Crocs Inc. (Nasdaq:CROX) today reported financial results for the
first quarter ended March 31, 2015.
First Quarter Highlights:
- GAAP revenue was $262.2 million, in line with expectations. On
a constant currency basis, revenue decreased 8% as compared to the
prior year.
- Net loss attributable to common stockholders on a GAAP basis
was $0.08 per diluted share for the first quarter.
- Excluding certain non-recurring and special charges, the
company reported non-GAAP adjusted net income attributable to
common shareholders of $4.7 million.
- The company announced a series of senior level organizational
changes including the elimination of the Chief Operating Officer
and the SVP of Global Supply Chain roles as well as the addition of
the SVP of Global Sourcing and the SVP of Global Distribution and
Logistics roles.
Gregg Ribatt, Chief Executive Officer, said: "We delivered first
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 continue to make meaningful progress in implementing
the 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
First quarter operating results In the first quarter of 2015,
the company incurred a GAAP net loss attributable to common
stockholders of $6.0 million or $0.08 per share, compared with net
income of $6.4 million or $0.06 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 $10.7 million in
non-recurring and special charges in the first quarter of 2015
compared with $8.1 million in non-recurring and special charges in
the first quarter of 2014.
Excluding these items the company reported:
- Non-GAAP operating income of $8.3 million versus $24.9 million
in the comparable prior year period.
- On a comparable basis, non-GAAP adjusted net income
attributable to common shareholders of $4.7 million in the quarter
versus $14.5 million in the first quarter of 2014.
Balance Sheet
Cash and cash equivalents at March 31, 2015, were $180.7
million. Inventory was $184.7 million compared with $171.0 million
on December 31, 2014.
Financial Outlook
Mr. Ribatt continued, "Compared to last year, our first quarter
financial results reflect the strategic shift to focus the
organization on a narrower range of businesses, less retail stores
and a narrowed geographic focus. The balance of our business
continues to stabilize across all of our regions while we address
the continuing challenges of the stronger US dollar, our China
business and the impact of the slowdown at the US ports. Our
balance sheet at the end of the first quarter reflected lower
inventory and global accounts receivables. As our business
continues to stabilize, we expect Q2 revenue in the $340 to $350
million range, showing slight growth excluding the impacts of our
China business and store closings and discontinued product
lines."
Organizational change
The company also announced that the Crocs' Chief Operating
Officer, Scott Crutchfield, is leaving the company. In conjunction
with Crutchfield's departure, the company is making a series of
senior level organizational changes that include the elimination of
the Chief Operating Officer and the SVP of Global Supply Chain
roles. Phil Blake is joining the company as SVP of Global Sourcing.
Blake previously served as the VP of Sourcing at Clarks Americas,
SVP of Sourcing at Collective Brands Performance & Lifestyle
Group and VP of Manufacturing at Timberland. Dennis Sheldon, an
8-year Crocs veteran, has been promoted to SVP of Global
Distribution & Logistics. Sheldon most recently led Crocs SAP
initiative. Prior to that he served as the company's VP of
Distribution & Logistics. Both Blake and Sheldon will report
directly to CEO Gregg Ribatt.
Mr. Ribatt added: "We are grateful to Scott and the significant
contributions he made to the success of Crocs in his nine years
with the company. Streamlining the organization at this time will
help improve communication, speed decision making and provide
better coordination between Crocs and its customers and
suppliers."
Stock Repurchase
The company repurchased 1.7 million shares of common stock in
the first quarter of 2015 at an average price of $11.60. The
company ended the quarter at 77.2 million common shares outstanding
and first quarter weighted average shares outstanding was 77.8
million.
Conference Call Information
A teleconference call to discuss first quarter 2015 results is
scheduled for today, Friday May 8, 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
39586739. 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 June 8, 2015.
About Crocs, Inc.
Crocs, Inc. (Nasdaq:CROX) 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 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.
All information in this document speaks as of May 8, 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.
