Third Quarter Operating Margin of 26%
and Adjusted Operating Margin of 28%
Diluted EPS Up 5.5% to $2.87 and Adjusted Diluted EPS Up 9.4% to
$3.25
BROOMFIELD, Colo., Nov. 2, 2023
/PRNewswire/ -- Crocs, Inc. (NASDAQ: CROX), a world leader in
innovative casual footwear for women, men, and children, today
announced its third quarter 2023 financial results.
"We delivered a strong third quarter, exceeding the high-end of
our guidance, led by double-digit revenue growth in our Crocs Brand
supported by healthy full-price selling and industry-leading
operating margins," said Andrew
Rees, Chief Executive Officer. "Both our brands gained share
during the back-to-school season. During the quarter, we took
decisive action around HEYDUDE to accelerate our marketplace
management strategy to ensure long-term brand health. As such, we
are adjusting our full-year outlook to reflect this shift."
Amounts referred to as "Adjusted" or "Non-GAAP" are Non-GAAP
measures and include adjustments that are described under the
heading "Reconciliation of GAAP Measures to Non-GAAP Measures." A
reconciliation of these amounts to their GAAP counterparts are
contained in the schedules below.
Third Quarter 2023 Highlights
- Consolidated revenues of $1,045.7
million increased 6.2%, or 5.8% on a constant currency
basis, as compared to 2022.
- Crocs Brand revenues of $798.8
million increased 11.6%, or 11.1% on a constant currency
basis, as compared to 2022.
- Crocs Brand growth was fueled by Asia revenue growth of 26.5%, or 28.6% on a
constant currency basis, and North
America direct-to-consumer ("DTC") comparable sales growth
of 10.2%, as compared to 2022.
- HEYDUDE Brand DTC revenues grew 14.6% as compared to 2022.
- Operating margin was 26.2% and adjusted operating margin was
28.3%.
- Diluted earnings per share increased 5.5% to $2.87 as compared to the same period last year.
Adjusted diluted earnings per share increased 9.4% to $3.25.
- During the quarter $90.0 million
of debt was repaid, and we reduced gross leverage to 1.7x. We
resumed our share repurchase program during the quarter,
repurchasing approximately 1.4 million shares for $150.0 million.
Third Quarter 2023 Operating Results
- Revenues were $1,045.7
million, an increase of 6.2% from the same period last year,
or 5.8% on a constant currency basis. DTC revenues grew 17.8%, or
17.7% on a constant currency basis. Wholesale revenues fell 3.6%
compared to 2022, or down 4.3% on a constant currency basis.
- Gross margin was 55.6% compared to 54.9% in the prior
year. Adjusted gross margin improved 230 basis points to 57.4%
compared to 55.1% in the same period last year.
- Selling, general, and administrative expenses
("SG&A") of $307.8 million
increased from $277.2 million in the
same period last year, and SG&A as a percent of revenues rose
to 29.4% from 28.1% in prior year. Adjusted SG&A increased to
29.1% of revenues versus 27.2% for the same period last year.
- Income from operations increased 3.7% to $273.9 million and operating margin fell slightly
to 26.2%, compared to 26.8% for the same period last year. Adjusted
income from operations rose 7.8% to $295.9
million and adjusted operating margin improved 40 basis
points to 28.3%.
- Diluted earnings per share increased 5.5% to
$2.87, as compared to $2.72 for the same period last year. Adjusted
diluted earnings per share increased 9.4% to $3.25 compared to 2022.
Third Quarter 2023 Brand Summary
- Crocs Brand: Revenues increased 11.6%, or 11.1% on a
constant currency basis, to $798.8
million. DTC comparable sales increased 15.3%. Wholesale
revenues increased 4.5%, or 3.6% on a constant currency basis.
- North America revenues of
$480.7 million increased 8.0%, or
8.2% on a constant currency basis.
- Asia Pacific revenues of
$175.2 million increased 26.5%, or
28.6% on a constant currency basis.
- Europe, Middle East, Africa, and Latin
America ("EMEALA") revenues of $142.8
million increased 8.3%, or 2.7% on a constant currency
basis.
- HEYDUDE Brand: Revenues during the third quarter
decreased 8.3% to $246.9 million. DTC
revenues increased 14.6% to $100.4
million. Wholesale revenues declined 19.4% to $146.5 million following prior year pipeline fill
and as our wholesale partners were more cautious on at-once
orders.
Balance Sheet and Cash Flow
- Cash and cash equivalents were $127.3 million as of September 30, 2023, compared to $191.6 million as of December 31, 2022.
- Inventories decreased to $390.2
million as of September 30,
2023, compared to $471.6
million as of December 31,
2022 and $513.7 million as of
September 30, 2022.
- Capital expenditures during the nine months ended
September 30, 2023 were $86.4 million, compared to $89.6 million for the same period last year,
reflecting continued investments in our distribution centers and
expansion of our corporate facilities to support growth.
- Borrowings were $1,938.7
million as of September 30,
2023 compared to $2,322.4
million as of December 31,
2022, as we repaid $389.1
million of debt year to date. Our liquidity position remains
strong with $127.3 million in cash
and cash equivalents and $563.7
million in available borrowing capacity as of September 30, 2023.
Share Repurchase Activity
During the third quarter we resumed our share repurchase
program, repurchasing $150.0 million
or approximately 1.4 million shares of our common stock at an
average price of $107.85 per share.
