Crocs, Inc. (NASDAQ:CROX) today reported financial results for
the three months ended March 31, 2016.
First Quarter Highlights:
- Revenue increased 6.5% to
$279.1 million. On a constant currency basis, revenue increased
9.2% compared to the first quarter of 2015.
- Net income attributable to
common stockholders on a GAAP basis was $6.4 million or $0.07 per
diluted share.
Gregg Ribatt, Chief Executive Officer, said: “We are pleased
with our start to the new year. First quarter revenue increased
6.5% driven by the positive response to our spring/summer 2016 line
and operational improvements. While operational supply chain
improvements resulted in some favorable timing of wholesale
shipments in the quarter compared to our initial expectations, the
strong growth in our e-commerce business and positive retail comps
in all regions demonstrates the meaningful progress we have made in
repositioning the Crocs brand and business over the past 21 months.
There is still work to be done to position the company for
sustained success; however, we remain confident that we are on
track to deliver our full year and future sales and profit
objectives.”
First Quarter Operating Results
In the first quarter of 2016, the company reported GAAP
net income attributable to common stockholders of $6.4 million or
$0.07 per share, compared with a net loss attributable to common
stockholders of $6.0 million or ($0.08) per 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 net charges of
$0.1 million not related to our core business in the first quarter
of 2016 compared with $10.7 million in the first quarter of 2015.
Excluding these items, the company reported on a comparable basis,
non-GAAP adjusted net income attributable to common shareholders of
$6.4 million in the first quarter of 2016 versus non-GAAP adjusted
net income attributable to common shareholders of $4.7 million in
the first quarter of 2015.
For the quarter ended March 31, 2016 we had 74.0 million diluted
shares outstanding and 73.1 million weighted average common shares
outstanding. The company did not repurchase any shares during the
three months ended March 31, 2016.
Balance Sheet
Cash and cash equivalents as of March 31, 2016 were $89.1
million compared with $143.3 million at December 31, 2015. The
decrease in cash and cash equivalents was primarily attributable to
the seasonal increase in our net working capital as we build
inventories and accounts receivable for our spring/summer 2016
selling season. Inventory was $186.1 million at March 31, 2016
compared to $168.2 million at December 31, 2015.
Financial Outlook
The company expects second quarter 2016 revenue in the $340 to
$350 million range compared to $345.7 million in the second quarter
of last year. This guidance reflects the timing impact from earlier
shipments in the first quarter, as noted above. Additionally,
revenue growth is anticipated to be in the mid-single digits, on a
constant currency basis, in the first half of the year compared to
the first half of 2015.
Conference Call
Information
A teleconference call to discuss first quarter 2016 results is
scheduled for today, Tuesday, May 10, 2016, at 8:30 am EDT.
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
42377507. 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
May 10, 2017.
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 65
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 May 10, 2016.
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
SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)($ thousands, except
per share data) |
|
|
|
|
|
Three Months Ended |
|
|
|
March 31, |
|
|
|
2016 |
|
2015 |
|
|
|
|
|
|
|
Revenues |
|
$ |
279,140 |
|
$ |
262,193 |
|
Cost of sales |
|
149,774 |
|
134,823 |
|
Gross
profit |
|
129,366 |
|
127,370 |
|
Selling, general and
administrative expenses |
|
114,930 |
|
126,069 |
|
Asset impairment
charges |
|
193 |
|
— |
|
Restructuring
charges |
|
— |
|
3,663 |
|
Income
(loss) from operations |
|
14,243 |
|
(2,362 |
) |
Foreign currency
transaction gain (loss), net |
|
(1,247 |
) |
494 |
|
Interest income |
|
216 |
|
288 |
|
Interest expense |
|
(243 |
) |
(219 |
) |
Other income (expense),
net |
|
82 |
|
(331 |
) |
Income
(loss) before income taxes |
|
13,051 |
|
(2,130 |
) |
Income tax expense |
|
(2,905 |
) |
(295 |
) |
Net income
(loss) |
|
$ |
10,146 |
|
$ |
(2,425 |
) |
|
|
|
|
|
|
Dividends on Series A
convertible preferred stock |
|
$ |
(3,000 |
) |
$ |
(2,833 |
) |
Dividend equivalents on
Series A convertible preferred shares related to redemption
value accretion and beneficial conversion feature |
|
(785 |
) |
(721 |
) |
Net income
(loss) attributable to common stockholders |
|
$ |
6,361 |
|
$ |
(5,979 |
) |
|
|
|
|
|
|
Net income (loss) per
common share: |
|
|
|
|
|
Basic |
|
$ |
0.07 |
|
$ |
(0.08 |
) |
Diluted |
|
$ |
0.07 |
|
$ |
(0.08 |
) |
|
|
|
|
|
|
|
|
CROCS, INC. AND
SUBSIDIARIESRECONCILIATION 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 “Non-GAAP selling, general, and
administrative expenses”, “Non-GAAP cost of sales”, and “Non-GAAP
adjusted net income (loss) attributable to common stockholders”,
which are non-GAAP financial measures. Adjusted results exclude the
impact of items that management believes affect the comparability
or underlying business trends in our consolidated financial
statements in the periods presented.
