EX-99.1 2 a15-16586_1ex99d1.htm EX-99.1

Exhibit 99.1

 

 

Investor Contact:

Brendon Frey, ICR

 

 

(203) 682-8200

 

 

Brendon.Frey@icrinc.com

 

 

 

 

Media Contact:

Katy Michael/Crocs Inc.

 

 

(303) 848-7000

 

 

kmichael@crocs.com

 

Crocs Inc. Reports Second Quarter 2015 Financial Results

Revenues in line with expectations

 

NIWOT, COLORADO — July 30, 2015 — Crocs Inc. (NASDAQ: CROX) today reported financial results for the second quarter ended June 30, 2015.

 

Second Quarter Highlights:

 

·                  Revenue was $345.7 million, in line with expectations.  On a constant currency basis, revenue decreased 1.1% as compared to the prior year.

 

·                  Net income attributable to common stockholders on a GAAP basis was $9.7 million per diluted share for the second quarter.  Earnings per share were 11 cents per diluted share.

 

·                  Excluding certain non-recurring and special charges, the company reported non-GAAP adjusted net income attributable to common shareholders of $27.3 million.

 

Gregg Ribatt, Chief Executive Officer, said: “We delivered second quarter sales in line with expectations. Our business continues to stabilize around the globe and we believe the strategy the company outlined last July is positioning Crocs for sustained success in the future.  We were particularly pleased to see global e-commerce revenue increase nearly 30% on a constant currency basis.  The company continues to make meaningful progress in implementing our strategy including: strengthening our brand; elevating our product stories; evolving our international business to focus on our six core markets; strengthening our relationships with key wholesale partners; improving our direct to consumer capabilities; simplifying our business model; and, building a best in class team.   We are confident that these moves are laying the foundation to position the company for sustained growth in the future.”

 



 

Financial Review

 

Second quarter operating results

 

In the second quarter of 2015, the company reported GAAP net income attributable to common stockholders of $9.7 million or $0.11 per share, compared with net income of $19.5 million or $0.19 per diluted share in the same quarter of the prior year.

 

As outlined in detail in the non-GAAP reconciliations set forth later in this press release, the company recorded $17.6 million in non-recurring and special charges in the second quarter of 2015 compared with $16.8 million in non-recurring and special charges in the second quarter of 2014.

 

Excluding these items the company reported:

 

·                  Non-GAAP operating income of $34.0 million versus $58.7 million in the comparable prior year period.

·                  On a comparable basis, non-GAAP adjusted net income attributable to common shareholders of $27.3 million in the quarter versus $36.3 million in the second quarter of 2014.

 

Balance Sheet

 

Cash and cash equivalents at June 30, 2015, were $197.3 million.  Inventory was $182.6 million compared with $171.0 million on December 31, 2014.

 

Financial Outlook

 

Mr. Ribatt continued, “We are confident that the strategic shift to focus the organization on a narrower range of businesses, fewer retail stores and reduced geographic footprint will lead to improved results in the future.  We invested an incremental $15 million in marketing in Q2 2015 compared to 2014 to build brand awareness.  We increased reserves for doubtful accounts by $5 million on our balance sheet at the end of the second quarter while reducing inventory and global accounts receivables compared to last year at June 30th.  As our business continues to stabilize, we expect Q3 revenue in the $280 to $290 million range compared to $302 million last year, showing growth on a constant currency basis at today’s rates and excluding the impacts of store closings and discontinued product lines.”

 

2



 

Stock Repurchase

 

The company repurchased 1.6 million shares of common stock in the second quarter of 2015 at an average price of $14.62.  The company ended the quarter at 75.8 million common shares outstanding and second quarter weighted average shares outstanding was 76.8 million.

 

Conference Call Information

 

A teleconference call to discuss second quarter 2015 results is scheduled for today, Thursday July 30, 2015, at 8:30 am EST.  The call participation number is (888) 771-4371. A recording 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 40293403. The call also will be streamed on the Crocs website, www.crocs.com.  An audio recording of the conference call will be available at www.crocs.com through September 8, 2015.

 

About Crocs, Inc.

 

Crocs, Inc. is a world leader in innovative casual footwear for men, women and children. Crocs offers a broad portfolio of all-season products, while remaining true to its core molded footwear heritage. 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 celebrates the fun of being a little different and encourages fans to “Find Your Fun” in every colorful pair of shoes. Since its inception in 2002, Crocs has sold more than 300 million pairs of shoes in more than 90 countries around the world.

