Crocs, Inc. Reports Record Quarterly Revenues of Over $1 Billion, Up 11%

Crocs, Inc. Reports Record Quarterly Revenues of Over  Billion, Up 11%

Second Quarter Operating Margin of 30%

Raises Full Year Outlook for Revenues, Operating Margin, and Earnings Per Share

BROOMFIELD, Colo., July 27, 2023 /PRNewswire/ — Crocs, Inc. (NASDAQ: CROX), a world leader in innovative casual footwear for women, men, and children, today announced its second quarter 2023 financial results.

“We achieved record quarterly revenues of over $1 billion, representing growth of 12% on a constant currency basis to prior year. Both the Crocs and HEYDUDE brands continue to gain share and bring in new consumers with our comfortable offerings, as evidenced by DTC growth of 26% in the second quarter,” said Andrew Rees, Chief Executive Officer. “We continue to invest behind our strategic priorities that are driving profitable growth.”

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.

Second Quarter 2023 Highlights

  • Consolidated revenues of $1,072.4 million increased 11.2%, or 12.0% on a constant currency basis, as compared to 2022.
  • Crocs Brand revenues of $833.0 million increased 13.8%, or 14.9% on a constant currency basis, as compared to 2022.
  • Crocs Brand growth was fueled by Asia revenue growth of 33.2%, or 39.0% on a constant currency basis, and North America direct-to-consumer (“DTC”) comparable sales growth of 12.9%, as compared to 2022.
  • HEYDUDE Brand DTC revenues grew 29.7% and digital revenues increased 36.7% as compared to 2022.
  • Operating margin was 29.7% and adjusted operating margin was 30.3%.
  • Diluted earnings per share increased 31.4% to $3.39 as compared to the same period last year. Adjusted diluted earnings per share rose 10.8% to $3.59.
  • We paid down $299.1 million of debt in the first half of 2023 and reduced gross leverage to 1.8x.

Second Quarter 2023 Operating Results

  • Revenues were $1,072.4 million, an increase of 11.2% from the same period last year, or 12.0% on a constant currency basis. DTC revenues, which includes retail and e-commerce, grew 26.0%, or 27.2% on a constant currency basis. Wholesale revenues grew 0.2% compared to 2022, or 0.8% on a constant currency basis.
  • Gross margin was 57.9% compared to 51.6% in the prior year. Adjusted gross margin improved 290 basis points to 58.1% compared to 55.2% in the same period last year.
  • Selling, general, and administrative expenses (“SG&A”) of $302.8 million increased from $249.8 million in the same period last year, and SG&A as a percent of revenues rose to 28.2% from 25.9% in prior year. Adjusted SG&A rose to 27.8% of revenues versus 25.1% for the same period last year.
  • Income from operations increased 28.4% to $318.5 million and operating margin improved to 29.7%, compared to 25.7% for the same period last year, due to higher gross margin and significantly less HEYDUDE acquisition expenses. Adjusted income from operations rose 11.7% to $324.6 million and adjusted operating margin improved 20 basis points to 30.3%.
  • Diluted earnings per share increased 31.4% to $3.39, as compared to $2.58 for the same period last year. Adjusted diluted earnings per share increased 10.8% to $3.59 compared to 2022.

Second Quarter 2023 Brand Summary

  • Crocs Brand: Revenues increased 13.8%, or 14.9% on a constant currency basis, to $833.0 million. DTC comparable sales increased 19.5%. Wholesale revenues increased 3.8%, or 4.6% on a constant currency basis.
    • North America revenues of $474.6 million increased 12.2%, or 12.5% on a constant currency basis.
    • Asia Pacific revenues of $198.3 million increased 33.2%, or 39.0% on a constant currency basis.
    • Europe, Middle East, Africa, and Latin America (“EMEALA”) revenues of $160.1 million declined 0.2%, or 1.4% on a constant currency basis.
  • HEYDUDE Brand: Revenues during the second quarter increased 3.0% to $239.4 million. DTC revenues increased 29.7% to $90.6 million. Wholesale revenues declined 8.4% to $148.8 million following pipeline fill in the same period last year.

