Exceeded All Guidance Metrics; Increased
Full-Year Guidance
Crocs, Inc. (NASDAQ: CROX), a world leader in innovative casual
footwear for men, women, and children, today announced its first
quarter 2018 financial results.
Andrew Rees, President and Chief Executive Officer, said, “The
year is off to a strong start, with first quarter results exceeding
guidance on all metrics. Our Spring/Summer 2018 collection is being
well-received, and our LiteRide launch surpassed our expectations.
We continue to successfully execute against our strategic
priorities and are increasing our guidance. We now expect full year
revenues to be up low single digits, as double-digit e-commerce
growth and moderate wholesale growth more than offset the decline
in retail revenues associated with our store closure plan.”
First Quarter 2018 Operating Results:
- Revenues were $283.1 million, growing
5.7% over the first quarter of 2017, or 0.7% on a constant currency
basis. Top line growth was achieved despite the loss of
approximately $12 million due to operating fewer stores and
business model changes. E-commerce grew 24.1%, wholesale grew 6.5%,
and the retail channel delivered positive comparable store sales of
7.6%.
- Gross margin was 49.4%, declining 50
basis points from last year’s first quarter. At the beginning of
the first quarter, the Company changed its inventory costing
methodology from average cost to first-in-first-out, or FIFO. This
change resulted in a timing-related charge to cost of sales in the
first quarter, but will have no impact on the full year. Absent
this charge, first quarter gross margin would have been up modestly
to prior year.
- Selling, general and administrative
expenses (“SG&A”) were $114.0 million compared to $118.0
million in the first quarter of 2017. As a percent of revenues,
SG&A improved 380 basis points and represented 40.2% of
revenues. First quarter 2018 results included $2.5 million of
non-recurring charges associated with our SG&A reduction plan
compared to $2.2 million in last year’s first quarter.
- Income from operations of $25.9 million
increased 66.4% compared to $15.6 million in last year’s first
quarter. Net income attributable to common stockholders was $12.5
million, or $0.15 per diluted share, compared to $7.2 million, or
$0.08 per diluted share, in last year’s first quarter. We had 71.7
million and 74.6 million weighted average diluted common shares
outstanding on March 31, 2018 and 2017, respectively.
Balance Sheet and Cash Flow Highlights:
- Cash used in operating activities
decreased 6.6% to $46.6 million during the first quarter of 2018
compared to $49.9 million during the first quarter of 2017.
- Cash and cash equivalents as of
March 31, 2018 increased 14.7% to $102.0 million compared to
$88.9 million as of March 31, 2017. This growth reflects the
successful execution of the Company’s strategic objectives along
with improved working capital management.
- Inventory declined 17.0% to $148.2
million as of March 31, 2018 compared to $178.5 million as of
March 31, 2017, reflecting the Company’s continued focus on
inventory management.
- Capital expenditures during the first
quarter of 2018 were $1.7 million compared to $5.4 million during
the same quarter in 2017, as the Company opened fewer stores,
completed fewer store remodels, and incurred lower
technology-related expenditures.
- At March 31, 2018, no borrowings
were outstanding against the Company’s $100 million credit
facility. This compares to $3.5 million of borrowings at March 31,
2017.
Share Repurchase Activity:
During the first quarter of 2018, the Company repurchased 1.4
million shares of its common stock for $20.1 million, at an average
price of $14.32 per share. At March 31, 2018, $198.8 million of the
Company’s $500 million share repurchase authorization remained
available for future share repurchases.
Closure of Company-Operated Mexico Manufacturing and
Distribution Facilities:
In connection with ongoing efforts to simplify the business and
improve profitability, the Company has made the decision to close
its manufacturing and distribution facilities in Mexico.
Manufacturing has ceased, and the distribution center will be
closed by the end of the third quarter. Related one-time charges
are identified in the Company’s second quarter and full year
SG&A guidance.
Financial Outlook:
Second Quarter 2018:
With respect to the second quarter of 2018, the Company
expects:
- Revenues of $315 to $325 million
compared to $313.2 million in the second quarter of 2017.
- Gross margin to be slightly above last
year’s 54.2% rate.