Following these repurchases, $900.0
million of share repurchase authorization remained available
for future repurchases. Our capital allocation priorities remain
debt paydown and repurchasing shares as we approach our
long-term net leverage target of 1.0x to 1.5x.
Financial Outlook
Fourth Quarter 2023
With respect to the fourth quarter of 2023, we expect:
- Revenues to decline approximately 1% to 4% compared to fourth
quarter 2022, resulting in revenues of approximately $903 million to $938
million at currency rates as of the end of the last reported
period.
- Adjusted operating margin of approximately 21.0%.
- Adjusted diluted earnings per share of $2.05 to $2.35.
Full Year 2023
With respect to 2023, we expect:
- Consolidated revenue growth to now be approximately 10% to 11%
compared to 2022, resulting in revenues of approximately
$3,905 to $3,940 million at currency rates as of the end of
the last reported period.
- Revenues for the Crocs Brand to grow approximately 12% to
13% on a reported basis.
- Revenues for the HEYDUDE Brand to now grow approximately 4% to
6% on a reported basis, implying a decline of approximately 4% to
6% including the period prior to the HEYDUDE acquisition.
- Adjusted operating margin to now be approximately 27.0%.
- Non-GAAP adjustments of approximately $60 million primarily related to investments in
our distribution centers to support growth and an anticipated
non-cash impairment for our corporate headquarters. We expect these
adjustments to be fairly balanced across cost of sales and
SG&A.
- Combined GAAP tax rate to be approximately 23% and non-GAAP
effective tax rate of approximately 20%.
- Adjusted diluted earnings per share to now be between
$11.55 and $11.85. Adjusted diluted earnings per share
guidance does not assume any impact from potential future share
repurchases.
- Capital expenditures to now be approximately $125 to $135
million, primarily related to the expansion of our
distribution capabilities including our new HEYDUDE distribution
center in Las Vegas,
implementation of technology systems for HEYDUDE, and expansion of
our corporate facilities to support growth.
Conference Call Information
A conference call to discuss third quarter 2023 results is
scheduled for today, Thursday, November 2, 2023, at
8:30 am ET. To receive conference
call details, please register at the Investor Relations section of
the Crocs website, investors.crocs.com. The webcast will also be
available live and on replay through November 2, 2024 at this
site.
About Crocs, Inc.:
Crocs, Inc. (Nasdaq: CROX), headquartered in Broomfield, Colorado, is a world leader in
innovative casual footwear for all, combining comfort and style
with a value that consumers know and love. The Company's brands
include Crocs and HEYDUDE, and its products are sold in more than
85 countries through wholesale and direct-to-consumer channels. For
more information on Crocs, Inc. visit investors.crocs.com. To learn
more about our brands, visit www.crocs.com or www.heydude.com.
Individuals can also visit
https://investors.crocs.com/news-and-events/ and follow both Crocs
and HEYDUDE on their social platforms.
Forward Looking Statements
This press release includes estimates, projections, and
statements relating to our business plans, commitments, objectives,
and expected operating results that are "forward-looking
statements" within the meaning of the Private Securities Litigation
Reform Act of 1995, Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended.
These statements include, but are not limited to, statements
regarding potential impacts to our business related to our supply
chain challenges, cost inflation, our financial condition, brand
and liquidity outlook, and expectations regarding our future
revenue, margins, non-GAAP adjustments, tax rate, earnings per
share, debt ratios and capital expenditures, share repurchases, the
acquisition of HEYDUDE and benefits thereof, Crocs' strategy,
plans, objectives, expectations (financial or otherwise) and
intentions, future financial results and growth potential,
statements regarding fourth quarter and full year 2023 financial
outlook and future profitability, cash flows, and brand strength,
anticipated product portfolio and our ability to deliver sustained,
highly profitable growth and create significant shareholder value.
These statements involve known and unknown risks, uncertainties,
and other factors, which may cause our actual results, performance,
or achievements to be materially different from any future results,
performances, or achievements expressed or implied by the
forward-looking statements. These risks and uncertainties include,
but are not limited to, the following: our expectations regarding
supply chain disruptions; the COVID-19 pandemic and related
government, private sector, and individual consumer responsive
actions; cost inflation; current global financial conditions,
including economic impacts resulting from the COVID-19 pandemic;
the effect of competition in our industry; our ability to
effectively manage our future growth or declines in revenues;
changing consumer preferences; our ability to maintain and expand
revenues and gross margin; our ability to accurately forecast
consumer demand for our products; our ability to successfully
implement our strategic plans; our ability to develop and sell new
products; our ability to obtain and protect intellectual property
rights; the effect of potential adverse currency exchange rate
fluctuations and other international operating risks; and other
factors described in our most recent Annual Report on Form 10-K
under the heading "Risk Factors" and our subsequent filings with
the Securities and Exchange Commission. Readers are encouraged to
review that section and all other disclosures appearing in our
filings with the Securities and Exchange Commission.
All information in this document speaks only as of
November 2, 2023. We do not undertake any obligation to update
publicly any forward-looking statements, whether as a result of the
receipt of new information, future events, or otherwise, except as
required by applicable law.