 Balance Sheet and Cash Flow

  • Cash and cash equivalents were $166.2 million as of June 30, 2023, compared to $191.6 million as of December 31, 2022.
  • Inventories decreased to $436.3 million as of June 30, 2023, compared to $471.6 million as of December 31, 2022 and $501.5 million as of June 30, 2022.
  • Capital expenditures during the six months ended June 30, 2023 were $51.6 million, compared to $56.7 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 $2,027.5 million as of June 30, 2023 compared to $2,322.4 million as of December 31, 2022, as we repaid $299.1 million of debt. Our liquidity position remains strong with $166.2 million in cash and cash equivalents and $563.7 million in available borrowing capacity as of June 30, 2023.

Share Repurchase Activity

As announced in June, we expected to resume our share repurchase program beginning in the third quarter. In July 2023, we repurchased 0.4 million shares of our common stock for $50.0 million. Following these repurchases, $1.0 billion of share repurchase authorization remained available for future repurchases. We will continue to methodically balance debt repayment and share repurchases as we approach our long-term net leverage target of 1.0x to 1.5x.

Financial Outlook

Third Quarter 2023

With respect to the third quarter of 2023, we expect:

  • Revenues to grow approximately 3% to 5% compared to third quarter 2022, resulting in revenues of approximately $1,013 million to $1,034 million at currency rates as of the latest reported period.
  • Adjusted operating margin of approximately 27.0%.
  • Adjusted diluted earnings per share of $3.07 to $3.15.

Full Year 2023

With respect to 2023, we expect:

  • Consolidated revenue growth to now be 12.5% to 14.5% compared to 2022, resulting in revenues of approximately $4,000 million to $4,065 million at currency rates as of the end of the last reported period.
    • Revenues for the Crocs Brand to now grow 12% to 13% on a reported basis.
    • Revenues for the HEYDUDE Brand to now grow 14% to 18% on a reported basis, which is approximately 3.5% to 7.5% including the period prior to the HEYDUDE acquisition.
  • Adjusted operating margin to now be approximately 27.5%.
  • Non-GAAP adjustments of approximately $35 million primarily related to investments in our distribution centers to support growth and 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 $11.83 and $12.22. Adjusted diluted earnings per share guidance does not assume any impact from potential future share repurchases.
  • Capital expenditures to be approximately $165 to $180 million, primarily related to the expansion of our distribution capabilities including our new HEYDUDE distribution center in Las Vegas opening later this year, implementation of new technology systems for HEYDUDE, and expansion of our corporate facilities to support growth.

Conference Call Information

A conference call to discuss second quarter 2023 results is scheduled for today, Thursday, July 27, 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 July 27, 2024 at this site.

About Crocs, Inc.

Crocs, Inc. (Nasdaq: CROX) is a world leader in innovative casual footwear for women, men, and children, 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. please visit investors.crocs.com. To learn more about our brands, please visit www.crocs.com or www.heydude.com.

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, 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 second 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 July 27, 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 June 30,


Six Months Ended June 30,


2023


2022


2023


2022

Revenues

$                1,072,367


$                   964,581


$                1,956,533


$                1,624,729

Cost of sales

451,060


466,848


858,856


802,072

Gross profit

621,307


497,733


1,097,677


822,657

Selling, general and administrative expenses

302,818


249,769


544,260


456,016

Income from operations

318,489


247,964


553,417


366,641

Foreign currency gains (losses), net

551


(1,202)


148


(722)

Interest income

548


86


719


188

Interest expense

(43,063)


(32,963)


(85,700)


(52,215)

Other income (expense), net

717


419


424


(528)

Income before income taxes

277,242


214,304


469,008


313,364

Income tax expense

64,830


53,989


107,053


80,289

Net income

$                   212,412


$                   160,315


$                   361,955


$                   233,075

Net income per common share:








Basic

$                          3.42


$                          2.60


$                          5.84


$                          3.84

Diluted

$                          3.39


$                          2.58


$                          5.78


$                          3.79

Weighted average common shares outstanding:








Basic

62,037


61,590


61,937


60,712

Diluted

62,603


62,236


62,616


61,571

CROCS, INC. AND SUBSIDIARIES

EARNINGS PER SHARE

(UNAUDITED)

