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Crocs, Inc. Reports 2012 Second Quarter Results

Balance Sheet

Cash and cash equivalents at June 30, 2012 increased 54.9% to $278.8 million compared to $180.0 million at June 30, 2011. Inventories at June 30, 2012 were $166.0 million, up 6.1% compared to inventories at June 30, 2011 of $156.5 million.

Backlog

Backlog at June 30, 2012 increased 2.7% to $172.6 million compared to backlog of $168.1 million at June 30, 2011. On a constant currency basis, backlog is up approximately 6% over 2011.

Guidance

For the third quarter of 2012, the Company expects revenue of $300 million and diluted earnings per share to be between $0.42 and $0.44.

John McCarvel, continued: “Based on our year to date results, the increasing count of retail stores and the strength of our wholesale business, we are projecting that we will finish 2012 with US dollar revenue growth of about 14% over 2011, which on a constant currency growth represents 17.5%, inline with our previous guidance . For the first half of the year, we earned $0.99 per diluted share and we now project earnings to be between $1.50 and $1.54 per diluted share for the full year. We believe the diversification in our business model, global presence and product breadth provides the platform for continued sales growth and earnings expansion.”

Conference Call Information

A conference call to discuss Crocs’ 2012 second quarter financial results is scheduled for today (July 25, 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 Six Months Ended
June 30, June 30,
($ thousands, except per share data)   2012     2011     2012     2011  
Revenues $ 330,942 $ 295,585 $ 602,740 $ 522,293
Cost of sales   134,857     125,367     261,856     232,869  
Gross profit 196,085 170,218 340,884 289,424
Selling, general and administrative expenses 124,718 108,486 229,009 198,097
Asset impairment 106   -   819   32  
Income (loss) from operations 71,261 61,732 111,056 91,295
Foreign currency transaction (gains) losses, net (1,627 ) (2,623 ) 2,649 (1,252 )
Other (income) expense, net (1,069 ) (664 ) (1,668 ) (649 )
Interest expense   132     241     179     429  
Income (loss) before income taxes 73,825 64,778 109,896 92,767
Income tax expense (benefit)   12,301     9,272     20,026     15,757  
Net income (loss) $ 61,524   $ 55,506   $ 89,870   $ 77,010  
Net income (loss) per common share:
Basic $ 0.68   $ 0.62   $ 1.00   $ 0.87  
Diluted $ 0.68   $ 0.61   $ 0.99   $ 0.85  

CROCS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
   
 
June 30, December 31, June 30,
($ thousands, except number of shares) 2012 2011 2011
ASSETS
Current assets:
Cash and cash equivalents $ 278,827 $ 257,587 $ 179,979
Accounts receivable, net of allowances of $18,858, $15,508 and $13,528, respectively 132,331 84,760 115,651
Inventories 166,013 129,627 156,464
Deferred tax assets, net 7,809 7,047 13,822
Income tax receivable 4,133 5,828 10,620
Other receivables 22,938 20,295 17,127
Prepaid expenses and other current assets   27,654     20,199     20,292  
Total current assets 639,705 525,343 513,955
Property and equipment, net 68,585 67,684 69,337
Intangible assets, net 47,360 48,641 48,164
Deferred tax assets, net 30,849 30,375 32,429
Other assets   29,221     23,410     19,629  
Total assets $ 815,720   $ 695,453   $ 683,514  
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable $ 62,965 $ 66,517 $ 66,186
Accrued expenses and other current liabilities 86,336 76,506 71,269
Deferred tax liabilities, net 3,480 2,889 15,337
Income taxes payable 21,781 8,273 16,076
Bank borrowings and capital lease obligations - current   61     1,118     3,257  
Total current liabilities 174,623 155,303 172,125
Long term income tax payable 41,945 41,665 35,429
Other liabilities   15,472     6,705     6,955  
Total liabilities   232,040     203,673     214,509  
 
