NIWOT, Colo., April 30, 2014 (GLOBE NEWSWIRE) -- Crocs, Inc. (Nasdaq:CROX) today reported financial results for the first quarter ended March 31, 2014.
First Quarter Financial Highlights:
- GAAP revenue increased 0.2% in the first quarter of 2014 to $312.4 million, which is in-line with previously provided guidance of $305 million to $315 million. On a constant currency basis, revenue increased 1.5% in the first quarter of 2014.
- The company reported net income of $0.06 per diluted common share on a GAAP basis in the first quarter of 2014. Excluding certain charges, the company reported a non-GAAP net income1 per common share of $0.14.
Crocs President and Chief Executive Officer John McCarvel said, "Revenues for our business globally in the quarter were in line with our expectations. From a segment perspective, our Asia segment continued to deliver solid quarterly revenue growth across all channels and our Europe segment remained on the positive trajectory, which started late last year. We saw continued momentum in our non-clog portfolio during the quarter, as new collections like our Stretch Sole, with its patent-pending Fit2U TechnologyTM, and our Busy Day collection helped us further expand our brand into a casual footwear leader."
First quarter operating results
In the first quarter of 2014, the company reported GAAP operating income of $16.8 million versus $37.7 million in the comparable quarter in the prior year.
The company had GAAP net income attributable to common shareholders of $6.4 million versus net income of $29.0 million in the comparable quarter in the prior year.
As outlined in the non-GAAP reconciliations set forth later in this press release, the company recorded $8.1 million in non-GAAP charges (of which $1.1 million were non-cash charges). The company also recorded $2.8 million of dividends and dividend equivalents on the preferred stock that was issued in the first quarter of 2014. Undistributed earnings related to preferred stock reduced net income for common shareholders by 13.5% (equal to the equity participation of the preferred investment). Excluding these items the company reported:
- Non-GAAP operating income of $25.0 million versus $39.5 million in the comparable prior year period.
- On a comparable basis, non-GAAP adjusted net income of $17.3 million in the quarter versus $30.8 million in the first quarter of 2013.
"Factors driving our first quarter 2014 performance included the impact of the shift of the Easter holiday from March into April, negative currency impacts in Japan and Russia, and the change in product mix," said Jeff Lasher, Crocs Chief Financial Officer. "Russia represents about 15 percent of our business in Europe and our results in the region were impacted by the sudden weakening of the ruble in mid-January. As we continue to diversify our product line with new footwear brands such as the Stretch Sole and Busy Day and carryover products such as the Huarache and A-Leigh wedge, we are experiencing a reduction in Clog sales as a percentage of revenues. During the three months ended March 31, 2014, Clog silhouettes represented approximately 42% of sales, as compared with 47% in the three months ended March 31, 2013.
"With the closing of the Blackstone investment in the quarter," Lasher added, "this is a time of transition for Crocs as we focus our strategy on enhancing returns for shareholders. We see opportunities to make significant improvements in our business model going forward in order to deliver on that goal."
Cash and cash equivalents at March 31, 2014, amounted to $411.8 million, which is an increase of 29.9% from December 31, 2013. This increase is primarily attributable to net proceeds of $182.2 million related to issuance of preferred stock to Blackstone on January 27, 2014. Inventories increased 18.5% during the first quarter of 2014 to $192.4 million, reflecting the normal seasonal build of product ahead of the company's core spring summer selling season and the impact of the Easter holiday shift.
During the quarter the company repurchased approximately 870,000 shares of common stock for $13 million under its previously announced $350 million stock repurchase program. The company repurchased approximately another 310,000 shares of common stock in April and intends to be patient, methodical and opportunistic in the execution of this buyback plan.
The company expects GAAP revenue of approximately $370 to $375 million in the second quarter of 2014.
As previously announced, Mr. McCarvel will retire as President, Chief Executive Officer and board member, today, April 30, 2014. The board is in the process of a search for Mr. McCarvel's replacement and Mr. Thomas J. Smach, Chairman of the Board of Crocs, will serve as interim Chief Executive Officer until the Board appoints a permanent President and/or Chief Executive Officer. The company will make an announcement when the search is successfully concluded.
"It has been an honor to be part of the Crocs global team for the past decade and to lead it since 2010," Mr. McCarvel said. "We've made tremendous progress as a company over these past 10 years – from a one-season, one-shoe, and one-country brand to a diversified, four-season global footwear leader that is on solid financial footing."
"John's contributions to this company are immeasurable," said Thomas J. Smach, Chairman of the Board of Crocs. "As our CEO, he led a turnaround of Crocs and established it as a profitable, diversified company with more than $1 billion in annual revenue, strong cash flows, and a very healthy balance sheet. Under his leadership, Crocs has grown into a global branded company that employs 4,500 people and sells more than 55 million shoes per year in more than 90 different countries. On behalf of the company's employees and directors, I would like to extend our appreciation and gratitude to John and wish him and his family continued success as he pursues his personal endeavors."