 

Visit www.crocs.com for additional information.

 

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 prospects, investments in our business and 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: 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 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 July 30, 2015.  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.

 

3



 

CROCS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

($ thousands, except per share data)

 

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

 

2015

 

2014

 

2015

 

2014

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

345,671

 

$

376,920

 

$

607,864

 

$

689,349

 

Cost of sales

 

155,801

 

172,320

 

290,624

 

328,522

 

Restructuring charges

 

 

2,029

 

 

2,029

 

Gross profit

 

189,870

 

202,571

 

317,240

 

358,798

 

Selling, general and administrative expenses

 

168,636

 

153,370

 

294,705

 

290,525

 

Restructuring charges

 

2,810

 

4,060

 

6,473

 

6,310

 

Asset impairment charges

 

2,075

 

3,230

 

2,075

 

3,230

 

Income from operations

 

16,349

 

41,911

 

13,987

 

58,733

 

Foreign currency transaction gain (loss), net

 

(217

)

(220

)

277

 

(2,988

)

Interest income

 

196

 

403

 

484

 

880

 

Interest expense

 

(260

)

(128

)

(479

)

(319

)

Other income (loss), net

 

(80

)

30

 

(411

)

171

 

Income before income taxes

 

15,988

 

41,996

 

13,858

 

56,477

 

Income tax expense

 

(2,562

)

(18,719

)

(2,857

)

(24,076

)

Net income

 

$

13,426

 

$

23,277

 

$

11,001

 

$

32,401

 

 

 

 

 

 

 

 

 

 

 

Dividends on Series A convertible preferred stock

 

(3,000

)

(3,033

)

(5,833

)

(5,166

)

Dividend equivalents on Series A convertible preferred shares related to redemption value accretion and beneficial conversion feature

 

(736

)

(721

)

(1,457

)

(1,339

)

Net income attributable to common stockholders

 

$

9,690

 

$

19,523

 

$

3,711

 

$

25,896

 

 

 

 

 

 

 

 

 

 

 

Net income per common share:

 

 

 

 

 

 

 

 

 

Basic

 

$

0.11

 

$

0.19

 

$

0.04

 

$

0.26

 

Diluted

 

$

0.11

 

$

0.19

 

$

0.04

 

$

0.25

 

 

4



 

CROCS, INC. AND SUBSIDIARIES

RECONCILIATION OF GAAP MEASURES TO NON-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 current period ‘adjusted results’, which are non-GAAP financial measures. Adjusted results of operations exclude the impact of items that management believes affect the comparability or underlying business trends in our condensed consolidated financial statements in the periods presented.

 

Management uses adjusted results to assist in comparing business trends from period to period on a consistent non-GAAP basis in communications with the board of directors, stockholders, analysts and investors concerning our financial performance. We believe that these non-GAAP measures are used by, and are useful to, investors and other users of our financial statements as an additional tool to evaluate our performance. We believe they also provide a useful baseline for analyzing trends in our operations. We do not suggest that investors should consider these non-GAAP measures in isolation from, or as a substitute for, financial information prepared in accordance with U.S. GAAP.

 

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

 

2015

 

2014

 

2015

 

2014

 

 

 

(in thousands)

 

(in thousands)

 

Selling, general and administrative expenses reconciliation:

 

 

 

 

 

 

 

 

 

GAAP selling, general and administrative expenses

 

$

168,636

 

$

153,370

 

$

294,705

 

$

290,525

 

Legal settlements, disbursements and reorganization (1)

 

(8,977

)

(2,804

)

(10,376

)

(6,297

)

New ERP implementation (2)

 

(2,739

)

(4,639

)

(8,387

)

(7,028

)

Non-GAAP selling, general and administrative expenses

 

$

156,920

 

$

145,927

 

$

275,942

 

$

277,200

 

 

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

 

2015

 

2014

 

2015

 

2014

 

 

 

(in thousands)

 

(in thousands)

 

Net income attributable to common stockholders reconciliation:

 

 

 

 

 

 

 

 

 

GAAP net income attributable to common stockholders

 

$

9,690

 

$

19,523

 

$

3,711

 

$

25,896

 

Legal settlements, disbursements, asset impairment, reorganization, and statutory audits (3)

 

12,052

 

6,034

 

13,451

 

9,527

 

Restructuring (4)

 

2,810

 

6,089

 

6,473

 

8,339

 

New ERP implementation (2)

 

2,739

 

4,639

 

8,387

 

7,028

 

Non-GAAP net income attributable to common stockholders

 

$

27,291

 

$

36,285

 

$

32,022

 

$

50,790

 

 


(1)         This represents certain legal liabilities, disbursements made to invalid vendors, and reorganization expenses related to our investment agreement with Blackstone.

