Attached files
| file | filename |
|---|---|
| 8-K - 8-K - Crocs, Inc. | crox-20210223.htm |
Exhibit 99.1
| Investor Contact: | Cori Lin, Crocs, Inc. | |||||||
| (303) 848-5053 | ||||||||
| clin@crocs.com | ||||||||
| PR Contact: | Melissa Layton, Crocs, Inc. | |||||||
| (303) 848-7885 | ||||||||
| mlayton@crocs.com | ||||||||
Crocs, Inc. Reports Record Annual Revenue of $1.4 billion, Up 13%
Full Year Diluted EPS was $4.56 and Adjusted EPS Doubled to $3.22
____________________
BROOMFIELD, COLORADO — February 23, 2021 — Crocs, Inc. (NASDAQ: CROX) a world leader in innovative casual footwear for women, men, and children, today announced its fourth quarter and full year 2020 financial results.
Andrew Rees, Chief Executive Officer, said, “We achieved record fourth quarter revenues and profitability and finished 2020 with very strong brand momentum. We are looking forward to an exceptional 2021 with accelerated revenue growth as we invest in digital, China, and our supply chain to support future growth. I am confident in our ability to continue to deliver outstanding profitability and strong cash flow. The Crocs brand has never been stronger and I am very excited about our future.”
Amounts referred to as "Adjusted" 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.
Fourth Quarter and Full Year 2020 Highlights
•Highest quarterly revenues in company history were achieved in the fourth quarter.
•Record 2020 revenues of $1.4 billion increased 12.6% over last year.
•Digital sales, which includes sales through our company-owned website, third party marketplaces, and e-tailers, grew 50.2% in 2020 to represent 41.5% of revenue versus 31.1% last year with growth in all regions.
•Direct-to-consumer comparable sales, which includes retail and e-commerce, increased 39.2% in 2020.
•2020 operating margin rose from 10.5% to 15.4% and adjusted operating margin grew from 11.6% to 18.9%.
•Full year diluted EPS was $4.56 per share. On a non-GAAP basis, diluted EPS doubled to $3.22.
Fourth Quarter 2020 Operating Results
•Revenues were $411.5 million, an increase of 56.5% from the same period last year, or 56.1% on a constant currency basis. E-commerce revenues grew 92.0%, wholesale revenues rose 52.2%, and retail comparable store sales increased 40.9%.
•Gross margin of 55.7% increased 770 basis points compared to 48.0% in the same period last year. Adjusted gross margin of 56.0% rose 670 basis points from the same period last year.
•SG&A expenses of $164.5 million increased from $117.9 million in the same period last year and SG&A as a percent of revenues improved by 480 basis points to 40.0%. Adjusted SG&A improved to 34.9% of revenues versus 44.4% for the same period last year.
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•Income from operations increased 673.5% to $64.6 million from $8.4 million for the same period last year. Operating margin rose to 15.7% from 3.2%. Adjusted income from operations rose 576.9% to $87.0 million and adjusted operating margin was 21.1% compared to 4.9% for the same period last year.
•Diluted earnings per share increased to $2.69 compared to $0.29 for the same period last year. Adjusted diluted earnings per share were exceptional at $1.06 compared to $0.12 for the same period last year.
2020 Operating Results
•Revenues were $1,386.0 million, an increase of 12.6% from the same period last year, or 13.5% on a constant currency basis. E-commerce revenues grew 58.2%, wholesale revenues rose 5.6%, and retail comparable store sales grew 21.2%.
•Gross margin of 54.1% increased 400 basis points compared to 50.1% last year. Adjusted gross margin of 54.6% rose 350 basis points from last year.
•SG&A expenses of $535.8 million increased from $488.4 million last year and SG&A as a percent of revenues improved by 100 basis points to 38.7%. Adjusted SG&A improved to 35.6% of revenues versus 39.5% for the same period last year.
•Income from operations increased 66.4% to $214.1 million from $128.6 million last year. Operating margin rose 490 basis points to 15.4%. Adjusted income from operations rose 83.6% to $262.6 million and adjusted operating margin was 18.9% compared to 11.6% last year.
•Diluted earnings per share increased 174.7% to $4.56 compared to $1.66 last year. Adjusted diluted earnings per share doubled to $3.22 compared to $1.61 for the same period last year.
2020 Geographic Summary
•Americas: Revenues of $863.6 million increased 35.7% on a constant currency basis.
•Asia Pacific: Revenues of $278.5 million decreased 19.2% on a constant currency basis.
•EMEA: Revenues of $243.7 million increased 1.5% on a constant currency basis.
2020 Channel Summary
•Wholesale: Revenues increased 5.6% to $692.9 million compared to $656.2 million for the same period last year.
•Retail: Revenues decreased 3.8% to $334.0 million compared to $347.4 million for the same period last year due to COVID-19 store closures.