Conference Call Information
A teleconference call to discuss first quarter 2014 results is scheduled for Thursday, May 1, 2014, at 8:00 a.m. ET. The call participation number is (888) 771-4371. A replay 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 37141714. 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 15, 2014.
About Crocs, Inc.
Crocs, Inc. is a world leader in innovative casual footwear for men, women and children. Crocs offers several distinct shoe collections with more than 300 four-season footwear styles. 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 fans "Get Crocs Inside" every pair of shoes, from the iconic clog to new sneakers, sandals, boots and heels. 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 April 30, 2014. 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.
1 Non-GAAP net income is a financial measure not calculated in accordance with U.S. Generally Accepted Accounting Principles (non-GAAP). See the non-GAAP reconciliations set forth later in this press release for additional information.
|CROCS, INC. AND SUBSIDIARIES|
|CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)|
| Three Months Ended |
|($ thousands, except per share data)||2014||2013|
|Revenues||$ 312,429||$ 311,656|
|Cost of sales||156,202||145,807|
|Selling, general and administrative expenses||139,405||128,199|
|Income from operations||16,822||37,650|
|Foreign currency transaction losses, net||2,768||2,600|
|Other income, net||(141)||(28)|
|Income before income taxes||14,481||35,175|
|Income tax expense||5,357||6,214|
|Dividends on Series A convertible preferred shares||2,133||--|
|Dividend equivalents on Series A convertible preferred shares related to redemption value accretion and beneficial conversion feature||618||--|
|Net income attributable to common stockholders||$ 6,373||$ 28,961|
|Net income per common share:|
|Basic||$ 0.06||$ 0.33|
|Diluted||$ 0.06||$ 0.33|
|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 of operations', which is a non-GAAP financial measure. 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 of operations to assist in comparing business trends from period to period on a consistent basis without regard to the impact of non-GAAP adjustments 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 in evaluating operating performance by providing better comparability between reporting periods because they provide an additional tool to evaluate our performance without regard to non-GAAP adjustments that may not be indicative of overall business trends. They also provide a better 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,|
|($ thousands, except per share data)||GAAP||Cash||Non-Cash||Non-GAAP||GAAP||Cash||Non-Cash||Non-GAAP|
|Revenues||$ 312,429||$||$||$ 312,429||$ 311,656||$||$||$ 311,656|
|Cost of sales||156,202||--||--||156,202||145,807||--||--||145,807|
|Selling, general and administrative expenses ("SG&A")||139,405||128,199|
|Restructuring charges and expenses (1)||(3,645)||--||(3,645)||--||--||--|
|New ERP implementation (2)||(1,985)||--||(1,985)||(1,131)||--||(1,131)|
|Contingency accruals (3)||(1,422)||--||(1,422)||--||--|
|Store closure costs (4)||--||(675)||(675)||--||--||--|
|Depreciation and amortization (5)||--||(404)||(404)||--||(722)||(722)|
|SG&A as a percentage of revenues||44.6%||42.0%||41.1%||40.5%|
|Income from operations||16,822||(7,052)||(1,079)||24,953||37,650||(1,131)||(722)||39,503|
|Foreign currency transaction losses, net||2,768||--||--||2,768||2,600||--||--||2,600|
|Other income, net||(141)||--||--||(141)||(28)||--||--||(28)|
|Income before income taxes||14,481||(7,052)||(1,079)||22,612||35,175||(1,131)||(722)||37,028|
|Income tax expense||5,357||--||--||5,357||6,214||--||--||6,214|
|Net income||$ 9,124||$ (7,052)||$ (1,079)||$ 17,255||$ 28,961||$ (1,131)||$ (722)||$ 30,814|
|Net income per common share (exclusive of series A preferred shares):|
|Diluted||$ 0.19||$ 0.35|
|Dividends on Series A preferred shares||$ 2,133||$ --||$ --||$ 2,133||$ --||$ --||$ --||$ --|
|Dividend equivalents on Series A preferred shares related to redemption value accretion and beneficial conversion feature||618||--||--||618||--||--||--||--|
|Net income attributable to common stockholders||$ 6,373||$ (7,052)||$ (1,079)||$ 14,504||$ 28,961||$ (1,131)||$ (722)||$ 30,814|
|Net income per common share:|
|Diluted||$ 0.06||$ 0.14||$ 0.33||$ 0.35|
|(1) This relates to severance expenses, bonuses and consulting fees related to recent restructuring activities and our investment agreement with Blackstone.|
|(2) This represents operating expenses related to the implementation of our new ERP system.|
|(3) This represents certain legal contingency accruals.|
|(4) This represents a non-cash liability recorded as a result of exit costs related to retail store restructuring.|
|(5) This represents 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.|