(in thousands, except per share data)



Three Months Ended June 30,


Six Months Ended June 30,


2023


2022


2023


2022

Numerator:








Net income

$                   212,412


$                   160,315


$                   361,955


$                   233,075

Denominator:








Weighted average common shares outstanding – basic

62,037


61,590


61,937


60,712

Plus: Dilutive effect of stock options and unvested restricted stock units

566


646


679


859

Weighted average common shares outstanding – diluted

62,603


62,236


62,616


61,571









Net income per common share:








Basic

$                          3.42


$                          2.60


$                          5.84


$                          3.84

Diluted

$                          3.39


$                          2.58


$                          5.78


$                          3.79

CROCS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(in thousands, except share and par value amounts)



June 30,
2023


December 31,
2022

ASSETS




Current assets:




Cash and cash equivalents

$          166,235


$          191,629

Restricted cash – current

2


2

Accounts receivable, net of allowances of $34,385 and $24,493, respectively

409,594


295,594

Inventories

436,269


471,551

Income taxes receivable

2,331


14,752

Other receivables

27,991


18,842

Prepaid expenses and other assets

58,794


33,605

Total current assets

1,101,216


1,025,975

Property and equipment, net of accumulated depreciation and amortization of $110,510 and $97,136, respectively

213,844


181,529

Intangible assets, net of accumulated amortization of $136,490 and $125,014, respectively

1,795,876


1,800,167

Goodwill

711,570


714,814

Deferred tax assets, net

539,545


528,278

Restricted cash

3,348


3,254

Right-of-use assets

228,076


239,905

Other assets

9,650


7,875

Total assets

$       4,603,125


$       4,501,797

LIABILITIES AND STOCKHOLDERS’ EQUITY




Current liabilities:




Accounts payable

$          261,909


$          230,821

Accrued expenses and other liabilities

241,530


239,424

Income taxes payable

84,845


89,211

Current borrowings

20,000


24,362

Current operating lease liabilities

57,656


57,456

Total current liabilities

665,940


641,274

Deferred tax liabilities, net

301,902


302,030

Long-term income taxes payable

231,577


224,837

Long-term borrowings

2,007,485


2,298,027

Long-term operating lease liabilities

204,088


215,119

Other liabilities

2,443


2,579

Total liabilities

3,413,435


3,683,866

Commitments and contingencies




Stockholders’ equity:




Common stock, par value $0.001 per share, 250.0 million shares authorized, 109.9 million
     and 109.5 million issued, 62.1 million and 61.7 million outstanding, respectively

110


110

Treasury stock, at cost, 47.8 million and 47.7 million shares, respectively

(1,707,136)


(1,695,501)

Additional paid-in capital

813,466


797,614

Retained earnings

2,181,154


1,819,199

Accumulated other comprehensive loss

(97,904)


(103,491)

Total stockholders’ equity

1,189,690


817,931

Total liabilities and stockholders’ equity

$       4,603,125


$       4,501,797

CROCS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(in thousands)



Six Months Ended June 30,


2023


2022

Cash flows from operating activities:




Net income

$                    361,955


$                 233,075

Adjustments to reconcile net income to net cash provided by operating activities:




Depreciation and amortization

25,780


16,754

Operating lease cost

36,592


30,887

Share-based compensation

15,852


17,575

Other non-cash items (1)

769


7,077

Changes in operating assets and liabilities, net of acquired assets and assumed liabilities:




Accounts receivable

(113,838)


(181,154)

Inventories

34,884


(121,452)

Prepaid expenses and other assets

(32,413)


(9,309)

Accounts payable, accrued expenses and other liabilities

27,819


85,091

Right-of-use assets and operating lease liabilities

(35,176)


(29,927)

Income taxes

8,389


36,127

Cash provided by operating activities

330,613


84,744

Cash flows from investing activities:




Purchases of property, equipment, and software

(51,645)


(56,744)

Acquisition of HEYDUDE, net of cash acquired


(2,040,265)

Other


(20)

Cash used in investing activities

(51,645)


(2,097,029)

