Crocs, Inc. - FORM 8-K - EX-99.1 - PRESS RELEASE

Attached files

file	filename
8-K - FORM 8-K - Crocs, Inc.	d429634d8k.htm

Exhibit 99.1

LOGO


Investor Contact:		William I. Kent/Crocs Inc. (303) 848-7000 wkent@crocs.com

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

Crocs Inc. Reports 2012 Third Quarter Financial Results

Company Reports Earnings Per Diluted Share of $0.49 and

Record Third Quarter Revenue of $295.6 million

NIWOT, COLORADO – October 24, 2012 – Crocs Inc. (NASDAQ: CROX) reported today financial results for the third quarter ended September 30, 2012. Revenue for the third quarter of 2012 increased 7.5% to $295.6 million compared with revenue of $274.9 million reported in the third quarter of 2011. Net income for the third quarter of 2012 was $45.1 million, or $0.49 per diluted share, compared with net income of $30.2 million, or $0.33 per diluted share, in the third quarter of 2011.

From a channel perspective, wholesale sales increased 1.5% to $156.2 million compared with sales of $154.0 million in the third quarter of 2011. Internet sales increased 6.0% to $27.1 million compared with sales of $25.6 million in the third quarter of 2011. Retail sales increased 17.7% to $112.2 million compared with sales of $95.3 million in the third quarter of 2011. The company ended the quarter with 499 retail store locations compared with 410 locations a year ago. Global same store sales for the third quarter of 2012 increased 1.0% on a currency neutral basis, as the Americas increased 5.5%, Europe increased 0.9%, and Asia declined 6.3%.

Sales growth during the quarter was driven by strength in the Americas and Asia. Geographically, revenue increased 7.4% for the Americas, 11.3% for Asia and decreased 2.9% for Europe. On a constant currency basis revenue, increased 8.6% for the Americas, 13.0% for Asia, 7.3% for Europe, and 10.3% globally.

“Our revenue growth during the third quarter reflects the benefit of balanced distribution channels globally. Our direct to consumer channel in the Americas increased 12% on year-over-year basis, highlighted by a mid single digit same store sales gain, and our expanded presence in Asia resulted in a direct to consumer sales increase of 17% in that region,” said John McCarvel, President and Chief Executive Officer. “Our Americas and Asia performance helped to more than offset weakness in

the European market, where challenging macroeconomic conditions and foreign currency exchange rate fluctuations continue to pressure our results. At the same time, we haven’t been fully immune to some of the recent choppiness in Asia, particularly in Japan, where consumer demand slowed as the third quarter progressed. Despite the economic headwinds we faced during quarter, we continued to grow the business and make strategic progress toward our long-term goal of evolving Crocs into a four-season brand. For the spring summer 2013 season our wholesale pre-books have been strong. We are excited about the prospects for 2013 as enthusiasm for our products continues to grow and our opportunities globally expand.”

Margins

Gross profit for the third quarter of 2012 increased 9.2% to $160.7 million, or 54.4% as a percentage of sales, from $147.2 million, or 53.5% as a percentage of sales in the same period last year. Selling, General, & Administrative expenses (SG&A) increased 8.1% to $120.7 million versus $111.7 million a year ago. As a percentage of sales, SG&A was 40.8% compared with 40.6% in the third quarter of 2011.

Balance Sheet

Cash and cash equivalents at September 30, 2012 increased 41.8% to $312.6 million compared to $220.4 million at September 30, 2011. Inventories at September 30, 2012 were $187.5 million, up 24.1% compared to inventories at September 30, 2011 of $151.1 million. Inventory levels during the third quarter of 2012 were partially driven by the 22% increase in retail store locations in the quarter and the need for additional inventory for the 35 to 40 new store openings planned for the fourth quarter of 2012.

Backlog

Backlog at September 30, 2012 increased 33.2% to $395.4 million compared with backlog of $296.8 million at September 30, 2011. John McCarvel continued “We saw exceptional growth in third quarter of 2012 pre-books as our wholesale customers accelerated their order books to secure sourcing for spring summer deliveries of our hottest new products for 2013, which include the huarache, molded boat shoes, and our women’s wedge line.”

Income Taxes

For the quarter, the company recorded a non-recurring tax benefit of $11.4 million due to a reversal of certain tax provisions and the release of certain valuation allowances associated with deferred tax assets.

