately $71 million to $74 million and fully diluted earnings per share in the range of $0.16 to $0.19.

Conference Call Information

The company will host a conference call today at approximately 4:30 p.m. ET to discuss its financial results and outlook in further detail. The conference call will be available to interested parties through a live audio Internet broadcast at www.volcom.com. A telephone playback of the conference call also will be available through 11:59 p.m. ET, Thursday, March 4. Listeners should call (800) 642-1687 (domestic) or (706) 645-9291 (international) and use reservation number 53413719.

About Volcom, Inc.

Volcom is an innovative designer, marketer and distributor of premium quality young mens and womens clothing, accessories and related products. The Volcom brand, symbolized by The Stone , is athlete-driven, creative and forward thinking. Volcom has consistently followed its motto of “youth against establishment,” and the brand is inspired by the energy of youth culture. Volcom branded products are sold throughout the United States and internationally. Volcom’s news announcements and SEC filings are available through the company’s website at www.volcom.com.

Safe Harbor Statement

Certain statements in this press release and oral statements made from time to time by representatives of the company are forward-looking statements for purposes of the safe harbor provisions of The Private Securities Litigation Reform Act of 1995, including statements in connection with or related to any discussion of or reference to Volcom’s future operations, opportunities or financial performance. In particular, statements regarding the company’s guidance and future financial performance contained under the section entitled 2010 First Quarter Financial Outlook and Mr. Woolcott’s comments regarding positioning “the company for future growth and success” are forward-looking statements. These forward-looking statements are based on management’s current expectations but they involve a number of risks and uncertainties. Volcom’s actual results and the timing of events could differ materially from those anticipated in the forward-looking statements as a result of risks and uncertainties, including, without limitation, further softening of the retail environment, sales of our products by key retailers, including Pacific Sunwear and Zumiez, changes in fashion trends and consumer preferences, general economic conditions, the impact of sourcing costs, and additional factors which are detailed in our filings with the Securities and Exchange Commission, including the Risk Factors contained in the company’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission (the “SEC”) and the subsequently filed Quarterly Reports on Form 10-Q, all of which are available at www.sec.gov. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. Volcom is under no obligation, and expressly disclaims any obligation, to update or alter any forward-looking statements, whether as a result of new information, future events or otherwise.

This press release contains non-GAAP financial measures, as defined in Regulation G promulgated by the Securities and Exchange Commission, with respect to the three and twelve month periods ended December 31, 2008. For purposes of Regulation G, a non-GAAP financial measure is a numerical measure of a company’s historical or future financial performance, financial position or cash flows that excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the most directly comparable measure calculated and presented in accordance with GAAP in the statement of income, balance sheet or statement of cash flows (or equivalent statements) of the company or includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the most directly comparable measure so calculated and presented. Pursuant to the requirements of Regulation G, Volcom has provided reconciliations herein of the non-GAAP financial measures to the most directly comparable GAAP financial measures. Specifically, the non-GAAP financial measures disclosed in this press release are “adjusted consolidated net income” and “adjusted consolidated net income per diluted share.” Volcom believes its presentation of historical non-GAAP financial measures provides useful supplementary information to investors regarding its operational performance because it enhances an investor’s overall understanding of the financial performance and prospects for the future of Volcom’s core business activities by providing a basis for the comparison of results of core business activities between current and past periods. The presentation of historical non-GAAP financial measures is not meant to be considered in isolation from or as a substitute for results prepared in accordance with accounting principles generally accepted in the United States.