CROCS, INC. AND
SUBSIDIARIES |
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS |
(Unaudited) |
($ thousands, except
per share data) |
|
|
Three Months
Ended |
|
March
31, |
|
2015 |
2014 |
Revenues |
$ 262,193 |
$ 312,429 |
Cost of sales |
134,823 |
156,202 |
Gross profit |
127,370 |
156,227 |
Selling, general and administrative
expenses |
126,069 |
137,155 |
Restructuring charges |
3,663 |
2,250 |
Income (loss) from operations |
(2,362) |
16,822 |
Foreign currency transaction gain (loss),
net |
494 |
(2,768) |
Interest income |
288 |
477 |
Interest expense |
(219) |
(191) |
Other income (expense), net |
(331) |
141 |
Income (loss) before income taxes |
(2,130) |
14,481 |
Income tax expense |
(295) |
(5,357) |
Net income (loss) |
(2,425) |
9,124 |
Dividends on Series A convertible preferred
shares |
(2,833) |
(2,133) |
Dividend equivalents on Series A convertible
preferred shares related to redemption value accretion and
beneficial conversion feature |
(721) |
(618) |
Net income (loss) attributable to common
stockholders |
$ (5,979) |
$ 6,373 |
Net income (loss) per common share: |
|
|
Basic |
$ (0.08) |
$ 0.06 |
Diluted |
$ (0.08) |
$ 0.06 |
|
|
|
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 |
|
March
31, |
|
2015 |
2014 |
Selling, general and administrative
expenses ("SG&A") and restructuring charges
reconciliation: |
|
|
GAAP SG&A and restructuring
charges |
129,732 |
139,405 |
Restructuring charges (1) |
(3,663) |
(2,250) |
New ERP implementation (2) |
(5,648) |
(2,375) |
Reorganization charges (1) |
(1,399) |
(2,192) |
Legal settlement (3) |
— |
(1,289) |
Non-GAAP SG&A and restructuring
charges |
$ 119,022 |
$ 131,299 |
|
|
|
Net income (loss) attributable to
common stockholders reconciliation: |
|
|
GAAP net income (loss) attributable to
common stockholders reconciliation: |
$ (5,979) |
$ 6,373 |
Restructuring charges (1) |
3,663 |
2,250 |
New ERP implementation (2) |
5,648 |
2,375 |
Reorganization charges (1) |
1,399 |
2,192 |
Legal settlement (3) |
— |
1,289 |
Non-GAAP net income attributable to common
stockholders |
$ 4,731 |
$ 14,479 |
|
(1) This relates to severance
expenses, bonuses, store closure costs, consulting fees and other
expenses related to recent restructuring and reorganization
activities and our investment agreement with Blackstone.
Reorganization activities in 2014 also include the net expenses
related to the resolution of a statutory tax audit in Brazil. |
(2) This represents operating
expenses related to the implementation of our new ERP system and
the add-back of accelerated depreciation and amortization on
tangible and intangible items related to our current ERP system and
supporting platforms that will no longer be utilized once the
implementation of a new ERP is complete. |
(3) This represents legal
settlement expenses. |
|
CROCS, INC. AND
SUBSIDIARIES |
CONDENSED CONSOLIDATED
BALANCE SHEETS (Unaudited) |
($ thousands, except
number of shares) |
|
|
As of March 31,
2015 |
As of December 31,
2014 |
ASSETS |
|
|
Current assets: |
|
|
Cash and cash equivalents |
$ 180,698 |
$ 267,512 |
Accounts receivable, net of allowances of
$33,745 and $32,392, respectively |
174,099 |
101,217 |
Inventories |
184,720 |
171,012 |
Deferred tax assets, net |
3,971 |
4,190 |
Income tax receivable |
11,833 |
9,332 |
Other receivables |
11,775 |
11,989 |
Prepaid expenses and other current
assets |
27,056 |
30,156 |
Total current assets |
594,152 |
595,408 |
Property and equipment, net |
68,277 |
68,288 |
Intangible assets, net |
89,384 |
97,337 |
Goodwill |
2,227 |
2,044 |
Deferred tax assets, net |
17,536 |
17,886 |
Other assets |
23,640 |
25,968 |
Total assets |
$ 795,216 |
$ 806,931 |
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
Current liabilities: |
|
|
Accounts payable |
$ 81,455 |
$ 42,923 |
Accrued expenses and other current
liabilities |
83,887 |
80,216 |
Deferred tax liabilities, net |
11,853 |
11,869 |
Accrued restructuring |
4,708 |
4,511 |
Income taxes payable |
6,186 |
9,078 |
Current portion of long-term borrowings