Category:Investors
CROCS, INC. AND
SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(in thousands,
except per share data)
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Revenues
|
$
1,045,717
|
|
$
985,094
|
|
$
3,002,250
|
|
$
2,609,823
|
Cost of
sales
|
464,081
|
|
443,792
|
|
1,322,937
|
|
1,245,864
|
Gross profit
|
581,636
|
|
541,302
|
|
1,679,313
|
|
1,363,959
|
Selling, general and
administrative expenses
|
307,784
|
|
277,239
|
|
852,044
|
|
733,255
|
Income from
operations
|
273,852
|
|
264,063
|
|
827,269
|
|
630,704
|
Foreign currency
losses, net
|
(1,770)
|
|
(393)
|
|
(1,622)
|
|
(1,115)
|
Interest
income
|
506
|
|
31
|
|
1,225
|
|
219
|
Interest
expense
|
(39,207)
|
|
(34,142)
|
|
(124,907)
|
|
(86,357)
|
Other income (expense),
net
|
24
|
|
16
|
|
448
|
|
(512)
|
Income before income
taxes
|
233,405
|
|
229,575
|
|
702,413
|
|
542,939
|
Income tax
expense
|
56,380
|
|
60,226
|
|
163,433
|
|
140,515
|
Net income
|
$
177,025
|
|
$
169,349
|
|
$
538,980
|
|
$
402,424
|
Net income per common
share:
|
|
|
|
|
|
|
|
Basic
|
$
2.90
|
|
$
2.75
|
|
$
8.74
|
|
$
6.59
|
Diluted
|
$
2.87
|
|
$
2.72
|
|
$
8.65
|
|
$
6.51
|
Weighted average common
shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
61,143
|
|
61,693
|
|
61,670
|
|
61,042
|
Diluted
|
61,615
|
|
62,367
|
|
62,280
|
|
61,840
|
CROCS, INC. AND
SUBSIDIARIES
EARNINGS PER
SHARE
(UNAUDITED)
(in thousands,
except per share data)
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Numerator:
|
|
|
|
|
|
|
|
Net income
|
$
177,025
|
|
$
169,349
|
|
$
538,980
|
|
$
402,424
|
Denominator:
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding - basic
|
61,143
|
|
61,693
|
|
61,670
|
|
61,042
|
Plus: Dilutive effect
of stock options and unvested restricted stock units
|
472
|
|
674
|
|
610
|
|
798
|
Weighted average
common shares outstanding - diluted
|
61,615
|
|
62,367
|
|
62,280
|
|
61,840
|
|
|
|
|
|
|
|
|
Net income per common
share:
|
|
|
|
|
|
|
|
Basic
|
$
2.90
|
|
$
2.75
|
|
$
8.74
|
|
$
6.59
|
Diluted
|
$
2.87
|
|
$
2.72
|
|
$
8.65
|
|
$
6.51
|
CROCS, INC. AND
SUBSIDIARIES
CONDENSED
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in thousands,
except share and par value amounts)
|
|
|
September
30,
2023
|
|
December 31,
2022
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
127,320
|
|
$
191,629
|
Restricted cash -
current
|
2
|
|
2
|
Accounts receivable,
net of allowances of $27,305 and $24,493, respectively
|
391,207
|
|
295,594
|
Inventories
|
390,163
|
|
471,551
|
Income taxes
receivable
|
3,047
|
|
14,752
|
Other
receivables
|
23,419
|
|
18,842
|
Prepaid expenses and
other assets
|
44,024
|
|
33,605
|
Total current
assets
|
979,182
|
|
1,025,975
|
Property and equipment,
net
|
223,061
|
|
181,529
|
Intangible assets, net
of accumulated amortization of $142,661 and $125,014,
respectively
|
1,793,704
|
|
1,800,167
|
Goodwill
|
711,885
|
|
714,814
|
Deferred tax assets,
net
|
527,678
|
|
528,278
|
Restricted
cash
|
3,707
|
|
3,254
|
Right-of-use
assets
|
313,608
|
|
239,905
|
Other assets
|
28,539
|
|
7,875
|
Total
assets
|
$
4,581,364
|
|
$
4,501,797
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
209,890
|
|
$
230,821
|
Accrued expenses and
other liabilities
|
248,160
|
|
239,424
|
Income taxes
payable
|
108,716
|
|
89,211
|
Current
borrowings
|
20,000
|
|
24,362
|
Current operating lease
liabilities
|
61,111
|
|
57,456
|
Total current
liabilities
|
647,877
|
|
641,274
|
Deferred tax
liabilities, net
|
299,296
|
|
302,030
|
Long-term income taxes
payable
|
226,006
|
|
224,837
|
Long-term
borrowings
|
1,918,668
|
|
2,298,027
|
Long-term operating
lease liabilities
|
286,910
|
|
215,119
|
Other
liabilities
|
2,349
|
|
2,579
|
Total
liabilities
|
3,381,106
|
|
3,683,866
|
Commitments and
contingencies
|
|
|
|
Stockholders'
equity:
|
|
|
|
Common stock, par
value $0.001 per share, 250.0 million shares authorized, 110.0
million
and 109.5 million issued, 60.8 million and 61.7 million
outstanding, respectively
|
110
|
|
110
|
Treasury stock, at
cost, 49.3 million and 47.7 million shares,
respectively
|
(1,863,567)
|
|
(1,695,501)
|
Additional paid-in
capital
|
821,120
|
|
797,614
|
Retained
earnings
|
2,358,179
|
|
1,819,199
|
Accumulated other
comprehensive loss
|
(115,584)
|
|
(103,491)
|
Total stockholders'
equity
|
1,200,258
|
|
817,931
|
Total liabilities and
stockholders' equity
|
$
4,581,364
|
|
$
4,501,797
|
CROCS, INC. AND
SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in
thousands)
|