 

(2)         This represents operating expenses related to the implementation of our new enterprise resource planning (“ERP”) system.

 

(3)         This represents certain legal liabilities, disbursements made to invalid vendors, the impairment of certain retail locations, reorganization expenses related to our investment agreement with Blackstone, and out-of-period customs/duty obligations.

 

(4)         This relates to bonuses, consulting fees and other expenses related to recent restructuring activities.

 

5



 

CROCS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

($ thousands, except number of shares)

 

 

 

June 30,

 

December 31,

 

 

 

2015

 

2014

 

ASSETS

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

197,279

 

$

267,512

 

Accounts receivable, net of allowances of $42,694 and $32,392, respectively

 

172,762

 

101,217

 

Inventories

 

182,626

 

171,012

 

Deferred tax assets, net

 

3,951

 

4,190

 

Income tax receivable

 

15,443

 

9,332

 

Other receivables

 

12,069

 

11,989

 

Prepaid expenses and other assets

 

33,308

 

30,156

 

Total current assets

 

617,438

 

595,408

 

Property and equipment, net

 

59,501

 

68,288

 

Intangible assets, net

 

90,336

 

97,337

 

Goodwill

 

2,227

 

2,044

 

Deferred tax assets, net

 

17,687

 

17,886

 

Other assets

 

23,259

 

25,968

 

Total assets

 

$

810,448

 

$

806,931

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

 

$

84,510

 

$

42,923

 

Accrued expenses and other liabilities

 

98,206

 

80,216

 

Deferred tax liabilities, net

 

11,726

 

11,869

 

Accrued restructuring

 

3,719

 

4,511

 

Income taxes payable

 

10,389

 

9,078

 

Current portion of long-term borrowings and capital lease obligations

 

5,350

 

5,288

 

Total current liabilities

 

213,900

 

153,885

 

Long-term income tax payable

 

4,172

 

8,843

 

Long-term borrowings and capital lease obligations

 

3,691

 

6,381

 

Long-term accrued restructuring

 

216

 

348

 

Other liabilities

 

11,209

 

12,277

 

Total liabilities

 

233,188

 

181,734

 

Commitments and contingencies

 

 

 

 

 

Series A convertible preferred stock, par value $0.001 per share, 1,000,000 shares authorized, 200,000 shares issued and outstanding, redemption amount and liquidation preference of $203,000 and $203,067 as of June 30, 2015 and December 31, 2014, respectively

 

174,136

 

172,679

 

Stockholders’ equity:

 

 

 

 

 

Preferred stock, par value $0.001 per share, 4,000,000 shares authorized, none outstanding

 

 

 

Common stock, par value $0.001 per share, 250,000,000 shares authorized, 92,505,166 and 75,845,884 shares issued and outstanding, respectively, as of June 30, 2015 and 92,325,201 and 78,516,566 shares issued and outstanding, respectively, as of December 31, 2014

 

93

 

92

 

Treasury stock, at cost, 17,059,282 and 13,808,635 shares as of June 30, 2015 and December 31, 2014, respectively

 

(241,324

)

(200,424

)

Additional paid-in capital

 

351,094

 

345,732

 

Retained earnings

 

329,180

 

325,470

 

Accumulated other comprehensive loss

 

(35,919

)

(18,352

)

Total stockholders’ equity

 

403,124

 

452,518

 

Total liabilities, commitments and contingencies and stockholders’ equity

 

$

810,448

 

$

806,931

 

 

6



 

The following tables summarize our total revenue by channel for the three and six months ended June 30, 2015 and 2014:

 

 

 

Three Months Ended June 30,

 

Change

 

Constant Currency Change (1)

 

 

 

2015

 

2014

 

$

 

%

 

$

 