Guidance

For the fourth quarter of 2012, the Company expects break-even diluted earnings per share on revenue of $220 million.

Conference Call Information

A conference call to discuss Crocs’ 2012 third quarter financial results is scheduled for today (October 24, 2012) 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.

About Crocs, Inc.

Celebrating its 10th anniversary in 2012, Crocs, Inc. is a world leader in innovative casual footwear for men, women and children. Crocs offers several distinct shoe collections with more than 300 four-season footwear styles. 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 fans “Get Crocs Inside” every pair of shoes, from the iconic clog to new sneakers, sandals, boots and heels. Since its inception in 2002, Crocs has sold more than 200 million pairs of shoes in more than 90 countries around the world. The brand celebrated reaching $1 billion in annual sales in 2011.

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 include, but are not limited to, statements regarding future revenue and earnings, backlog, future orders, prospects and product pipeline. 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 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; our ability to open and operate additional retail locations; 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. 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

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,
($ thousands, except per share data)	2012			2011			2012			2011
Revenues	$	295,569		$	274,897		$	898,309		$	797,189
Cost of sales		134,826			127,722			396,682			360,591

Gross profit		160,743			147,175			501,627			436,598
Selling, general and administrative expenses		120,729			111,672			349,737			309,769
Asset impairment		—			495			819			527

Income from operations		40,014			35,008			151,071			126,302
Foreign currency transaction (gains) losses, net		21			(2,358	)		2,670			(4,560	)
Other (income) expense, net		(80	)		335			(1,747	)		636
Interest expense		377			204			556			632

Income before income taxes		39,696			36,827			149,592			129,594
Income tax expense (benefit)		(5,384	)		6,620			14,642			22,377

Net income	$	45,080		$	30,207		$	134,950		$	107,217

Net income per common share:
Basic	$	0.50		$	0.34		$	1.50		$	1.21

Diluted	$	0.49		$	0.33		$	1.48		$	1.18

CROCS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)


($ thousands)	September 30, 2012			December 31, 2011			September 30, 2011
ASSETS
Current assets:
Cash and cash equivalents	$	312,580		$	257,587		$	220,388
Accounts receivable, net of allowances of $17,557 and $15,508, respectively		121,396			84,760			95,305
Inventories		187,527			129,627			151,109
Deferred tax assets, net		8,042			7,047			14,134
Income tax receivable		5,829			5,828			16,460
Other receivables		26,105			20,295			18,488
Prepaid expenses and other current assets		26,813			20,199			18,654

Total current assets		688,292			525,343			534,538
Property and equipment, net		76,577			67,684			66,115
Intangible assets, net		61,049			48,641			47,372
Deferred tax assets, net		32,882			30,375			31,423
Other assets		32,804			23,410			24,806

Total assets	$	891,604		$	695,453		$	704,254

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	78,103		$	66,517		$	57,354
Accrued expenses and other current liabilities		94,389			76,506			75,563
Deferred tax liabilities, net		3,497			2,889			15,237
Income taxes payable		25,260			8,273			22,373
Bank borrowings and current portion of capital lease obligations		28			1,118			1,232

Total current liabilities		201,277			155,303			171,759
Long term income tax payable		30,449			41,665			35,427
Long term deferred tax liabilities, net		—			—			1,070
Other liabilities		18,894			6,705			5,749

Total liabilities		250,620			203,673			214,005

Commitments and contingencies
Stockholders’ equity:
Preferred shares, par value $0.001 per share, 5,000,000 shares authorized, none outstanding		—			—			—
Common shares, par value $0.001 per share, 250,000,000 shares authorized, 90,972,999 and 90,465,878 shares issued and outstanding, respectively, at Sept 30, 2012 and 90,306,432 and 89,807,146 shares issued and outstanding, respectively, at December 31, 2011		91			90			90
Treasury stock, at cost, 522,186 and 499,286 shares, respectively		(19,211	)		(19,759	)		(20,103	)
Additional paid-in capital		305,204			293,959			291,609
Retained earnings		337,620			202,669			197,098
Accumulated other comprehensive income		17,280			14,821			21,555