|
|
Nine Months Ended
September 30,
|
|
2023
|
|
2022
|
Cash flows from
operating activities:
|
|
|
|
Net income
|
$
538,980
|
|
$
402,424
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
Depreciation and
amortization
|
40,531
|
|
26,498
|
Operating lease
cost
|
56,880
|
|
47,945
|
Share-based
compensation
|
23,507
|
|
25,463
|
Other non-cash
items
|
7,411
|
|
12,568
|
Changes in operating
assets and liabilities, net of acquired assets and assumed
liabilities:
|
|
|
|
Accounts
receivable
|
(99,912)
|
|
(166,864)
|
Inventories
|
77,915
|
|
(139,682)
|
Prepaid expenses and
other assets
|
(30,714)
|
|
(20,526)
|
Accounts payable,
accrued expenses and other liabilities
|
(4,935)
|
|
51,608
|
Right-of-use assets
and operating lease liabilities
|
(54,287)
|
|
(45,824)
|
Income
taxes
|
25,350
|
|
53,075
|
Cash provided by
operating activities
|
580,726
|
|
246,685
|
Cash flows from
investing activities:
|
|
|
|
Purchases of property,
equipment, and software
|
(86,378)
|
|
(89,588)
|
Acquisition of
HEYDUDE, net of cash acquired
|
—
|
|
(2,046,881)
|
Other
|
(90)
|
|
(20)
|
Cash used in investing
activities
|
(86,468)
|
|
(2,136,489)
|
Cash flows from
financing activities:
|
|
|
|
Proceeds from
borrowings
|
214,634
|
|
2,240,677
|
Repayments of
borrowings
|
(603,703)
|
|
(350,285)
|
Deferred debt issuance
costs
|
(1,736)
|
|
(51,395)
|
Repurchases of common
stock
|
(150,013)
|
|
—
|
Repurchases of common
stock for tax withholding
|
(17,034)
|
|
(11,439)
|
Other
|
—
|
|
95
|
Cash provided by (used
in) financing activities
|
(557,852)
|
|
1,827,653
|
Effect of exchange
rate changes on cash, cash equivalents, and restricted
cash
|
(262)
|
|
(8,821)
|
Net change in cash,
cash equivalents, and restricted cash
|
(63,856)
|
|
(70,972)
|
Cash, cash
equivalents, and restricted cash—beginning of period
|
194,885
|
|
216,925
|
Cash, cash
equivalents, and restricted cash—end of period
|
$
131,029
|
|
$
145,953
|
CROCS, INC. AND
SUBSIDIARIES
RECONCILIATION OF GAAP MEASURES TO NON-GAAP
MEASURES
In addition to financial measures presented on the basis of
accounting principles generally accepted in the United States of America ("GAAP"), we
present "Non-GAAP cost of sales," "Non-GAAP gross profit,"
"Non-GAAP gross margin," "Non-GAAP gross margin by brand,"
"Non-GAAP selling, general, and administrative expenses," "Non-GAAP
selling, general and administrative expenses as a percent of
revenues," "Non-GAAP income from operations," "Non-GAAP operating
margin," "Non-GAAP income before income taxes," "Non-GAAP income
tax expense (benefit)," "Non-GAAP effective tax rate," "Non-GAAP
net income," and "Non-GAAP basic and diluted net income per common
share," which are non-GAAP financial measures. We also present
future period guidance for "Non-GAAP operating margin," "Non-GAAP
operating income," "Non-GAAP effective tax rate," and "Non-GAAP
diluted earnings per share." Non-GAAP results exclude the impact of
items that management believes affect the comparability or
underlying business trends in our condensed consolidated financial
statements in the periods presented.
We also present certain information related to our current
period results of operations through "constant currency," which is
a non-GAAP financial measure and should be viewed as a supplement
to our results of operations and presentation of reportable
segments under GAAP. Constant currency represents current period
results that have been retranslated using exchange rates used in
the prior year comparative period to enhance the visibility of the
underlying business trends excluding the impact of foreign currency
exchange rate fluctuations.
Management uses non-GAAP results to assist in comparing business
trends from period to period on a consistent basis in
communications with the board of directors, stockholders, analysts,
and investors concerning our financial performance. We believe that
these non-GAAP measures, in addition to corresponding GAAP
measures, are useful to investors and other users of our condensed
consolidated financial statements as an additional tool for
evaluating operating performance and trends. For the three and nine
months ended September 30, 2023,
management believes it is helpful to evaluate our results excluding
the impacts of various adjustments relating to special or
non-recurring items. Investors should not consider these non-GAAP
measures in isolation from, or as a substitute for, financial
information prepared in accordance with GAAP.