and capital lease obligations |
5,284 |
5,288 |
Total current liabilities |
193,373 |
153,885 |
Long-term income tax payable |
7,832 |
8,843 |
Long-term borrowings and capital lease
obligations |
5,074 |
6,381 |
Long-term accrued restructuring |
244 |
348 |
Other liabilities |
9,753 |
12,277 |
Total liabilities |
216,276 |
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 $202,833 and $203,067 as of March 31, 2015 and
December 31, 2014, respectively |
173,400 |
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, 92,771,653 and 77,222,053 shares
issued and outstanding, respectively, as of March 31, 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, 15,549,600 and
13,808,635 shares as of March 31, 2015 and December 31, 2014,
respectively |
(220,635) |
(200,424) |
Additional paid-in capital |
348,807 |
345,732 |
Retained earnings |
319,491 |
325,470 |
Accumulated other comprehensive loss |
(42,216) |
(18,352) |
Total stockholders' equity |
405,540 |
452,518 |
Total liabilities, commitments and
contingencies and stockholders' equity |
$ 795,216 |
$ 806,931 |
|
|
|
The following table summarizes our total revenue by channel for
the three months ended March 31, 2015 and 2014 ($
thousands):
|
Three Months
Ended |
|
Constant
Currency |
|
March
31, |
Change |
Change(1) |
|
2015 |
2014 |
$ |
% |
$ |
% |
|
|
|
|
|
|
|
Wholesale: |
|
|
|
|
|
|
Americas |
$ 61,176 |
$ 70,175 |
$ (8,999) |
(12.8)% |
$ (7,384) |
(10.5)% |
Asia Pacific |
72,497 |
99,044 |
(26,547) |
(26.8) |
(21,468) |
(21.7) |
Europe |
44,653 |
47,780 |
(3,127) |
(6.5) |
8,663 |
18.1 |
Other businesses |
225 |
258 |
(33) |
(12.8) |
(3) |
(1.2) |
Total Wholesale |
178,551 |
217,257 |
(38,706) |
(17.8) |
(20,192) |
(9.3) |
Consumer-direct: |
|
|
|
|
|
|
Retail: |
|
|
|
|
|
|
Americas |
34,617 |
36,581 |
(1,964) |
(5.4) |
(1,766) |
(4.8) |
Asia Pacific |
23,345 |
28,249 |
(4,904) |
(17.4) |
(3,407) |
(12.1) |
Europe |
8,411 |
10,730 |
(2,319) |
(21.6) |
444 |
4.1 |
Total Retail |
66,373 |
75,560 |
(9,187) |
(12.2) |
(4,729) |
(6.3) |
Internet: |
|
|
|
|
|
|
Americas |
9,976 |
10,364 |
(388) |
(3.7) |
(272) |
(2.6) |
Asia Pacific |
3,933 |
3,622 |
311 |
8.6 |
665 |
18.4 |
Europe |
3,360 |
5,626 |
(2,266) |
(40.3) |
(1,353) |
(24.0) |
Total Internet |
17,269 |
19,612 |
(2,343) |
(11.9) |
(960) |
(4.9) |
Total revenues |
$ 262,193 |
$ 312,429 |
$ (50,236) |
(16.1)% |
$ (25,881) |
(8.3)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
|
Constant
Currency |
|
March
31, |
Change |
Change(1) |
($ thousands) |
2015 |
2014 |
$ |
% |
$ |
% |
Regional Revenue: |
|
|
|
|
|
|
Americas |
$ 105,769 |
$ 117,120 |
$ (11,351) |
(9.7)% |
$ (9,422) |
(8.0)% |
Asia Pacific |
99,775 |
130,915 |
(31,140) |
(23.8) |
(24,210) |
(18.5) |
Europe |
56,424 |
64,136 |
(7,712) |
(12.0) |
7,754 |
12.1 |
Other businesses |
225 |
258 |
(33) |
(12.8) |
(3.0) |
(1.2) |
Total revenues |
$ 262,193 |
$ 312,429 |
$ (50,236) |
(16.1)% |
$ (25,881) |
(8.3)% |
|
|
|
|
|
|
|
CROCS, INC.
SUBSIDIARIES |
RETAIL STORE COUNTS
(UNAUDITED) |
|
|
December 31, |
|
|
March 31, |
Company-operated retail locations: |
2014 |
Opened |
Closed |
2015 |
Type: |
|
|
|
|
Kiosk/Store in Store |
100 |
1 |
(8) |
93 |
Retail Stores |
311 |
1 |
(18) |
294 |
Outlet Stores |
174 |
1 |
(4) |
171 |
Total |
585 |
3 |
(30) |
558 |
Operating segment: |
|
|
|
|
Americas |
210 |
— |
(9) |
201 |
Asia Pacific |
258 |
2 |
(15) |
245 |
Europe |
117 |
1 |
(6) |
112 |
Total |
585 |
3 |
(30) |
558 |
|
|
|
|
|
CROCS, INC. AND
SUBSIDIARIES |
COMPARABLE STORE SALES
(UNAUDITED) |
|
|
Constant Currency |
Constant Currency |
|
Three Months Ended |
Three Months Ended |
Comparable store sales (1) |
March 31,
2015(2) |
March 31,
2014(2) |
Americas |
(5.8)% |
(5.0)% |
Asia Pacific |
(9.4) |
3.3 |
Europe |
5.7 |
0.6 |
Global |
(5.3)% |
(1.5)% |
|
|
|
(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. |
|
CONTACT: Investor Contact: Brendon Frey, ICR
(203) 682-8200
Brendon.Frey@icrinc.com
Media Contact: Katy Michael/Crocs Inc.
(303) 848-7000
kmichael@crocs.com
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