Total stockholders’ equity		640,984			491,780			490,249

Total liabilities and stockholders’ equity	$	891,604		$	695,453		$	704,254


	Three Months Ended September 30,					% Change			Constant Currency % Change ⁽¹⁾			Nine Months Ended September 30,				% Change			Constant Currency % Change ⁽¹⁾
($ thousands)	2012		2011			% Change			Constant Currency % Change ⁽¹⁾			2012		2011		% Change			Constant Currency % Change ⁽¹⁾
Channel revenues:
Wholesale:
Americas	$	56,445	$	55,430			1.8	%		3.9	%	$	187,870	$	172,853		8.7	%		10.5	%
Asia		76,976		71,286			8.0	%		9.4	%		249,491		211,734		17.8	%		17.6	%
Europe		22,667		27,343			(17.1	%)		(7.4	%)		97,773		109,606		(10.8	%)		(3.1	%)
Other businesses		161		(80	)		(301.3	%)		(313.8	%)		333		103		223.3	%		201.0	%

Total Wholesale		156,249		153,979			1.5	%		4.6	%		535,467		494,296		8.3	%		10.6	%
Consumer-direct:
Retail
Americas		58,798		52,407			12.2	%		12.7	%		149,296		131,404		13.6	%		14.1	%
Asia		41,826		36,245			15.4	%		17.6	%		110,766		85,301		29.9	%		31.6	%
Europe		11,550		6,649			73.7	%		85.5	%		25,158		15,832		58.9	%		69.7	%

Total Retail		112,174		95,301			17.7	%		19.7	%		285,220		232,537		22.7	%		24.3	%
Internet
Americas		16,705		15,010			11.3	%		11.8	%		46,700		40,196		16.2	%		16.4	%
Asia		4,893		3,654			33.9	%		36.1	%		12,319		8,672		42.1	%		42.5	%
Europe		5,548		6,953			(20.2	%)		(9.9	%)		18,603		21,488		(13.4	%)		(4.5	%)

Total Internet		27,146		25,617			6.0	%		9.4	%		77,622		70,356		10.3	%		13.2	%

Total Revenues	$	295,569	$	274,897			7.5	%		10.3	%	$	898,309	$	797,189		12.7	%		14.8	%


	Three Months Ended September 30,					% Change			Constant Currency % Change ⁽¹⁾			Nine Months Ended September 30,				% Change			Constant Currency % Change ⁽¹⁾
($ thousands)	2012		2011			% Change			Constant Currency % Change ⁽¹⁾			2012		2011		% Change			Constant Currency % Change ⁽¹⁾
Regional Revenue:
Americas	$	131,948	$	122,847			7.4	%		8.6	%	$	383,866	$	344,453		11.4	%		12.6	%
Asia		123,695		111,185			11.3	%		13.0	%		372,576		305,707		21.9	%		22.2	%
Europe		39,765		40,945			(2.9	%)		7.3	%		141,534		146,926		(3.7	%)		4.6	%
Other businesses		161		(80	)		(301.3	%)		(313.8	%)		333		103		223.3	%		201.0	%

Total Revenues	$	295,569	$	274,897			7.5	%		10.3	%	$	898,309	$	797,189		12.7	%		14.8	%

⁽¹⁾	Current period results have been restated using 2011 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.


Company-operated retail locations:	September 30, 2011		December 31, 2011		Opened		Closed			September 30, 2012
Geography:
Americas		195		197		21		(29	)		189
Asia		182		198		74		(39	)		233
Europe		33		35		43		(1	)		77

Total company-operated retail locations		410		430		138		(69	)		499

Type:
Kiosk		67		57		3		(26	)		34
Store in Store		92		101		30		(32	)		99
Retail stores		167		180		74		(9	)		245
Outlet stores		84		92		31		(2	)		121

Total company-operated retail locations		410		430		138		(69	)		499


Comparable store sales growth ⁽¹⁾	Constant Currency Three Months Ended September 30, 2012 ⁽²⁾			Constant Currency Nine Months Ended September 30, 2012 ⁽²⁾


Americas		5.5	%		3.7	%
Asia		(6.3	)		1.2
Europe		0.9			7.5
Total		1.0	%		3.1	%

⁽¹⁾

Comparable store status is determined on a monthly basis. Comparable store sales begin in the thirteen 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 they have comparable prior year sales. Temporarily closed stores are excluded from the comparable store sales calculation during the month of closure. Locations closures in excess of three months are excluded until the thirteen month post re-opening.

⁽²⁾	Current period results have been restated using 2011 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.

Crocs, Inc. - FORM 8-K - EX-99.1 - PRESS RELEASE - October 24, 2012

Attached files

Crocs, Inc. Reports