•E-commerce: Revenues increased 58.2% to $359.0 million compared to $227.0 million for the same period last year.
•Digital sales grew 50.2% to 41.5% of total revenues versus 31.1% for the same period last year.
•Direct-to-consumer comparable sales grew 39.2% compared to 16.0% for the same period last year.
Balance Sheet and Cash Flow
•Cash and cash equivalents were $135.8 million as of December 31, 2020, up from $108.3 million as of December 31, 2019.
•Inventories increased to $175.1 million as of December 31, 2020 compared to $172.0 million as of December 31, 2019.
•Cash provided by operating activities rose 196.7% to $266.9 million during 2020 compared to $90.0 million during 2019.
•Capital expenditures were $42.0 million during 2020 compared to $36.6 million during 2019.
•Borrowings at December 31, 2020 were $180.0 million. Our liquidity position remains strong with $319.4 million in available borrowing capacity.
Share Repurchase Activity
During the fourth quarter of 2020, we repurchased 1.7 million shares of our common stock for $131.7 million, which included a $125 million accelerated share repurchase (“ASR”). For the full year, we repurchased 3.2 million shares of our common stock for $170.8 million. Including the impact of the final ASR share delivery in January 2021, the average price for share repurchase in 2020 was $46.50 per share. At year end, $337.8 million of our $1.0 billion share repurchase authorization remained available for future repurchases.
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Financial Outlook
First Quarter 2021
With respect to the first quarter of 2021, we expect:
•Revenue growth to be between 40% and 50% compared to first quarter 2020 revenues of $281.2 million
•Non-GAAP adjustments of approximately $3 million related to distribution center investments that will impact gross margin
•Adjusted operating margin to be between 17% and 18%
Full Year 2021
With respect to 2021, we expect:
•Revenue growth to be between 20% and 25% compared to 2020 revenues of $1,386.0 million
•Non-GAAP adjustments of approximately $12 to $15 million related to distribution center investments that will impact gross margin
•Adjusted operating margin to be between 18% and 19%
•GAAP tax rate of approximately 25% and non-GAAP effective tax rate of approximately 16% to 18%
•Capital expenditures of approximately $100 to $130 million for supply chain investments to support growth
Conference Call Information:
A conference call to discuss fourth quarter and full year 2020 results is scheduled for today, February 23, 2021, 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 February 23, 2022 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 vast majority of shoes within Crocs’ collection contains Croslite™ material, a proprietary, molded footwear technology, delivering extraordinary comfort with each step.
In 2021, Crocs declares that expressing yourself and being comfortable are not mutually exclusive. To learn more about Crocs or our global Come As You Are™ campaign, please visit www.crocs.com or follow @Crocs on Facebook, Instagram and Twitter.
Forward Looking Statements:
This news release includes “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 full year and first quarter 2021 financial outlook and future profitability, cash flows, and brand strength. 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: 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 as of February 23, 2021. We do not undertake any obligation to update publicly any forward-looking statements, including, without limitation, any estimate regarding revenues, margins, capital expenditures, or SG&A, whether as a result of the receipt of new information, future events, or otherwise.
Category:Investors
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CROCS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
| Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
Revenues | $ | 411,506 | $ | 262,979 | $ | 1,385,951 | $ | 1,230,593 | |||||||||||||||
Cost of sales | 182,422 | 136,741 | 636,003 | 613,537 | |||||||||||||||||||
Gross profit | 229,084 | 126,238 | 749,948 | 617,056 | |||||||||||||||||||
Selling, general and administrative expenses | 164,453 | 117,882 | 535,824 | 488,407 | |||||||||||||||||||
| Income from operations | 64,631 | 8,356 | 214,124 | 128,649 | |||||||||||||||||||
Foreign currency gains (losses), net | 306 | (430) | (1,128) | (1,323) | |||||||||||||||||||
Interest income | 26 | 108 | 215 | 601 | |||||||||||||||||||
Interest expense | (1,149) | (1,893) | (6,742) | (8,636) | |||||||||||||||||||
| Other income (expense), net | (391) | 79 | 510 | 31 | |||||||||||||||||||
| Income before income taxes | 63,423 | 6,220 | 206,979 | 119,322 | |||||||||||||||||||
| Income tax benefit | (119,907) | (13,693) | (105,882) | (175) | |||||||||||||||||||