- SG&A to be approximately flat with
$140.4 million last year. Non-recurring charges incurred in
connection with our SG&A reduction plan are estimated at $1
million, compared to $1.8 million in last year’s second quarter. In
addition, the Company will incur approximately $5.0 million of
non-recurring charges in connection with the closure of its Mexico
manufacturing and distribution facilities.
Full Year 2018:
With respect to 2018, the Company now expects:
- Revenues to increase low single digits
over 2017 revenues of $1,023.5 million, as we expect double digit
e-commerce growth and moderate wholesale growth to more than offset
lower retail revenues due to operating fewer stores and business
model changes.
- Gross margin to be up approximately 70
to 100 basis points over 2017 gross margin of 50.5%.
- SG&A to be approximately $485
million. This includes approximately $15 million of non-recurring
charges. Approximately $5 million of the non-recurring charges
relate to the SG&A reduction plan. Approximately $10 million
relate to the closure of the Mexico manufacturing and distribution
facilities, with approximately half being non-cash. 2017 SG&A
was $499.9 million, including $17.0 million of non-recurring
charges.
- Income from operations to be
approximately $50 million compared to $17.3 million in 2017.
- Depreciation and amortization to be
approximately $30 million compared to $33.1 million in 2017.
- Income tax expense of approximately $17
million compared to $7.9 million in 2017.
Conference Call Information:
A conference call to discuss first quarter 2018 results is
scheduled for today, Tuesday, May 8, 2018 at 8:30 a.m. EDT.
The call participation number is (888) 771-4371. A replay of the
conference call will be available two hours after the completion of
the call at (888) 843-7419. International participants can dial
(847) 585-4405 to take part in the conference call, and can access
a replay of the call at (630) 652-3042. All of the above calls will
require the input of the conference identification number 46719244.
The call will also be streamed live on the Crocs website,
www.crocs.com, and that audio recording will be available at
www.crocs.com through May 8, 2019.
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. Every pair of
shoes within Crocs’ collection contains Croslite™ material, a
proprietary, molded footwear technology, delivering extraordinary
comfort with each step.
In 2018, Crocs reinforces its mission of “everyone comfortable
in their own shoes” with the second year of its global Come As You
Are™ campaign. To learn more about Crocs or Come As You
Are, 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 prospects, expectations and our revenue, gross margin,
SG&A, income from operations, depreciation and amortization,
and tax expense outlook. 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 May 8, 2018.
We do not undertake any obligation to update publicly any
forward-looking statements, including, without limitation, any
estimates provided in the “Financial Outlook” section above,
whether as a result of the receipt of new information, future
events, or otherwise.
CROCS, INC. AND SUBSIDIARIES CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (in
thousands, except per share data)
Three Months EndedMarch 31, 2018
2017 Revenues $ 283,148 $ 267,907 Cost of sales
143,275 134,323 Gross profit 139,873 133,584 Selling,
general and administrative expenses 113,951 118,002
Income from operations 25,922 15,582 Foreign currency gains, net
1,071 276 Interest income 279 150 Interest expense (113 ) (184 )
Other income, net 53 124 Income before income taxes
27,212 15,948 Income tax expense 10,758 4,938 Net
income 16,454 11,010 Dividends on Series A convertible preferred
stock (3,000 ) (3,000 )
Dividend equivalents on Series A
convertible preferred shares related to redemption value accretion
and beneficial conversion feature
(931 ) (855 ) Net income attributable to common stockholders $
12,523 $ 7,155 Net income per common share: Basic $
0.15 $ 0.08 Diluted $ 0.15 $ 0.08
Weighted average common shares outstanding: Basic 68,705
73,810 Diluted 71,668 74,561
EARNINGS PER SHARE (UNAUDITED) (in thousands,
except per share data)
Three Months EndedMarch
31,
2018 2017 Numerator: Net income
attributable to common stockholders $ 12,523 $ 7,155 Less: Net
income allocable to Series A convertible preferred stockholders (1)
(2,094 ) (1,127 ) Adjusted net income available to common
stockholders - basic and diluted $ 10,429 $ 6,028
Denominator: Weighted average common shares outstanding - basic
68,705 73,810 Plus: dilutive effect of stock options and unvested
restricted stock units 2,963 751 Weighted average
common shares outstanding - diluted 71,668 74,561
Net income per common share: Basic $ 0.15 $ 0.08 Diluted $
0.15 $ 0.08 (1) Represents the amount which would have been
paid to preferred stockholders in the event the Company had
declared a dividend on its common stock.