We also 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 restated using prior year 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.
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, stockholders, analysts, and
investors concerning our financial performance. We believe that
these non-GAAP measures are useful to investors and other users of
our 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
SUBSIDIARIESRECONCILIATION OF GAAP MEASURES TO
NON-GAAP
MEASURES(UNAUDITED) |
|
|
|
|
|
Three Months Ended March 31, |
|
|
|
2016 |
|
2015 |
|
|
|
(in thousands) |
|
Selling, general and
administrative expenses reconciliation: |
|
|
|
|
|
GAAP
selling, general and administrative expenses |
|
$ |
114,930 |
|
$ |
126,069 |
|
Reorganization charges (1) |
|
(184 |
) |
(1,399 |
) |
Customs
audit settlements (2) |
|
(354 |
) |
— |
|
ERP
implementation (3) |
|
— |
|
(5,648 |
) |
Total
selling, general and administrative adjustments |
|
(538 |
) |
(7,047 |
) |
Non-GAAP
selling, general and administrative expenses |
|
$ |
114,392 |
|
$ |
119,022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|
|
2016 |
|
2015 |
|
|
|
(in thousands) |
|
Cost of sales
reconciliation: |
|
|
|
|
|
GAAP cost of
sales: |
|
$ |
149,774 |
|
$ |
134,823 |
|
Favorable
settlement of customs audit (4) |
|
650 |
|
— |
|
Non-GAAP
cost of sales |
|
$ |
150,424 |
|
$ |
134,823 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|
|
2016 |
|
2015 |
|
|
|
(in thousands) |
|
Net loss attributable to
common stockholders reconciliation: |
|
|
|
|
|
GAAP net
income (loss) attributable to common stockholders
reconciliation: |
|
$ |
6,361 |
|
$ |
(5,979 |
) |
Favorable
settlement of customs audit (4) |
|
(650 |
) |
— |
|
Reorganization charges (1) |
|
377 |
|
1,399 |
|
Customs
audit settlements (2) |
|
354 |
|
— |
|
ERP
implementation (3) |
|
— |
|
5,648 |
|
Restructuring charges (5) |
|
— |
|
3,663 |
|
Total
adjustments |
|
81 |
|
10,710 |
|
Non-GAAP
adjusted net income attributable to common stockholders |
|
$ |
6,442 |
|
$ |
4,731 |
|
_____________________ |
|
|
|
|
|
|
|
(1) Relates to
severance expenses, bonuses, store closure costs, consulting fees,
and other expenses related to recent reorganization
activities. |
(2) Represents
penalties and fees related to the settlement of the customs
audit. |
(3) Represents
operating expenses related to the implementation of our new ERP
system. |
(4) Represents the
release of the reserve due to favorable settlement terms of the
customs audit. |
(5) Represents
severance, lease and other contract exit costs, and other expenses
associated with the restructuring plan that concluded in
December 2015. |
CROCS, INC. AND
SUBSIDIARIESCONSOLIDATED BALANCE
SHEETS($ thousands, except number
of shares) |
|
|
|
|
|
March 31, |
|
December 31, |
|
|
|
2016 |
|
2015 |
|
ASSETS |
|
|
|
|
|
Current assets: |
|
|
|
|
|
Cash and
cash equivalents |
|
$ |
89,080 |
|
$ |
143,341 |
|
Accounts
receivable, net of allowances of $52,254 and $49,364,
respectively |
|
157,159 |
|
83,616 |
|
Inventories |
|
186,113 |
|
168,192 |
|
Income tax
receivable |
|
10,001 |
|
10,233 |
|
Other
receivables |