| Net income | $ | 183,330 | $ | 19,913 | $ | 312,861 | $ | 119,497 | |||||||||||||||
| Net income per common share: | |||||||||||||||||||||||
Basic | $ | 2.75 | $ | 0.29 | $ | 4.64 | $ | 1.70 | |||||||||||||||
Diluted | $ | 2.69 | $ | 0.29 | $ | 4.56 | $ | 1.66 | |||||||||||||||
Weighted average common shares outstanding: | |||||||||||||||||||||||
Basic | 66,729 | 68,441 | 67,386 | 70,357 | |||||||||||||||||||
Diluted | 68,054 | 69,843 | 68,544 | 71,771 | |||||||||||||||||||
| Gross margin | 55.7 | % | 48.0 | % | 54.1 | % | 50.1 | % | |||||||||||||||
| Operating margin | 15.7 | % | 3.2 | % | 15.4 | % | 10.5 | % | |||||||||||||||
Selling, general and administrative expenses as a percentage of revenues | 40.0 | % | 44.8 | % | 38.7 | % | 39.7 | % | |||||||||||||||
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CROCS, INC. AND SUBSIDIARIES
EARNINGS PER SHARE
(in thousands, except per share data)
| Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
| Numerator: | |||||||||||||||||||||||
| Net income | $ | 183,330 | $ | 19,913 | $ | 312,861 | $ | 119,497 | |||||||||||||||
| Denominator: | |||||||||||||||||||||||
| Weighted average common shares outstanding - basic | 66,729 | 68,441 | 67,386 | 70,357 | |||||||||||||||||||
| Plus: Dilutive effect of stock options and unvested restricted stock units | 1,325 | 1,402 | 1,158 | 1,414 | |||||||||||||||||||
Weighted average common shares outstanding - diluted | 68,054 | 69,843 | 68,544 | 71,771 | |||||||||||||||||||
| Net income per common share: | |||||||||||||||||||||||
| Basic | $ | 2.75 | $ | 0.29 | $ | 4.64 | $ | 1.70 | |||||||||||||||
| Diluted | $ | 2.69 | $ | 0.29 | $ | 4.56 | $ | 1.66 | |||||||||||||||
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CROCS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and par value amounts)
| December 31, | |||||||||||
| 2020 | 2019 | ||||||||||
| ASSETS | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 135,802 | $ | 108,253 | |||||||
| Restricted cash — current | 1,542 | 1,500 | |||||||||
| Accounts receivable, net of allowances of $21,093 and $18,797, respectively | 149,847 | 108,199 | |||||||||
| Inventories | 175,121 | 172,028 | |||||||||
| Income taxes receivable | 1,857 | 1,341 | |||||||||
| Other receivables | 10,816 | 8,711 | |||||||||
| Prepaid expenses and other assets | 17,856 | 25,350 | |||||||||
| Total current assets | 492,841 | 425,382 | |||||||||
| Property and equipment, net | 57,467 | 47,405 | |||||||||
| Intangible assets, net | 37,636 | 47,095 | |||||||||
| Goodwill | 1,719 | 1,578 | |||||||||
| Deferred tax assets, net | 350,784 | 24,747 | |||||||||
| Restricted cash | 1,929 | 2,292 | |||||||||
| Right-of-use assets | 167,421 | 182,228 | |||||||||
| Other assets | 8,926 | 8,075 | |||||||||
| Total assets | $ | 1,118,723 | $ | 738,802 | |||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | 112,778 | $ | 95,754 | |||||||
| Accrued expenses and other liabilities | 126,704 | 108,677 | |||||||||
| Income taxes payable | 5,038 | 4,207 | |||||||||
| Current operating lease liabilities | 47,064 | 48,585 | |||||||||
| Total current liabilities | 291,584 | 257,223 | |||||||||
| Long-term income taxes payable | 205,974 | 4,522 | |||||||||
| Long-term borrowings | 180,000 | 205,000 | |||||||||
| Long-term operating lease liabilities | 146,401 | 140,148 | |||||||||
| Other liabilities | 4,131 | 4 | |||||||||
| Total liabilities | 828,090 | 606,897 | |||||||||
| Commitments and contingencies | |||||||||||
| Stockholders’ equity: | |||||||||||
| Common stock, par value $0.001 per share, 105.0 million and 104.0 million issued, 65.9 million and 68.2 million shares outstanding, respectively | 105 | 104 | |||||||||
| Treasury stock, at cost, 39.1 million and 35.8 million shares, respectively | (688,849) | (546,208) | |||||||||
| Additional paid-in capital | 482,385 | 495,903 | |||||||||
| Retained earnings | 553,346 | 240,485 | |||||||||
| Accumulated other comprehensive loss | (56,354) | (58,379) | |||||||||
| Total stockholders’ equity | 290,633 | 131,905 | |||||||||
| Total liabilities and stockholders’ equity | $ | 1,118,723 | $ | 738,802 | |||||||
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CROCS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
| Year Ended December 31, | |||||||||||
| 2020 | 2019 | ||||||||||
Cash flows from operating activities: | |||||||||||
Net income | $ | 312,861 | $ | 119,497 | |||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
Depreciation and amortization | 27,619 | 24,213 | |||||||||
Operating lease cost | 61,583 | 60,142 | |||||||||
| Inventory donations | 8,994 | 109 | |||||||||
Provision for doubtful accounts, net | 5,779 | 1,566 | |||||||||
Share-based compensation | 16,361 | 14,412 | |||||||||
Unrealized foreign currency gain, net | 126 | (1,140) | |||||||||
Loss (gain) on disposals of assets | 340 | (213) | |||||||||