CROCS, INC. AND
SUBSIDIARIES
RECONCILIATION OF
GAAP MEASURES TO NON-GAAP MEASURES
(UNAUDITED)
|
Non-GAAP cost of
sales, gross profit, and gross margin
reconciliation:
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
(in
thousands)
|
GAAP
revenues
|
$
1,045,717
|
|
$
985,094
|
|
$
3,002,250
|
|
$
2,609,823
|
|
|
|
|
|
|
|
|
GAAP cost of
sales
|
$
464,081
|
|
$
443,792
|
|
$
1,322,937
|
|
$
1,245,864
|
Distribution centers
(1)
|
(18,797)
|
|
(2,316)
|
|
(23,664)
|
|
(4,896)
|
HEYDUDE inventory fair
value step-up (2)
|
—
|
|
12
|
|
—
|
|
(62,238)
|
Inventory reserve in
Russia (3)
|
—
|
|
1,025
|
|
—
|
|
(200)
|
Total
adjustments
|
(18,797)
|
|
(1,279)
|
|
(23,664)
|
|
(67,334)
|
Non-GAAP cost of
sales
|
$
445,284
|
|
$
442,513
|
|
$
1,299,273
|
|
$
1,178,530
|
|
|
|
|
|
|
|
|
GAAP gross
profit
|
$
581,636
|
|
$
541,302
|
|
$
1,679,313
|
|
$
1,363,959
|
GAAP gross
margin
|
55.6 %
|
|
54.9 %
|
|
55.9 %
|
|
52.3 %
|
|
|
|
|
|
|
|
|
Non-GAAP gross
profit
|
$
600,433
|
|
$
542,581
|
|
$
1,702,977
|
|
$
1,431,293
|
Non-GAAP gross
margin
|
57.4 %
|
29
|
55.1 %
|
|
56.7 %
|
|
54.8 %
|
|
|
(1)
|
Represents expenses,
including expansion costs, duplicate rent costs, and transitional
storage costs, primarily related to our distribution centers in
Dayton, Ohio and Las Vegas, Nevada.
|
(2)
|
Primarily represents a
prior year step-up of HEYDUDE inventory costs to fair value upon
the close of the acquisition on February 17, 2022.
|
(3)
|
Represents the net
impact of a prior year inventory reserve expense in our EMEALA
segment associated with the shutdown of our direct operations in
Russia.
|
Non-GAAP gross
margin reconciliation by brand:
Crocs
Brand:
|
|
Three Months Ended
September 30,
|
|
2023
|
|
2022
|
GAAP Crocs Brand gross
margin
|
61.9 %
|
|
57.3 %
|
Non-GAAP
adjustments:
|
|
|
|
Distribution centers
(1)
|
0.2 %
|
|
0.3 %
|
Inventory reserve in
Russia (2)
|
— %
|
|
(0.1) %
|
Non-GAAP Crocs Brand
gross margin
|
62.1 %
|
|
57.5 %
|
|
|
(1)
|
Represents expenses,
including expansion costs and duplicate rent costs, primarily
related to our distribution centers in Dayton, Ohio.
|
(2)
|
Represents a prior year
inventory reserve expense in our EMEALA segment associated with the
shutdown of our direct operations in Russia.
|
HEYDUDE
Brand:
|
|
Three Months Ended
September 30,
|
|
2023
|
|
2022
|
GAAP HEYDUDE Brand
gross margin
|
35.6 %
|
|
48.8 %
|
Non-GAAP
adjustments:
|
|
|
|
Distribution centers
(1)
|
7.2 %
|
|
— %
|
Non-GAAP HEYDUDE Brand
gross margin
|
42.8 %
|
|
48.8 %
|
|
|
(1)
|
Represents expenses,
including expansion costs, duplicate rent costs, and transitional
storage costs, related to our distribution center in Las Vegas,
Nevada.
|
Non-GAAP selling,
general and administrative reconciliation:
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
(in
thousands)
|
GAAP
revenues
|
$
1,045,717
|
|
$
985,094
|
|
$
3,002,250
|
|
$
2,609,823
|
|
|
|
|
|
|
|
|
GAAP selling, general
and administrative expenses
|
$
307,784
|
|
$
277,239
|
|
$
852,044
|
|
$
733,255
|
Information technology
project discontinuation
|
—
|
|
—
|
|
(4,119)
|
|
—
|
Duplicate headquarters
rent (1)
|
(976)
|
|
—
|
|
(3,169)
|
|
—
|
HEYDUDE acquisition
and integration costs (2)
|
(545)
|
|
(6,863)
|
|
(1,961)
|
|
(33,205)
|
Impact of shutdown of
Russia direct operations (3)
|
—
|
|
40
|
|
—
|
|
(5,797)
|
Other
(4)
|
(1,749)
|
|
(2,300)
|
|
(7,357)
|
|
(3,502)
|
Total
adjustments
|
(3,270)
|
|
(9,123)
|
|
(16,606)
|
|
(42,504)
|
Non-GAAP selling,
general and administrative expenses (5)
|
$
304,514
|
|
$
268,116
|
|
$
835,438
|
|
$
690,751
|
|
|
|
|
|
|
|
|
GAAP selling, general
and administrative expenses as a percent of revenues
|
29.4 %
|
|
28.1 %
|
|
28.4 %
|
|
28.1 %
|
Non-GAAP selling,
general and administrative expenses as a percent of
revenues
|
29.1 %
|
|
27.2 %
|
|
27.8 %
|
|
26.5 %
|
|
|
(1)
|
Represents duplicate
rent costs associated with our upcoming move to a new
headquarters.
|
(2)
|
Represents costs
related to the integration of HEYDUDE in the three and nine months
ended September 30, 2023 and costs related to the acquisition and
integration of HEYDUDE in the three months ended September 30, 2022
and the partial period from the acquisition date of February 17,
2022 through September 30, 2022 (the "Partial Period").