Cash flows from financing activities:




Proceeds from borrowings

214,634


2,240,677

Repayments of borrowings

(513,703)


(195,000)

Deferred debt issuance costs

(612)


(51,395)

Repurchases of common stock for tax withholding

(11,636)


(6,756)

Other


95

Cash provided by (used in) financing activities

(311,317)


1,987,621

Effect of exchange rate changes on cash, cash equivalents, and restricted cash

7,049


(1,690)

Net change in cash, cash equivalents, and restricted cash

(25,300)


(26,354)

Cash, cash equivalents, and restricted cash—beginning of period

194,885


216,925

Cash, cash equivalents, and restricted cash—end of period

$                    169,585


$                 190,571



(1)

Amounts for the six months ended June 30, 2022 have been reclassified to conform to current period presentation. 

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 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 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 six months ended June 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 June 30,


Six Months Ended June 30,


2023


2022


2023


2022


(in thousands)

GAAP revenues

$            1,072,367


$               964,581


$                1,956,533


$            1,624,729









GAAP cost of sales

$               451,060


$               466,848


$                  858,856


$               802,072

Distribution centers (1)

(1,586)


(1,389)


(4,867)


(2,580)

HEYDUDE inventory fair value step-up (2)


(34,323)



(62,250)

Inventory reserve in Russia (3)


575



(1,225)

Total adjustments

(1,586)


(35,137)


(4,867)


(66,055)

Non-GAAP cost of sales

$               449,474


$               431,711


$                  853,989


$               736,017









GAAP gross profit

$               621,307


$               497,733


$              1,097,677


$               822,657

GAAP gross margin

57.9 %


51.6 %


56.1 %


50.6 %









Non-GAAP gross profit

$               622,893


$               532,870


$              1,102,544


$               888,712

Non-GAAP gross margin

58.1 %


55.2 %


56.4 %


54.7 %



(1)

Represents expenses, including expansion costs and duplicate rent costs, related to our distribution centers in Dayton, Ohio and Las Vegas, Nevada.

(2)

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 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 June 30,


2023


2022

GAAP Crocs Brand gross margin

61.9 %


57.7 %

Non-GAAP adjustments:




Distribution centers (1)

0.1 %


0.2 %

Non-GAAP Crocs Brand gross margin

62.0 %


57.9 %



(1)

Represents expenses, including expansion costs and duplicate rent costs, primarily related to our distribution centers in Dayton, Ohio.

HEYDUDE Brand:



Three Months Ended June 30,


2023


2022

GAAP HEYDUDE Brand gross margin

47.1 %


32.4 %

Non-GAAP adjustments:




Distribution centers

less than 0.1%


— %

Inventory fair value step-up (1)

— %


14.7 %

Non-GAAP HEYDUDE Brand gross margin

47.1 %


47.1 %



(1)

Represents a prior year step-up of HEYDUDE inventory costs to fair value upon the close of the acquisition on February 17, 2022.

Non-GAAP selling, general and administrative reconciliation:



Three Months Ended June 30,


Six Months Ended June 30,


2023


2022


2023


2022


(in thousands)

GAAP revenues

$            1,072,367


$               964,581


$            1,956,533


$            1,624,729









GAAP selling, general and administrative expenses

$               302,818


$               249,769


$               544,260


$               456,016

Information technology project discontinuation



(4,119)


Duplicate headquarters rent (1)

(1,126)


(1,202)


(2,193)


(1,202)

HEYDUDE acquisition and integration costs (2)

(130)


(5,741)


(1,416)


(26,342)

Impact of shutdown of Russia direct operations (3)


(570)



(5,837)

Other (4)

(3,248)



(5,608)


Total adjustments

(4,504)


(7,513)


(13,336)


(33,381)

Non-GAAP selling, general and administrative expenses (5)

$               298,314


$               242,256


$               530,924


$               422,635









GAAP selling, general and administrative expenses as a percent of revenues

28.2 %


25.9 %


27.8 %


28.1 %

Non-GAAP selling, general and administrative expenses as a percent of revenues

27.8 %


25.1 %


27.1 %


26.0 %



(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 six months ended June 30, 2023 and costs related to the acquisition and integration of HEYDUDE in the three months ended June 30, 2022 and the partial period from the acquisition date of February 17, 2022 through June 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 June 30,