Asset impairments | 21,071 | — | |||||||||
Deferred taxes | (325,061) | (16,259) | |||||||||
Other non-cash items | 4,841 | (1,072) | |||||||||
Changes in operating assets and liabilities: | |||||||||||
Accounts receivable, net of allowances | (47,045) | (15,015) | |||||||||
Inventories | (13,462) | (48,156) | |||||||||
Prepaid expenses and other assets | 5,007 | (4,012) | |||||||||
Accounts payable | 23,229 | 6,032 | |||||||||
Accrued expenses and other liabilities | 22,358 | 13,265 | |||||||||
Operating lease liabilities | (61,178) | (64,313) | |||||||||
Income taxes | 203,479 | 902 | |||||||||
Cash provided by operating activities | 266,902 | 89,958 | |||||||||
Cash flows from investing activities: | |||||||||||
Purchases of property, equipment, and software | (42,033) | (36,576) | |||||||||
Proceeds from disposal of property and equipment | 463 | 616 | |||||||||
Other | (192) | (276) | |||||||||
Cash used in investing activities | (41,762) | (36,236) | |||||||||
Cash flows from financing activities: | |||||||||||
Proceeds from borrowings | 210,000 | 315,000 | |||||||||
Repayments of borrowings | (235,000) | (230,000) | |||||||||
Dividends — Series A convertible preferred stock (1) | — | (2,985) | |||||||||
Repurchases of common stock | (170,832) | (147,190) | |||||||||
Other | (2,206) | (3,463) | |||||||||
Cash used in financing activities | (198,038) | (68,638) | |||||||||
Effect of exchange rate changes on cash, cash equivalents, and restricted cash | 126 | (569) | |||||||||
Net change in cash, cash equivalents, and restricted cash | 27,228 | (15,485) | |||||||||
Cash, cash equivalents, and restricted cash — beginning of year | 112,045 | 127,530 | |||||||||
Cash, cash equivalents, and restricted cash — end of year | $ | 139,273 | $ | 112,045 | |||||||
| Cash paid for interest | $ | 6,658 | $ | 7,519 | |||||||
| Cash paid for income taxes | 20,816 | 16,050 | |||||||||
(1) Represents $3.0 million paid to induce conversion of the Series A Convertible Preferred Stock to common stock during the year ended December 31, 2019.
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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 selling, general, and administrative expenses,” “Non-GAAP income from operations and operating margin,” “Non-GAAP income tax expense (benefit) and effective tax rate,” “Non-GAAP net income,” “Non-GAAP weighted average common shares outstanding - basic and diluted,” 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 adjusted operating margin” and “Non-GAAP effective tax rate.” Non-GAAP results and guidance exclude the impact of items that management believes affect the comparability or underlying business trends in our consolidated financial statements for 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. We believe the use of constant currency enhances the visibility of the underlying business trends excluding the impact of foreign currency exchange rate fluctuations.
We use 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 consolidated financial statements as an additional tool for evaluating operating performance and trends. For the three months and year ended December 31, 2020, we believe it is helpful to evaluate our results excluding the impacts of excluding the impacts of various adjustments relating to special or nonrecurring
items. Investors should not consider these non-GAAP measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP.
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CROCS, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES
Non-GAAP cost of sales, gross profit, and gross margin reconciliation:
| Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||
| GAAP revenues | $ | 411,506 | $ | 262,979 | $ | 1,385,951 | $ | 1,230,593 | |||||||||||||||
| GAAP cost of sales | $ | 182,422 | $ | 136,741 | $ | 636,003 | $ | 613,537 | |||||||||||||||
New distribution centers (1) | (1,550) | (3,413) | (4,186) | (11,394) | |||||||||||||||||||
COVID-19 inventory write-off (2) | — | — | (2,396) | — | |||||||||||||||||||
| Other | — | 84 | (119) | (91) | |||||||||||||||||||
| Total adjustments | (1,550) | (3,329) | (6,701) | (11,485) | |||||||||||||||||||
Non-GAAP cost of sales | $ | 180,872 | $ | 133,412 | $ | 629,302 | $ | 602,052 | |||||||||||||||
| GAAP gross profit | $ | 229,084 | $ | 126,238 | $ | 749,948 | $ | 617,056 | |||||||||||||||
| GAAP gross margin | 55.7 | % | 48.0 | % | 54.1 | % | 50.1 | % | |||||||||||||||
| Non-GAAP gross profit | $ | 230,634 | $ | 129,567 | $ | 756,649 | $ | 628,541 | |||||||||||||||
| Non-GAAP gross margin | 56.0 | % | 49.3 | % | 54.6 | % | 51.1 | % | |||||||||||||||
(1) Represents expenses, including expansion costs, related to our distribution centers in Dayton, Ohio and Dordrecht, the Netherlands and initial costs for our new third-party operated distribution center in Chiba, Japan.
