Crocs, Inc. Reports Better-Than-Expected Third Quarter Results And Adjusts Full Year 2024 Outlook

Third Quarter Diluted EPS Up 17% to $3.36 and Adjusted Diluted EPS Up 11% to $3.60

Third Quarter Revenues Increase 2% to $1.06 Billion

Third Quarter Crocs Brand Grows 8% Constant Currency Fueled By Balanced Channel Growth

BROOMFIELD, Colo., Oct. 29, 2024 /PRNewswire/ -- Crocs, Inc. (NASDAQ:CROX), a world leader in innovative casual footwear for all, today announced its third quarter 2024 financial results.

"We reported third quarter results which exceeded our Enterprise guidance on sales and profitability," said Andrew Rees, Chief Executive Officer. "Our overall performance including strong gross margin gains allowed us to accelerate our strategic investments in the quarter while continuing to deliver earnings per share growth through the deployment of our strong cash flow. Strength was led by our Crocs Brand fueled by 17% international and 8% direct-to-consumer growth."

Mr. Rees continued, "We have sharpened our strategy around HEYDUDE as we work to create higher brand relevance through our product and marketing initiatives. While we are seeing early green shoots from these actions, HEYDUDE's recent performance and the current operating environment are signaling it will take longer than we had initially planned for the brand to turn a corner. While we are resetting our full-year outlook for HEYDUDE, I remain confident in the long-term trajectory of the brand."

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 2024 Operating Results (Compared to the Same Period Last Year)

Consolidated revenues were $1,062 million, an increase of 1.6%, or 2.0% on a constant currency basis. Direct-to-consumer ("DTC") revenues grew 4.4%, or 4.6% on a constant currency basis. Wholesale revenues contracted 1.4%, or 0.9% on a constant currency basis.

Gross margin was 59.6% compared to 55.6%. Adjusted gross margin improved 220 basis points to 59.6% compared to 57.4%.

Selling, general, and administrative expenses ("SG&A") of $364 million increased 18.1% from $308 million, and represented 34.2% of revenues compared to 29.4%. Adjusted SG&A of $364 million increased 19.4% from $305 million, and represented 34.2% of revenues compared to 29.1%.

Income from operations of $270 million decreased 1.5% from $274 million, resulting in operating margin of 25.4% compared to 26.2%. Adjusted income from operations of $270 million decreased 8.8% from $296 million, resulting in adjusted operating margin of 25.4% compared to 28.3%.

Diluted earnings per share of $3.36 increased 17.1% from $2.87. Adjusted diluted earnings per share of $3.60 increased 10.8% from $3.25.

During the quarter, we repaid $110 million of debt. We repurchased approximately 1.1 million shares for $151 million, and at quarter end, $549 million of share repurchase authorization remained available for future repurchases.

Third Quarter 2024 Brand Summary

Crocs Brand: Revenues increased 7.4% to $858 million, or 7.9% on a constant currency basis.

Channel

DTC revenues increased 7.7% to $463 million, or 8.0% on a constant currency basis.

Wholesale revenues increased 7.1% to $396 million, or 7.8% on a constant currency basis.

Geography

North America revenues increased 2.1% to $491 million, or 2.2% on a constant currency basis.

International revenues increased 15.5% to $367 million, or 16.5% on a constant currency basis.

HEYDUDE Brand: Revenues decreased 17.4% to $204 million.

Channel

DTC revenues decreased 9.3% to $91 million.

Wholesale revenues decreased 22.9% to $113 million.

 Balance Sheet and Cash Flow (September 30, 2024 as compared to September 30, 2023)

Cash and cash equivalents were $186 million compared to $127 million.

Inventories were $367 million compared to $390 million.

Total borrowings were $1,422 million compared to $1,939 million.

Capital expenditures were $51 million compared to $86 million.

Financial Outlook

Fourth Quarter 2024

With respect to the fourth quarter of 2024, we expect:

Revenues to be flat to up slightly compared to fourth quarter 2023, at currency rates as of the end of the last reported period.

Crocs Brand to grow approximately 2% compared to fourth quarter 2023.

HEYDUDE Brand to be down 6% to 4% compared to fourth quarter 2023.

Adjusted operating margin of approximately 19.5%.

Adjusted diluted earnings per share of $2.20 to $2.28.

Full Year 2024

With respect to 2024, we now expect:

Revenue growth of approximately 3% compared to 2023, at currency rates as of the end of the last reported period, at the lower end of prior guidance of 3% to 5%.

Revenues for the Crocs Brand to grow approximately 8%, versus growth of 7% to 9% prior.

Revenues for the HEYDUDE Brand to be down approximately 14.5%, versus down 10% to 8% prior.

Adjusted operating margin of more than 25%.

Non-GAAP adjustments of approximately $28 million related to the implementation of a new enterprise resource planning ("ERP") system for HEYDUDE, and costs to transition to our new HEYDUDE distribution center in Las Vegas, Nevada.

Combined GAAP tax rate of approximately 21% and non-GAAP effective tax rate of approximately 16%.