%

 

 

 

(in thousands)

 

Wholesale:

 

 

 

 

 

 

 

 

 

 

 

 

 

Americas

 

$

65,250

 

$

65,715

 

$

(465

)

(0.7

)%

$

1,149

 

1.7

%

Asia Pacific

 

92,824

 

98,445

 

(5,621

)

(5.7

)

(229

)

(0.2

)

Europe

 

30,807

 

44,576

 

(13,769

)

(30.9

)

(4,773

)

(10.7

)

Other businesses

 

327

 

(86

)

413

 

(480.2

)

317

 

(368.6

)

Total wholesale

 

189,208

 

208,650

 

(19,442

)

(9.3

)

(3,536

)

(1.7

)

Consumer-direct:

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail:

 

 

 

 

 

 

 

 

 

 

 

 

 

Americas

 

58,309

 

60,622

 

(2,313

)

(3.8

)

(1,739

)

(2.9

)

Asia Pacific

 

45,898

 

56,976

 

(11,078

)

(19.4

)

(7,230

)

(12.7

)

Europe

 

14,522

 

19,620

 

(5,098

)

(26.0

)

(583

)

(3.0

)

Total retail

 

118,729

 

137,218

 

(18,489

)

(13.5

)

(9,552

)

(7.0

)

Internet:

 

 

 

 

 

 

 

 

 

 

 

 

 

Americas

 

19,560

 

15,231

 

4,329

 

28.4

 

4,502

 

29.6

 

Asia Pacific

 

10,835

 

7,260

 

3,575

 

49.2

 

3,999

 

55.1

 

Europe

 

7,339

 

8,561

 

(1,222

)

(14.3

)

450

 

5.3

 

Total internet

 

37,734

 

31,052

 

6,682

 

21.5

 

8,951

 

28.8

 

Total revenues

 

$

345,671

 

$

376,920

 

$

(31,249

)

(8.3

)%

$

(4,137

)

(1.1

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

Americas

 

$

143,119

 

$

141,568

 

$

1,551

 

1.1

%

$

3,912

 

2.8

%

Asia Pacific

 

149,557

 

162,681

 

(13,124

)

(8.1

)

(3,460

)

(2.1

)

Europe

 

52,668

 

72,757

 

(20,089

)

(27.6

)

(4,906

)

(6.7

)

Total segment revenues

 

345,344

 

377,006

 

(31,662

)

(8.4

)

(4,454

)

(1.2

)

Other businesses

 

327

 

(86

)

413

 

(480.2

)

317

 

(368.6

)

Total consolidated revenues

 

$

345,671

 

$

376,920

 

$

(31,249

)

(8.3

)%

$

(4,137

)

(1.1

)%

 


(1)         Reflects year over year change as if the current period results were in “constant currency,” which is a non-GAAP financial measure. See “Use of Non-GAAP Financial Measures” above for more information.

 

7



 

 

 

Six Months Ended June 30,

 

Change

 

Constant Currency Change (1)

 

 

 

2015

 

2014

 

$

 

%

 

$

 

%

 

 

 

(in thousands)

 

Wholesale:

 

 

 

 

 

 

 

 

 

 

 

 

 

Americas

 

$

126,427

 

$

135,890

 

$

(9,463

)

(7.0

)%

$

(6,849

)

(5.0

)%

Asia Pacific

 

165,319

 

197,489

 

(32,170

)

(16.3

)

(21,896

)

(11.1

)

Europe

 

75,460

 

92,356

 

(16,896

)

(18.3

)

705

 

0.8

 

Other businesses

 

552

 

172

 

380

 

220.9

 

320

 

186.0

 

Total wholesale

 

367,758

 

425,907

 

(58,149

)

(13.7

)

(27,720

)

(6.5

)

Consumer-direct:

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail:

 

 

 

 

 

 

 

 

 

 

 

 

 

Americas

 

92,925

 

97,203

 

(4,278

)

(4.4

)

(3,436

)

(3.5

)

Asia Pacific

 

69,244

 

85,225

 

(15,981

)

(18.8

)

(10,615

)

(12.5

)

Europe

 

22,933

 

30,350

 

(7,417

)

(24.4

)

(604

)

(2.0

)

Total retail

 

185,102

 

212,778

 

(27,676

)

(13.0

)

(14,655

)

