Crocs, Inc. (NASDAQ: CROX) today reported financial results for
the first quarter ended March 31, 2009.
Q1 2009 revenue of $134.9 million is up 7% from the quarter
ended Q4 of 2008 and down $63.6, or 32% from Q1 of 2008. The
Company reported a net loss of $22.4 million in the first quarter
of 2009 with a diluted loss per share of $0.27, compared to a Q4
net loss of $34.7 million, or ($0.42) per share and a Q1 2008 net
loss of $4.5, or ($0.05) per share. Selling, general and
administrative costs are down 26% compared to Q4 2008 and down 6.2%
from the same quarter a year ago.
Year-over-year changes in the Company�s channel revenue streams
were as follows:
- Retail sales increased 60% to
$27.9 million;
- Internet sales increased 46% to
$11.7 million; and
- Wholesale sales decreased 45% to
$95.3 million.
Changes in the Company�s regional revenue streams during the
same periods were as follows:
- Asia increased 7% to $39.0
million;
- Europe decreased 49% to $28.3
million; and
- Americas decreased 37% to $67.6
million.
The Company reported a net loss of $22.4 million, or ($0.27) per
diluted share for the three months ended March 31, 2009 compared to
a net loss of $4.5 million, or ($0.05) per diluted share for the
three months ended March 31, 2008. Excluding a $3.4 million pre-tax
foreign currency exchange rate loss primarily on intercompany
balances, the Company�s non-GAAP net loss was $19.0 million or
($0.23) per diluted share in the three months ended March 31,
2009.
Balance Sheet
The Company�s cash and cash equivalents declined to $50.9
million from $51.7 million as of December 31, 2008. However,
compared to the quarter ended March 31, 2008, the Company�s cash
and cash equivalents increased by approximately $21.3 million.
Borrowings under the Company�s credit facility were $19.8 million
at March 31, 2009 compared to $22.4 million at December 31, 2008
and $42.8 million at March 31, 2008. During the first quarter of
2009, the Company was successful in extending the term of its bank
credit facility through September 30, 2009. The Company is
currently in discussions regarding a new borrowing arrangement and
is exploring alternatives for other sources of capital for ongoing
cash needs.
Inventory decreased 8% since December 31, 2008 to $131.2 million
at March 31, 2009. Compared to first quarter 2008, inventories
decreased 51% as a result of more stringent asset management and
inventory write-downs taken in the last half of 2008.
The Company had accounts receivable of $60.6 million as of March
31, 2009 compared to $35.3 million at December 31, 2008 and $154.6
million as of March 31, 2008. The year-over-year reduction in
accounts receivable is due to an improvement in accounts receivable
collections as days sales outstanding decreased from 70.9 days for
the three months ended March 31, 2008 to 40.4 days for the three
months ended March 31, 2009.
Capital expenditures, net of proceeds, in the first quarter of
2009 were $4.4 million compared to $22.2 million in the first
quarter of 2008.
�While our first quarter results were generally in line with
expectations, there is still much work ahead of us in order to
improve on our recent performance and return to consistent
profitability,� stated John Duerden, President and Chief Executive
Officer of Crocs, Inc. �Crocs achieved a tremendous amount in a few
short years and quickly established itself as a truly global brand
with market penetration in more than 100 countries. During this
time, the product line evolved significantly from a few key items
into seasonal footwear collections that have created a large and
loyal consumer base. With this rapid growth came a number of
challenges which, along with the recent recession, have negatively
impacted the business. In response, Crocs took several steps
throughout 2008 to better align its expense structure with lower
sales volumes and strengthen its balance sheet. Our intention in
2009 is to preserve the strength of the Crocs brand while
endeavoring to strike a balance between lowering our fixed cost
base and responsibly reducing our inventory. I am confident that
with the solid foundation already in place and the talented group
of people working here that we can accomplish our near-term
objectives while creating a stronger, more efficient company for
the future.�
Guidance
The Company expects to generate between $135 to $160 million in
revenue during its fiscal second quarter, with a diluted loss per
share between ($0.31) and ($0.15). Due to uncertainties created by
the current global economic downturn, the Company is not providing
annual guidance at this time.
Conference Call Information
A conference call to discuss first quarter fiscal 2009 financial
results is scheduled for today (May 7, 2009) 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 the
latter site prior to the call, where you can download the software
for free.
About Crocs, Inc.
Crocs, Inc. is a designer, manufacturer and retailer of footwear
for men, women and children under the Crocs� brand.
All Crocs� brand shoes feature Crocs� proprietary closed-cell
resin, Croslite�, which represents a substantial innovation in
footwear. The Croslite� material enables Crocs to produce soft,
comfortable, lightweight, superior-gripping, non-marking and
odor-resistant shoes. These unique elements make Crocs� footwear
ideal for casual wear, as well as for professional and recreational
uses such as boating, hiking, hospitality and gardening. The
versatile use of the material has enabled Crocs to successfully
market its products to a broad range of consumers.
