For Crocs, Inc.
Company Contact:
Jennifer Almquist/ Investor Relations
(303) 848-7000
Tia Mattson/ Media Relations
(303) 848-7199
Investor Contact:
ICR, Inc.
Chad Jacobs/Brendon Frey
(203) 682-8200
CROCS, INC. REPORTS 2009 THIRD QUARTER FINANCIAL RESULTS
Announces Profitable Third Quarter
Third Quarter Revenue Improved to $177.1 Million, Exceeding Guidance and Prior Year Revenue
Cash Increases 50% to $76 Million in First Nine Months of 2009
NIWOT, COLORADO - November 5, 2009 - Crocs, Inc. (NASDAQ: CROX) today reported financial results for the third quarter ended September 30, 2009.
Third quarter 2009 revenues increased 1.7% to $177.1 million compared to revenues of $174.2 million in the year ago period, ahead of the Company’s guidance for revenues between $150 and $160 million. The Company’s third quarter 2009 revenue included $11.5 million in planned sales of previously impaired footwear.
The Company reported net income of $22.1 million in the third quarter of 2009 with diluted earnings per share of $0.25, compared to a third quarter 2008 net loss of $148.0 million, or ($1.79) per diluted share. Third quarter 2009 net income includes the effects of the following:
- $9.6 million gross margin impact related to sales of product that had been previously impaired,
- $1.0 million gain from foreign currency exchange rate fluctuations during the 2009 third quarter, and
- $14.4 million one-time tax benefit related to a change in the Company’s corporate tax structure.
These positive effects on net income were partially offset by the unfavorable impacts of $3.6 million in impairment and restructuring charges and net charitable donations.
On a non-GAAP basis, the Company’s third quarter 2009 net income after taxes and excluding certain other one-time items was $0.6 million, or $0.01 per diluted share.
Year-over-year third quarter changes in the Company’s channel revenue streams were as follows:
- Retail sales increased 39.6% to $53.9 million;
- Internet sales increased 61.0% to $16.1 million; and
- Wholesale sales decreased 14.7% to $107.1 million.
Changes in the Company’s regional revenue streams during the same periods were as follows:
- Asia increased 7.4% to $68.0 million;
- Europe increased 1.7% to $29.9 million, and
- Americas decreased 2.8% to $79.3 million.
Balance Sheet
The Company’s cash and cash equivalents as of September 30, 2009 increased nearly 50% since December 31, 2008 to $76.0 million, despite fully repaying previously-outstanding debt of $17.3 million during the quarter. During the quarter, the Company also secured a new asset-backed credit facility with up to $30.0 million in borrowings available, which is intended to provide additional liquidity and flexibility in the future.
Inventory of $113.7 million at September 30, 2009 was 20.6% lower than at December 31, 2008 resulting in a trailing twelve month inventory turnover of 3 times.
The Company ended the third quarter of 2009 with accounts receivable of $65.8 million compared to $35.3 million at December 31, 2008 as a result of higher sales in the quarter. Days sales outstanding decreased from 37.5 days for the three months ended September 30, 2008 to 34.2 days for the three months ended September 30, 2009.
Net capital expenditures in the third quarter of 2009 were $6.1 million compared to $18.3 million the third quarter of 2008.
“Our third quarter results were driven by the continuing strength of our consumer-direct businesses and the favorable effects of our cost reduction programs,” said John Duerden, President and Chief Executive Officer. “While we are encouraged by our top-line growth and return to profitability in the quarter, the normal seasonality of our business will make it difficult to maintain profitability in the fourth quarter. However, future wholesale bookings for the spring 2010 line are strong in all regions. When coupled with the launch of our new, targeted marketing programs, this provides us with increased confidence that we will return to profitability during 2010. In the meantime, we will continue to invest in the products, systems, processes and customer relationships necessary to deliver the best long-term results.”
Guidance
The Company expects to generate between $110 million and $115 million in revenue during its fiscal fourth quarter, with a loss per diluted share between ($0.20) and ($0.15). This guidance excludes the effect of fluctuations in foreign currency, charitable contributions and one-time and non-recurring charges. Guidance includes the effect of impaired inventory sales and will on a go-forward basis.
Conference Call Information
A conference call to discuss Crocs’ third quarter 2009 financial results is scheduled for today (November 5, 2009) at 5:00 PM Eastern Time. A webcast of the call will take place simultaneously and can be accessed by clicking the ‘Investor Relations’ link under the Company section on www.crocs.com or at www.earnings.com. To listen to the broadcast, your computer must have Windows Media Player installed. If you do not have Windows Media Player, go to www.earnings.com prior to the call, where you can download the software for free.
CROX 3Q09 Financial Tables
Reg G Reconciliation
About Crocs, Inc.
Crocs, Inc. is a designer, manufacturer and retailer of footwear for men, women and children under the CrocsTM brand.
All CrocsTM brand shoes feature Crocs’ proprietary closed-cell resin, CrosliteTM, which represents a substantial innovation in footwear. The CrosliteTM material enables Crocs to produce soft, comfortable, lightweight, superior-gripping, non-marking and odor-resistant shoes. These unique elements make CrocsTM footwear ideal for casual wear, as well as for professional and recreational uses such as boating, hiking, hospitality and gardening. The versatile use of the material has enabled Crocs to successfully market its products to a broad range of consumers.
CrocsTM shoes are sold in 125 countries and come in a wide array of colors and styles. Please visit www.crocs.com for additional information.
Forward-looking statements
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 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 crisis; our ability to obtain adequate financing; our significant expansion in recent years; our ability to manage our future growth or decline effectively; changing fashion trends; our defense and the ultimate outcome of a pending class action lawsuit; our ability to accurately anticipate and respond to seasonal or quarterly fluctuations in our operating results; our management and information systems infrastructure; our ability to obtain and protect intellectual property rights; our reliance on third party manufacturing and logistics providers for the production and distribution of products; our limited manufacturing capacity and distribution channels; our reliance on a single source supply for certain raw materials; inherent risks associated with the manufacture, distribution and sale of our products overseas; our reliance on market acceptance of the small number of products we sell; our ability to develop and sell new products; our limited operating history; our ability to accurately forecast consumer demand for our products; our ability to maintain effective internal controls; our ability to attract, assimilate and retain management talent; retail environment; our ability to effectively market and maintain a positive brand image; the effect of competition in our industry; the effect of potential adverse currency exchange rate fluctuations; and other factors described in our 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. 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.