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Crocs, Inc. Reports First Quarter 2016 Financial Results
Revenue Increased 6.5% to $279.1 Million

NIWOT, Colo., May 10, 2016 (GLOBE NEWSWIRE) -- Crocs, Inc. (NASDAQ:CROX) today reported financial results for the three months ended March 31, 2016.

First Quarter Highlights:

  • Revenue increased 6.5% to $279.1 million. On a constant currency basis, revenue increased 9.2% compared to the first quarter of 2015.
  • Net income attributable to common stockholders on a GAAP basis was $6.4 million or $0.07 per diluted share.

Gregg Ribatt, Chief Executive Officer, said: “We are pleased with our start to the new year. First quarter revenue increased 6.5% driven by the positive response to our spring/summer 2016 line and operational improvements. While operational supply chain improvements resulted in some favorable timing of wholesale shipments in the quarter compared to our initial expectations, the strong growth in our e-commerce business and positive retail comps in all regions demonstrates the meaningful progress we have made in repositioning the Crocs brand and business over the past 21 months. There is still work to be done to position the company for sustained success; however, we remain confident that we are on track to deliver our full year and future sales and profit objectives.”

First Quarter Operating Results

In the first quarter of 2016, the company reported  GAAP net income attributable to common stockholders of $6.4 million or $0.07 per share, compared with a net loss attributable to common stockholders of $6.0 million or ($0.08) per share in the same quarter of the prior year.

As outlined in detail in the non-GAAP reconciliations set forth later in this press release, the company recorded net charges of $0.1 million not related to our core business in the first quarter of 2016 compared with $10.7 million in the first quarter of 2015. Excluding these items, the company reported on a comparable basis, non-GAAP adjusted net income attributable to common shareholders of $6.4 million in the first quarter of 2016 versus non-GAAP adjusted net income attributable to common shareholders of $4.7 million in the first quarter of 2015.

For the quarter ended March 31, 2016 we had 74.0 million diluted shares outstanding and 73.1 million weighted average common shares outstanding. The company did not repurchase any shares during the three months ended March 31, 2016.

Balance Sheet

Cash and cash equivalents as of March 31, 2016 were $89.1 million compared with $143.3 million at December 31, 2015. The decrease in cash and cash equivalents was primarily attributable to the seasonal increase in our net working capital as we build inventories and accounts receivable for our spring/summer 2016 selling season. Inventory was $186.1 million at March 31, 2016 compared to $168.2 million at December 31, 2015.

Financial Outlook

The company expects second quarter 2016 revenue in the $340 to $350 million range compared to $345.7 million in the second quarter of last year. This guidance reflects the timing impact from earlier shipments in the first quarter, as noted above. Additionally, revenue growth is anticipated to be in the mid-single digits, on a constant currency basis, in the first half of the year compared to the first half of 2015.

Conference Call Information

A teleconference call to discuss first quarter 2016 results is scheduled for today, Tuesday, May 10, 2016, at 8:30 am EDT. The call participation number is (888) 771-4371. A recording of the conference call will be available two hours after the completion of the call at (888) 843-7419. International participants can dial (847) 585-4405 to take part in the conference call and can access a replay of the call at (630) 652-3042. All of the above calls will require the input of the conference identification number 42377507. The call also will be streamed on the Crocs website, www.crocs.com. An audio recording of the conference call will be available at www.crocs.com through May 10, 2017.

About Crocs, Inc.

Crocs, Inc. is a world leader in innovative casual footwear for men, women, and children. Crocs offers a broad portfolio of all-season products, while remaining true to its core molded footwear heritage. All Crocs™ shoes feature Croslite™ material, a proprietary, revolutionary technology that gives each pair of shoes the soft, comfortable, lightweight, non-marking and odor-resistant qualities that Crocs fans know and love. Crocs celebrates the fun of being a little different and encourages fans to “Find Your Fun” in every colorful pair of shoes. Since its inception in 2002, Crocs has sold more than 300 million pairs of shoes in more than 65 countries around the world.

Visit www.crocs.com for additional information.