CROCS,
INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE
SHEETS (UNAUDITED) (in thousands, except share and
par value amounts)
March
31, 2018
December 31, 2017 ASSETS Current
assets: Cash and cash equivalents $ 101,953 $ 172,128 Accounts
receivable, net of allowances of $30,380 and $31,389, respectively
169,954 83,518 Inventories 148,187 130,347 Income taxes receivable
7,781 3,652 Other receivables 11,554 10,664 Restricted cash -
current 2,359 2,144 Prepaid expenses and other assets 21,981
22,596
Total current assets
463,769 425,049 Property and equipment, net of accumulated
depreciation and amortization of $90,554 and $91,806, respectively
30,746 35,032 Intangible assets, net 53,023 56,427 Goodwill 1,734
1,688 Deferred tax assets, net 10,097 10,174 Restricted cash 2,513
2,783 Other assets 11,001 12,542 Total assets $
572,883 $ 543,695 LIABILITIES AND
STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 87,751
$ 66,381 Accrued expenses and other liabilities 85,448 84,446
Income taxes payable 15,142 5,515 Current portion of borrowings and
capital lease obligations 281 676 Total current
liabilities 188,622 157,018 Long-term income taxes payable 6,195
6,081 Other liabilities 11,218 12,298 Total
liabilities 206,035 175,397 Commitments and
contingencies: Series A convertible preferred stock, 1.0 million
shares authorized, 0.2 million outstanding, liquidation preference
$203 million 183,364 182,433 Stockholders’ equity: Preferred stock,
par value $0.001 per share, 4.0 million shares authorized, none
outstanding — — Common stock, par value $0.001 per share, 250
million shares authorized, 95.7 million and 94.8 million issued,
68.3 million and 68.8 million outstanding, respectively 96 95
Treasury stock, at cost, 27.4 million and 26.0 million shares,
respectively (355,209 ) (334,312 ) Additional paid-in capital
376,808 373,045 Retained earnings 202,954 190,431 Accumulated other
comprehensive loss (41,165 ) (43,394 ) Total stockholders’ equity
183,484 185,865 Total liabilities and stockholders’
equity $ 572,883 $ 543,695
CROCS,
INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS (UNAUDITED) (in thousands)
Three Months EndedMarch
31,
2018 2017 Cash flows from operating
activities: Net income $ 16,454 $ 11,010 Adjustments to reconcile
net income to net cash used in operating activities: Depreciation
and amortization 7,643 8,446 Unrealized foreign currency (gain)
loss, net (787 ) 856 Share-based compensation 2,674 2,611 Other
non-cash items 941 (689 ) Changes in operating assets and
liabilities: Accounts receivable, net of allowances (86,850 )
(66,917 ) Inventories (20,853 ) (28,591 ) Prepaid expenses and
other assets 5,112 9,618 Accounts payable, accrued expenses and
other liabilities 29,065 13,766 Cash used in
operating activities (46,601 ) (49,890 ) Cash flows from investing
activities: Purchases of property, equipment, and software (1,668 )
(5,410 ) Proceeds from disposal of property and equipment 16
12 Cash used in investing activities (1,652 ) (5,398 ) Cash
flows from financing activities: Proceeds from bank borrowings —
5,500 Repayments of bank borrowings and capital lease obligations
(400 ) (3,376 ) Dividends—Series A preferred stock (3,000 ) (3,000
) Repurchases of common stock (20,061 ) — Other (692 ) (240 ) Cash
used in financing activities (24,153 ) (1,116 ) Effect of exchange
rate changes on cash, cash equivalents, and restricted cash 2,176
(1,389 ) Net change in cash, cash equivalents, and
restricted cash (70,230 ) (57,793 ) Cash, cash equivalents, and
restricted cash—beginning of period 177,055 152,646
Cash, cash equivalents, and restricted cash—end of period $ 106,825
$ 94,853
CROCS, INC. AND SUBSIDIARIESNON-GAAP
MEASURES(UNAUDITED)
In addition to financial measures presented on the basis of
accounting principles generally accepted in the United States of
America (“U.S. GAAP”), we 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 U.S. GAAP. Constant
currency represents current period results that have been
retranslated using exchange rates used in the prior year
comparative period to enhance the visibility of the underlying
business trends excluding the impact of foreign currency exchange
rate fluctuations.