Six Months Ended June 30,


2023


2022


2023


2022


(in thousands)

GAAP revenues

$            1,072,367


$               964,581


$            1,956,533


$            1,624,729









GAAP income from operations

$               318,489


$               247,964


$               553,417


$               366,641

Non-GAAP cost of sales adjustments (1)

1,586


35,137


4,867


66,055

Non-GAAP selling, general and administrative expenses adjustments (2)

4,504


7,513


13,336


33,381

Non-GAAP income from operations

$               324,579


$               290,614


$               571,620


$               466,077









GAAP operating margin

29.7 %


25.7 %


28.3 %


22.6 %

Non-GAAP operating margin

30.3 %


30.1 %


29.2 %


28.7 %



(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 June 30,


Six Months Ended June 30,


2023


2022


2023


2022


(in thousands)

GAAP income from operations

$               318,489


$               247,964


$               553,417


$               366,641

GAAP income before income taxes

277,242


214,304


469,008


313,364









Non-GAAP income from operations (1)

$               324,579


$               290,614


$               571,620


$               466,077

GAAP non-operating income (expenses):








Foreign currency gains (losses), net

551


(1,202)


148


(722)

Interest income

548


86


719


188

Interest expense

(43,063)


(32,963)


(85,700)


(52,215)

Other income (expense), net

717


419


424


(528)

Non-GAAP income before income taxes

$               283,332


$               256,954


$               487,211


$               412,800









GAAP income tax expense

$                 64,830


$                 53,989


$               107,053


$                 80,289

Tax effect of non-GAAP operating adjustments

1,544


8,416


4,614


16,038

Impact of intra-entity IP transfers (2)

(7,695)


(6,799)


(12,516)


(9,906)

Non-GAAP income tax expense

$                 58,679


$                 55,606


$                 99,151


$                 86,421









GAAP effective income tax rate

23.4 %


25.2 %


22.8 %


25.6 %

Non-GAAP effective income tax rate

20.7 %


21.6 %


20.4 %


20.9 %



(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 June 30,


Six Months Ended June 30,


2023


2022


2023


2022


(in thousands, except per share data)

Numerator:








GAAP net income

$                   212,412


$                   160,315


$                   361,955


$                   233,075

Non-GAAP cost of sales adjustments (1)

1,586


35,137


4,867


66,055

Non-GAAP selling, general and administrative expenses adjustments (2)

4,504


7,513


13,336


33,381

Tax effect of non-GAAP adjustments

6,151


(1,617)


7,902


(6,132)

Non-GAAP net income

$                   224,653


$                   201,348


$                   388,060


$                   326,379

Denominator:








GAAP weighted average common shares outstanding – basic

62,037


61,590


61,937


60,712

Plus: GAAP dilutive effect of stock options and unvested restricted stock units

566


646


679


859

GAAP weighted average common shares outstanding – diluted

62,603


62,236


62,616


61,571









GAAP net income per common share:








Basic

$                          3.42


$                          2.60


$                          5.84


$                          3.84

Diluted

$                          3.39


$                          2.58


$                          5.78


$                          3.79









Non-GAAP net income per common share:








Basic

$                          3.62


$                          3.27


$                          6.27


$                          5.38

Diluted

$                          3.59


$                          3.24


$                          6.20


$                          5.30



(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

26.6 %

Non-GAAP adjustments, primarily related to investments to support growth (1)

0.9 %

Non-GAAP operating margin

27.5 %

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

$10.95 to $11.34

Non-GAAP adjustments, primarily related to investments to support growth and amortization of intellectual property (1)(2)

$0.88

Non-GAAP diluted earnings per share

$11.83 to $12.22



(1)

For the full year 2023, we expect to incur approximately $35 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 third quarter of 2023.