(2) Represents an inventory write-off in our Asia Pacific segment associated with the impact of COVID-19.
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Non-GAAP selling, general and administrative expenses reconciliation:
| Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||
| GAAP revenues | $ | 411,506 | $ | 262,979 | $ | 1,385,951 | $ | 1,230,593 | |||||||||||||||
| GAAP selling, general and administrative expenses | $ | 164,453 | $ | 117,882 | $ | 535,824 | $ | 488,407 | |||||||||||||||
| Donations of inventory | 70 | — | (9,900) | — | |||||||||||||||||||
| COVID-19 severance costs | — | — | (2,403) | — | |||||||||||||||||||
COVID-19 impact of bad debt expense (1) | 315 | — | (4,118) | — | |||||||||||||||||||
Other COVID-19 costs (2) | (18) | — | (845) | — | |||||||||||||||||||
Asset impairments (3) | (21,071) | — | (21,071) | — | |||||||||||||||||||
Duplicate headquarters rent (4) | (154) | — | (1,274) | — | |||||||||||||||||||
| Non-recurring expenses associated with cost reduction initiatives in 2019 | — | (584) | — | (2,282) | |||||||||||||||||||
Offering fees (5) | — | (589) | — | (589) | |||||||||||||||||||
Other (6) | 8 | — | (2,125) | — | |||||||||||||||||||
| Total adjustments | (20,850) | (1,173) | (41,736) | (2,871) | |||||||||||||||||||
Non-GAAP selling, general and administrative expenses (7) | $ | 143,603 | $ | 116,709 | $ | 494,088 | $ | 485,536 | |||||||||||||||
| GAAP selling, general and administrative expenses as a percent of revenues | 40.0 | % | 44.8 | % | 38.7 | % | 39.7 | % | |||||||||||||||
| Non-GAAP selling, general and administrative expenses as a percent of revenues | 34.9 | % | 44.4 | % | 35.6 | % | 39.5 | % | |||||||||||||||
(1) Represents bad debt expense associated with the impact of COVID-19 on wholesale partners in our Asia Pacific and Americas segments.
(2) Represents costs incurred in response to the COVID-19, including hazard pay, cleaning costs, and legal costs.
(3) Represents impairments to our long-lived assets for a retail store in New York City and for our former corporate headquarters in Niwot, Colorado.
(4) Represents ongoing duplicate rent costs associated with our move to our new headquarters in Broomfield, Colorado, while we conclude the lease for our former headquarters.
(5) Represents fees associated with the November 4, 2019 underwritten public offering, in which certain investment funds affiliated with The Blackstone Group Inc. sold 6.9 million shares of our stock to Morgan Stanley & Co. LLC. We did not receive any proceeds from this sale.
(6) Represents non-recoverable duties, non-recurring costs related to the closure of company-owned retail stores in Australia, employee severance costs, and various other immaterial items.
(7) Non-GAAP selling, general and administrative expenses are presented gross of tax.
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Non-GAAP income from operations and operating margin reconciliation:
| Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||
| GAAP revenues | $ | 411,506 | $ | 262,979 | $ | 1,385,951 | $ | 1,230,593 | |||||||||||||||
| GAAP income from operations | $ | 64,631 | $ | 8,356 | $ | 214,124 | $ | 128,649 | |||||||||||||||
Non-GAAP cost of sales adjustments (1) | 1,550 | 3,329 | 6,701 | 11,485 | |||||||||||||||||||
Non-GAAP selling, general and administrative expenses adjustments (2) | 20,850 | 1,173 | 41,736 | 2,871 | |||||||||||||||||||
| Non-GAAP income from operations | $ | 87,031 | $ | 12,858 | $ | 262,561 | $ | 143,005 | |||||||||||||||
| GAAP operating margin | 15.7 | % | 3.2 | % | 15.4 | % | 10.5 | % | |||||||||||||||
| Non-GAAP operating margin | 21.1 | % | 4.9 | % | 18.9 | % | 11.6 | % | |||||||||||||||
(1) See ‘Non-GAAP cost of sales and gross margin reconciliation’ above for more details.
(2) See ‘Non-GAAP selling, general and administrative expenses reconciliation’ above for more details.