The matters regarding the future discussed in this news release include “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, statements regarding prospects, investments in our business and outlook. 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: macroeconomic issues, including, but not limited to, the current global financial conditions; the effect of competition in our industry; our ability to effectively manage our future growth or declines in revenue; changing fashion trends; 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 as of May 10, 2016.  We do not undertake any obligation to update publicly any forward-looking statements, including, without limitation, any estimate regarding revenues or earnings, whether as a result of the receipt of new information, future events, or otherwise. 

CROCS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
($ thousands, except per share data)
 
   
    Three Months Ended  
    March 31,  
    2016   2015  
           
Revenues   $ 279,140   $ 262,193  
Cost of sales    149,774   134,823  
Gross profit    129,366   127,370  
Selling, general and administrative expenses   114,930   126,069  
Asset impairment charges   193    
Restructuring charges      3,663  
Income (loss) from operations    14,243   (2,362 )
Foreign currency transaction gain (loss), net   (1,247 ) 494  
Interest income   216   288  
Interest expense   (243 ) (219 )
Other income (expense), net   82   (331 )
Income (loss) before income taxes   13,051   (2,130 )
Income tax expense   (2,905 ) (295 )
Net income (loss)   $ 10,146   $ (2,425 )
           
Dividends on Series A convertible preferred stock   $ (3,000 ) $ (2,833 )
Dividend equivalents on Series A convertible preferred shares related to redemption value accretion and beneficial conversion feature   (785 ) (721 )
Net income (loss) attributable to common stockholders    $ 6,361   $ (5,979 )
           
Net income (loss) per common share:          
Basic    $ 0.07   $ (0.08 )
Diluted    $ 0.07   $ (0.08 )
               

CROCS, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES
(UNAUDITED)

In addition to financial measures presented on the basis of accounting principles generally accepted in the United States of America (“U.S. GAAP”), we present “Non-GAAP selling, general, and administrative expenses”, “Non-GAAP cost of sales”, and “Non-GAAP adjusted net income (loss) attributable to common stockholders”, which are non-GAAP financial measures. Adjusted results exclude the impact of items that management believes affect the comparability or underlying business trends in our 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 U.S. GAAP. Constant currency represents current period results that have been restated using prior year average foreign exchange rates for the comparative period to enhance the visibility of the underlying business trends excluding the impact of foreign currency exchange rate fluctuations.

Management uses adjusted results to assist in comparing business trends from period to period on a consistent non-GAAP basis in communications with the Board, stockholders, analysts, and investors concerning our financial performance. We believe that these non-GAAP measures are useful to investors and other users of our consolidated financial statements as an additional tool for evaluating operating performance. We believe they also provide a useful baseline for analyzing trends in our operations. Investors should not consider these non-GAAP measures in isolation from, or as a substitute for, financial information prepared in accordance with U.S. GAAP.

 

CROCS, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES
(UNAUDITED)
 
   
    Three Months Ended March 31,  
    2016   2015  
    (in thousands)  
Selling, general and administrative expenses reconciliation:          
GAAP selling, general and administrative expenses    $ 114,930   $ 126,069  
Reorganization charges (1)    (184 ) (1,399 )
Customs audit settlements (2)    (354 )  
ERP implementation (3)      (5,648 )
Total selling, general and administrative adjustments    (538 ) (7,047 )
Non-GAAP selling, general and administrative expenses   $ 114,392   $ 119,022  
               
       
    Three Months Ended March 31,  
    2016   2015  
    (in thousands)  
Cost of sales reconciliation:          
GAAP cost of sales:   $ 149,774   $ 134,823  
Favorable settlement of customs audit (4)    650    
Non-GAAP cost of sales   $ 150,424   $ 134,823  
               
       
    Three Months Ended March 31,  
    2016   2015  
    (in thousands)  
Net loss attributable to common stockholders reconciliation:          
GAAP net income (loss) attributable to common stockholders reconciliation:   $ 6,361   $ (5,979 )
Favorable settlement of customs audit (4)    (650 )  
Reorganization charges (1)    377   1,399  
Customs audit settlements (2)    354    
ERP implementation (3)      5,648  
Restructuring charges (5)      3,663  
Total adjustments   81   10,710  
Non-GAAP adjusted net income attributable to common stockholders    $ 6,442   $ 4,731  
_____________________              