|
16,925 |
|
14,233 |
|
Prepaid
expenses and other assets |
|
35,477 |
|
26,334 |
|
Total
current assets |
|
494,755 |
|
445,949 |
|
Property and equipment,
net |
|
50,047 |
|
49,490 |
|
Intangible assets,
net |
|
79,651 |
|
82,297 |
|
Goodwill |
|
2,611 |
|
1,973 |
|
Deferred tax assets,
net |
|
6,746 |
|
6,608 |
|
Other assets |
|
21,676 |
|
21,703 |
|
Total
assets |
|
$ |
655,486 |
|
$ |
608,020 |
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
Accounts
payable |
|
$ |
83,331 |
|
$ |
63,336 |
|
Accrued
expenses and other liabilities |
|
96,265 |
|
92,573 |
|
Income taxes
payable |
|
7,682 |
|
6,416 |
|
Current
portion of long-term borrowings and capital lease
obligations |
|
12,658 |
|
4,772 |
|
Total
current liabilities |
|
199,936 |
|
167,097 |
|
Long-term income tax
payable |
|
4,684 |
|
4,547 |
|
Long-term borrowings and
capital lease obligations |
|
901 |
|
1,627 |
|
Other
liabilities |
|
13,623 |
|
13,120 |
|
Total
liabilities |
|
219,144 |
|
186,391 |
|
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 $203,000 as of March 31, 2016 and
December 31, 2015, respectively |
|
176,442 |
|
175,657 |
|
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,
93,576,893 and 73,298,471 shares issued and outstanding,
respectively, as of March 31, 2016 and 93,101,007 and
72,851,418 shares issued and outstanding, respectively, as of
December 31, 2015 |
|
94 |
|
94 |
|
Treasury
stock, at cost, 20,278,422 and 20,249,589 shares as of
March 31, 2016 and December 31, 2015,
respectively |
|
(284,176 |
) |
(283,913 |
) |
Additional
paid-in capital |
|
356,271 |
|
353,241 |
|
Retained
earnings |
|
233,824 |
|
227,463 |
|
Accumulated
other comprehensive loss |
|
(46,113 |
) |
(50,913 |
) |
Total
stockholders’ equity |
|
259,900 |
|
245,972 |
|
Total
liabilities, commitments and contingencies and stockholders’
equity |
|
$ |
655,486 |
|
$ |
608,020 |
|
|
|
|
|
|
|
|
|
The following tables summarize our total revenue by channel for
the three months ended March 31, 2016 and 2015:
|
|
Three Months Ended March 31, |
|
Change |
|
Constant Currency Change (1) |
|
|
|
2016 |
|
2015 |
|
$ |
|
% |
|
$ |
|
% |
|
|
|
|
|
|
|
|
|
(in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wholesale: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas |
|
$ |
74,155 |
|
$ |
61,176 |
|
$ |
12,979 |
|
21.2 |
% |
$ |
15,104 |
|
24.7 |
% |
Asia
Pacific |
|
77,154 |
|
72,497 |
|
4,657 |
|
6.4 |
% |
6,659 |
|
9.2 |
% |
Europe |
|
39,062 |
|
44,653 |
|
(5,591 |
) |
(12.5 |
)% |
(4,611 |
) |
(10.3 |
)% |
Other
businesses |
|
172 |
|
225 |
|
(53 |
) |
(23.6 |
)% |
(52 |
) |
(23.1 |
)% |
Total
wholesale |
|
190,543 |
|
178,551 |
|
11,992 |
|
6.7 |
% |
17,100 |
|
9.6 |
% |
Retail: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas |
|
35,749 |
|
34,617 |
|
1,132 |
|
3.3 |
% |
1,238 |
|
3.6 |
% |
Asia
Pacific |
|
22,519 |
|
23,345 |
|
(826 |
) |
(3.5 |
)% |
145 |
|
0.6 |
% |
Europe |
|
7,555 |
|
8,411 |
|
(856 |
) |
(10.2 |
)% |
(336 |
) |
(4.0 |
)% |
Total
retail |
|
65,823 |
|
66,373 |
|
(550 |
) |
(0.8 |
)% |
1,047 |
|
1.6 |
% |
E-commerce: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas |
|
14,226 |
|
9,976 |
|
4,250 |
|
42.6 |
% |
4,335 |
|
43.5 |
% |
Asia
Pacific |
|
4,829 |
|
3,933 |
|
896 |
|
22.8 |
% |
1,074 |
|
27.3 |
% |
Europe |
|
3,719 |
|
3,360 |
|
359 |
|
10.7 |
% |
507 |
|
15.1 |
% |
Total
e-commerce |
|
22,774 |
|
17,269 |
|
5,505 |
|
31.9 |
% |
5,916 |
|
34.3 |
% |
Total
revenues |
|
$ |
279,140 |
|
$ |
262,193 |
|
$ |
16,947 |
|
6.5 |
% |
$ |
24,063 |
|
9.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas |
|
$ |
124,130 |
|
$ |
105,769 |
|
$ |
18,361 |
|
17.4 |
% |
$ |
20,677 |
|
19.5 |
% |
Asia
Pacific |
|
104,502 |
|
99,775 |
|
4,727 |
|
4.7 |
% |
7,878 |
|
7.9 |
% |
Europe |
|
50,336 |
|
56,424 |
|
(6,088 |
) |
(10.8 |
)% |
(4,440 |
) |
(7.9 |
)% |
Total
segment revenues |
|
278,968 |
|
261,968 |
|
17,000 |
|
6.5 |
% |
24,115 |
|
9.2 |
% |
Other businesses |
|
172 |
|
225 |
|
(53 |
) |
(23.6 |
)% |
(52 |
) |
(23.1 |
)% |
Total
consolidated revenues |
|
$ |
279,140 |
|
$ |
262,193 |
|
$ |
16,947 |
|
6.5 |
% |
$ |
24,063 |
|
9.2 |
% |
_______________________ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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. |
CROCS, INC.
SUBSIDIARIESRETAIL STORE
COUNTS(UNAUDITED) |
|
|
|
|
|
December 31,
2015 |
|
Opened |
|
Closed |
|
March 31,
2016 |
|
Company-operated retail
locations |
|
|
|
|
|
|
|
|
|
Type |
|
|
|
|
|
|
|
|
|
Kiosk/store
in store |
|
98 |
|
2 |
|
3 |
|
97 |
|
Retail
stores |
|
275 |
|
1 |
|
11 |
|
265 |
|
Outlet
stores |
|
186 |
|
3 |
|
1 |
|
188 |
|
Total |
|
559 |
|
6 |
|
15 |
|
550 |
|
Operating
segment |
|
|
|
|
|
|
|
|
|
Americas |
|
196 |
|
1 |
|
1 |
|
196 |
|
Asia
Pacific |
|
261 |
|
5 |
|
12 |
|
254 |
|
Europe |
|
102 |
|
— |
|
(1 |
) |
2 |
|
100 |
|
Total |
|
559 |
|
6 |
|
15 |
|
550 |
|
________________________ |
|
(1) Excludes eight retail locations acquired in Austria
on March 31, 2016 as no revenue was recognized associated with
those locations in the three months ended March 31, 2016. |
|
CROCS, INC. AND
SUBSIDIARIESCOMPARABLE STORE
SALESRETAIL AND DIRECT TO
CONSUMER(UNAUDITED) |
|
|
|
Constant Currency (2) |
|
Constant Currency (2) |
|
|
|
Three Months Ended |
|
Three Months Ended |
|
|
|
March 31, 2016 |
|
March 31, 2015 |
|
Comparable store sales
(retail only) (1) |
|
|
|
|
|
Americas |
|
2.9 |
% |
(5.8 |
)% |
Asia
Pacific |
|
2.0 |
% |
(9.4 |
)% |
Europe |
|
7.5 |
% |
5.7 |
% |
Global |
|
3.1 |
% |
(5.3 |
)% |
|
|
|
|
|
|
|
|
Constant Currency (2) |
|
Constant Currency (2) |
|
|
|
Three Months Ended |
|
Three Months Ended |
|
|
|
March 31, 2016 |
|
March 31, 2015 |
|
Direct to Consumer
comparable store sales (includes retail and e-commerce) (1) |
|
|
|
|
|
Americas |
|
12.2 |
% |
(4.3 |
)% |
Asia
Pacific |
|
5.8 |
% |
(5.8 |
)% |
Europe |
|
9.7 |
% |
2.1 |
% |
Global |
|
9.9 |
% |
(3.7 |
)% |
______________________ |
|
|
|
|
|
|
(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 e-commerce 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 prior year average foreign exchange rates 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. |
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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