Non-GAAP income tax expense (benefit) and effective tax rate reconciliation:
| Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||
| GAAP income from operations | $ | 64,631 | $ | 8,356 | $ | 214,124 | $ | 128,649 | |||||||||||||||
| GAAP income before income taxes | 63,423 | 6,220 | 206,979 | 119,322 | |||||||||||||||||||
Non-GAAP income from operations (1) | $ | 87,031 | $ | 12,858 | $ | 262,561 | $ | 143,005 | |||||||||||||||
| GAAP non-operating income (expenses): | |||||||||||||||||||||||
Foreign currency gains (losses), net | 306 | (430) | (1,128) | (1,323) | |||||||||||||||||||
Interest income | 26 | 108 | 215 | 601 | |||||||||||||||||||
Interest expense | (1,149) | (1,893) | (6,742) | (8,636) | |||||||||||||||||||
| Other income (expense), net | (391) | 79 | 510 | 31 | |||||||||||||||||||
| Non-GAAP income before income taxes | $ | 85,823 | $ | 10,722 | $ | 255,416 | $ | 133,678 | |||||||||||||||
| GAAP income tax benefit | $ | (119,907) | $ | (13,693) | $ | (105,882) | $ | (175) | |||||||||||||||
| Tax effect of non-GAAP operating adjustments | 6,014 | 1,126 | 12,123 | 3,589 | |||||||||||||||||||
| Benefit of U.S. deferred tax assets previously subject to valuation allowance in 2019 | — | 14,655 | — | 14,655 | |||||||||||||||||||
Intra-entity IP transfer (2) | 127,718 | — | 127,718 | — | |||||||||||||||||||
| Non-GAAP income tax expense | $ | 13,825 | $ | 2,088 | $ | 33,959 | $ | 18,069 | |||||||||||||||
| GAAP effective income tax rate | (189.1) | % | (220.1) | % | (51.2) | % | (0.1) | % | |||||||||||||||
| Non-GAAP effective income tax rate | 16.1 | % | 19.5 | % | 13.3 | % | 13.5 | % | |||||||||||||||
(1) See ‘Non-GAAP income from operations and operating margin reconciliation’ above for more details.
(2) Represents 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 transfer resulted in a step-up in tax basis of intellectual property rights and a correlated increase in foreign deferred tax assets based on the fair value of the transferred intellectual property rights.
11
Non-GAAP earnings per share reconciliation:
| Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
| (in thousands, except per share data) | |||||||||||||||||||||||
| Numerator: | |||||||||||||||||||||||
| GAAP net income | $ | 183,330 | $ | 19,913 | $ | 312,861 | $ | 119,497 | |||||||||||||||
Non-GAAP cost of sales adjustments (1) | 1,550 | 3,329 | 6,701 | 11,485 | |||||||||||||||||||
Non-GAAP selling, general and administrative expenses adjustments (2) | 20,850 | 1,173 | 41,736 | 2,871 | |||||||||||||||||||
Non-GAAP other income adjustment (3) | — | — | (919) | — | |||||||||||||||||||
Tax effect of non-GAAP adjustments (4) | (133,732) | (15,781) | (139,841) | (18,244) | |||||||||||||||||||
| Non-GAAP net income | $ | 71,998 | $ | 8,634 | $ | 220,538 | $ | 115,609 | |||||||||||||||
| Denominator: | |||||||||||||||||||||||
| GAAP weighted average common shares outstanding - basic | 66,729 | 68,441 | 67,386 | 70,357 | |||||||||||||||||||
| Plus: GAAP dilutive effect of stock options and unvested restricted stock units | 1,325 | 1,402 | 1,158 | 1,414 | |||||||||||||||||||
| GAAP weighted average common shares outstanding - diluted | 68,054 | 69,843 | 68,544 | 71,771 | |||||||||||||||||||
| GAAP net income per common share: | |||||||||||||||||||||||
| Basic | $ | 2.75 | $ | 0.29 | $ | 4.64 | $ | 1.70 | |||||||||||||||
| Diluted | $ | 2.69 | $ | 0.29 | $ | 4.56 | $ | 1.66 | |||||||||||||||
| Non-GAAP net income per common share: | |||||||||||||||||||||||
| Basic | $ | 1.08 | $ | 0.13 | $ | 3.27 | $ | 1.64 | |||||||||||||||
| Diluted | $ | 1.06 | $ | 0.12 | $ | 3.22 | $ | 1.61 | |||||||||||||||
(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 reconciliation’ above for more information.
(3) Represents a fair value adjustment associated with our donations of inventory.
(4) See ‘Non-GAAP income tax expense (benefit) and effective tax rate reconciliation’ above for more information.