(1)  Relates to severance expenses, bonuses, store closure costs, consulting fees, and other expenses related to recent reorganization activities.
(2)  Represents penalties and fees related to the settlement of the customs audit.
(3)  Represents operating expenses related to the implementation of our new ERP system.
(4)  Represents the release of the reserve due to favorable settlement terms of the customs audit.
(5)  Represents severance, lease and other contract exit costs, and other expenses associated with the restructuring plan that concluded in December 2015.

 

CROCS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
($ thousands, except number of shares)
 
   
    March 31,   December 31,  
    2016   2015  
ASSETS          
Current assets:          
Cash and cash equivalents    $ 89,080   $ 143,341  
Accounts receivable, net of allowances of $52,254 and $49,364, respectively    157,159   83,616  
Inventories   186,113   168,192  
Income tax receivable    10,001   10,233  
Other receivables    16,925   14,233  
Prepaid expenses and other assets    35,477   26,334  
Total current assets    494,755   445,949  
Property and equipment, net    50,047   49,490  
Intangible assets, net    79,651   82,297  
Goodwill   2,611   1,973  
Deferred tax assets, net    6,746   6,608  
Other assets   21,676   21,703  
Total assets    $ 655,486   $ 608,020  
LIABILITIES AND STOCKHOLDERS’ EQUITY          
Current liabilities:          
Accounts payable   $ 83,331   $ 63,336  
Accrued expenses and other liabilities    96,265   92,573  
Income taxes payable    7,682   6,416  
Current portion of long-term borrowings and capital lease obligations    12,658   4,772  
Total current liabilities   199,936   167,097  
Long-term income tax payable    4,684   4,547  
Long-term borrowings and capital lease obligations    901   1,627  
Other liabilities    13,623   13,120  
Total liabilities    219,144   186,391  
Commitments and contingencies          
Series A convertible preferred stock, par value $0.001 per share, 1,000,000 shares authorized, 200,000 shares issued and outstanding, redemption amount and liquidation preference of $203,000 and $203,000 as of March 31, 2016 and December 31, 2015, respectively    176,442   175,657  
Stockholders’ equity:          
Preferred stock, par value $0.001 per share, 4,000,000 shares authorized, none outstanding       
Common stock, par value $0.001 per share, 250,000,000 shares authorized, 93,576,893 and 73,298,471 shares issued and outstanding, respectively, as of March 31, 2016 and 93,101,007 and 72,851,418 shares issued and outstanding, respectively, as of December 31, 2015    94   94  
Treasury stock, at cost, 20,278,422 and 20,249,589 shares as of March 31, 2016 and December 31, 2015, respectively    (284,176 ) (283,913 )
Additional paid-in capital    356,271   353,241  
Retained earnings   233,824   227,463  
Accumulated other comprehensive loss    (46,113 ) (50,913 )
Total stockholders’ equity   259,900   245,972  
Total liabilities, commitments and contingencies and stockholders’ equity   $ 655,486   $ 608,020  
               

The following tables summarize our total revenue by channel for the three months ended March 31, 2016 and 2015:

    Three Months Ended March 31,   Change   Constant Currency Change (1)  
    2016   2015   $   %   $   %  
                (in thousands)
           
