Brendon Frey/ICR, Inc.
Shelley Weibel/Crocs, Inc.
Crocs, Inc. Reports 2010 Second Quarter Financial Results
Company Exceeds Guidance with Diluted EPS of $0.37
Second Quarter Revenue Improves to $228 Million
Gross Margin Increases from 51.1% to 57.8%
Operating Margin Improves to 16.9%
NIWOT, COLORADO – August 5, 2010 – Crocs, Inc. (NASDAQ: CROX) today reported financial results for the second quarter ended June 30, 2010.
Revenue for the second quarter of 2010 increased 31% to $228.0 million, over adjusted revenue of $174.1 million reported in the second quarter of 2009, which excluded $23.7 million in previously impaired product sales that the Company has stated would be non-recurring. On a GAAP basis, second quarter revenue increased 15% year-over-year.
Second quarter 2010 net income was $32.3 million with diluted earnings per share of $0.37, compared to a second quarter 2009 net loss of $30.3 million, or a loss per diluted share of ($0.36).
Year-over-year second quarter changes in the Company’s channel revenue streams were as follows:
- Wholesale sales increased 12% to $140.0 million;
- Retail sales increased 20% to $66.4 million; and
- Internet sales increased 24% to $21.6 million.
Changes in the Company’s regional revenue streams during the same quarterly periods were as follows:
- Americas increased 23% to $104.8 million;
- Asia increased 11% to $88.6 million; and
- Europe increased 7% to $34.6 million.
Gross profit for the second quarter of 2010 increased 30% to $131.9 million, or 57.8% as a percentage of sales, compared to $101.1 million, or 51.1% of sales in the year ago period. Selling, General, & Administrative expenses (including foreign exchange, restructuring, impairment, and charitable contributions) decreased 25.8% to $93.2 million or 40.9% of sales, versus $125.6 million, or 63.5% of sales in the second quarter of 2009.
The Company’s cash and cash equivalents as of June 30, 2010 increased 25% to $96.9 million compared to $77.5 million at June 30, 2009. The Company had no bank debt at June 30, 2010.
Inventory increased 2% to $113.6 million at June 30, 2010 from $111.6 million at June 30, 2009, resulting in inventory turnover of 3.5 times in the current quarter.
The Company ended the second quarter of 2010 with accounts receivable of $94.0 million compared to $67.1 million at June 30, 2009.
“We are very pleased with our second quarter results, which show further strengthening of our global wholesale and consumer direct businesses” commented John McCarvel, President and Chief Executive Officer. “We believe sales are being driven by product innovation, improved service, and brand building initiatives as well as new distribution from the expansion of our company-operated stores and key wholesale accounts. Importantly, our updated business model is generating enhanced profitability and higher cash flow. We are encouraged with our recent performance and believe we have the right strategies in place along with the balance sheet strength to capitalize on the global opportunities still in front of us.”
For the third quarter of 2010, the Company expects revenue of approximately $205 million, a 24% increase over third quarter 2009 adjusted revenue of $165.7 million, which excludes $11.5 million in impaired product sales that the Company has stated would be non-recurring. On a GAAP basis, the company expects third quarter 2010 revenue to grow approximately 16% year-over-year.
The Company expects diluted earnings per share for the third quarter 2010 to increase to approximately $0.22 to $0.24 versus $0.09 in third quarter 2009, which excludes last year’s one time tax benefit of $0.16.
Conference Call Information
A conference call to discuss Crocs’ second quarter 2010 financial results is scheduled for today (August 5, 2010) 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 www.earnings.com prior to the call, where you can download the software for free.
About Crocs, Inc.
A world leader in innovative casual footwear for men, women and children, Crocs, Inc. (NASDAQ: CROX), offers several distinct shoe collections with more than 120 styles to suit every lifestyle. As lighthearted as they are lightweight, Crocs™ footwear provides profound comfort and support for any occasion and every season. All Crocs™ branded shoes feature Croslite™ material, a proprietary, revolutionary technology that produces soft, non-marking, and odor-resistant shoes that conform to your feet.
Crocs™ products are sold in 125 countries. Every day, millions of Crocs™ shoe lovers around the world enjoy the exceptional form, function, versatility and feel-good qualities of these shoes while at work, school and play.
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 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 effectively manage our future growth or declines in revenue;
changing fashion trends; our ability to maintain and expand revenues and gross margin, our management and information systems infrastructure; our ability to repatriate cash held in foreign locations in a timely and cost-effective manner; our ability to develop and sell new products; our ability to obtain and protect intellectual property rights; the effect of competition in our industry; and the effect of potential adverse currency exchange rate fluctuations; 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. 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.