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RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL GUIDANCE
First Quarter 2021: | |||||
| Approximately: | |||||
| Non-GAAP operating margin reconciliation: | |||||
| GAAP operating margin | 16% to 17% | ||||
| Non-GAAP adjustments associated with distribution center investments | 1% | ||||
| Non-GAAP operating margin | 17% to 18% | ||||
Full Year 2021: | |||||
| Approximately: | |||||
| Non-GAAP operating margin reconciliation: | |||||
| GAAP operating margin | 17% to 18% | ||||
| Non-GAAP adjustments associated with distribution center investments | 1% | ||||
| Non-GAAP operating margin | 18% to 19% | ||||
| Non-GAAP effective tax rate reconciliation: | |||||
| GAAP effective tax rate | 25% | ||||
| Non-GAAP adjustments associated with amortization of IP | (7)% to (9)% | ||||
| Non-GAAP effective tax rate | 16% to 18% | ||||
13
CROCS, INC. AND SUBSIDIARIES
REVENUES BY CHANNEL
| Three Months Ended December 31, | Year Ended December 31, | % Change | Constant Currency % Change (1) | ||||||||||||||||||||||||||||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | Q4 ‘20-’19 | 2020-2019 | Q4 ‘20-‘19 | 2020-2019 | ||||||||||||||||||||||||||||||||||||||||
| ($ in thousands) | |||||||||||||||||||||||||||||||||||||||||||||||
| Wholesale: | |||||||||||||||||||||||||||||||||||||||||||||||
| Americas | $ | 134,671 | $ | 58,438 | $ | 390,930 | $ | 275,284 | 130.5 | % | 42.0 | % | 134.1 % | 44.0 | % | ||||||||||||||||||||||||||||||||
| Asia Pacific | 23,712 | 37,937 | 133,416 | 207,405 | (37.5) | % | (35.7) | % | (38.5) | % | (34.7) | % | |||||||||||||||||||||||||||||||||||
| EMEA | 31,902 | 28,795 | 168,410 | 173,480 | 10.8 | % | (2.9) | % | 6.9 % | (2.0) | % | ||||||||||||||||||||||||||||||||||||
| Other businesses | 57 | (117) | 163 | 58 | (148.7) | % | 181.0 | % | (148.7) | % | 181.0 | % | |||||||||||||||||||||||||||||||||||
| Total wholesale | 190,342 | 125,053 | 692,919 | 656,227 | 52.2 | % | 5.6 | % | 52.7 % | 7.0 | % | ||||||||||||||||||||||||||||||||||||
| Retail: | |||||||||||||||||||||||||||||||||||||||||||||||
| Americas | 90,651 | 59,578 | 249,238 | 241,694 | 52.2 | % | 3.1 | % | 52.2 % | 3.1 | % | ||||||||||||||||||||||||||||||||||||
| Asia Pacific | 13,145 | 13,892 | 64,789 | 74,793 | (5.4) | % | (13.4) | % | (9.1) | % | (12.5) | % | |||||||||||||||||||||||||||||||||||
| EMEA | 4,019 | 5,422 | 19,989 | 30,875 | (25.9) | % | (35.3) | % | (23.0) | % | (33.7) | % | |||||||||||||||||||||||||||||||||||
| Total retail | 107,815 | 78,892 | 334,016 | 347,362 | 36.7 | % | (3.8) | % | 36.2 % | (3.5) | % | ||||||||||||||||||||||||||||||||||||
| E-commerce: | |||||||||||||||||||||||||||||||||||||||||||||||
| Americas | 84,936 | 37,741 | 223,445 | 123,537 | 125.0 | % | 80.9 | % | 124.9 % | 81.0 | % | ||||||||||||||||||||||||||||||||||||
| Asia Pacific | 14,922 | 12,521 | 80,310 | 65,874 | 19.2 | % | 21.9 | % | 13.1 % | 22.2 | % | ||||||||||||||||||||||||||||||||||||
| EMEA | 13,491 | 8,772 | 55,261 | 37,593 | 53.8 | % | 47.0 | % | 47.7 % | 46.8 | % | ||||||||||||||||||||||||||||||||||||
| Total e-commerce | 113,349 | 59,034 | 359,016 | 227,004 | 92.0 | % | 58.2 | % | 89.7 % | 58.3 | % | ||||||||||||||||||||||||||||||||||||
| Total revenues | $ | 411,506 | $ | 262,979 | $ | 1,385,951 | $ | 1,230,593 | 56.5 | % | 12.6 | % | 56.1 | % | 13.5 | % | |||||||||||||||||||||||||||||||
| Total by segment: | |||||||||||||||||||||||||||||||||||||||||||||||
| Americas | $ | 310,258 | $ | 155,757 | $ | 863,613 | $ | 640,515 | 99.2 | % | 34.8 | % | 100.5 | % | 35.7 | % | |||||||||||||||||||||||||||||||
| Asia Pacific | 51,779 | 64,350 | 278,515 | 348,072 | (19.5) | % | (20.0) | % | (22.1) | % | (19.2) | % | |||||||||||||||||||||||||||||||||||
| EMEA | 49,412 | 42,989 | 243,660 | 241,948 | 14.9 | % | 0.7 | % | 11.4 % | 1.5 | % | ||||||||||||||||||||||||||||||||||||
| Other businesses | 57 | (117) | 163 | 58 | (148.7) | % | 181.0 | % | (148.7) | % | 181.0 | % | |||||||||||||||||||||||||||||||||||
| Total revenues | $ | 411,506 | $ | 262,979 | 1,385,951 | $ | 1,230,593 | 56.5 | % | 12.6 | % | 56.1 | % | 13.5 | % | ||||||||||||||||||||||||||||||||
(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” for more information.
