Huntington Beach-based clothing maker Quiksilver Inc. reported a quarterly profit that topped Wall Street’s expectations and said it reworked a credit line with a lower interest rate.
Quiksilver, which makes clothes inspired by surfing, skateboarding and snowboarding, reported a profit of $12.5 million before charges for the three months through July.
That was up from a profit of $3.7 million a year earlier.
Analysts were looking for a profit of $3.7 million.
Including restructuring and other charges, Quiksilver reported a profit of $7.8 million.
Sales were $441.5 million, down 12% from a year earlier and shy of the $442.9 expected by Wall Street.
“Our team executed well in an economic environment that continues to present significant challenges around the world,” Chief Executive Bob McKnight said.
Quiksilver faces a tough clothing market that’s been slow to recover from the downturn.
The company also continues to dig out of a hole it created for itself with 2005’s ill-fated buy of French ski maker Rossignol.
Quiksilver bought money-losing Rossignol for $560 million and sold it in a 2008 fire sale for $50 million.
Lingering debt from the deal coupled with the downturn nearly sunk Quiksilver last year.
The company took another step away from the wreckage with word Thursday that it reworked terms of a $150 million credit line with Bank of America Corp. and General Electric Co.’s GE Capital.
The interest rate on the credit line was cut by about 150 basis points, the company said. Commitment fees to keep the unused line of credit open were cut by 50 basis points.
The reworking came after a debt-for-stock swap by Quiksilver.
In August, Quiksilver exchanged shares for $140 million in debt in a move that bolstered the company’s once crippling balance sheet.
Quiksilver exchanged 31.1 million shares for the debt, which was held by with New York-based Rhone Group LLC.
The debt stems from a deal struck with Rhone last year that helped Quiksilver get a U.S. line of credit and consolidate its European debt.
The Rhone financing was seen as a lifesaver for Quiksilver. It’s come at a price—Rhone now owns nearly a third of Quiksilver, up from 16% before the stock-for-debt swap.
Quiksilver now has $843 million in total debt.