|
(3)
|
Represents various
costs in the prior year associated with the shutdown of our direct
operations in Russia, including severance and lease exit costs and
penalties.
|
(4)
|
Includes various
restructuring costs, as well as costs associated with the
implementation of a new enterprise resource planning
system.
|
(5)
|
Non-GAAP selling,
general and administrative expenses are presented gross of
tax.
|
Non-GAAP income from
operations and operating margin reconciliation:
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
(in
thousands)
|
GAAP
revenues
|
$
1,045,717
|
|
$
985,094
|
|
$
3,002,250
|
|
$
2,609,823
|
|
|
|
|
|
|
|
|
GAAP income from
operations
|
$
273,852
|
|
$
264,063
|
|
$
827,269
|
|
$
630,704
|
Non-GAAP cost of sales
adjustments (1)
|
18,797
|
|
1,279
|
|
23,664
|
|
67,334
|
Non-GAAP selling,
general and administrative expenses adjustments
(2)
|
3,270
|
|
9,123
|
|
16,606
|
|
42,504
|
Non-GAAP income from
operations
|
$
295,919
|
|
$
274,465
|
|
$
867,539
|
|
$
740,542
|
|
|
|
|
|
|
|
|
GAAP operating
margin
|
26.2 %
|
|
26.8 %
|
|
27.6 %
|
|
24.2 %
|
Non-GAAP operating
margin
|
28.3 %
|
|
27.9 %
|
|
28.9 %
|
|
28.4 %
|
|
|
(1)
|
See 'Non-GAAP cost of
sales, gross profit, and gross margin reconciliation' above for
more details.
|
(2)
|
See 'Non-GAAP selling,
general and administrative expenses and selling, general and
administrative expenses as a percent of revenues reconciliation'
above for more details.
|
Non-GAAP income tax
expense (benefit) and effective tax rate
reconciliation:
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
(in
thousands)
|
GAAP income from
operations
|
$
273,852
|
|
$
264,063
|
|
$
827,269
|
|
$
630,704
|
GAAP income before
income taxes
|
233,405
|
|
229,575
|
|
702,413
|
|
542,939
|
|
|
|
|
|
|
|
|
Non-GAAP income from
operations (1)
|
$
295,919
|
|
$
274,465
|
|
$
867,539
|
|
$
740,542
|
GAAP non-operating
income (expenses):
|
|
|
|
|
|
|
|
Foreign currency
losses, net
|
(1,770)
|
|
(393)
|
|
(1,622)
|
|
(1,115)
|
Interest
income
|
506
|
|
31
|
|
1,225
|
|
219
|
Interest
expense
|
(39,207)
|
|
(34,142)
|
|
(124,907)
|
|
(86,357)
|
Other income
(expense), net
|
24
|
|
16
|
|
448
|
|
(512)
|
Non-GAAP income before
income taxes
|
$
255,472
|
|
$
239,977
|
|
$
742,683
|
|
$
652,777
|
|
|
|
|
|
|
|
|
GAAP income tax
expense
|
$
56,380
|
|
$
60,226
|
|
$
163,433
|
|
$
140,515
|
Tax effect of non-GAAP
operating adjustments
|
5,462
|
|
2,751
|
|
10,076
|
|
18,789
|
Impact of intra-entity
IP transfers (2)
|
(6,717)
|
|
(8,368)
|
|
(19,233)
|
|
(18,274)
|
Non-GAAP income tax
expense
|
$
55,125
|
|
$
54,609
|
|
$
154,276
|
|
$
141,030
|
|
|
|
|
|
|
|
|
GAAP effective income
tax rate
|
24.2 %
|
|
26.2 %
|
|
23.3 %
|
|
25.9 %
|
Non-GAAP effective
income tax rate
|
21.6 %
|
|
22.8 %
|
|
20.8 %
|
|
21.6 %
|
|
|
(1)
|
See 'Non-GAAP income
from operations and operating margin reconciliation' above for more
details.
|
(2)
|
In the fourth quarter
of 2020, and subsequently in the fourth quarter of 2021, we made
changes to our international legal structure, including an
intra-entity transfer of certain intellectual property rights,
primarily to align with current and future international
operations. The transfers resulted in a step-up in the tax basis of
intellectual property rights and correlated increases in foreign
deferred tax assets based on the fair value of the transferred
intellectual property rights. This adjustment represents the
current period impact of these transfers. The prior year adjustment
also includes the release of the valuation allowance as a result of
a tax law change.