Commitments and contingencies (Note 11)
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, 90,727,610 and 90,205,424 shares issued and outstanding, respectively, at June 30, 2012; 90,306,432 and 89,807,146 shares issued and outstanding, respectively, at December 31, 2011; and 89,919,925 and 89,390,187 shares issued and outstanding, respectively, at June 30, 2011 91 90 90
Treasury stock, at cost, 522,186, 499,286 and 529,738 shares, respectively (19,930 ) (19,759 ) (21,213 )
Additional paid-in capital 301,262 293,959 286,968
Retained earnings 292,538 202,669 166,891
Accumulated other comprehensive income   9,719     14,821     36,269  
Total stockholders’ equity   583,680     491,780     469,005  
Total liabilities and stockholders’ equity $ 815,720   $ 695,453   $ 683,514  

  Three Months Ended       Constant       Six Months Ended       Constant
June 30, Currency

June 30,

Currency
($ thousands)   2012     2011 % Change   % Change (1)    

 

2012     2011 % Change   % Change (1)  
Channel revenues:
Wholesale:
Americas 62,369 55,535 12.3 % 14.9 % 131,425 117,423 11.9 % 13.7 %
Asia 93,620 83,594 12.0 % 11.5 % 172,515 140,448 22.8 % 21.8 %
Europe 32,490 36,496 (11.0 %) (0.5 %) 75,107 82,263 (8.7 %) (1.6 %)
Other businesses   47   125 (62.4 %) (57.6 %)

 

 

172   184 (6.5 %) (1.6 %)
Total Wholesale $ 188,526 $ 175,750 7.3 % 10.1 %

 

$

379,219 $ 340,318 11.4 % 13.3 %
Consumer-direct:
Retail
Americas 54,952 50,574 8.7 % 9.3 % 90,498 78,997 14.6 % 15.1 %
Asia 48,359 34,912 38.5 % 40.9 % 68,941 49,056 40.5 % 41.9 %
Europe   9,163   6,264 46.3 % 58.7 %

 

 

13,608   9,183 48.2 % 58.3 %
Total Retail 112,474 91,750 22.6 % 24.7 % 173,047 137,236 26.1 % 27.5 %
Internet
Americas 17,290 15,286 13.1 % 13.3 % 29,995 25,185 19.1 % 19.3 %
Asia 4,878 3,394 43.7 % 44.7 % 7,425 5,019 47.9 % 47.1 %
Europe   7,774   9,405 (17.3 %) (7.1 %)

 

 

13,054   14,535 (10.2 %) (2.0 %)
Total Internet   29,942   28,085 6.6 % 10.3 %   50,474   44,739 12.8 % 15.5 %
Total Revenues $ 330,942 $ 295,585 12.0 % 14.6 %

 

$

602,740 $ 522,293 15.4 % 17.2 %
 
 
Three Months Ended Constant Six Months Ended Constant
June 30, Currency June 30, Currency
($ thousands)   2012   2011 % Change   % Change (1) 2012   2011 % Change   % Change (1)  
Regional Revenue:
Americas 134,611 121,395 10.9 % 12.4 % 251,918 221,605 13.7 % 14.8 %
Asia 146,857 121,900 20.5 % 20.9 % 248,881 194,523 27.9 % 27.5 %
Europe 49,427 52,165 (5.2 %) 5.4 % 101,769 105,981 (4.0 %) 3.5 %
Other businesses   47   125 (62.4 %) (57.6 %)   172   184 (6.5 %) (1.6 %)
Total Revenues $ 330,942 $ 295,585 12.0 % 14.6 %

 

$

602,740 $ 522,293 15.4 % 17.2 %
(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:   June 30, 2011   December 31, 2011   Opened   Closed   June 30, 2012
Geography:
Americas 192 197 15 (15 ) 197
Asia 175 198 55 (20 ) 233
Europe 30   35 19 -   54
Total company-operated retail locations 397 430 89 (35 ) 484
Type:
Kiosk 66 57 2 (14 ) 45
Store in Store 97 101 23 (16 ) 108
Retail stores 153 180 44 (4 ) 220
Outlet stores 81   92 20 (1 ) 111
Total company-operated retail locations 397 430 89 (35 ) 484
 
 
Constant Currency Constant Currency
Three Months Ended Six Months Ended
Comparable store sales growth (1) June 30, 2012 (2) June 30, 2012 (2)
Americas (1.2

)%

 

2.6 %
Asia 5.2 6.5
Europe 9.5   13.3  
Total 1.8

%

 

4.6 %
(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.




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