CROCS, INC. AND SUBSIDIARIES

REVENUES BY SEGMENT AND CHANNEL

(UNAUDITED)



Three Months Ended
June 30,


Six Months Ended
June 30,


% Change


Constant Currency

% Change (1)




Favorable (Unfavorable)


2023


2022


2023


2022


Q2 2023-
2022


YTD
2023-2022


Q2 2023-
2022


YTD
2023-2022


(in thousands)



Revenues:
















North America

$   474,558


$   422,936


$   825,866


$   742,386


12.2 %


11.2 %


12.5 %


11.5 %

Asia Pacific

198,257


148,889


338,259


244,737


33.2 %


38.2 %


39.0 %


45.1 %

EMEALA

160,135


160,377


317,602


290,297


(0.2) %


9.4 %


(1.4) %


10.5 %

Brand corporate


14


1


21


(100.0) %


(95.2) %


(100.0) %


(95.2) %

Crocs Brand revenues

832,950


732,216


1,481,728


1,277,441


13.8 %


16.0 %


14.9 %


17.8 %

HEYDUDE Brand revenues (2)

239,417


232,365


474,805


347,288


3.0 %


36.7 %


2.9 %


36.9 %

Total consolidated revenues

$  1,072,367


$   964,581


$  1,956,533


$  1,624,729


11.2 %


20.4 %


12.0 %


21.8 %



(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 six months ended June 30, 2022 represent results during the Partial Period.


Three Months Ended
June 30,


Six Months Ended
June 30,


% Change


Constant Currency %
Change (1)




Favorable (Unfavorable)


2023


2022


2023


2022


Q2 2023-
2022


YTD
2023-2022


Q2 2023-
2022


YTD
2023-2022


(in thousands)

Crocs Brand:
















Wholesale

$   407,342


$   392,511


$   817,905


$   736,768


3.8 %


11.0 %


4.6 %


12.9 %

Direct-to-consumer

425,608


339,705


663,823


540,673


25.3 %


22.8 %


26.8 %


24.4 %

Total Crocs Brand

832,950


732,216


1,481,728


1,277,441


13.8 %


16.0 %


14.9 %


17.8 %

HEYDUDE Brand:
















Wholesale

148,825


162,499


316,688


249,418


(8.4) %


27.0 %


(8.5) %


27.4 %

Direct-to-consumer

90,592


69,866


158,117


97,870


29.7 %


61.6 %


29.7 %


61.6 %

Total HEYDUDE Brand (2)

239,417


232,365


474,805


347,288


3.0 %


36.7 %


2.9 %


36.9 %

Total consolidated revenues

$  1,072,367


$   964,581


$  1,956,533


$  1,624,729


11.2 %


20.4 %


12.0 %


21.8 %



(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 six months ended June 30, 2022 represent results during the Partial Period.

CROCS, INC. AND SUBSIDIARIES

DIGITAL SALES PERCENTAGE AND DIRECT-TO-CONSUMER COMPARABLE SALES

(UNAUDITED)  


Digital sales, which includes sales through our company-owned websites, third party marketplaces, and e-tailers, as a percent of total revenues, by operating segment were:



Three Months Ended June 30,


Six Months Ended June 30,


2023


2022


2023


2022

Digital sales as a percent of total revenues:








Crocs Brand

37.7 %


37.2 %


34.4 %


35.3 %

HEYDUDE Brand (1)

41.8 %


31.5 %


36.0 %


29.6 %

Total

38.6 %


35.8 %


34.8 %


34.1 %



(1)

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 six months ended June 30, 2022 represent results during the Partial Period.

Direct-to-consumer (“DTC”) comparable sales were as follows:



Constant Currency (1)


Three Months Ended June 30,


Six Months Ended June 30,


2023


2022


2023


2022

Direct-to-consumer comparable sales: (2)








Crocs Brand

19.5 %


7.5 %


20.5 %


10.7 %



(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.

Investor Contact:

Cori Lin, Crocs, Inc.


(303) 848-5053


[email protected]



PR Contact:

Melissa Layton, Crocs, Inc.


(303) 848-7885


[email protected]

SOURCE Crocs, Inc.

Originally published at https://www.prnewswire.com/news-releases/crocs-inc-reports-record-quarterly-revenues-of-over-1-billion-up-11-301887007.html
Some images courtesy of https://pixabay.com