Management uses 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 condensed consolidated financial statements as an additional
tool for evaluating operating performance. We believe they also
provide a useful baseline for analyzing trends in our operations.
Investors should not consider these non-GAAP measures in isolation
from, or as a substitute for, financial information prepared in
accordance with U.S. GAAP.
CROCS, INC. AND SUBSIDIARIES REVENUES BY
CHANNEL (UNAUDITED)
Three Months EndedMarch
31,
% Change
ConstantCurrency
%Change (1)
2018 2017 (in thousands)
Wholesale: Americas $ 72,674 $ 71,023 2.3 % 2.5 % Asia Pacific
71,733 70,935 1.1 % (5.2 )% Europe 49,877 40,583 22.9 % 7.6 % Other
businesses 313 190 64.7 % 46.3 % Total wholesale
194,597 182,731 6.5 % 0.7 % Retail: Americas 34,716 32,829 5.7 %
5.6 % Asia Pacific 17,614 21,532 (18.2 )% (22.4 )% Europe 7,176
7,419 (3.3 )% (12.7 )% Total retail 59,506 61,780
(3.7 )% (6.4 )% E-commerce: Americas 16,440 13,869 18.5 % 18.0 %
Asia Pacific 7,815 5,877 33.0 % 24.3 % Europe 4,790 3,650
31.2 % 15.0 % Total e-commerce 29,045 23,396
24.1 % 19.1 % Total revenues $ 283,148 $ 267,907 5.7
% 0.7 % (1)
Reflects year over year change as if the
current period results were in constant currency, which is a
non-GAAP financial measure. See “Non-GAAP Measures” for more
information.
CROCS, INC. AND SUBSIDIARIES RETAIL STORE
COUNTS (UNAUDITED)
December 31,2017
Opened Closed
March 31,2018
Company-operated retail locations: Type: Kiosk/store-in-store 71 —
— 71 Retail stores 161 — 16 145 Outlet stores 215 — 6
209 Total 447 — 22 425 Operating
segment: Americas 175 — 1 174 Asia Pacific 186 — 9 177 Europe 86
— 12 74 Total 447 — 22
425
CROCS, INC. AND
SUBSIDIARIESCOMPARABLE RETAIL STORE SALES AND DIRECT TO
CONSUMER COMPARABLE STORE SALES(UNAUDITED)
Comparable retail sales and direct to consumer sales by
operating segment were:
Constant Currency (1)
Three Months EndedMarch
31,
2018 2017 Comparable retail store
sales: (2) Americas 10.9 % (6.0 )% Asia Pacific 4.7 % (1.4 )%
Europe (2.6 )% (7.7 )% Global 7.6 % (4.8 )%
Constant
Currency (1)
Three Months EndedMarch
31,
2018 2017 Direct to consumer comparable store sales
(includes retail and e-commerce): (2) Americas 13.1 % (5.0 )% Asia
Pacific 10.4 % 5.5 % Europe 4.2 % (5.2 )% Global 11.2 % (2.2 )% (1)
Reflects period over period change as if
the current period results were in constant currency, which is a
non-GAAP financial measure. See “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. 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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180508005549/en/
Crocs, Inc.Investor
Contact:Marisa Jacobs,
303-848-7322mjacobs@crocs.comorMedia
Contact:Ryan Roccaforte,
303-848-7116rroccaforte@crocs.com
Crocs (NASDAQ:CROX)
Historical Stock Chart
From Mar 2024 to Apr 2024
Crocs (NASDAQ:CROX)
Historical Stock Chart
From Apr 2023 to Apr 2024