                           
Wholesale:                          
Americas    $ 74,155   $ 61,176   $ 12,979   21.2 % $ 15,104   24.7 %
Asia Pacific   77,154   72,497   4,657   6.4 % 6,659   9.2 %
Europe    39,062   44,653   (5,591 ) (12.5 )% (4,611 ) (10.3 )%
Other businesses   172   225   (53 ) (23.6 )% (52 ) (23.1 )%
Total wholesale   190,543   178,551   11,992   6.7 % 17,100   9.6 %
Retail:                          
Americas    35,749   34,617   1,132   3.3 % 1,238   3.6 %
Asia Pacific   22,519   23,345   (826 ) (3.5 )% 145   0.6 %
Europe    7,555   8,411   (856 ) (10.2 )% (336 ) (4.0 )%
Total retail   65,823   66,373   (550 ) (0.8 )% 1,047   1.6 %
E-commerce:                          
Americas    14,226   9,976   4,250   42.6 % 4,335   43.5 %
Asia Pacific   4,829   3,933   896   22.8 % 1,074   27.3 %
Europe    3,719   3,360   359   10.7 % 507   15.1 %
Total e-commerce   22,774   17,269   5,505   31.9 % 5,916   34.3 %
Total revenues    $ 279,140   $ 262,193   $ 16,947   6.5 % $ 24,063   9.2 %
                           
Revenues:                          
Americas    $ 124,130   $ 105,769   $ 18,361   17.4 % $ 20,677   19.5 %
Asia Pacific   104,502   99,775   4,727   4.7 % 7,878   7.9 %
Europe    50,336   56,424   (6,088 ) (10.8 )% (4,440 ) (7.9 )%
Total segment revenues   278,968   261,968   17,000   6.5 % 24,115   9.2 %
Other businesses   172   225   (53 ) (23.6 )% (52 ) (23.1 )%
Total consolidated revenues   $ 279,140   $ 262,193   $ 16,947   6.5 % $ 24,063   9.2 %
_______________________                                  
(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” above for more information.

          

CROCS, INC. SUBSIDIARIES
RETAIL STORE COUNTS
(UNAUDITED)
 
   
    December 31, 
2015
  Opened   Closed   March 31, 
2016
 
Company-operated retail locations                  
Type                  
Kiosk/store in store   98   2   3   97  
Retail stores   275   1   11   265  
Outlet stores   186   3   1   188  
Total   559   6   15   550  
Operating segment                  
Americas   196   1   1   196  
Asia Pacific   261   5   12   254  
Europe   102     (1 ) 2   100  
Total   559   6   15   550  
________________________  
(1) Excludes eight retail locations acquired in Austria on March 31, 2016 as no revenue was
recognized associated with those locations in the three months ended March 31, 2016.
 

       

CROCS, INC. AND SUBSIDIARIES
COMPARABLE STORE SALES
RETAIL AND DIRECT TO CONSUMER
(UNAUDITED)
 
    Constant Currency (2)   Constant Currency (2)  
    Three Months Ended   Three Months Ended  
    March 31, 2016   March 31, 2015  
Comparable store sales (retail only) (1)          
Americas   2.9 % (5.8 )%
Asia Pacific    2.0 % (9.4 )%
Europe    7.5 % 5.7 %
Global    3.1 % (5.3 )%
           
    Constant Currency (2)   Constant Currency (2)  
    Three Months Ended   Three Months Ended  
    March 31, 2016   March 31, 2015  
Direct to Consumer comparable store sales (includes retail and e-commerce) (1)          
Americas   12.2 % (4.3 )%
Asia Pacific    5.8 % (5.8 )%
Europe    9.7 % 2.1 %
Global    9.9 % (3.7 )%
______________________          
 
(1) Comparable store status is determined on a monthly basis. Comparable store sales begin in the thirteenth month of a store’s operation. 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. Location closures in excess of three months are excluded until the thirteenth month post re-opening. Comparable store sales exclude the impact of our e-commerce channel revenues and are calculated on a currency neutral basis using historical quarterly average currency rates.
 
(2) Reflects quarter-over-quarter and year-over-year change as if the current period results were in “constant currency,” which is a non-GAAP financial measure. Constant currency is a measure utilized by management in which current period results have been restated using prior year average foreign exchange rates for the comparative period to enhance the visibility of the underlying business trends by excluding the impact of foreign currency exchange rate fluctuations. We do not suggest that investors should consider this non-GAAP measure in isolation from, or as a substitute for, financial information prepared in accordance with U.S. GAAP.

 

Investor Contact:
Brendon Frey, ICR
(203) 682-8200
Brendon.Frey@icrinc.com

Media Contact:
Katy Michael/Crocs Inc.
(303) 848-7000
kmichael@crocs.com

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