Adjusted diluted earnings per share of $12.82 to $12.90, at the high end of prior guidance of $12.45 to $12.90. Adjusted diluted earnings per share guidance does not assume any impact from potential future share repurchases.

Capital expenditures of $90 million to $100 million compared to prior guidance of $100 million to $110 million.

Conference Call Information

A conference call to discuss third quarter 2024 results is scheduled for today, Tuesday, October 29, 2024, 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 October 29, 2025 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 80 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 cost inflation, our financial condition, brand and liquidity outlook, and expectations regarding our future financial results, share repurchases, our strategy, plans, objectives, expectations (financial or otherwise) and intentions, future financial results and growth potential, statements regarding fourth quarter and full year 2024 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: cost inflation; current global financial conditions; 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 October 29, 2024. 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,

2024

2023

2024

2023

Revenues

$                1,062,200

$                1,045,717

$                3,112,335

$                3,002,250

Cost of sales

428,861

464,081

1,275,003

1,322,937

 Gross profit

633,339

581,636

1,837,332

1,679,313

Selling, general and administrative expenses

363,510

307,784

1,015,336

852,044

 Income from operations

269,829

273,852

821,996

827,269

Foreign currency losses, net

(332)

(1,770)

(3,928)

(1,622)

Interest income

1,366

506

2,908

1,225

Interest expense

(26,203)

(39,207)

(85,927)

(124,907)

Other income, net

237

24

302

448

 Income before income taxes

244,897

233,405

735,351

702,413

Income tax expense

45,096

56,380

154,189

163,433

Net income

$                   199,801

$                   177,025

$                   581,162

$                   538,980

Net income per common share:

 Basic

$                          3.38

$                          2.90

$                          9.69

$                          8.74

 Diluted

$                          3.36

$                          2.87

$                          9.62

$                          8.65

Weighted average common shares outstanding:

 Basic

59,046

61,143

59,973

61,670

 Diluted

59,501

61,615

60,437

62,280

 

CROCS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(in thousands, except share and par value amounts)

September 30,2024

December 31,2023

ASSETS

Current assets:

 Cash and cash equivalents

$          186,122

$          149,288

 Restricted cash - current

2

2

 Accounts receivable, net of allowances of $33,634 and $27,591, respectively

361,651

305,747

 Inventories

367,191

385,054

 Income taxes receivable

2,913

4,413

 Other receivables

21,618

21,071

 Prepaid expenses and other assets

50,923

45,129

Total current assets

990,420

910,704

Property and equipment, net of accumulated depreciation of $146,957 and $120,510, respectively

243,358

238,315

Intangible assets, net of accumulated amortization of $155,943 and $138,611, respectively

1,783,677

1,792,562

Goodwill

711,602

711,588

Deferred tax assets, net

659,861

667,972

Restricted cash

3,421

3,807

Right-of-use assets

303,758

287,440

Other assets

17,053

31,446

Total assets

$       4,713,150

$       4,643,834

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

 Accounts payable

$          240,891

$          260,978

 Accrued expenses and other liabilities

277,982

285,771

 Income taxes payable

106,753

65,952

 Current borrowings

—

23,328

 Current operating lease liabilities

66,900

62,267

Total current liabilities

692,526

698,296

Deferred tax liabilities, net

12,824

12,912

Long-term income taxes payable

572,362

565,171

Long-term borrowings

1,421,952

1,640,996

Long-term operating lease liabilities

285,155

269,769

Other liabilities

3,213

2,767

Total liabilities

2,988,032

3,189,911

Commitments and contingencies

Stockholders' equity:

 Common stock, par value $0.001 per share, 250.0 million shares authorized, 110.4 million and 110.1 million issued, 58.5 million and 60.5 million outstanding, respectively

110

110

 Treasury stock, at cost, 51.9 million and 49.6 million shares, respectively

(2,226,193)

(1,888,869)

 Additional paid-in capital

851,228

826,685

 Retained earnings

3,192,927

2,611,765

 Accumulated other comprehensive loss

(92,954)

(95,768)

Total stockholders' equity

1,725,118

1,453,923

Total liabilities and stockholders' equity

$       4,713,150

$       4,643,834

 

CROCS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(in thousands)

Nine Months Ended September 30,

2024

2023

Cash flows from operating activities:

Net income

$                    581,162

$                 538,980

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

Depreciation and amortization

51,890

40,531

Operating lease cost

62,209

56,880

Share-based compensation

24,377

23,507

Asset impairment

24,081

—

Other non-cash items

26,113

7,411

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

Accounts receivable

(58,510)

(99,912)

Inventories

17,983

77,915

Prepaid expenses and other assets

(9,356)

(30,714)

Accounts payable, accrued expenses and other liabilities

(32,847)

(4,935)

Right-of-use assets and operating lease liabilities

(64,495)

(54,287)

Income taxes

47,942

25,350

Cash provided by operating activities

670,549

580,726

Cash flows from investing activities: