Quiksilver, Inc. (ZQK)

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Quiksilver (ZQK)

Q3 2012 Earnings Call

September 06, 2012 4:30 pm ET

Executives

Robert Jaffe

Robert B. McKnight - Co-Founder, Executive Chairman, Chief Executive Officer and President

Richard J. Shields - Chief Financial Officer and Principal Accounting Officer

Craig Stevenson - Chief Operating Officer and Global Brand President

Robert Owen Colby - President of Americas Region

Analysts

Diana Katz - Lazard Capital Markets LLC, Research Division

William M. Reuter - BofA Merrill Lynch, Research Division

Erinn E. Murphy - Piper Jaffray Companies, Research Division

Mitchel J. Kummetz - Robert W. Baird & Co. Incorporated, Research Division

Jeffrey Wallin Van Sinderen - B. Riley & Co., LLC, Research Division

Christian Buss - Crédit Suisse AG, Research Division

Presentation

Operator

Good day, and welcome to the Quiksilver Fiscal 2012 Third Quarter Financial Results Conference call. As a reminder, today's conference is being recorded. At this time, I would like to turn the conference over to Robert Jaffe, head of Investor Relations for Quiksilver. Please go ahead, sir.

Robert Jaffe

Thank you, operator. Good afternoon, everyone, and welcome to the Quiksilver Third Quarter Fiscal 2012 Earnings Conference Call. Our speakers today are Bob McKnight, our Chairman, President and Chief Executive Officer; and Richard Shields, our Chief Financial Officer. Also joining us are Craig Stevenson, our Global Brand President and Chief Operating Officer of Quiksilver, Inc.; and Rob Colby, our Americas Region President.

Before we begin, I'd like to briefly review the company's Safe Harbor statement. Throughout our call today, items may be discussed that are not based on historical fact and are considered forward-looking statements within the meanings of the Private Securities Litigation Reform Act of 1995. In particular, statements regarding Quiksilver's business outlook and future performance constitute forward-looking statements, and results could differ materially from those stated or implied by these forward-looking statements as a result of risks, uncertainties and other factors, including those identified in our filings with the Securities and Exchange Commission, specifically under the section titled Risk Factors in our most recent annual report on Form 10-K and our -- and in our quarterly reports on Form 10-Q.

All forward-looking statements made on this call speak only as of today's date, September 6, 2012, and the company undertakes no duty to update any forward-looking statement. In addition, this presentation may contain references to non-GAAP financial information. A reconciliation of non-GAAP financial information to the most directly comparable GAAP financial information is included in our press release, which can be found in electronic form on our website at www.quiksilverinc.com.

With that out of the way, I'd like to now turn the call over to Bob McKnight.

Robert B. McKnight

Thanks, Robert. Good afternoon, everyone, and thanks for joining us today for our third quarter conference call. Today marks a personal milestone for myself as I take part in my 100th earnings call for Quiksilver. As I look back on 25 years of helping lead and define this great company, I'm more excited than ever about our opportunities to create memorable products, captivate our customers and seize global opportunities to make Quiksilver, Roxy and DC the most demanded action sports brands in the world.

Turning to our business in the third quarter, we made solid progress and remained focused on our 3 long-term initiatives, which can be summarized -- best summarized as follows: strengthening our brands, expanding our business and driving operational efficiencies. Our entire team has been working diligently on implementing these initiatives during this transformative time. Let me expand on each of these a bit more.

Brand identity is one of the most important elements of our business, and strengthening our brands is critical to our continued growth. This includes all of our market initiatives, including our extensive base of team writers, global and local events, advertising, promotions and product development. During the quarter, Roxy’s Let The Sea Set You Free social media campaign with an enormous success with Roxy gaining more than 300,000 Facebook fans in just 2 months. In June, 3 winners from the contest were picked from more than 5,000 entries across 83 countries, creating an immeasurable excitement and buzz about Roxy and making Let The Sea Set You Free its most successful digital campaign ever.

Also in the quarter, Roxy launched its outdoor fitness line, which is projected to do about $6 million in sales in its first year. We believe this line broadens Roxy's customer base and further extends the brand into a market that complements the active females that enjoy the Roxy attitude and aesthetic. We are really pleased with this new line's positive reviews.

Meanwhile, DC pumped its presence in the quarter with the 2012 DC Street League pro skate tour, which was founded by iconic DC personality, Rob Dyrdek, and included 2 wins in 3 events by DC rider, Nyjah Houston. DC made another major marketing splash as Ken Block's Gymkhana FIVE video went viral on the Internet, attracting an astonishing 25 million views in the first month, making the white-knuckle adrenaline ride through the streets of San Francisco one of the Web's most shared videos this summer.

Nothing strengthens the Quiksilver brand like the success of our surf team riders, and Stephanie Gilmore did just that in the quarter, winning her fifth ASP world title in July at the Roxy Pro in Biarritz.

While our brands are some of the most sought after in action sports, we can never take our business for granted and need to continue to inspire consumers around the globe. All of these events and initiatives during the quarter helped to reimburse -- to reinforce and differentiate the Quiksilver, Roxy and DC brands.

Read the rest of this transcript for free on seekingalpha.com