|
Non-GAAP net income
per share reconciliation:
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
(in thousands,
except per share data)
|
Numerator:
|
|
|
|
|
|
|
|
GAAP net
income
|
$
177,025
|
|
$
169,349
|
|
$
538,980
|
|
$
402,424
|
Non-GAAP cost of sales
adjustments (1)
|
18,797
|
|
1,279
|
|
23,664
|
|
67,334
|
Non-GAAP selling,
general and administrative expenses adjustments
(2)
|
3,270
|
|
9,123
|
|
16,606
|
|
42,504
|
Tax effect of non-GAAP
adjustments
|
1,255
|
|
5,617
|
|
9,157
|
|
(515)
|
Non-GAAP net
income
|
$
200,347
|
|
$
185,368
|
|
$
588,407
|
|
$
511,747
|
Denominator:
|
|
|
|
|
|
|
|
GAAP weighted average
common shares outstanding - basic
|
61,143
|
|
61,693
|
|
61,670
|
|
61,042
|
Plus: GAAP dilutive
effect of stock options and unvested restricted stock
units
|
472
|
|
674
|
|
610
|
|
798
|
GAAP weighted average
common shares outstanding - diluted
|
61,615
|
|
62,367
|
|
62,280
|
|
61,840
|
|
|
|
|
|
|
|
|
GAAP net income per
common share:
|
|
|
|
|
|
|
|
Basic
|
$
2.90
|
|
$
2.75
|
|
$
8.74
|
|
$
6.59
|
Diluted
|
$
2.87
|
|
$
2.72
|
|
$
8.65
|
|
$
6.51
|
|
|
|
|
|
|
|
|
Non-GAAP net income per
common share:
|
|
|
|
|
|
|
|
Basic
|
$
3.28
|
|
$
3.00
|
|
$
9.54
|
|
$
8.38
|
Diluted
|
$
3.25
|
|
$
2.97
|
|
$
9.45
|
|
$
8.28
|
|
|
(1)
|
See 'Non-GAAP cost of
sales, gross profit, and gross margin reconciliation' above for
more information.
|
(2)
|
See 'Non-GAAP selling,
general and administrative expenses and selling, general and
administrative expenses as a percent of revenues reconciliation'
above for more information.
|
RECONCILIATION OF GAAP TO NON-GAAP
FINANCIAL GUIDANCE
|
|
|
Full Year
2023:
|
|
|
Approximately:
|
Non-GAAP operating
margin and operating income reconciliation:
|
|
GAAP operating
margin
|
25.5 %
|
Non-GAAP adjustments,
primarily related to investments to support growth
(1)
|
1.5 %
|
Non-GAAP operating
margin
|
27.0 %
|
Non-GAAP effective
tax rate reconciliation:
|
|
GAAP effective tax
rate
|
23.0 %
|
Non-GAAP adjustments,
primarily related to amortization of intellectual property
(1)(2)
|
(3.0) %
|
Non-GAAP effective tax
rate
|
20.0 %
|
Non-GAAP diluted
earnings per share reconciliation:
|
|
GAAP diluted earnings
per share
|
$10.37
to $10.67
|
Non-GAAP adjustments,
primarily related to investments to support growth and amortization
of intellectual property (1)(2)
|
$1.18
|
Non-GAAP diluted
earnings per share
|
$11.55
to $11.85
|
|
|
(1)
|
For the full year 2023,
we expect to incur approximately $60 million in costs primarily
related to investments to support growth and to be fairly balanced
across COGS and SG&A.
|
(2)
|
In the fourth quarter
of 2020, and subsequently in the fourth quarter of 2021, we made
changes to our international legal structure, including an
intra-entity transfer of certain intellectual property rights,
primarily to align with current and future international
operations. This adjustment represents the amortization of the
deferred tax asset related to these intellectual property rights in
this period.
|
Non-GAAP Financial Guidance
Our forward-looking guidance for consolidated "adjusted
operating margin," and "adjusted diluted earnings per share"
represents non-GAAP financial measures that exclude or otherwise
have been adjusted for special items from our U.S. GAAP financial
statements. We consider these items to be necessary adjustments for
purposes of evaluating our ongoing business performance and are
often considered non-recurring. Such adjustments are subjective and
involve significant management judgment.
While we are able to estimate full year non-GAAP adjustments, we
are unable to reconcile forward-looking adjusted measures to their
nearest U.S. GAAP measure quarter-by-quarter because we are unable
to predict the timing of these adjustments with a reasonable degree
of certainty. By their very nature, special and other non-core
items are difficult to anticipate with precision because they are
generally associated with unexpected and unplanned events that
impact our company and its financial results. Therefore, we are
unable to provide a reconciliation of these measures for the
guidance related to the fourth quarter of 2023.
CROCS, INC. AND
SUBSIDIARIES
REVENUES BY SEGMENT
AND CHANNEL
(UNAUDITED)
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
%
Change
|
|
Constant
Currency
%
Change (1)
|
|
|
|
Favorable
(Unfavorable)
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
Q3 2023-
2022
|
|
YTD
2023-2022
|
|
Q3 2023-
2022
|
|
YTD
2023-2022
|
|
(in thousands)
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North
America
|
$
480,744
|
|
$
445,327
|
|
$
1,306,609
|
|
$
1,187,713
|
|
8.0 %
|
|
10.0 %
|
|
8.2 %
|
|
10.3 %
|
Asia
Pacific
|
175,199
|
|
138,450
|
|
513,459
|
|
383,187
|
|
26.5 %
|
|
34.0 %
|
|
28.6 %
|
|
39.2 %
|
EMEALA
|
142,826
|
|
131,929
|
|
460,429
|
|
422,226
|
|
8.3 %
|
|
9.0 %
|
|
2.7 %
|
|
8.0 %
|
Brand
corporate
|
—
|
|
1
|
|
—
|
|
22
|
|
(100.0) %
|
|
(100.0) %
|
|
(100.0) %
|
|
(100.0) %
|
Crocs Brand
revenues
|
798,769
|
|
715,707
|
|
2,280,497
|
|
1,993,148
|
|
11.6 %
|
|
14.4 %
|
|
11.1 %
|
|
15.3 %
|
HEYDUDE Brand revenues
(2)
|
246,948
|
|
269,387
|
|
721,753
|
|
616,675
|
|
(8.3) %
|
|
17.0 %
|
|
(8.5) %
|
|
17.0 %
|
Total consolidated
revenues
|
$
1,045,717
|
|
$
985,094
|
|
$
3,002,250
|
|
$
2,609,823
|
|
6.2 %
|
|
15.0 %
|
|
5.8 %
|
|
15.7 %
|
|
|
(1)
|
Reflects year over year
change as if the current period results were in constant currency,
which is a non-GAAP financial measure. See "Use of Non-GAAP
Financial Measures" for more information.
|
(2)
|
We acquired HEYDUDE on
February 17, 2022 and, as a result, added the HEYDUDE Brand as a
new operating segment. Therefore, the amounts shown above for the
nine months ended September 30, 2022 represent results during the
Partial Period.