|CROCS, INC. AND SUBSIDIARIES|
|CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)|
|($ thousands, except number of shares)|| March 31, |
| December 31, |
|Cash and cash equivalents||$ 411,806||$ 317,144|
|Accounts receivable, net of allowances of $14,513 and $10,513, respectively||206,213||104,405|
|Deferred tax assets, net||4,521||4,440|
|Income tax receivable||14,004||10,630|
|Prepaid expenses and other current assets||34,559||29,175|
|Total current assets||880,504||640,077|
|Property and equipment, net||86,413||86,971|
|Intangible assets, net||81,415||74,822|
|Deferred tax assets, net||19,688||19,628|
|Total assets||$ 1,108,950||$ 875,159|
|LIABILITIES AND STOCKHOLDERS' EQUITY|
|Accounts payable||$ 89,130||$ 57,450|
|Accrued expenses and other current liabilities||119,127||97,111|
|Deferred tax liabilities, net||11,193||11,199|
|Income taxes payable||16,924||15,992|
|Current portion of long-term borrowings and capital lease obligations||5,192||5,176|
|Total current liabilities||241,566||186,928|
|Long term income tax payable||36,508||36,616|
|Long-term borrowings and capital lease obligations||10,359||11,670|
|Commitments and contingencies|
|Series A convertible preferred shares, par value $0.001 per share, 200,000 shares issued and outstanding, redemption amount and liquidation preference of $202,133 and $0 at March 31, 2014 and December 31, 2013, respectively||182,838||--|
|Preferred shares, par value $0.001 per share, 5,000,000 shares authorized, none outstanding||--||--|
|Common shares, par value $0.001 per share, 250,000,000 shares authorized, 91,987,136 and 87,888,964 shares issued and outstanding, respectively, at March 31, 2014 and 91,662,656 and 88,450,203 shares issued and outstanding, respectively, at December 31, 2013||92||92|
|Treasury stock, at cost, 4,098,172 and 3,212,453 shares, respectively||(68,265)||(55,964)|
|Additional paid-in capital||325,441||321,532|
|Accumulated other comprehensive income||13,672||14,652|
|Total stockholders' equity||621,745||624,744|
|Total liabilities, commitments and contingencies and stockholders' equity||$ 1,108,950||$ 875,159|
Schedule 1: Revenue Results – Channel and Regional First Quarter 2014 (UNAUDITED)
|Three Months Ended March 31,||Change||Constant Currency Change (1)|
|Americas||$ 70,175||$ 81,604||$ (11,429)||(14.0)%||$ (10,294)||(12.6)%|
|Total revenues:||$ 312,429||$ 311,656||$ 773||0.2%||$ 4,689||1.5%|
|Three Months Ended March 31,||Change||Constant Currency Change(1)|
|Americas||$ 117,120||$ 129,429||$ (12,309)||(9.5)%||$ (10,649)||(8.2)%|
|Total revenues:||$ 312,429||$ 311,656||$ 773||0.2%||$ 4,689||1.5%|
|(1) 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 2013 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.|
Schedule 2: Company Operated Retail Highlights (UNAUDITED)
2014 First Quarter Comparable Store Sales
|Comparable store sales (1)|| Constant Currency |
Three Months Ended
March 31, 2014 (2)
| Constant Currency |
Three Months Ended
March 31, 2013 (2)
|(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 growth is calculated on a currency neutral basis using historical annual 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 2013 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.|
Retail store counts
|Company-operated retail locations:|| December 31, |
| March 31, |
|Kiosk/Store in Store||122||2||(4)||120|
|Company-operated retail locations:|| March 31, |
| March 31, |
|Kiosk/Store in Store||116||19||(15)||120|
Schedule 3: CROCS, INC. BACKLOG (UNAUDITED)
|Americas||$ 107,275||$ 95,701|
|Total backlog (1)||$ 350,290||$ 292,938|
|(1) We receive a significant portion of orders from our wholesale customers and distributors that remain unfilled as of any date and, at that point, represent orders scheduled to be shipped at a future date. We refer to these unfilled orders as backlog. While all orders in our backlog are subject to cancellation by customers, we expect that the majority of such orders will be filled within one year. Backlog as of a particular date is affected by a number of factors, including seasonality, manufacturing schedule and the timing of product shipments. Further, the mix of future and immediate delivery orders can vary significantly period over period. Backlog only relates to wholesale and distributor orders for the next season and current season fill-in orders and excludes potential sales in our retail and internet channels. Backlog also is affected by the timing of customers' orders and product availability. Due to these factors and since the unfulfilled orders can be canceled at any time prior to shipment by our customers, we believe that backlog may be an imprecise indicator of future revenues that may be achieved in a fiscal period and comparisons of backlog from period to period may be misleading. In addition, our historical cancellation experience may not be indicative of future cancellation rates.|