(6.9

)

Internet:

 

 

 

 

 

 

 

 

 

 

 

 

 

Americas

 

29,536

 

25,595

 

3,941

 

15.4

 

4,216

 

16.5

 

Asia Pacific

 

14,769

 

10,882

 

3,887

 

35.7

 

4,660

 

42.8

 

Europe

 

10,699

 

14,187

 

(3,488

)

(24.6

)

(834

)

(5.9

)

Total internet

 

55,004

 

50,664

 

4,340

 

8.6

 

8,042

 

15.9

 

Total revenues

 

$

607,864

 

$

689,349

 

$

(81,485

)

(11.8

)%

$

(34,333

)

(5.0

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

Americas

 

$

248,888

 

$

258,688

 

$

(9,800

)

(3.8

)%

$

(6,069

)

(2.3

)%

Asia Pacific

 

249,332

 

293,596

 

(44,264

)

(15.1

)

(27,851

)

(9.5

)

Europe

 

109,092

 

136,893

 

(27,801

)

(20.3

)

(733

)

(0.5

)

Total segment revenues

 

607,312

 

689,177

 

(81,865

)

(11.9

)

(34,653

)

(5.0

)

Other businesses

 

552

 

172

 

380

 

220.9

 

320

 

186.0

 

Total consolidated revenues

 

$

607,864

 

$

689,349

 

$

(81,485

)

(11.8

)%

$

(34,333

)

(5.0

)%

 


(1)         Reflects year over year change as if the current period results were in “constant currency,” which is a non-GAAP financial measure. See “Use of Non-GAAP Financial Measures” above for more information

 

8



 

CROCS, INC. SUBSIDIARIES

RETAIL STORE COUNTS (UNAUDITED)

 

 

 

December 31,
2014

 

Opened

 

Closed

 

June 30,
2015

 

Company-operated retail locations

 

 

 

 

 

 

 

 

 

Type

 

 

 

 

 

 

 

 

 

Kiosk/store in store

 

100

 

5

 

10

 

95

 

Retail stores

 

311

 

9

 

30

 

290

 

Outlet stores

 

174

 

4

 

4

 

174

 

Total

 

585

 

18

 

44

 

559

 

Operating segment

 

 

 

 

 

 

 

 

 

Americas

 

210

 

2

 

13

 

199

 

Asia Pacific

 

258

 

15

 

22

 

251

 

Europe

 

117

 

1

 

9

 

109

 

Total

 

585

 

18

 

44

 

559

 

 

9



 

CROCS, INC. AND SUBSIDIARIES

COMPARABLE STORE SALES

(UNAUDITED)

 

 

 

Constant Currency

 

Constant Currency

 

 

 

Three Months Ended

 

Three Months Ended

 

 

 

June 30, 2015 (2)

 

June 30, 2014 (2)

 

Comparable store sales (1)

 

 

 

 

 

Americas

 

(3.4

)%

(6.2

)%

Asia Pacific

 

(9.4

)%

(6.1

)%

Europe

 

0.3

%

1.1

%

Global

 

(5.1

)%

(5.1

)%

 

 

 

Constant Currency

 

Constant Currency

 

 

 

Six Months Ended

 

Six Months Ended

 

 

 

June 30, 2015 (2)

 

June 30, 2014 (2)

 

Comparable store sales (1)

 

 

 

 

 

Americas

 

(4.3

)%

(5.7

)%

Asia Pacific

 

(9.4

)%

(3.1

)%

Europe

 

2.3

%

1.0

%

Global

 

(5.2

)%

(3.8

)%

 


(1)         Comparable store status is determined on a monthly basis. Comparable store sales begin in the thirteenth 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 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. Comparable store sales exclude the impact of our internet channel revenues and are calculated on a currency neutral basis using historical quarterly average currency rates.

 

(2)         Reflects quarter-over-quarter and year-over-year change as if the current period results were in “constant currency,” which is a non-GAAP financial measure. Constant currency is a measure utilized by management in which current period results have been restated using 2014 and 2013 average foreign exchange rates, respectively, for the comparative period to enhance the visibility of the underlying business trends by excluding the impact of foreign currency exchange rate fluctuations. We do not suggest that investors should consider this non-GAAP measure in isolation from, or as a substitute for, financial information prepared in accordance with U.S. GAAP.

 

10