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
%
Change
|
|
Constant
Currency
% Change (1)
|
|
|
|
Favorable
(Unfavorable)
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
Q3 2023-
2022
|
|
YTD
2023-2022
|
|
Q3 2023-
2022
|
|
YTD
2023-2022
|
|
(in thousands)
|
Crocs Brand:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wholesale
|
$
369,177
|
|
$
353,304
|
|
$
1,187,081
|
|
$
1,090,073
|
|
4.5 %
|
|
8.9 %
|
|
3.6 %
|
|
9.9 %
|
Direct-to-consumer
|
429,592
|
|
362,403
|
|
1,093,416
|
|
903,075
|
|
18.5 %
|
|
21.1 %
|
|
18.4 %
|
|
22.0 %
|
Total Crocs
Brand
|
798,769
|
|
715,707
|
|
2,280,497
|
|
1,993,148
|
|
11.6 %
|
|
14.4 %
|
|
11.1 %
|
|
15.3 %
|
HEYDUDE
Brand:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wholesale
|
146,501
|
|
181,768
|
|
463,189
|
|
431,186
|
|
(19.4) %
|
|
7.4 %
|
|
(19.7) %
|
|
7.5 %
|
Direct-to-consumer
|
100,447
|
|
87,619
|
|
258,564
|
|
185,489
|
|
14.6 %
|
|
39.4 %
|
|
14.6 %
|
|
39.4 %
|
Total HEYDUDE Brand
(2)
|
246,948
|
|
269,387
|
|
721,753
|
|
616,675
|
|
(8.3) %
|
|
17.0 %
|
|
(8.5) %
|
|
17.0 %
|
Total consolidated
revenues
|
$
1,045,717
|
|
$
985,094
|
|
$
3,002,250
|
|
$
2,609,823
|
|
6.2 %
|
|
15.0 %
|
|
5.8 %
|
|
15.7 %
|
|
|
(1)
|
Reflects year over year
change as if the current period results were in constant currency,
which is a non-GAAP financial measure. See 'Reconciliation of GAAP
Measures to Non-GAAP Measures' above for more
information.
|
(2)
|
We acquired HEYDUDE on
February 17, 2022 and, as a result, added the HEYDUDE Brand as a
new operating segment. Therefore, the amounts shown above for the
nine months ended September 30, 2022 represent results during the
Partial Period.
|
CROCS, INC. AND
SUBSIDIARIES
DIRECT-TO-CONSUMER
COMPARABLE SALES
(UNAUDITED)
|
|
Direct-to-consumer
("DTC") comparable sales were as follows:
|
|
|
Constant Currency
(1)
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Direct-to-consumer
comparable sales: (2)
|
|
|
|
|
|
|
|
Crocs Brand
|
15.3 %
|
|
18.2 %
|
|
18.4 %
|
|
13.6 %
|
HEYDUDE Brand
(3)
|
8.1 %
|
|
N/A
|
|
16.5 %
|
|
N/A
|
|
|
(1)
|
Reflects period over
period change on a constant currency basis, which is a non-GAAP
financial measure. See "Use of Non-GAAP Financial Measures" for
more information.
|
(2)
|
Comparable store
status, as included in the DTC comparable sales figures above, is
determined on a monthly basis. Comparable store sales include the
revenues of stores that have been in operation for more than twelve
months. Stores in which selling square footage has changed more
than 15% as a result of a remodel, expansion, or reduction are
excluded until the thirteenth month in which they have comparable
prior year sales. Temporarily closed stores are excluded from the
comparable store sales calculation during the month of closure and
in the same month in the following year. Location closures in
excess of three months are excluded until the thirteenth month post
re-opening. E-commerce comparable revenues are based on same site
sales period over period. E-commerce sites that are temporarily
offline or unable to transact or fulfill orders ("site disruption")
are excluded from the comparable sales calculation during the month
of site disruption and in the same month in the following year.
E-commerce site disruptions in excess of three months are excluded
until the thirteenth month after the site has re-opened.
|
(3)
|
We acquired HEYDUDE on
February 17, 2022 and, as a result, added the HEYDUDE Brand as a
new operating segment. As such, in the three and nine months ended
September 30, 2022, we did not disclose DTC comparable sales for
the HEYDUDE Brand.
|
Investor
Contact:
|
Erinn Murphy, Crocs,
Inc.
|
|
(303)
848-7005
|
|
emurphy@crocs.com
|
|
|
PR
Contact:
|
Melissa Layton, Crocs,
Inc.
|
|
(303)
848-7885
|
|
mlayton@crocs.com
|
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SOURCE Crocs, Inc.