Crocs� shoes are sold in 100 countries and come in a wide array
of colors and styles. Please 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
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 crisis; our ability to
obtain adequate financing; our significant recent expansion; our
ability to manage our future growth effectively; changing fashion
trends; our defense and the ultimate outcome of a pending class
action lawsuit; our ability to accurately anticipate and respond to
seasonal or quarterly fluctuations in our operating results; our
management and information systems infrastructure; our ability to
obtain and protect intellectual property rights; our reliance on
third party manufacturing and logistics providers for the
production and distribution of products; our limited manufacturing
capacity and distribution channels; our reliance on a single source
supply for certain raw materials; inherent risks associated with
the manufacture, distribution and sale of our products overseas;
our reliance on market acceptance of the small number of products
we sell; our ability to develop and sell new products; our limited
operating history; our ability to accurately forecast consumer
demand for our products; our ability to maintain effective internal
controls; our ability to attract, assimilate and retain management
talent; retail environment; our ability to effectively market and
maintain a positive brand image; the effect of competition in our
industry; the effect of potential adverse currency exchange rate
fluctuations; and other factors described in our 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 OPERATIONS (In thousands, except share and per
share data) (Unaudited) � �
Three Months Ended March
31, 2009 2008 � Revenues $ 134,892 $ 198,540 Cost
of sales � 85,161 � � 113,305 � Gross profit 49,731 85,235 Selling,
general and administrative expenses 72,187 76,977 Restructuring
charges 38 3,849 Impairment charges � 69 � � 10,813 � Income (loss)
from operations (22,563 ) (6,404 ) Interest expense 696 374 Other
income � (1,052 ) � (362 ) Income (loss) before income taxes
(22,207 ) (6,416 ) Income tax expense (benefit) � 210 � � (1,889 )
Net income (loss) $ (22,417 ) $ (4,527 ) Net Income (loss) per
common share: Basic � ($0.27 ) � ($0.05 ) Diluted � ($0.27 ) �
($0.05 ) Weighted average common shares outstanding: Basic �
84,392,620 � � 82,488,601 � Diluted � 84,392,620 � � 82,488,601 �
CROCS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED
BALANCE SHEETS (In thousands, except share data)
(Unaudited) �
March 31, 2009 December 31, 2008
ASSETS Current assets: Cash and cash equivalents $ 50,895 $
51,665 Accounts receivable, net 60,605 35,305 Inventories 131,161
143,205 Deferred tax assets, net 10,856 11,364 Income tax
receivable 5,391 24,417 Prepaid expenses and other current assets �
17,130 � � 13,415 � Total current assets 276,038 279,371 � Property
and equipment, net 91,027 95,892 Restricted cash 1,835 2,922
Intangible assets, net 39,307 40,892 Deferred tax assets, net
22,355 21,231 Other assets � 16,370 � � 15,691 � Total assets $
446,932 � $ 455,999 � �
LIABILITIES AND STOCKHOLDERS� EQUITY
Current liabilities: Accounts payable $ 63,469 $ 35,137 Accrued
expenses and other current liabilities 41,793 50,076 Accrued
restructuring charges 499 1,439 Deferred tax liabilities, net 92 30
Income taxes payable 18,520 24,420 Note payable, current portion of
long-term debt and capital lease obligations � 19,947 � � 22,431 �
Total current liabilities 144,320 133,533 � Deferred tax
liabilities, net 4,755 2,917 Long term restructuring 1,024 959
Other liabilities � 31,907 � � 31,427 � Total liabilities � 182,006
� � 168,836 � � Commitments and contingencies (note 12) �
Stockholders� equity: Common shares, par value $0.001 per share;
250,000,000 shares authorized, 84,393,940 and 83,869,940 shares
issued and outstanding at March 31, 2009 and 83,543,501 and
83,019,501 shares issued and outstanding at March 31, 2008 84 84
Treasury Stock, 524,000 shares, at cost (25,022 ) (25,022 )
Additional paid-in capital 235,955 232,037 Deferred compensation
(54 ) (246 ) Retained earnings 41,816 64,233 Accumulated other
comprehensive income � 12,147 � � 16,077 � Total stockholders�
equity � 264,926 � � 287,163 � Total liabilities and stockholders�
equity $ 446,932 � $ 455,999 �
Crocs, Inc. Reconciliation
of GAAP Measures to Non-GAAP Measures (In thousands, except
share and per share data) (Unaudited) � � �
The Company prepares and reports
its financial statements in accordance with U.S. Generally Accepted
Accounting Principles (�GAAP�). Internally, management monitors the
operating performance of its business using non-GAAP metrics
similar to those below. These non-GAAP measures exclude the effects
of foreign exchange rate loss, restructuring activities, inventory
write-down, and asset impairment charges. In management�s opinion,
these non-GAAP measures are important indicators of the continuing
operations of our business and provide better comparability between
reporting periods because they exclude items that may not be
indicative of current period results and provide a better baseline
for analyzing trends in our operations. The Company does not, nor
does it suggest that investors should, consider such non-GAAP
financial measures in isolation from, or as a substitute for,
financial information prepared in accordance with GAAP. The Company
believes the disclosure of the effects of these items increases the
reader�s understanding of the underlying performance of the
business and that such non-GAAP financial measures provide
investors with an additional tool to evaluate our financial results
and assess our prospects for future performance.
� �
Non-GAAP Reconciliations 3 months ended 3
months ended 3 months ended March 31, 2009
March 31, 2008 December 31, 2008 � GAAP selling,
general and administrative expense 72,187 76,977 97,576 Foreign
currency (gain)/loss 3,408 � (1) (9,159 )
(1)
21,091
(1)
Non-GAAP selling, general and administrative expense 68,779 �
86,136 � 76,485 � � GAAP net loss (22,417 ) Foreign currency
(gain)/loss, net of tax 3,376 � (1) Non-GAAP net loss (19,041 )
Non-GAAP net loss per diluted share $ (0.23 ) (2) � � (1) The
proforma adjustments in the GAAP to Non-GAAP reconciliation above
represent the add-back of GAAP charges taken in connection with our
quarter foreign currency exchange rate loss, net of tax calculated
based on our quarterly effective tax rate. � (2) As the Company
reported a GAAP net loss for the quarter ended March 31, 2008, the
dilutive effect of stock options and awards were not included in
the computation of diluted earnings per share because their
inclusion would have been anti-dilutive.
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