14
CROCS, INC. AND SUBSIDIARIES
RETAIL STORE COUNTS
| September 30, 2020 | Opened | Closed/Transferred | December 31, 2020 | ||||||||||||||||||||
Type: | |||||||||||||||||||||||
Outlet stores | 186 | 1 | 1 | 186 | |||||||||||||||||||
Retail stores | 100 | 1 | 1 | 100 | |||||||||||||||||||
| Store-in-store | 65 | — | — | 65 | |||||||||||||||||||
Total | 351 | 2 | 2 | 351 | |||||||||||||||||||
Operating segment: | |||||||||||||||||||||||
Americas | 165 | — | — | 165 | |||||||||||||||||||
Asia Pacific | 136 | 2 | 1 | 137 | |||||||||||||||||||
EMEA | 50 | — | 1 | 49 | |||||||||||||||||||
Total | 351 | 2 | 2 | 351 | |||||||||||||||||||
| December 31, 2019 | Opened | Closed/Transferred | December 31, 2020 | ||||||||||||||||||||
Type: | |||||||||||||||||||||||
Outlet stores | 193 | 6 | 13 | 186 | |||||||||||||||||||
Retail stores | 109 | 4 | 13 | 100 | |||||||||||||||||||
| Store-in-store | 65 | 1 | 1 | 65 | |||||||||||||||||||
Total | 367 | 11 | 27 | 351 | |||||||||||||||||||
Operating segment: | |||||||||||||||||||||||
Americas | 165 | 2 | 2 | 165 | |||||||||||||||||||
Asia Pacific | 145 | 7 | 15 | 137 | |||||||||||||||||||
EMEA | 57 | 2 | 10 | 49 | |||||||||||||||||||
Total | 367 | 11 | 27 | 351 | |||||||||||||||||||
15
CROCS, INC. AND SUBSIDIARIES
DIGITAL SALES PERCENTAGE, COMPARABLE RETAIL STORE SALES, AND DIRECT-TO-CONSUMER COMPARABLE SALES
Digital sales, which includes sales through our company-owned website, third party marketplaces, and e-tailers, as a percent of total revenues, by operating segment were:
| Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
| Digital sales as a percent of total revenues: | |||||||||||||||||||||||
| Americas | 37.9 | % | 34.0 | % | 38.5 | % | 29.5 | % | |||||||||||||||
| Asia Pacific | 40.2 | % | 30.0 | % | 39.2 | % | 28.1 | % | |||||||||||||||
| EMEA | 59.8 | % | 41.3 | % | 54.8 | % | 39.9 | % | |||||||||||||||
| Global | 40.8 | % | 34.2 | % | 41.5 | % | 31.1 | % | |||||||||||||||
Comparable retail store sales and direct-to-consumer comparable sales by reportable operating segment are as follows:
Constant Currency (1) | |||||||||||||||||||||||
| Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
Comparable retail store sales: (2) | |||||||||||||||||||||||
| Americas | 54.4 | % | 24.2 | % | 32.8 | % | 18.8 | % | |||||||||||||||
| Asia Pacific | (2.7) | % | (5.8) | % | (1.2) | % | (2.0) | % | |||||||||||||||
| EMEA | (4.5) | % | (1.4) | % | (5.4) | % | 5.0 | % | |||||||||||||||
| Global | 40.9 | % | 16.0 | % | 21.2 | % | 12.4 | % | |||||||||||||||
Constant Currency (1) | |||||||||||||||||||||||
| Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
Direct-to-consumer comparable sales (includes retail and e-commerce): (2) | |||||||||||||||||||||||
| Americas | 84.4 | % | 28.1 | % | 54.4 | % | 21.0 | % | |||||||||||||||
| Asia Pacific | 4.5 | % | 5.7 | % | 9.6 | % | 5.6 | % | |||||||||||||||
| EMEA | 33.3 | % | 11.5 | % | 29.7 | % | 13.3 | % | |||||||||||||||
| Global | 63.8 | % | 21.7 | % | 39.2 | % | 16.0 | % | |||||||||||||||
(1) Reflects period over period change as if the current period results were in constant currency, which is a non-GAAP financial measure. See “Reconciliation of GAAP to Non-GAAP Measures” for more information.
(2) Comparable store status 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 revenues are based on same site sales period over period.
16